Hoteles City Results

Hoteles City Express Reports Q2 2015 10.7% Chain-wide Growth in RevPar and 32.3% Growth in Adjusted EBITDA

EBITDA and Adjusted EBITDA were $145.0 million and $147.4 million respectively, reflecting increases of 33.6% and 32.3%, in comparison with the same period of the year before. EBITDA margin and Adjusted EBITDA margin for the period came to 34.0% and 34.6% respectively.

Hoteles City Express

Hoteles City Express S.A.B. de C.V. (BMV: HCITY) yesterday announced its results for the second quarter of 2015.  The figures have been prepared in accordance with International Financial Reporting Standards and are presented in Mexican Pesos .

Financial and Operating Highlights (2Q15)

  • At the Chain level, occupancy during 2Q15 came to 62.7%, 502 basis points ("pbs") higher than the same period a year earlier. The Average Daily Rate ("ADR") and the Revenue per Available Room ("RevPAR") showed increases of 1.8% and 10.7% in comparison with 2Q14, coming to $757 and $475 respectively.
  • Total Revenues were $426.3 million, which represents an increase of 26.0% over the same quarter in 2014, mainly due to 23.8% rise in the number of Occupied Room Nights at the Chain level, together with growth of 10.7% in RevPAR.
  • Operating Income was $81.4 million in 2Q15, an increase of 42.0% over the same quarter last year.
  • EBITDA and Adjusted EBITDA were $145.0 million and $147.4 million respectively, reflecting increases of 33.6% and 32.3%, in comparison with the same period of the year before. EBITDA margin and Adjusted EBITDA margin for the period came to 34.0% and 34.6% respectively.
  • Net Income for the period rose to $66.4 million, an increase of 106.0% over the second quarter of 2014. Net Income Margin was 15.6% for the quarter.
  • At the close of the quarter, the Chain was operating 98 hotels, a gain of 12 new units compared to 86 hotels operating at the close of the same period in 2014. The number of rooms in operation in 2Q15 came to 11,092 compared to 9,778 at the close of 2Q14. In the first week of July, the Chain opened its 99th and 100th hotel in Tuxpan, Veracruz, and in Guadalajara, Jalisco, for a total of 11,313 rooms in operation.

Operating and Financial Highlights

2Q15

2Q14

2Q15 vs 2Q14

6M15

6M14

6M15 vs 6M14

% Change

% Change

Operating Statistics for the Chain

Number of Hotels at the End of the Period

98

86

14.0%

98

86

14.0%

Number of Rooms at the End of the Period

11,092

9,778

13.4%

11,092

9,778

13.4%

Number of Installed Room Nights

1,004,399

882,215

13.8%

1,987,143

1,729,097

14.9%

Number of Occupied Room Nights

629,322

508,510

23.8%

1,190,457

976,411

21.9%

Average Occupancy Rate (%)

62.7%

57.6%

502 pbs

59.9%

56.5%

344 pbs

ADR($)

757

744

1.8%

759

730

4.1%

RevPAR($)

475

429

10.7%

455

412

10.4%

Consolidated Financial Information (Thousands of Pesos)

Total Revenues

426,282

338,288

26.0%

802,676

649,439

23.6%

Operating Income

81,365

57,302

42.0%

139,959

102,851

36.1%

Operating Income Margin

19.1%

16.9%

215 pbs

17.4%

15.8%

160 pbs

Adjusted EBITDA

147,362

111,423

32.3%

268,060

210,934

27.1%

Adjusted EBITDA Margin (%)

34.6%

32.9%

163 pbs

33.4%

32.5%

92 pbs

EBITDA

145,034

108,558

33.6%

263,803

204,228

29.2%

EBITDA Margin (%)

34.0%

32.1%

193 pbs

32.9%

31.4%

142 pbs

Net Income

66,373

32,227

106.0%

111,551

48,872

128.3%

Net Income Margin (%)

15.6%

9.5%

604 pbs

13.9%

7.5%

637 pbs

Adjusted EBITDA = Operating Income + depreciation + amortization + non-recurring expenditures (pre-opening expenditures for new hotels).

Comments of Luis Barrios, Chief Executive Officer of Hoteles City Express:

"We are proud to announce our results for the second quarter of 2015, which continue to show a positive trend across all key operating financial metrics. 

During the quarter, we achieved growth of 26.0% in Total Revenues compared to the same period in 2014. The strong performance of Established Hotels and the solid ramp-up of hotels that opened recently drove growth of 10.7% in RevPAR at the Chain level.

It should be emphasized that Established Hotels recorded an occupancy rate of 67.3%, with ADR growth of 2.6% and a 14.0% rise in their RevPAR over the same period in 2014. This is due to a combination of factors, such as growth in export manufacturing activity along the central and northern industrial corridors of the country, a general pick-up in consumer spending, as well as the strong commercial and marketing execution of our team. 

In terms of productivity during the quarter, we achieved growth in Adjusted EBITDA and Net Income of more than 32% and 106% respectively. Ongoing growth of the Chain was also reflected in an Adjusted EBITDA margin of 34.6% and EBITDA of 34.0%.  This is due to our operating leverage as we gain additional scale and our focus on controlling costs and expenses. 

With regard to new hotel development, throughout the year, we have opened four new properties, two in Los Cabos, one in Tuxpan and one in Guadalajara.  As a result, we have 100 hotels and more than 11,300 rooms in operation. We currently hold room inventory to serve more than 4.0 million guests a year in Mexico, Costa Rica and Colombia.  Despite some delays in openings, our development plan is proceeding satisfactorily. We are confident that most of the hotels in our development plan will open during the final months of the year. Furthermore, we have managed to keep the cost per room under control for our new properties.

We will continue working to keep offering our shareholders a company with profitable growth and high potential for value generation over the medium and long term."  

About Hoteles City Express:

Hoteles City Express is considered the leading and fastest-growing limited-service hotel chain in Mexico, in terms of number of hotels, number of rooms, geographic presence, market share and revenues. Founded in 2002, Hoteles City Express specializes in offering high-quality, comfortable and safe lodging at affordable prices via a limited-service hotel chain geared mainly towards domestic business travelers. With 100 hotels located in Mexico, Costa Rica and Colombia, Hoteles City Express operates four distinct brands: City Express, City Express Plus, City Express Suites and City Express Junior to serve different segments of its target market. In June 2013, Hoteles City Express completed its IPO and began trading on the Mexican Stock Exchange under the ticker symbol "HCITY;" furthermore, in October of 2014, Hoteles City Express completed a follow-on with the aim of accelerating its growth in new hotels in coming years.

HCITY is covered by the following financial institutions and analysts: Bank of America Merrill Lynch (Carlos Peyrelongue), Citigroup (Dan McGoey), Morgan Stanley (Nikolaj Lippman and Jorel Guilloty), Actinver (Pablo Duarte) y J.P. Morgan (Adrian Huerta), Vector Analisis (Marco Montanez), Santander (Pedro Balcao) Signum Research (Armando Rodriguez) and UBS (Marimar Torreblanca).



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