LaSalle Hotel Properties (NYSE:LHO) Q3 2016 Earnings Conference Call - Final Transcript
Oct 20, 2016 • 11:00 am ET
Good day and welcome to the LHO Third Quarter 2016 Earnings Call. At this time, I would like to turn the conference over to Mr. Max Leinweber, Director of Finance. Please go ahead, sir.
Thank you, David. Good morning, everyone and welcome to the third quarter 2016 earnings call and webcast for LaSalle Hotel Properties. I am here today with Mike Barnello, our President and CEO and Ken Fuller, our CFO. Mike will discuss our third quarter results and activities. Then he will provide an overview of the industry. Ken will provide details on our portfolio performance and an update on our balance sheet. Then we will open the call for Q&A.
Before we start, please take note of the following. Any statements that we make today about future results and performance or plans and objectives are forward-looking statements. Actual results may differ as a result of factors, risks and uncertainties over which the company may have no control. Factors that may cause actual results to differ materially are discussed in the company's 10-K, quarterly reports and its other reports filed with the SEC. The company disclaims any obligation or undertaking to update or revise any forward-looking statements. Our SEC reports as well as our press releases are available at our website, lasallehotels.com. Our most recent 8-K and yesterday's press release include reconciliations of non-GAAP measures with the most comparable GAAP measures.
With that, I will turn the call over to Mike Barnello. Mike?
Thanks, Max and thanks everyone for joining our third quarter call. We will start out this morning with a recap of Q3. Our portfolio performed well in the slow growth operating environment. While we benefited from the recovery of last year's loss business Park Central New York and WestHouse, our results excluding these hotels still reflected moderate RevPAR growth and solid expense management. For the whole portfolio, our consistently best in class hotel EBITDA margin rose again to an outstanding 36.8% and expanded by 29 basis points. Certainly, one of the contributors to the success was the recovery of lost business of Park Central New York and WestHouse. We also benefited from reduced real estate taxes, which resulted from lower than expected assessments at our two Chicago assets. Another bright spot was energy, which has been the case several quarters in a row. Energy decreased 5% per occupied room in the third quarter resulting from a combination of reduced consumption and a strategic staggering of our utility contracts.
Food and beverage was a disappointment this quarter driven entirely by a 5% revenue decline. Our banquet business this quarter was most negatively impacted in San Francisco, Chicago and Boston, where citywide group rooms were up, but in-house banquets were down. Our newest hotel, Mason and Rook, did bock this trend with food and beverage revenue increasing by $700,000 during the quarter, an early indicator of the strong incremental return we expect to realize by expanding the meeting space there and adding in a bar-centric restaurant that caters to