Total expenses increased $54.2 million in the three months ended MarcH 31, 1999, from $36.0 million to $90.2 million, compared to the same period in 1998. This increase resulted primarily from the additional hotels acquired in 1998. Total expenses as a percentage of total revenue increased to 71% for thethree months ended March 31, 1999, from 63% in the same period of 1998.
The major components of the increase in expenses, as a percentage oftotal revenue, are: taxes, insurance, and other; and interest expense.
Taxes, insurance, and other increased $13.7 million primarily as a result of the increased number of hotels owned. As a percentage of total revenue, taxes, insurance, and other increased from 12.6% to 16.5%. The majority of the increase, as a percentage of total revenue, is attributed to land leases, which represent 3.2% of total revenue in 1999 but only 0.4% in 1998. Land leaseS as a percentage of total revenue increased because of the greater number of hotels subject to land leases acquired through the Bristol Merger.
Interest increased as a percentage of total revenue to 22.4% in the three months ended March 31, 1999, from 16.9% in the three months ended March 31, 1998. This increase in interest expense is attributed to the increased use of debt to finance acquisitions and renovations and the assumption of debt related to the more highly leveraged Bristol assets. Debt, as a Percentage of investment in hotels at cost, increased from 28% at March 31, 1998 to 38% at March 31, 1999.