The economic recovery may appear rocky, but for Four Seasons (FS:NYSE) the upscale business travel recovery is picking up steam, with the company posting profits and showing 20% year-over-year revenue growth in the second quarter.
Four Seasons Tuesday announced second-quarter net income of C$17.3 million, or 46 cents a share, up from the loss of $1.4 million, or 4 cents a share, it had a year ago. The company had net earnings of US$13.1 million, or 35 cents a share. (Since the company did not provide exchange rates in its release, all of the currency conversions are based on the current rate of 76 Canadian cents to the U.S. dollar.)
On an adjusted basis in U.S. dollars, which is how Wall Street views the company, Four Seasons earned $14.6 million, or 39 cents a share, which is up 118% from last year and tops the 35-cent analyst estimate, according to Thomson Financial.
"Our second-quarter financial results reflect the continued recovery in business and leisure travel demand," said Isadore Sharp, chairman and CEO. "We expect the contribution in management earnings from new Four Seasons managed properties to continue to increase."
Consolidated revenue for the quarter came in at C$97 million, or US$73.7 million, which tops the $71.5 million expected by Wall Street and is up 20% year over year.
The strong top-line growth was driven by rising revenue per available room, or revpar, at the company's upscale properties as well as rising average daily room rates and growth in operating margins. Revpar at the company's core hotels rose 22.7% from last year, while gross operating margins came in at 31.2%, up from 27.4% in the year-ago quarter.
Going forward the company said that it expected revpar growth at core hotels to increase more than 10% in the third quarter, with occupancy rates continuing to improve even as room rates rise.