Results preview 2011

NH Hoteles posts EBITDA growth of 37% to €202.4mn, achieving net profit of €6.2mn compared to a loss of over €41mn in 2010

 

• 79% of Group EBITDA was generated by the business units Central Europe, Benelux and America. Revenue rose 7% to €1,428mn

 

• Cost-cutting was intense in 4Q11 (operating expenses: -6.6%), underpinned by the start-up of a efficiency program in which the Company invested more than €30mn last year

 

• The Group has bulked up its sales and marketing platforms and is focusing strategically on online channels

• Consolidated net debt was cut by over €100mn in the fourth quarter. Having raised over €300mn from its fully-executed divestment plan, debt-to-EBITDA was reduced by 30% year-on-year

• In 2011, NH Hoteles continued to execute its growth strategy, opening 8 hotels and 1,416 rooms. The inauguration of the NH Bogota 93, marking the chain’s debut in Colombia, stands out. The Group continues to cement its geographic footprint, consolidating its presence in Europe and growing in Latin America

• Outlook for 2012 is for revenue growth of 3% to 5%. The January figures mark a turnaround with respect to 4Q11. The recovery is expected to gain momentum from April, especially in Central Europe, Benelux and America

 

NH Hoteles’ 2011 earnings highlights show considerable recovery and momentum with respect to 2010. The efforts made by the Company, including the reinforcement of its sales platforms, underpinned year-on-year EBITDA growth of 37% to €202.4mn. A noteworthy 79% of EBITDA was generated by the Company’s operations in the business units Central Europe, Benelux and America.

NH Hoteles posted total Group revenue in 2011 of €1,428mn, marking growth of 7% on 2010. Thanks the multiple initiatives set in motion in 2011 and an intense cost control effort during the latter part of the year, the Group’s net profit for the year recovered significantly to €6.2mn, compared to a loss of €41.3mn in 2010.

It is worth highlighting the intense cost-cutting effort maintained throughout the year, most particularly in the fourth-quarter during which revenue has increased 5%, operating expenses have significantly decreased 6.6% and EBITDA has grown 63%.

The Company also managed to bring its leverage ratio, measured by debt-to-EBITDA, down from 6.5x at year-end 2010 to 4.5x at 31 December 2011. The Company reduced its net debt by more than €100mn during the last quarter of the year.

Positive assessment of the Company’s performance in 2011

 

In 2011, the Company achieved its stated targets of aligning its management structure with its current business model and redefining its processes and organisational structure in order to compete in the new business environment more effectively and efficiently.

Last year, NH Hoteles designed a new organisational structure that bolsters the sales and marketing area. As a result, the Company has matched its needs with its targets and put in place the technology and sales platforms needed to execute its strategy. In addition, the Group applied a productivity enhancement program to all its processes so that top line growth outpaced increase in operating expenses. Moreover, in order to give the Company the solvency it needs to service its financial commitments, it continued to execute the divestment plan initiated in 2010, exceeding the initial target of €300mn by €45mn

Results – Key figures for the NH Hoteles Group at 31st December 2011:

 

CONSOLIDATED RESULTS 2011
(€ million)			2011	2010	% var
REVENUE			1,428.3	1,334.8	7.0%
GOP			493.8	417.6	18.3%
EBITDA			202.4	147.8	36.9%
NET INCOME			6.2	(41.3)	115.1%

 

Hotel business: RevPar growth across all business units

 

The hotel chain’s overall occupancy rate rose by 3.7% in 2011 reaching 65%, with occupancy in the business unit America and Spain up a notable 4%.

All of the Group’s business units registered growth in RevPar (revenue per available room), with America up 7.4% and Benelux up 6.1% standing out. Like-for-like RevPar growth was 4.9%. The Company continued to win market share in its operating markets; in particular, the Group’s urban hotels strongly outperformed its competitors’ establishments in Barcelona, Brussels, Frankfurt and London, among other cities.

The Central Europe business unit, which encompasses NH Hoteles’ presence in Germany, Austria, Switzerland, Hungary, the Czech Republic, Rumania and Poland, posted excellent earnings momentum throughout 2011. Even though the business segment in Spain was hurt somewhat towards the end of the year by the concentration of bank holidays, the business unit Spain and Portugal posted RevPar growth of 2.7%, driven by a 4.1% increase in the occupancy rate. In the business unit Italy, where demand from business travellers continues to recover, benefitted from a substantially higher number of trade fairs in November. The Benelux business unit stands out for registering the highest growth in average prices (ADR) of any unit, spearheaded by an especially strong performance in Amsterdam. Lastly, earnings momentum in the business unit America was strong all year, shaped by growth in RevPar, occupancy and average prices, spurred in part by a higher number of international congresses in the biggest cities.

Outlook for 2012

 

In line with general outlook for this year, the Company’s expectations are moderately optimistic for the sector’s performance, foreseeing growth for the year as a whole. Although revenue growth could lack intensity in the first quarter, albeit without falling below last quarter’s performance, management expects to generate year-on-year growth from the second quarter on. The business units expected to mirror this outlook for growing momentum throughout the first half are Central Europe, Benelux and America. For the full year, management is looking for revenue growth of 3% to 5%, coupled with double-digit EBITDA growth.

The cornerstones of NH Hoteles’ growth strategy for 2012 include greater integration between the business units and corporate service departments, paving the way for more consistent implementation of corporate policies and identification of sales opportunities. The Company is strategically committed to bolstering and investing in its technology and sales platforms while building an organisational model that allows it to grow, while encompassing and addressing the chain’s diverse geographic markets, trademarks and hotel business models.

As announced by the Company at the international tourism fair (Fitur) celebrated in Madrid last month, the sales and marketing strategy for 2012 is centred on ‘customer service 2.0’, specifically by boosting virtual channels and stimulating the highest potential issuer markets by placing the spotlight on distribution and online channels.

In addition to implementing new revenue management tools, the sales and marketing structure has been reinforced with new appointments. Last year the Group named Mikael Anderson Chief Commercial Officer, and more recently Rafael Ros as the new Senior Vice President Sales. Rafael has an extensive track record in sales and marketing and deep knowledge of the telecommunications sector, having served as CEO at Tele2 and Relacom in Luxembourg and Spain, respectively.

International development

 

The Group’s international expansion priorities are to consolidate the chain’s presence in Europe and to commit more decisively to growth in Latin America, as this market is the ideal platform for making the most of NH Hoteles’ competitive advantages by leveraging the brand’s privileged position in some of the continent’s most important markets and the affinity with the Company’s cultural roots and language. NH Hoteles is in talks to enter the Brazilian market, which presents significant upside for the Group, and is also studying entry into other Latin American markets.

The Group’s strategy for expanding its hotel portfolio by leveraging formulae entailing low capital requirements is beginning to bear fruit. Half of all planned openings - encompassing 19 hotels with more than 2,000 rooms all over the world – rely on the management model.

New hotels and markets

 

Since the start of 2010, the Group has opened eight new hotels with 1,091 rooms, as well as extending another two existing hotels (adding 170 and 155 rooms, respectively).

The two hotels opened under management agreements in Turin (with 240 and 140 rooms, respectively) and Madrid’s NH Ribera del Manzanares (224 rooms) stand out among the hotels inaugurated in 2011.

The Hesperia WTC Valencia hotel (Venezuela), which opened its doors at the end of 4Q10 with 32 rooms, has since added 170 new rooms. When work at this property is completed, the hotel will have a total of 323 rooms.

The Group also added an existing hotel in Castellar de la Frontera in Cadiz (74 rooms) to its portfolio under a management agreement. The Group has also opened a second hotel in Algeciras. Very recently it opened a new establishment in Barcelona, where it has around 30 hotels, thereby consolidating its leadership position in this core market.

NH Hoteles also opened a hotel (under a lease contract) beside Frankfurt’s trade fair centre targeted specifically at business travellers.

Last October, the hotel chain entered the Colombian market, opening its first establishment in the capital city. It is actively looking at new short-term opportunities both in Colombia and in the Brazilian market.

Following the addition of these new hotels, NH Hoteles currently has almost 400 hotels with around 60,000 rooms in 26 countries across Europe, America and Africa.

Sustainability policy

NH Hoteles views the environment as one of its core stakeholders. The Company accordingly builds environmental protection and business sustainability standards into every stage of its business cycle, from hotel planning, design and construction to its everyday operations and customer service.

In 2008 the Group launched its Sustainability and Energy Efficiency Strategic Plan for 2008-2012, which is based on quantifying the chain’s impact on the environment and setting targets for cutting energy and water consumption, carbon emissions and waste generation. This Plan will put the Group four years ahead of the European Union’s 20-20-20 targets.

The ratios monitored per guest and night continue to show considerable improvement in terms of both consumption and emissions. Energy consumption fell by 10% in 2011, while water consumption was reduced by 3%. Waste generation was cut by 11% and the Company’s carbon footprint was pared back by 12%.

Significantly, in 2011 NH Hoteles became the first global hotel chain to achieve ISO 50001 certification, the most important and stringent Energy Management Systems standard. This certification is testimony to NH Hoteles’ environmental protection and sustainability pledge and consolidates its role as the standard bearer in the tourism sector in terms of corporate responsibility.

About NH HOTELES

NH Hoteles (www.nh-hotels.com) ranks third in the European urban business hotel segment. It operates close to 400 hotels with almost 60,000 rooms in 26 countries across Europe, America and Africa. NH Hoteles currently has 19 new hotels under construction which will add over 2,000 new rooms to its portfolio.

NH Hoteles is traded on the Madrid stock exchange.

 

FOR FURTHER INFORMATION:

NH Hoteles Communications Department
Tel: +34914519762
Tel: +34 91451 97 18 (switchboard)
Email: comunicacion@nh-hotels.com

 

RESERVATIONS

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Website: http://www.nh-hotels.com