NH earnings gather momentum in the second quarter, reaching net profits of €15.7 million

NH Hotel Group's second-quarter results 

Second-quarter revenue rose by 6.8%, EBITDA climbed 25% higher and recurring net profit jumped 85.8% to €15.7 million; adding in non-recurring items, reported net profit was €11.8 million, compared to a loss of €-4.2 million in 1H14

Including the contribution of Hoteles Royal, which has been consolidated since March, second-quarter revenue growth rises to 11.3%, EBITDA growth to 27.8% and net recurrent income growth to 86.7%

In 1H15, consolidated revenue growth rose by 8.3% year-on-year, while EBITDA and net profit grew by 36.7% and 59.2%, respectively

Madrid, 28 July 2015. Today NH Hotel Group presented its first-half 2015 results, which confirmed the earnings momentum initiated last year. Momentum accelerated during the second quarter thanks to stronger hotel business volumes and the result of the first initiatives rolled out under the scope of the Group's five-year business plan. 

Second-quarter earnings performance

The key hotel business performance indicators gathered intensity with respect to prior quarters. Excluding the impact of Colombian chain Hoteles Royal acquired this year, NH's second-quarter revenue increased by 6.8% to €371.5 million, while EBITDA jumped by 25% to €65.3 million. As a result, the Group reported a recurring net profit between April and June of €15.7 million, year-on-year growth of 85.8%. Adding in non-recurring items, second-quarter net profit reached €11.8 million, compared to a loss of €4.2 million in 2Q14.

Including the contribution of Hoteles Royal, NH reported revenue of €387.2 million, up 11.3% year-on-year, EBITDA of €66.7 million, up 27.8%, and recurring net profit of €15.7 million, up 86.7% over 2Q14.

The repositioning strategy and improvements implemented by the Company under the scope of its five-year business plan are driving guest satisfaction higher and the results of the Group's hotels are improving in tandem. In most of the Company's markets, the hotels are performing better than their direct competitors. Perception of the Group's hotels continues to improve, as evidenced by the trend in the guest feedback ratings tracked internally in the form of satisfaction surveys and externally by travel websites that base their recommendations on users' opinions.

The hotel repositioning plan (27 refurbishments completed as of the 2Q15 close, another 16 underway and a further 19 scheduled for works starting in the second half), the development of the new NH Collection brand (43 hotels rebranded and another 14 scheduled for rebranding by the end of 2015), the effort to reinforce the Group's positioning in the Meeting & Events segment by emphasising IT solutions such as 3D holographic projection technology and telepresence and interactive collaboration systems, and the communication and marketing campaigns designed to increase the Group's visibility and boost guest loyalty (advertising campaigns, new website and revamped NH Rewards loyalty programme) are driving growth in guest satisfaction and, in turn, generating growth quarter after quarter in average daily room rates (ADR) and revenues per available room (RevPAR).

During the second quarter, consolidated RevPAR increased by 12%, double the rate of growth presented by the Company in 1Q15 (+5.8%). All of the Group's markets presented RevPAR growth, driven by significant growth in average rates, which rose by 11.2% at the Company level, marking the fifth consecutive quarter of growth. It is worth highlighting the excellent performance posted by Spain and Italy, where RevPAR growth reached 18.8% and 18.5%, respectively, last quarter. Occupancy, meanwhile, held steady, edging 0.7% higher in the second quarter.

1H15 earnings performance

Recurring first-half revenue rose 8.3% to €665.3 million, including the revenue generated by Hoteles Royal, whose results have been consolidated by NH Hotel Group since 4 March 2015 (revenue of €643.9m without the Colombian chain).

The Group retained strong control over expenses during the first six months of the year - revenue growth significantly outpaced cost growth - and recurring EBITDA rose 36.7% to €62.5 million (€60.3m excluding Hoteles Royal). Reported net profit (including non-recurring items), meanwhile, climbed 59.2% higher year-on-year in 1H15.

Debt: lower interest expense and longer maturities

NH Hotel Group has taken action on several fronts to reinforce its financial situation in recent months, improving the cost and repayment terms of two of its loans, the long-term syndicated loan arranged in October 2013 and a mortgage loan arranged in Germany. The cost of the first facility has been reduced from Euribor +4% to 2.5% and its original maturity extended from 12 months until October 2018, while the cost of the second (fixed rate) facility has been reduced from 5% to 2.5% and its maturity extended from June 2016 to October 2018.

Outlook for the rest of 2015

In terms of RevPAR, and after the good performance of Q2, the estimation for the year is ~9%. Total revenue for the year remains as the initial estimate because there is more room inventory in refurbishment and other income is expected to remain constant during the second half of the year (outsourcing restoration centres, segmentation changes). At EBITDA level due to the factors discussed above the growth target remains at 25% in the year.

The Company is also in a position to reiterate other strategic targets for 2015, which include completing 75% of the overall repositioning plans, concluding transformation of its systems and administration, making further progress on change the mix of the RevPAR composition and continuing to consolidate the cultural change underway.

Upcoming change in NH Hotel Group's chairmanship

During the Board meeting of 27 July, Rodrigo Echenique, non-executive Chairman of NH Hotel Group, announced, taking advantage of the Company's healthy business performance, coupled with the sentiment that the financial and shareholder stability objectives have been met, and in light of his new responsibilities outside the Group, his decision to leave the Company's chairmanship in the coming months, as soon as a suitable replacement has been identified.

Trend in like-for-like hotel business by market (2Q15 like-for-like hotel data + hotels under refurbishment)

Spain presented substantial 2Q15 RevPAR growth of 17.9% year-on-year, underpinned by growth in rates and occupancy of 11.6% and 5.6%, respectively, with top city destinations such as Madrid and Barcelona staging an excellence performance.

Italy is the Group's best-performing market. RevPAR in this market reached 18.6% between April and June, shaped by growth in the ADR of 18.2% and in occupancy, of 0.4%. The Milan market was the star performer, thanks mainly to Expo 2015, the Universal Exhibition being hosted by this city, in which the Company operates 11 hotels and 2,157 rooms.

Benelux posted RevPAR growth of 7.2%, driven mainly by ADR growth of 6.8%. In this business unit the cities of Brussels and Amsterdam performed particularly well.

Central Europe posted RevPAR growth of 2.4% in the second quarter, shaped by ADR growth of 6.2%. The drop in occupancy in this market (-3.5%) is attributable to the celebration of fewer trade fairs in the main city destinations this year, as well as less favourable bank holiday timing in May. In this business unit, the trend in Frankfurt is worth highlighting.

In the Americas, regionwide second-quarter RevPAR growth was 20.4%, or 12.8% in constant currency terms, driven primarily by considerable growth in the ADR of 23.5% (13.7% in constant currency terms). Mexico and Argentina performed well in terms of rates in the second quarter, registering ADR growth of 16.3% (+10.4% in constant currency terms) and 30.1% (+16.9% in constant currency), respectively.

About NH Hotel Group

NH Hotel Group (www.nh-hotels.com) is Europe's third-ranked business hotel chain. It operates close to 400 hotels with almost 60,000 rooms in 29 markets across Europe, the Americas and Africa, including top city destinations such as Amsterdam, Barcelona, Berlin, Bogota, Brussels, Buenos Aires, Düsseldorf, Frankfurt, London, Madrid, Mexico City, Milan, Munich, New York, Rome and Vienna.