Hoteles City Express Results

Hoteles City Express Reports 10.2% Growth in RevPAR and Adjusted EBITDA Margin of 34.8% for 3rd Quarter 2016

Hoteles City Express

Hoteles City Express S.A.B. de C.V. (BMV: HCITY), announced today its results for the third quarter of 2016. The figures have been prepared in accordance with International Financial Reporting Standards and are presented in Mexican Pesos ("$").

Financial and Operating Highlights (3Q16)

  • At the Chain level, occupancy in 3Q16 came to 63.2%. The Average Daily Rate ("ADR") and Revenue per Available Room ("RevPAR") showed significant increases of 11.5% and 10.2% in comparison with 3Q15, registering $854 and $539, respectively.
  • Total Revenues were $533.6 million, which represent an 18.7% increase with respect to the same quarter in 2015, primarily due to a 9.9% rise in the number of Occupied Room Nights at the Chain level, as well as a 10.2% increase in RevPAR.
  • Operating Income was $105.4 million in 3Q16, an increase of 23.6% over the same quarter last year.
  • EBITDA and Adjusted EBITDA were $180.5 million and $185.5 million, respectively, reflecting increases of 15.6% and 17.3% compared with the same period of the year before. EBITDA margin and Adjusted EBITDA margin for the period came to 33.8% and 34.8%, respectively.
  • Net Income for the period reached $71.6 million. Net Income margin was 13.4% for the quarter.
  • At the close of the quarter, the Chain was operating 115 hotels; an increase of 15 new units compared to the 100 hotels operating at the close of the same period in 2015. The number of rooms in operation in 3Q16 was 12,887, an increase of 13.9% in comparison with the 11,313 at the close of 3Q15.

Operating and Financial Highlights

3Q16

3Q15

3Q16 vs 3Q15

9M16

9M15

9M16 vs 9M15

% Change

% Change

Operating Statistics for the Chain

Number of Hotels at the End of the Period

115

100

15.0%

115

100

15.0%

Number of Rooms at the End of the Period

12,887

11,313

13.9%

12,887

11,313

13.9%

Number of Installed Room Nights

1,156,089

1,038,642

11.3%

3,351,858

3,025,785

10.8%

Number of Occupied Room Nights

730,338

664,348

9.9%

2,069,821

1,854,805

11.6%

Average Occupancy Rate (%)

63.2%

64.0%

-79 bps

61.8%

61.3%

45 bps

ADR($)

854

765

11.5%

826

762

8.5%

RevPAR($)

539

490

10.2%

510

467

9.3%

Consolidated Financial Information (Thousands of Pesos)

Total Revenues

533,593

449,368

18.7%

1,486,028

1,252,044

18.7%

Operating Income

105,428

85,278

23.6%

269,632

225,236

19.7%

Operating Income Margin

19.8%

19.0%

78 bps

18.1%

18.0%

15 bps

Adjusted EBITDA

185,526

158,170

17.3%

501,061

426,228

17.6%

Adjusted EBITDA Margin (%)

34.8%

35.2%

-43 bps

33.7%

34.0%

-32 bps

EBITDA

180,534

156,213

15.6%

489,570

420,015

16.6%

EBITDA Margin (%)

33.8%

34.8%

-93 bps

32.9%

33.5%

-60 bps

Net Income

71,561

57,310

24.9%

185,385

168,861

9.8%

Net Income Margin (%)

13.4%

12.8%

66 bps

12.5%

13.5%

-101 bps

Adjusted EBITDA = Operating Income + Depreciation + Non recurring expenses associated with new hotel openings

Comments from Mr. Luis Barrios, CEO of Hoteles City Express:

"Our third quarter 2016 operating and financial results continue to show strengthening trends on all fronts. Specifically, our emphasis on accelerated growth with strong profitability enabled us to report double-digit increases in RevPAR, Total Income, Adjusted EBITDA and Net Income this quarter.

During the third quarter, we continued to focus on increasing ADR across the chain through effective marketing and yield management, which resulted in a 10.2% increase in RevPAR. Along these lines, it's important to note that our Established hotels, those in operation for at least 36 months, reported 68.8% occupancy at the quarter end, with ADR and RevPAR growth of 12.4% and 12.6%, respectively.

Hoteles City Express has maintained this strong operating performance against the backdrop of Mexico's uneven economic growth, due to our geographical diversification and our presence in higher growth markets. We also continue to benefit from strong growth of the maquila industry in the north of the country, as well as regions with exposure to manufacturing and service industries, primarily within metropolitan areas. Encouragingly, weakness in the energy corridor seems to have bottomed out, and we're beginning to see a stabilization process.

In terms of productivity, Hoteles City Express continues to maintain disciplined cost and expense control. During 3Q16, we achieved an Adjusted EBITDA margin of 34.8% despite opening 15 new hotels over the last twelve months. The strengthening of cost and expense control initiatives at our hotels and at the operating company are also beginning to show positive results, and represent a foundation for gradual improvement in profitability.

Our development plan continues to progress well, with 15 hotels opened since 3Q15. Our goal is to open 8 to 12 new properties by the end of this calendar year. Our target to have between 123 to 127 hotels by the end of 2016 remains intact, in line with the target we announced at the beginning of the year.

We will continue working to consolidate our position as one of the fastest growing and most profitable companies in our industry, focusing on modernity, innovation, warmth and excellence in service."



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