NH Hotel Group SA

07/25/2019 | Press release | Distributed by Public on 07/25/2019 11:58

EBITDA growth of 14%, strong financial position and shareholder's remuneration, highlights of NH Hotel Group in the first half of the year

- 1H19 results -

  • Total Group revenue increased by 4.6% to €822 million, driven by a strong performance across all the European markets, with momentum particularly favourable in Spain
  • Revenue per available room (RevPAR) registered growth of 5.3%, due almost entirely to growth in the average daily rate, which was 4.7% higher at €102.3, without undermining occupancy (+0.5%)
  • EBITDA(1) was €16 million higher at €131 million (€257 million including the impact of IFRS 16) thanks to business momentum and cost control, the factors primarily responsible for the profit growth in the first half
  • The Group's recurring net profit increased by a significant 83% in the first half to €41.9 million (€36.1 million including the impact of IFRS 16), similarly due to stronger business volumes but also lower finance costs
  • Including non-recurring items, the reported net profit was €40 million and the comparison with the same half of previous year is affected by the net gains recognised on assets disposed in the first half of 2018
  • NH Hotel Group has closed the first half of the year with a net financial debt of -€204 million and a cash position of €245 million
  • After being approved by the General Shareholder´s Meeting, the Company has paid out a gross dividend €0.15 per share (approx. €59 millions), aligned with the shareholder's remuneration policy announce

- Strategic initiatives with Minor International -

  • A number of agreements were announced during the second quarter of the year under which NH Hotel Group will operate Minor International's hotels in Portugal and Brazil, adding an estimated €13 million to annual EBITDA
  • In early March, both groups agreed to introduce the luxury brand, Anantara Hotels, Resorts & Spas, in Spain with an agreement to operate the hotel Villa Padierna Palace (located in Marbella)

Today, NH Hotel Group presented its results for the first half of 2019, a set of earnings which evidences the momentum being sustained by the Group in recent years and marked by significant growth in the main profit headings and financial metrics. According to Ramón Aragonés, CEO of NH Hotel Group, 'the strong start to the year continued throughout the second quarter of 2019, which was characterised by stronger revenue growth on the back of a higher ADR which, coupled with control cost, drove healthy cash flow generation while maintaining low debt level. In parallel, the integration and joint plans with Minor International have been progressing as expected and are showing the first signs of materialisation in the form of the agreements announced during the first half for the operations of Minor Hotels' establishments in Portugal and Brazil and the introduction of the Anantara Hotels, Resorts & Spas brand in Spain, to be operated by NH Hotel Group'.

- 1H19 results -

The Group reported overall revenue growth of 4.6% to €822 million in the first half of 2019, despite adverse currency effects in Latin America and the opportunity cost implied by the hotels being refurbished during the period. The topline growth was driven by a strong performance in the hotel business in Europe, particularly in Spain, where the recovery already underway in Barcelona was amplified by an excellent performance in Madrid (due to a stronger conference line-up and the final of the Champions League in June), as well as a positive evolution in the secondary cities. While the performance in Spain was extraordinarily positive in the first half, the rest of the European markets were also very strong, with Benelux, Central Europe and Italy standing out in the second quarter in comparison to the start of the year.

Revenue per available room (RevPAR), the most important business metric in the hotel business, registered growth across all of the Group's business units reaching an overall growth of 5.3%. Of that growth, 4.7% is attributable to growth in the average daily rate (ADR), which went from €97.7 in the first half of 2018 to €102.3 this year. Occupancy, meanwhile, also increased by 0.5%. The improvement in the key business metrics was also tangible in the feedback provided by users about their experiences at the Group's hotels via the main online search engines. The TripAdvisor score increased from 8.4 points out of 10 to 8.6, while the Google Reviews score improved from 8.5 to 8.6 points.

Revenue growth combined with cost control meant that the Group's recurring EBITDA(1) increased by 14% year-on-year to €131 million (€257 million including the impact of IFRS 16), implying margin expansion of 1.3 percentage points compared to the first half of 2018.

The improvement in business and lower finance costs have driven a significant growth of 82% in recurring net profit (€41.9 million; €36.1 million including the impact of IFRS 16), compared to €23 million in the first half of 2018. Layering in non-recurring items leaves reported net profit at €40 million, down €24 million year-on-year, shaped by the less net gains recognised on assets disposed (+€57 million of in the first half of 2018).

Cash flow generation during the first half left cash at €245 million and net financial debt at the low level of €204 million at the June close, despite having invested €85 million and paid out €59 million in dividends (€0.15 per share, paid out against 2018 profits on 14 June 2019).

- Portfolio evolution -

At the June close, NH Hotel Group was operating 369 hotels and 57,356 rooms. The Company continues to improve the quality of their hotel portfolio. During the first half of 2019, the Group refurbished 22 hotels, six of which in Spain, another six in Italy, three in Benelux, four in Central Europe and the last three in Latin America. In addition to the hotels signed up under the scope of the strategic agreement with Minor in Portugal (13 hotels), the Group added five new hotels to its portfolio (located in Spain, Italy, Andorra and Mexico).

- Strategic initiatives with Minor International -

In the wake of the takeover bid by Minor International in the last quarter of 2018, and as foreshadowed in its prospectus with regards to the search for a far-reaching transaction that would allow NH Hotel Group to operate the establishments run by the former in Portugal and Brazil, a number of enabling agreements materialised at the end of June. Minor International agreed to sell three hotels in Lisbon to funds managed by Invesco Real Estate, which will be operated by NH Hotel Group under a long-term sustainable lease agreement with the new owner. In parallel, NH Hotel Group entered into an agreement with Minor International for the management of another nine of the latter chain's hotels in Portugal and the provision of management advisory at its two establishments in Brazil. Those agreements will contribute an estimated €13 million to NH Hotel Group's annual EBITDA.

Elsewhere, in April 2019, Minor Hotels and NH Hotel Group announced an agreement for the operation by the latter of the hotel Villa Padierna Palace, located in Marbella, in the south of Spain, a property to be rebranded under Minor Hotels' luxury brand, Anantara Hotels, Resorts & Spas. The two groups are thus aligning their interests in order to make the most of the opportunities for expanding their brands and rebranding existing properties.

(1) Recurring EBITDA before the reversal of provisions for onerous contracts and gains from asset sales and excluding the impact of first-time application of IFRS 16

APPENDIX

Hotel business performance in 1H19 by market

Ratios: like-for-like hotel data + hotels under refurbishment

EBITDA figures: recurring EBITDA before the reversal of provisions for onerous contracts and gains from asset sales, excluding the impact of IFRS 16

Spain. Revenue climbed by 10% to €218.8 million in the first half, fuelled by the ongoing recovery in Barcelona, an excellent performance in Madrid, shaped by a strong line-up of congresses and the celebration of the Champions League Final, and a good performance in the secondary cities. RevPAR increased by 9.2%, 7.8pp of which is attributable to growth in the ADR and 1.3pp to occupancy. As a result, EBITDA increased by 26.8% to €34.7 million.

Italy. First-half revenue registered growth of 3.3% to €147.1 million. Rome led the gains while Milan recovered from a weaker start to the year due to a less favourable trade fair line-up. RevPAR in Italy rose by 3.1%, thanks to growth in the ADR of 2.6% and in occupancy of 0.5%, while EBITDA came in at €34.1 million, growth of 11.6% year-on-year.

Benelux. Brussels and Amsterdam were the main momentum drivers in this region, where revenue increased by 0.7% to €173.1 million (+2.7% excluding the impact of a hotel under refurbishment in Amsterdam). The conference-oriented hotels recovered their momentum in the second quarter, having suffered somewhat during the first quarter when the number of congresses dipped. RevPAR growth was 2.2%, thanks to growth in the ADR of 1.2% and in occupancy of 1.0%. Lastly, EBITDA, at €31 million (-3.6%), was affected by the temporary loss of business due to the refurbishment of an important hotel in Amsterdam and an increase in costs as a result of the application of collective bargaining agreements.

Central Europe. A favourable trade fair schedule in Munich and in Austria contributed to revenue growth of 1.9% to €182.7 million in 1H19 (+2.6% excluding the impact of the hotels under refurbishment). RevPAR increased by 4.3%, thanks to growth in the ADR of 3.2% and in occupancy of 1%, to leave EBITDA in the region 0.7% higher at €9 million.

Americas. Revenue in this region registered growth of 1% (real exchange rate) to €61 million. RevPAR growth was 0.2%. By region: Mexico posted topline growth of 3.9% (real exchange rate); although Argentina sustained sharp growth due to hyperinflation, significant currency devaluation left revenue 1.4% lower at real exchange rate; and in Colombia and Chile, revenue decreased by 6.6%, affected by surplus supply in Bogota and currency weakness. EBITDA in Latin America was €12.6 million, growth of 11.6% from 1H18.

About NH Hotel Group

NH Hotel Group is a consolidated multinational player and a leading urban hotel operator in Europe and America, where it operates over 350 hotels. Since 2019, the Company works with Minor Hotels in the integration of their hotel brands under a single corporate umbrella with presence in over 50 countries worldwide. Together, both Groups have a portfolio of over 500 hotels articulated around eight brands: NH Hotels, NH Collection, nhow, Tivoli, Anantara, Avani, Elewana and Oaks - that comprise a broad and diverse range of hotel propositions connected to the needs and desires of today's global travellers.