Hoteles City Express Results

Hoteles City Express Announces Second Quarter 2017 Results with

Reports ADR Growth of 15.8% and Operating Income Increase of 23.9%

Hoteles City Express

Hoteles City Express S.A.B. de C.V. (BMV: HCITY), announced today its results for the second quarter of 2017.  The figures have been prepared in accordance with International Financial Reporting Standards ("IFRS") and are presented in Mexican Pesos ("$").

Financial and Operating Highlights (2Q17)

  • At the Chain level, Average Daily Rate ("ADR") and Revenue per Available Room ("RevPAR") increased by 15.8% and 11.5% in comparison with 2Q16, to $940 and $567, respectively. Chain occupancy in 2Q17 was 60.3%. 
  • Total Revenues were $609.3 million, which represents a 22.5% increase with respect to the same quarter in 2016, primarily due to a 14.0% increase in the number of Installed Room Nights at the Chain level, as well as a 11.5% increase in RevPAR 
  • Operating income was $111.0 million in 2Q17, an increase of 23.9% over the same quarter the year before. 
  • EBITDA and Adjusted EBITDA were $197.4 million and $201.9 million, respectively, reflecting year on year increases of 20.2% and 20.9%. EBITDA margin and Adjusted EBITDA margin for the period came to 32.4% and 33.1%, respectively. 
  • Net Income for the period reached $44.2 million. Net Income margin was 7.3% for the quarter. 
  • At the close of the quarter, the Chain was operating 125 hotels; an increase of 16 new units compared to the 109 hotels operating at the close of the same period in 2016. The number of rooms in operation in 2Q17 was 13,951, an increase of 14.0% in comparison with the 12,236 at the close of 2Q16. 
  • Since the closing of the 2Q17 to the date of the this report, the Company has announced the opening of 3 additional units, reaching a total portfolio of 127 hotels, City Express Junior Puebla Angelópolis, City Express Altamira hotels and the expansion of City Express Mérida hotel.

 

Operating and Financial Highlights

2Q17

2Q16

2Q17 vs 2Q16

6M17

6M16

6M17 vs 6M16

% Change

% Change

Operating Statistics for the Chain

Number of Hotels at the End of the Period

125

109

14.7%

125

109

14.7%

Number of Rooms at the End of the Period

13,951

12,236

14.0%

13,951

12,236

14.0%

Number of Installed Room Nights

1,264,080

1,109,102

14.0%

2,504,951

2,195,769

14.1%

Number of Occupied Room Nights

762,291

694,653

9.7%

1,452,065

1,339,483

8.4%

Average Occupancy Rate (%)

60.3%

62.6%

-233 bps

58.0%

61.0%

-304 bps

ADR($)

940

812

15.8%

948

811

16.8%

RevPAR($)

567

508

11.5%

550

495

11.0%

Consolidated Financial Information (Thousands of Pesos)

Total Revenues

609,341

497,482

22.5%

1,180,649

952,436

24.0%

Operating Income

111,032

89,644

23.9%

220,902

164,204

34.5%

Operating Income Margin

18.2%

18.0%

20 bps

18.7%

17.2%

147 bps

Adjusted EBITDA

201,932

166,980

20.9%

398,008

315,535

26.1%

Adjusted EBITDA Margin (%)

33.1%

33.6%

-43 bps

33.7%

33.1%

58 bps

EBITDA

197,398

164,178

20.2%

391,159

309,036

26.6%

EBITDA Margin (%)

32.4%

33.0%

-61 bps

33.1%

32.4%

68 bps

Net Income

44,212

66,610

-33.6%

82,629

113,825

-27.4%

Net Income Margin (%)

7.3%

13.4%

-613 bps

7.0%

12.0%

-495 bps

Adjusted EBITDA = Operating income + depreciation + amortization + non-recurring expenses (expenses prior to opening new hotels).

Comments by Luis Barrios, CEO of Hoteles City Express:

"We announce our results for the second quarter of the year, which were characterized by robust operating, financial and profitability performance. 

In a period marked by receding uncertainty and strong economic fundamentals which justify our investment thesis in Mexico and Latin America, the hotel industry continues to be underpinned by a positive demand cycle. Demand generators such as consumption, exports and service, trade and industry activities remained strong, specifically in the northern border corridor of the country, the Bajío corridor and locations with exposure to diverse economic activities such as metropolitan areas. Our hotel portfolio continues to benefit from a broad diversification of markets and geographies. 

Regarding our commercial performance, the quarter was characterized by the refinement of our price optimization models, which enabled us to maintain double digit growth in RevPAR at the Chain level. 

Consistent with the yield management strategy we have implemented since the third quarter of 2016, ADR increased by 15.8% in 2Q17, while RevPAR grew by close to 12%. 

With Total Revenues growing by over 20% and an Adjusted EBITDA margin of more than 33%, 2Q17 was once again marked by profitable growth dynamics. In addition, these results highlight the importance of our Operating Company and proprietary room distribution platform which was responsible for over 80% of rooms sold in the quarter, enabling us to minimize commission payments to third parties and maximize margins at the property level.

Regarding our cultural transformation efforts, we continue to strengthen our training, coaching and empowerment programs for employees, emphasizing decision making at the point of closest proximity to the guest. We remain confident that these efforts, combined with the innovative use of technology and databases we have developed within the Company, will help us consolidate our position as the best integrated platform for digital marketing, operation and hotel distribution in Mexico and Latin America. 

Finally, regarding the 2017 development plan, as of the date of this report we have commenced operations in all of our planned hotels. Our development program remains on track, and we are confident of reaching a total inventory of more than 15,000 rooms and 140 hotels in the coming months. We will continue to take advantage of our healthy cash position to maximize the utilization of our land bank and optimize the Company's global ROIC. 

As always, we will redouble our efforts to ensure that the first half of the year is just the beginning of another period of profitable growth for Hoteles City Express, and as always, we are grateful for your support and trust. "



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