The company’s EBITDA climbed to €73.3 million, 46% up on the same period of 2010 – Business units of Latin America, Benelux and Central Europe account for 75% of EBITDA – The company’s Chairman announces a “2015 Initiatives Plan”, with the aim of helping to boost the growth in EBITDA forecast for the coming five years – NH Hoteles is committed to electronic distribution channels as a means of driving Group sales. Mariano Pérez Claver, Chairman of NH Hoteles, marking his first appearance at the company’s General Shareholders’ Meeting, announced that after two years of sharp drops in occupancy rates and prices, 2010 turned out to be a milestone on the path to sector-wide recovery, which is expected to continue over the years to come.
During the meeting, the company’s Chairman presented the results as of May 2011. Pérez Claver highlighted that the Group’s EBITDA had climbed to 73.3 million euros, 46% up on the same figure for May 2010. Over this same period, NH Hoteles’ net profit spiralled to 21.7 million euros, in contrast to the -41.3 million euros reported as of 2010.
Total NH Hoteles income for the first five months of 2011 stood at 589.4 million euros, representing a 12% increase on the figure for the previous year. The first five months of 2011 are providing yet further proof of the sector-wide recovery first seen in 2010. On aggregate, hotel income for the period has grown at a rate just shy of 9% year-on-year, including a very satisfactory 15% for the month of May.
Furthermore, the company’s Chairman stressed that “our operations in Latin America, Benelux and Central Europe have accounted for 75% of recurring hotel EBITDA”.
At the end of March, the Group launched a shock plan covering the entire organisation and based on two core objectives: streamlining the corporate structure and bringing general expenses to below growth in occupancy rates. At the 31st of May, the company’s permanent structure had in fact dropped by 4% in comparison to the same period of 2010. Moreover, the company expects that rallying productivity, coupled with an increase in operating costs of less than RevPar growth, will enable it to reach a sales-to-GOP conversion ratio of close to 60%.
The General Shareholders’ Meeting also addressed the contents of the 2015 Initiatives Plan, a long-term global project intended to complement the individual objectives of all Group departments. The plan envisages improvement initiatives aimed at the sales and central services departments, the company’s financial structure and its cost generating areas. The company’s Chairman is confident that the plan will significantly help to spur on growth in EBITDA forecast for the coming five years.
The company has been implementing new income management tools, both at central corporate level and at a significant number of chain hotels, while simultaneously strengthening its management structures by incorporating new heads of this area and improving alignment with sales structures.
Focusing on territories, the two Business Units previously operating in Central Europe (Germany and others) have been merged into one single Business Unit. Moreover, the company created its Resorts Business Unit at the start of the year, and the marketing and distribution divisions have been brought together under one single commercial department.
During the year to date, reservations through the NH Hoteles website has accounted for 10.3% of total sales, with highlights including the advances reported in Spain and Benelux, which boasted figures of 12% and 12.6%, respectively.
The entire organisation focused on the Group’s primary business
All the Group’s resources and personnel are wholly committed to obtaining the maximum possible profitability from the Group’s primary hotel business, by streamlining structures and costs, and avoiding any operations or business with scant valued added or those that generate negative EBITDA.
Reducing debt through the sale of assets
Fiscal year 2011 has been marked by two key priorities: securing significant growth in EBITDA and arranging a stable framework for refinancing the balance sheet with the Group’s lending institutions.
In terms of the second priority, the divestment plan first unveiled in 2010 has been continuing to take shape over 2011, with 90% of the plan already accomplished.
The most significant of these divestments include the agreement reached with the Costes Group last March to sell 33% of the holding company of the Lotti hotel in Paris, and the Artos operation, which affected a total of 8 hotels in Germany and 2 in Austria.
Large-scale strategic agreement with the Chinese HNA Group
On the 9th of May, the company concluded a large-scale agreement with the Chinese HNA Group.
“The agreement reached with HNA aligns the interests of both parties and will enable NH to strengthen its balance sheet, while affording it new, until now unimaginable strategic and commercial opportunities”, confirmed Mariano Pérez Claver at the General Shareholders’ Meeting.
The idea underpinning this agreement is that part of the funds obtained from the capital increase can be put towards a possible dividend pay-out subject to a limit of 20 million for 2011.
Stock market performance
Despite the crushing pressures dragging down stock markets, which have been particularly harsh over the month of June, NH’s stock price has performed impressively in both absolute and relative terms over the year, outperforming similar companies and significantly outpacing overall IBEX performance. The company’s share price has appreciated by over 42% during the year to date, and by 88% year-on-year.
In line with the pattern first seen in 2010, which has run into the first few months of 2011, the company hopes to be able to pay shareholders a dividend if growth remains at current levels.
About NH HOTELES
NH Hoteles (www.nh-hotels.com) is currently placed third in the European ranking of business hotels. The Group boasts 399 hotels and 59,444 rooms in 24 different countries across Europe, America and Africa. At present, NH Hoteles has 23 new hotels under construction, which will boost rooms by a further 3,000.
NH Hoteles is listed on the Madrid Stock Exchange.
