Hoteles City Express Results

Hoteles City Express Announces Third Quarter 2017

Reports Total Revenue Growth of 20.3% and Adjusted EBITDA Margin of 34.8%

Hoteles City Express

Hoteles City Express S.A.B. de C.V. (BMV: HCITY), today announced its results for the third quarter of 2017 .  The figures are presented in Mexican pesos ($).

Financial and Operating Highlights (3Q17)

  • At the Chain level, the Average Daily Rate ("ADR") and Revenue per Available Room ("RevPAR") increased by 7.2% and 5.4% in comparison with 3Q16, to $915 and $568, respectively. Chain occupancy in 3Q17 was 62.1%. 
  • Total Revenues were $641.8 million; a 20.3% year-on-year increase primarily due to a 14.0% increase in the number of Installed Room Nights at the Chain level as well as a 5.4% increase in RevPAR.
  • Operating income was $135.9 million in 3Q17, an increase of 29.0% over the same quarter in the prior year. 
  • EBITDA and Adjusted EBITDA were $218.4 million and $223.4 million, respectively, reflecting year-on-year increases of 21.0% and 20.4%. EBITDA margin and Adjusted EBITDA margin for the period were 34.0% and 34.8%, respectively. 
  • Net Income for the period was $88.2 million. Net Income margin was 13.7% for the quarter. 
  • At the close of the quarter, the Chain was operating 130 hotels; an increase of 15 new units compared to the 115 hotels operating at the close of the same period in 2016. The number of rooms in operation in 3Q17 was 14,606; a 13.3% increase of over the 12,887 rooms in operation at the close of 3Q16. 
  • During the quarter, the Company announced the opening of six units – 5 new hotels and one expansion to an existing property - to the 125 it operated, hotels opened included: City Express Junior Puebla Angelópolis, City Express Altamira, expansion of the hotel City Express Mérida, City Express Plus Puerto Vallarta, City Express Plus Medellín, and City Express Tuxtepec. 

Operating and Financial Highlights

3Q17

3Q16

3Q17 vs 3Q16

9M17

9M16

9M17 vs 9M16

% Change

% Change

Operating Statistics for the Chain

Number of Hotels at the End of the Period

130

115

13.0%

130

115

13.0%

Number of Rooms at the End of the Period

14,606

12,887

13.3%

14,606

12,887

13.3%

Number of Installed Room Nights

1,317,750

1,156,089

14.0%

3,822,701

3,351,858

14.0%

Number of Occupied Room Nights

817,934

730,338

12.0%

2,269,999

2,069,821

9.7%

Average Occupancy Rate (%)

62.1%

63.2%

-110 bps

59.4%

61.8%

-237 bps

ADR($)

915

854

7.2%

936

826

13.3%

RevPAR($)

568

539

5.4%

556

510

9.0%

Consolidated Financial Information (Thousands of Pesos)

Total Revenues

641,762

533,593

20.3%

1,822,411

1,486,028

22.6%

Operating Income

135,952

105,428

29.0%

356,854

269,632

32.3%

Operating Income Margin

21.2%

19.8%

143 bps

19.6%

18.1%

144 bps

Adjusted EBITDA

223,370

185,526

20.4%

621,378

501,061

24.0%

Adjusted EBITDA Margin (%)

34.8%

34.8%

4 bps

34.1%

33.7%

38 bps

EBITDA

218,366

180,534

21.0%

609,525

489,570

24.5%

EBITDA Margin (%)

34.0%

33.8%

19 bps

33.4%

32.9%

50 bps

Net Income

88,174

71,561

23.2%

170,803

185,385

-7.9%

Net Income Margin (%)

13.7%

13.4%

33 bps

9.4%

12.5%

-310 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:

"Based on stable economic growth environment and healthy market dynamics Hoteles City Express achieved strong operational, financial and profitability results for quarter.

Total Revenues growing more than 20%, occupancy levels almost completely recovered from their programmed declines in previous quarters and ADR growth of more than 7% taking into account a significantly higher comparable base, are evidence of the commercial strength that underpins a diversified portfolio across 4 countries and 70 cities in LatAm.

As for the absorption of new properties and performance of our portfolio, we continue to see strong economic fundamentals at national and local level that continue to drive a positive cycle of the hospitality industry in Mexico. With strength in private consumption, double-digit exports and unemployment rates at historic lows, our portfolio benefits from its exposure to locations with growth rates above the national average. Particularly in regions such as the Bajio, the Northern Corridor and Metropolitan Areas the common denominator is a thriving demand that seeks a high price-value ratio aligned to the 5 brands of the Company.

In terms of productivity, with an Adjusted EBITDA margin of 34.8%, it is worth noticing the absorption of the costs of our operating platform, which has the infrastructure necessary to sustain future growth without the need for cost increases.

Our objective regarding our Development Plan remains intact and progresses successfully, with more than 35 projects in different phases of construction and development, we are confident that we can achieve a total inventory of more than 15,000 rooms and 140 hotels in by 1Q18 as well as to contemplate between 15 to 20 additional properties for the 2018 Plan.

Based on the significant market potential, long-term fundamentals and consolidation trends of the hotel industry seen in other latitudes, the Company continues to be committed to keep the speed of its growth, this being said, a few days ago, we executed the Vehículo de Refinanciamiento de Activos Turísticos through the closing of a Syndicated Structured Facility of $2.0 billion guaranteed by a portfolio of properties at a value of $6.4 billion.

Finally, with respect to the unfortunate natural events of September in Mexico, the Company supported by an impeccable execution of our safety and emergency protocols - which ensured the evacuation of more than 1,200 people in record time and without incident - resumed normal operations in less than 24 hours.

Even beyond this challenge, Hoteles City Express, consistent with its commitment to social responsibility, was a catalyst for help and support on different fronts, from the donation of tools for debris collection (shovels, chainsaws, etc.), to temporary free accommodation to rescuers, employees and affected victims. To date, the Company's hotel portfolio has no structural damage to any of its properties.

Once again, we reaffirm our commitment to continue working to consolidate our position as one of the companies with higher growth and profitability in Mexico, investing in the generation of value in the short, medium and long term to our shareholders."



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