Grupo Hotelero Santa Fe S.A.B. de C.V. (BMV:HOTEL), announced last week its consolidated results for the second quarter period (“2Q16”) ended June 30, 2016. Figures are expressed in Mexican Pesos, are unaudited and are in accordance with International Financial Reporting Standards “IFRS”).
- Total Revenue for 2Q16 reached Ps. 271.9 million, 24.4% higher compared to 2Q15, driven by the following increases: 24.8% in Room Revenue, 20.1% in Food and Beverages, 14.5% in Other Hotel Revenue and 62.7% in management fees related to third-party owned hotels.
- As a result of the revenue growth and efficiencies from operating leverage achieved in 2Q16, EBITDA1 reached Ps. 81.6 million, 27.8% higher compared to the figure reported in 2Q15. EBITDA margin rose by 0.8 percentage points compared to 2Q15, to reach 30.0% in 2Q16.
- Net operating cash flow for 2Q16 was Ps. 95.9 million, an increase of 96.1% compared to the Ps. 48.9 million reported in 2Q15. This increase was 65.2% driven by the EBITDA growth and the remaining was driven by a more efficient working capital management.
- Net Debt/EBITDA (LTM) ratio for 2Q16 was -1.4x. Operating cash flow in dollars represented 43.1% of total operating cash flow, thereby maintaining a natural hedge of the dollarized financial debt.
- HOTEL’s total portfolio at the conclusion of 2Q16 reached 4,265 rooms in operation, a 14.6% increase compared to the 3,722 rooms at end of 2Q15. The 543-room increase was the result the following: 64% from new contracts for third-party owned hotels managed by the Company, 26% from the addition of Company-owned hotels to the portfolio and 10% from the remodeling and/or expansion of third-party owned managed by the Company.
- RevPAR2 for the Company-owned hotels rose by 11.3% in 2Q16 compared to 2Q15, driven by increased of 5.3% in ADR2 and 3.5 percentage points in occupancy.
- During June, the Company carried out a global Follow On Public offer, which consisted of 215,584,530 shares, including the overallotment option, at a price of Ps. 8.5 per share. The total amount of the offer was Ps. 1,832.5 million, which will be used to continue executing the Company’s expansion plans.
- As a result of the FPO, during 2Q16 the Company’s equity increased 88.1% compared to 2Q15, improving its strength and financial position.
Comments from the Chief Executive Officer
Mr. Francisco Zinser, stated:
Once again, I am pleased to share with you that Grupo Hotelero Santa Fe is living a great moment in its history. During fJune, we successfully carried out a global FPO, strengthening our financial position as the Company’s equity increased 88% compared to the prior year. This follow on took place less than two years from the Initial Public Offering, evidence of the Company’s ability to utilize the funds raised. The capital obtained will again be used to continue the execution of our expansion plans. As such, we expect to replicate the strong growth achieved since the IPO and remain on the right track towards becoming the leading hotel company in Mexico.
As part of our growth plan, we initiated the expansion of 100 rooms in the Krystal Grand Punta Cancun hotel, located in Cancun, Quintana Roo, which is one of the most attractive destinations of the country. During the past three years, this destination has demonstrated an average occupancy that is 18% higher than that of the rest of Mexico. The approximate total investment during the next 12 months will be equal to Ps. 222.0 million. With this expansion, our total portfolio will reach 5,022 rooms.
This quarter has been an outstanding once again. Company-owned hotels reached balanced growth in terms of both occupancy and ADR, which drove the RevPAR increase of 11.3% compared to the same quarter last year. Revenues of Ps. 271.9 million and EBITDA of Ps. 81.6 million rose 24.4% and 27.8%, respectively, year over year.
Notably, the 43.1% growth in operating cash flow compared to 2Q15 was mainly driven by the EBITDA increase. It is important to highlight that revenue from third-party owned hotels managed by the Company significantly contributed to growth.
Of the 543 rooms incorporated into the portfolio, 64% are from new agreements with third-party owned hotels managed by the Company. Adding these types of properties to our portfolio yields significant profits, given that they represent a minimal cost to the Company and expands our positioning and commercial network. All of the above reflects the confidence that the hotel owners have in our operational capability; we will continue working along these lines in order to continue expanding the efficiencies of our business model.
Lastly, I would like to mention that none of these achievements would have been possible without the support of our great management team, our dedicated employees as well as the trust of our shareholders.
About Grupo Hotelero Santa Fe
HOTEL is one of the leading companies in the Mexican hotel industry and is focused on acquiring, developing and operating hotels. The Company has a unique business model characterized by its flexibility and adaptability as HOTEL´s experience allows it to operate under different brands, local and foreign, in different segments.
The Company maintains a focus on the strengthening and positioning of its Krystal® brand, which has considerable recognition in the Mexican market. This strategy allows HOTEL to offer different experiences adapted to the specific demand in each market and to maximize the profitability of its investments.
The Company’s operating model is characterized by the multi-functionality and efficiency of its personnel, as well as a strict cost control that allows a rapid adaptation and anticipation to the changing necessities of the industry. HOTEL has the capacity to add new hotels to its existing portfolio through acquisition, development and conversion of properties or through the celebration of operating contracts with third parties. The Company considers that its diversified portfolio and its management capacities focused on profitability, in addition to the property of a brand with high recognition in the market, all together help HOTEL to obtain new operating contracts for hotels owned by third parties.
1EBITDA is calculated by adding Operating Income, Depreciation and Total Non-recurring expenses.
2Revenue per Available Room (“RevPAR”) and Average Daily Rate (“ADR”).
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