MADISON, Wisconsin—Great Wolf Resorts, (NASDAQ: WOLF), North America’s leading family of indoor waterpark resorts, today reported results for the fourth quarter and year ended December 31, 2008.
Highlights
• Achieved 2008 fourth quarter Adjusted EBITDA of $11.1 million, which was significantly above consensus analysts’ estimates of $8.6 million and above the company’s previously issued fourth quarter guidance range of $6.6 - $10.6 million. Adjusted EBITDA for the full year 2008 was $67.6 million, also above consensus estimates and guidance.
• Reported a 7.9 percent decline in 2008 fourth quarter Great Wolf Lodge® brand same store revenue per available room (RevPAR), compared to a hotel industry average decline of 9.8 percent, according to Smith Travel Research data. The company’s same store RevPAR for the full year was up 0.8 percent, compared to an industry decline of 1.9 percent.
• Elected Kim Schaefer, chief executive officer, to the company’s board of directors in February 2009.
• Negotiated an extension of the maturity date to November 30, 2009 on the $76.8 million mortgage loan on the company’s Mason, Ohio resort property.
• Opened in December 2008, a 203-suite addition and 20,000 square feet of meeting space at the Great Wolf Lodge -- Grapevine, Texas resort.
The company reported 2008 fourth quarter net loss of $(36.5) million, or $(1.18) per diluted share, compared to net loss of $(7.7) million, or $(0.25) per diluted share for the same period a year earlier. Fourth quarter 2008 operating results include the impact of previously announced pre-tax impairment charges of $17.4 million for goodwill and $18.8 million for the company’s investment in one of its joint ventures, and the related effect on income taxes of the non-deductibility of a majority of the goodwill impairment charge for income tax purposes.
Operating Results
“Our resorts performed relatively well in the fourth quarter, despite a difficult macroeconomic and consumer spending environment,” said Kim Schaefer, chief executive officer. “In the current challenging operating environment, we have moved quickly to point out to the consumer the excellent value, convenience and quality of a stay at our resorts. We achieved operating results during the fourth quarter that were better than the overall hotel industry. Our Generation II properties, which are our newer, larger resorts, reflect the broad range of guest amenities we seek to incorporate into our future development properties, and contribute over 80 percent of our Adjusted EBITDA, posted operating statistics in the fourth
quarter better than the overall hotel industry. These properties had a same-store RevPAR decline of 4.9 percent in the quarter, or about half the decline reported for the overall hotel industry during the period.
For the full year 2008, same-store RevPAR for all Great Wolf Lodge brand resorts increased 0.8 percent, led by a 3.9 percent increase at the company’s Generation II properties. This compares to a 1.9 percent RevPAR decline for the overall hotel industry.
“We believe that, despite the current economic climate, families will continue to appreciate and seek opportunities to spend time together in a fun, safe and convenient location,” Schaefer said. “We believe our resorts can be a terrific option for families that want to focus on taking shorter, closer-to-home trips. We believe such ‘stay-cations’ may become even more common in 2009 and that our properties are well positioned to take advantage of that trend.
“Our Great Wolf Lodge brand same store RevPAR increased 1.4 percent in January. This was significantly better than the overall hotel industry, which reported double-digit January RevPAR declines. Although January is normally the lightest operating month in our first quarter, we are encouraged by this relatively strong early 2009 operating performance as we prepare to enter the traditionally busy Spring break period.”
The company increased its focus on cost control during the 2008 fourth quarter. “Like all companies today, we are stressing careful management of all aspects of our cost structure, including labor,” Schaefer continued. “We have aggressively evaluated the operations at our resorts and made adjustments consistent with changing occupancy projections. Our booking window has remained relatively consistent over the past few months, with about 70 percent of our transient rooms being booked within 21 days of arrival. With this booking timeframe, we will continue to concentrate on proper staffing and other cost levels. Importantly, though, we also maintain a strong emphasis on guest satisfaction. Our guest satisfaction scores have remained high, even as we adjust our overall cost structure at the resorts.”
Similar to leisure trends in the fourth quarter, the company saw group business also decline during the period. “Our same store number of group rooms was down 8 percent, or about 1,250 rooms, during the fourth quarter,” Schaefer commented. “We believe this is primarily due to the widespread economic shifts that started in September 2008. For the full year 2008, our same store group rooms were up more than 29 percent. As a result, we believe the long-term trends in this business can be favorable for us and will remain an important part of our plan to increase our mid-week business.”