A significant factor in the favorable change in net loss was the reduction in real-estate rent expense that resulted from the lease amendment TA entered with Hospitality Properties Trust (HPT), [image-nocss] effective January 1, 2011, that reduced TA's annual rent payments by approximately $42 million.
TA's results also reflected improvement in EBITDAR, which increased by $11.3 million in the 2011 first quarter over the 2010 first quarter. TA's fuel gross margin per gallon increased in the 2011 first quarter as compared to the 2010 first quarter, resulting in total fuel gross margin that was $10.6 million higher in the 2011 first quarter than the 2010 first quarter. Nonfuel sales for the 2011 first quarter increased over the 2010 first quarter largely due to increased customer spending in TA's travel centers as the U.S. economy improves as well as from price increases.
TA's operating expenses as a percentage of nonfuel revenues on a same-site basis for the 2011 first quarter decreased as compared to the 2010 first quarter because certain of TA's expenses are fixed in nature or otherwise do not vary directly with sales so that increases in its nonfuel revenues did not result in corresponding increases in its operating expenses. Also, TA's operating results are typically at their lowest in the first quarter of the year because freight movement by professional truck drivers and motorist travel typically are at their lowest levels of the year during the winter months and certain of TA's expenses are fixed.
The trucking industry is the primary customer for TA's goods and services. Freight and trucking demand in the United States generally reflects the level of commercial activity in the U.S. economy. The condition of the U.S. economy generally, and the financial condition and activity of the trucking industry in the United States specifically, impacted TA's financial results during the first quarters of 2010 and 2011, and TA expects these matters will continue to impact its financial results in future periods. While the U.S. economy recently has shown signs of growing, recent economic activity is still below pre-recession levels and the strength and sustainability of any economic recovery is uncertain.
During first-quarter 2011, TA experienced a 0.5% decrease in total fuel sales volume, compared with first-quarter 2010. TA believes its fuel volume results were negatively impacted by severe weather across the nation during first-quarter 2011 as compared to first-quarter 2010, with severe storms affecting significant portions of the country and resulting in lost days of shipping activity. TA said it believes that without the effects of these storms its fuel sales volume might have modestly increased over the 2010 first quarter. Also, TA did not pursue lower-margin business as aggressively in first-quarter 2011 as it had in first-quarter 2010 and this negatively affected the volume results between years.
In order to try to take advantage of the recent opportunities in the travel center industry, TA has used some of its available cash liquidity to acquire new locations at what TA believes are attractive prices. Since the beginning of 2011, TA has invested or agreed to invest approximately $37.2 million related to the acquisition of eight travel centers: In March 2011, TA spent $7.2 million to acquire and improve a new travel center in Texas that was purchased at a foreclosure auction. The property was renovated as a Petro Stopping Center and opened for business on May 1, 2011. Also during March 2011, TA exercised its right to purchase a former Petro franchisee's travel center in Kansas for approximately $5.5 million; TA expects to close on this purchase and begin to operate this site for its own account during the second quarter of 2011. In April 2011, TA agreed to acquire six new travel centers (five in Indiana and one in Illinois) at a bankruptcy auction. Staggered closings for these sites began on May 2, 2011, and are expected to be completed during the second quarter of 2011. One of these sites has been operated as a Petro franchise site since 1990 and TA intends to continue its operation as a Petro Stopping Center upon closing. Three of these six sites are expected to be rebranded prior to the end of 2011, two as Petro Stopping Centers and one as a TA. Two of these sites are adjacent to, and are expected to function as ancillary facilities to, existing TA locations. TA expects to operate these properties under their current brands until such time as its renovation and improvements are complete. TA agreed to purchase these six properties for an aggregate of approximately $24.5 million, which TA estimates equates to slightly over four times the historically generated annual cash flow at these locations. TA expects to spend between $15 million and $20 million to renovate these properties; and TA expects the cash flow from these sites may improve when they are renovated and operated by TA.
TA's business of operating high-sales-volume travel centers open 24 hours every day requires that TA make regular capital investments in its existing sites to maintain their competitive attractiveness to TA's customers. During the three months ended March 31, 2011, TA spent approximately $15 million on improvements to its existing sites. As TA's business enters what TA believes may be a prolonged recovery, TA expects to continue its refurbishment program. To help pay some of the costs of these improvements, TA intends to request that during the second quarter of 2011 HPT purchase improvements TA has previously made to the properties it leases from HPT for proceeds of approximately $35 million, which would result in an increase in annual rent of approximately $3 million. In the future, TA may request that HPT fund additional approved amounts for renovation and improvements at the leased travel centers in return for rent increases; however, HPT is not obligated to fund such amounts.
During the 2011 first quarter, changes in market conditions, principally the changes in the market prices of petroleum products, caused TA to make significant investments in working capital. Inventory increased $11.9 million due to both increases in fuel prices and increases in nonfuel wholesale purchase prices and in the amounts of inventories required to respond to increased sales levels. Accounts receivable and accounts payable both also increased as a result of higher fuel prices.
Effective January 2011, TA entered a new contract with Comdata Network Inc., the largest issuer of third party fuel cards to trucking companies, that increased its working capital requirements during the first quarter of 2011 and that TA expects will further increase its working capital requirements during the second quarter and for the remainder of 2011 as compared to the same periods of 2010; TA estimates that the new Comdata contract terms increased TA's working capital investment in accounts receivable by approximately $26 million during first-quarter 2011, and these new contract terms may increase TA's working capital investment in accounts receivable (assuming no change in fuel prices and sales volumes) by an additional approximately $26 million during the remainder of 2011.
Earlier this month, TA also said that entered into a multi-year supply agreement with Continental Tire the Americas LLC for commercial truck tires. TA will supply its fleet and owner-operator customers with Continental tires at more than 220 TA Truck Service and Petro:Lube maintenance and repair centers it operates across the the United States and Canada. TA Truck Service and Petro:Lube truck service centers are currently adding inventory of Continental tires into their service centers with plans to begin selling by the end of May. Continental tires will have national account availability. Additionally, customers will also be able to have emergency replacement Continental tires supplied by TA's RoadSquad emergency roadside assistance program.
Meanwhile, three TA locations in Jeffersonville, Ohio, Walton, Kentucky, and Florence, Ky., served as dropoff locations for supplies being gathered to help tornado victims in Alabama. Owner-operator Sam Jones, from R&R Trucking, organized the collection effort. He donated his time and truck to transport all of the donations down to those who need help.
Headquartered in Westlake, Ohio, TravelCenters of America is a leading national chain of 229 travel centers in 41 states and Canada that operate under the TravelCenters of America (166) and Petro (63) brands. With convenient locations on interstate exits, TA offers its customers diesel and gasoline fueling services, full- and quick-service restaurants, heavy-truck maintenance services, 24-hour convenience stores, entertainment and other services, all within large, high-traffic facilities.
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