Grupo Hotelero Santa Fe Results

Grupo Hotelero Santa Fe Reports Increase of 36% in Total Revenue and 46% EBITDA for 1Q16

Total Revenue for 1Q16 reached Ps. 322.2 million, 36.1% higher compared to 1Q15, driven by the following increases: 34.9% in Room Revenue, 37.2% in Food and Beverages, 25.0% in Other Hotel Revenue and 64.5% in management fees related to third-party owned hotels.

Grupo Hotelero Santa Fe

Grupo Hotelero Santa Fe S.A.B. de C.V. (BMV:HOTEL) announced yesterday its consolidated results for the first quarter period (“1Q16”) ended March 31, 2016. Figures are expressed in Mexican Pesos, are unaudited and are in accordance with International Financial Reporting Standards (“IFRS”).

1Q16 Highlights

  • Total Revenue for 1Q16 reached Ps. 322.2 million, 36.1% higher compared to 1Q15, driven by the following increases: 34.9% in Room Revenue, 37.2% in Food and Beverages, 25.0% in Other Hotel Revenue and 64.5% in management fees related to third-party owned hotels.
  • As a result of the revenue growth and efficiencies from operating leverage achieved in 1Q16, EBITDA reached Ps. 129.3 million, 46.4% higher compared to the figure reported in 1Q15. EBITDA margin rose by 2.8 percentage points compared to 1Q15, to reach 40.1% in 1Q16.
  • Net operating cash flow for 1Q16 was Ps. 115.2 million, an increase of 101.3% compared to the Ps. 57.3 million reported in 1Q15. The increase was 72.0% driven by the EBITDA growth and a more efficient working capital management.
  • Net Debt/EBITDA (LTM) ratio for 1Q16 was 2.5x. Operating cash flow in dollars represented 75.8% of total operating cash flow, thereby maintaining a natural hedge of the dollarized financial debt.
  • HOTEL’s total portfolio at the conclusion of 1Q16 reached 4,265 rooms in operation, a 21.6% increase compared to the 3,507 rooms at end of 1Q15. The 758-room increase was the result the following: 47% from the addition of Company-owned hotels to the portfolio, 46% from new contracts for third-party owned hotels managed by the Company and 7% from the remodeling and/or expansion of third-party owned managed by the Company.
  • RevPAR for the Company-owned hotels rose by 17.0% in 1Q16 compared to 1Q15, driven by an 8.0% ADR2 increase and a 5.4 percentage point occupancy increase.
  • During March 2016, the Company initiated operations in the Krystal Urban Guadalajara, with 140 rooms, the first use conversion hotel developed by the Company.

Comments from the Chief Executive Officer

Mr. Francisco Zinser, stated:

The tourism industry and specifically the hotel industry demonstrate significant signs of strength and growth. According to Sectur, just in the first two months of the year, Mexico registered a 6.8% increase in foreign currency inflows related to international tourism. 5.6 million international tourists visited the country during this period, an increase of 10.8% compared with the 5.0 million visitors received during January and February of 2015. Of the total number of international tourists, those that came by air travel increased by 12.5%, from 2.7 to 3.0 million. Border tourism also increased 4.7% during the same period.

For HOTEL, 1Q16 has been extraordinary in many ways. Company-owned hotels increased, both in terms of occupancy and rates, driving RevPAR growth of 17%. It is important to highlight that 47% of this increase was the result of average daily rates (ADR). Revenues reached Ps. 322 million and EBITDA reached Ps. 129 million, increases of 36% and 46%, respectively, versus the previous year. As a result, 1Q16 has been the highest quarter in terms of revenue generation in our history.

Notably, this growth was driven by significant improvements across all of the revenue line items and was further driven by the fact that the Easter holiday fell in March, instead of in April. The peso-dollar depreciation also created a positive impact, as it encourages a higher number of international and domestic tourists, the latter whom may find foreign destinations more expensive. In particular, the EBITDA margin reached 40.1%, with 2.8 percentage point growth compared to 1Q15.

February marked the first anniversary of the Krystal Rewards® loyalty program where the rate of new program affiliates, as well as its popularity among our guests, has exceeded our expectations. The main goal of the program is to increase the loyalty of our clients and guests and to seek direct sales via promotions and custom-made products. This is based on behavior we have observed in the use of loyalty cards and “Krystal” point redemptions throughout our vacation destinations.

During mid-March, we inaugurated the Krystal Urban Guadalajara hotel, the first of our properties developed under the mixed-use format. This property has been well-received by the market and has experienced a positive operating performance.

HOTEL is on the right path towards becoming the leading hotel company in Mexico with the top management team and employee base, recognized for their passion and commitment. This, together with high efficiency levels and growth, shall enable us meet our objective. As always, we are thankful for the trust and support 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.

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