La Quinta Cuts RevPAR Guidance, To Buyback Up To $100 Mln Stock; Stock Down 5%

(RTTNews) - La Quinta Holdings Inc (LQ), an operator of select-service hotels, on Thursday slashed its its 2015 RevPAR guidance as a result of weaker than anticipated hotel demand during August and September and industry trends which indicate weaker demand for the portfolio for the remainder of the year.

The company now expects 2015 RevPAR (revenue per average room) on a system-wide comparable hotel basis to increase 3.5 percent to 4.5 percent, down from prior guidance of 4.5 percent to 5.5 percent.

La Quinta now anticipates 2015 Pro Forma Adjusted EBITDA of $393 million to $400 million, from prior guidance of $398 million to $404 million.

Additionally, the company said it will incur a charge of about $11 million related to executive separation, which is excluded from Pro Forma Adjusted EBITDA.

La Quinta also announced that its Board approved a program to repurchase an aggregate of up to $100 million of its common stock, effective immediately.

The company had previously announced a $200 million program which would commence once the company's net debt to Pro Forma Adjusted EBITDA ratio falls below 4.0 times. However, given recent market activity, the company and the Board have decided to accelerate a portion of the program.

The share repurchase of $100 million is expected to be funded by up to a $30 million draw on the company's revolver, with the remainder from available cash.

As a result, the company expects that its net debt to Pro Forma Adjusted EBITDA ratio will remain above its previously stated target of 4.0 times.