Third Quarter part of ‘difficult’ year for Sax owner

October 22, 2009 – Saying it expects the year to continue to be difficult, the real estate investment trust that owns Hotel Sax and commercial property at Marina City is reporting net income in the third quarter of 2009 less than one-third of what is was a year ago.

Lasalle Hotel Properties says net income in July, August, and September was $3.4 million, compared to $12.5 million in last year’s third quarter. Earnings before interest, taxes, depreciation, and amortization were $48.4 million, down 19 percent. Occupancy at the company’s 31 hotels nationwide was 79.4 percent, down 2.5 percent from the same period in 2008 – but still better than the industry in general.

While revenues were down, so were expenses, declining about 12 percent.

(Left) Hotel Sax at Marina City in late September, from across Dearborn Street.

Chicago continues to be a weak market for Lasalle. Besides Hotel Sax, the company owns The Westin Michigan Avenue. Occupancy at the two hotels was down 3.1 percent from last year. According to company president Michael Barnello, Chicago “suffered from very poor convention attendance and widespread discounting.”

Barnello believes industry demand for rooms and meetings will continue to be down in 2009 and the year will be “incredibly challenging,” but the fourth quarter will be the best quarter of 2009, and business should improve next year.

“Due to the rapid decline in hotel rooms under construction already this year, supply growth should fall off significantly in 2010 and be relatively immaterial for the next five to seven years,” he said during a conference call with investors on Thursday morning, “likely setting the stage for a strong and long recovery as demand returns with economic growth.”