Company Results

Hoteles City Announces Third Quarter 2014 RevPAR Up 11.7%

Reports Revenue and Adjusted EBITDA of 11.7%, 28.0% and 38.2%, Respectively Reaching an Adjusted EBITDA Margin of 35.5%

Hoteles City Express

Hoteles City Express S.A.B. de C.V. (BMV: HCITY), the leading limited-service hotel chain in Mexico, today announced its financial results for the third quarter ended September 30, 2014 ("3Q14").  These figures were prepared in accordance with International Financial Reporting Standards ("IFRS") and are presented in Mexican Pesos ("$").

Financial and Operating Highlights (3Q14)

  • At the close of the third quarter of 2014, Hoteles City Express achieved a total of 90 hotels in operation, representing a growth of 16 new units in relation to the 74 hotels operating at the close of 3Q13.  The total number of rooms in operation as of 3Q14 came to 10,204, an increase of 21.5% in contrast with the 8,399 the chain had at the close of the same period last year.
  • At the chain level, occupancy in 3Q14 reached 61.6%, with an Average Daily Rate ("ADR") of $738, and Revenue per Available Room ("RevPAR") of $454, which represents an increase of 1.9% and 11.7%, respectively, against the same period in 2013.  The hotels with more than 36 months in operation, registered an occupancy rate of 64.1%, with an ADR of $720 and RevPAR of $461, increases of 0.6% and 9.4% respectively over the same period last year.
  • In the third quarter of 2014, Total Revenues came to $369.0 million, representing an increase of 28.0% over the same period in 2013, due to a 29.1% lift in Occupied Room Nights at the chain level, in combination with growth in ADR and RevPAR.
  • EBITDA and Adjusted EBITDA for 3Q14 stood at $129.4 million and $131.0 million respectively, representing increases of 39.0% and 38.2% in relation to the same period last year.  Accordingly, EBITDA and Adjusted EBITDA margins expanded by 277 and 263 basis points ("bps") during the period, reaching 35.1% and 35.5%, respectively.
  • Net Income for 3Q14 rose to $45.3 million, an increase of 65.5% with respect to 3Q13.  The Net Income margin stood at 12.3% for the quarter, an improvement of 279 bps in comparison with the same period of the previous year.

Operating and Financial Highlights

3Q14

3Q13

3Q14 vs 3Q13

9M14

9M13

9M14 vs 9M13

% Change

% Change

Operating Statistics for the Chain

Number of Hotels at the End of the Period

90

74

21.6%

90

74

21.6%

Number of Rooms at the End of the Period

10,204

8,399

21.5%

10,204

8,399

21.5%

Number of Installed Room Nights

907,616

770,697

17.8%

2,636,713

2,250,494

17.2%

Number of Occupied Room Nights

559,162

433,039

29.1%

1,535,573

1,220,026

25.9%

Average Occupancy Rate (%)

61.6%

56.2%

542 bps

58.2%

54.2%

403 bps

ADR ($) 

738

724

1.9%

733

724

1.2%

RevPAR ($) 

454

407

11.7%

427

392

8.7%

Consolidated Financial Information (thousands of pesos)

Total Revenues

369,038

288,321

28.0%

1,018,476

797,776

27.7%

Operating Profit

75,878

54,365

39.6%

178,728

129,522

38.0%

Operating Margin (%)

20.6%

18.9%

171 bps

17.5%

16.2%

131 bps

Adjusted EBITDA

131,024

94,787

38.2%

341,957

251,424

36.0%

Adjusted EBITDA Margin (%)

35.5%

32.9%

263 bps

33.6%

31.5%

206 bps

EBITDA

129,384

93,093

39.0%

333,611

243,918

36.8%

EBITDA Margin (%)

35.1%

32.3%

277 bps

32.8%

30.6%

218 bps

Net Income

45,335

27,386

65.5%

94,207

55,643

69.3%

Net Income Margin (%)

12.3%

9.5%

279 bps

9.2%

7.0%

228 bps

Adjusted EBITDA = Operating Earnings + Depreciation + Amortization + Expenses for Opening of New Hotels.

Comments from the Chief Executive Officer                                                          

Luis Barrios, Chief Executive Officer of Hoteles City, commented:

"In the context of a moderate but improving economic recovery in Mexico, operating and financial results for Hoteles City Express show solid performance at all levels.  For example, the key figures for growth in Installed Room Nights and Occupied Room Nights of 17.8% and 29.1% respectively.  This drove an increase of approximately 600 bps in occupancy and 11.7% in RevPAR at the Chain level in the third quarter.  It should be noted that these results are a consequence, to a large extent, of a well-executed commercial strategy that has been implemented since the end of 2013.   

Total Revenues came to $369.0 million, which represents growth of 28.0% compared to the same quarter a year earlier.  Adjusted EBITDA showed an increase of 38.2%, reaching $131.0 million for the quarter, which results in a margin of 35.5% for the three months to September.  The rise in revenues per installed room, together with our discipline in maintaining high levels of productivity, enables us to follow a path of accelerated growth with higher levels of profitability for Adjusted EBITDA as well as Operating and Net Earnings. 

With respect to our activity in the development of new hotels, during the third quarter the Hotel City Express Monterrey Norte, Hotel City Express Central de Abastos, Hotel City Suites Puebla Autopista and Hotel City Express Apizaco all commenced operations, adding to our ample hotel presence in Mexico's key industrial, commercial and export corridors. With the opening of these hotels, we continue to move towards our goal of new hotel development.  We are committed to the opening of up to 10 additional hotels through the end of the year, which would conclude our Development Plan for 2014 with 100 in operation.

On October 9, we successfully undertook a global primary offering of 100 million shares for a total amount of $2.35 billion, without including the option of an over-allotment of up to 15 million additional shares assigned to the underwriters.  Hoteles City Express will use funds from this issue to continue with growth plans in the number of new hotels, as well as to strengthen our operating and distribution platform. With these funds, Hoteles City Express will be able to implement its expansion plans with greater vigor, and take advantage of investment opportunities presented, particularly in Mexico."



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