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HOTEL reports 7% growth in Total Revenues for 3Q19

MEXICO CITY, Oct. 24, 2019 (GLOBE NEWSWIRE) -- Grupo Hotelero Santa Fe S.A.B. de C.V. (BMV:HOTEL) (“HOTEL” or the “Company”), announced its consolidated results for the third quarter (“3Q19”) ended September 30, 2019. Figures are expressed in Mexican pesos, are unaudited and are in accordance with International Financial Reporting Standards (“IFRS”) and may vary due to rounding.

Highlights

  • 3Q19 Total Revenue was Ps. 507.8 million, a 6.9% increase compared to 3Q18, driven by growth in the following: i) 16.0% in Food and Beverages Revenue, ii) 34.5% in Other Hotel Revenue, and iii) 1.6% in Third-Party Hotel Management Fees, which more than offset a 2.4% decrease in Room Revenue.

  • 3Q19 EBITDA1 was Ps. 139.5 million, a 2.9% decrease compared to 3Q18, derived from higher costs and expenses. 3Q19 EBITDA margin was 27.5% compared to 30.3% in 3Q18.

  • In 3Q19, HOTEL recorded a Net Loss of Ps. 29.2 million, compared to a gain of Ps. 123.1 million in 3Q18. This variation was attributed to a negative FX result in the quarter.

  • 3Q19 Net Operating Cash Flow was Ps. 148.5 million, a decrease of 7.7% compared to the Ps. 160.9 million reported in 3Q18; this was the result of less favorable working capital performance in the quarter.

  • Net Debt/EBITDA (LTM) ratio was 4.0x at the end of 3Q19. Operating Cash Flow in US dollars represented 91.1% of Total Operating Cash Flow, thereby providing a natural hedge of the dollarized financial debt.

  • HOTEL’s total portfolio at the end of 3Q19 was 6,380 rooms in operation, an 8.2% increase compared to the 5,896 rooms at the end of 3Q18.

  • RevPAR2 for Company-owned hotels decreased by 6.3% in 3Q19 compared to 3Q18, mainly derived from an 8.4% decrease in ADR.

  • The Company announces its updated 2019 guidance: 2019e Total Revenue - Ps. 2,200 million; 2019e EBITDA - Ps. 645 million. This guidance has been prepared using an average US dollar/Mexican peso exchange rate of $19.00.
       
  Third Quarter   9 months ended September 30
Figures in thousand Mexican pesos 2019 2018 Var. % Var.   2019 2018 Var. % Var.
Total Revenue 507,846   475,055   32,790 6.9   1,672,370   1,522,200   150,171 9.9
EBITDA 139,511   143,726   (4,215) (2.9)   484,904   502,456   (17,552) (3.5)
EBITDA Margin 27.5%   30.3%   (2.8 pt) (2.8 pt)   29.0%   33.0%   (4.0 pt) (4.0 pt)
Operating Income 75,443   90,278   (14,835) (16.4)   291,607   339,070   (47,464) (14.0)
Net Income (29,223)   123,130   (152,353) NA   96,879   250,261   (153,382) (61.3)
Net Income Margin (5.8%)   25.9%   (31.7 pt) (31.7 pt)   5.8%   16.4%   (10.6 pt) (10.6 pt)
Operating Cashflow 148,501   160,945   (12,444) (7.7)   477,645   501,036   (23,391) (4.7)
Occupancy 57.3%   56.0%   1.3 pt 1.3 pt   60.9%   63.1%   (2.2 pt) (2.2 pt)
ADR 1,274   1,391   (117) (8.4)   1,317   1,429   (112) (7.8)
RevPAR 730   779   (49) (6.3)   803   901   (98) (10.9)
Note: operating figures include hotels with 50%+ ownership.                
                 


_____________________________________
1EBITDA is calculated by adding Operating Income, Depreciation and Total Non-recurring Expenses.
2Revenue per Available Room (“RevPAR”) and Average Daily Rate (“ADR”). 

Comments from the Executive Vice President

Mr. Francisco Zinser, stated:

2019 has been a tough year for the Mexican tourism sector in general, including us. Our quarterly results were below our expectations due to external factors. In Mexico, tourist activity at both resort and urban destinations continued to show softer dynamics. At resort destinations, the main headwind was the slowdown in international tourism that began at the end of last year, driven by the combined effect of perception of decreased security in certain markets, and sargassum (brown algae) washing up along the beaches in Cancún and the Riviera Maya. However, tourist destinations in the Pacific region, such as Puerto Vallarta and Los Cabos, had favorable results. Regarding urban destinations, the slowdown in economic activity continued to affect booking activity in several segments, including meetings and conventions, corporate accounts, and government accounts. Keep in mind that this last item includes not only government accounts, but all the third-party consultants and service providers that cater to this segment.

Providing more insight into our quarterly performance, results were impacted by the aforementioned items, combined with the maturation curve of the Reflect Krystal Grand properties, which have been negatively affected by the same factors, weighing on our performance. Quarterly revenues were Ps. 507.8 million, up 6.9% compared to 3Q18. 3Q19 EBITDA, on the other hand, was Ps. 139.5 million, down 2.9% compared to 3Q18 mainly due to lower top line growth, coupled with lower-than-expected results at Reflect Krystal Grand properties. This affected our margins, as this brand has higher standards and therefore higher operating costs. Regarding Company-owned hotels, RevPAR decreased by 6.3%, due to an 8.4% decrease in ADR, which was partially offset by a 1.3 percentage point expansion in Occupancy.

Due to the previously mentioned factors, which were mostly unpredictable, we are adjusting our guidance in revenues and EBITDA to Ps. 2,200 million and Ps. 645 million, respectively, implying a 6.5% growth rate in revenues and a 4.6% contraction in EBITDA. We believe this guidance more accurately depicts the reality of Mexico’s tourism sector.

In order to strengthen our balance sheet and lower the amount of Company-owned assets whose results are not consolidated in our financial statements, we are announcing the divestment from our stake of Ps. 88 million in the Breathless Tulum Resort & Spa. However, please note that our management contract for this hotel remains in place.

HOTEL is on the right track to become the leading hotel company in Mexico. Our management team and associates, who are recognized for their passion and commitment, combined with the Company’s high efficiency levels and profitable growth, will enable us to meet our goals. As always, we are thankful for the trust and support of our shareholders.

Recent Events
During 3Q19, and as of the date of this report, HOTEL’s recent developments included:

  • On July 30, the Company announced signature of a Management Contract for the AC Hotel by Marriott Santa Fe, with 168 rooms located in Mexico City’s Santa Fe district. The hotel, which is owned by a third party and was inaugurated in May 2017, is located on Juan Salvador Agraz, just steps away from the Centro Comercial Santa Fe Mall. This Management Contract is in line with the Company’s expansion plan, which includes growth in the urban hotel segment through third-party brands at strategic locations.

  • On August 1, the Company announced signature of a Management Contract for the Courtyard by Marriott Puebla, with 154 rooms located in the city of Puebla, Puebla. The hotel, which is owned by a third party, is located on Avenida 31 Poniente, minutes away from the Angelopolis Mall. This Management Contract is in line with the Company’s expansion plan, which includes growth in the urban hotel segment through third-party brands at strategic locations.

  • The Company announced divestment from its stake in the Breathless Tulum Resort & Spa, which will strengthen the Company’s balance sheet. The full investment of Ps. 88 million was recovered, and the management contract for this hotel is still in place.

  • The Company announced its updated 2019 guidance:
              2019e Total Revenue: Ps. 2,200 million.
              2019e EBITDA: Ps. 645 million.
    This guidance has been prepared using an average USD/MXN exchange rate of $19.00.
3Q19 Conference Call Details:
HOTEL will host its earnings webcast (audio + presentation) to discuss results:
Date: Friday, October 25, 2019
Time: 12:00 p.m. Mexico City Time
  1:00 p.m. New York Time
To participate in the conference call and Q&A session please dial:
Telephone: US: 1 800 863 3908
  International +1 334 323 7224
  Mexico: 01 800 847 7666
Conference password: HOTEL 000
Webcast: The webcast will be in English. To follow the Power Point presentation and the audio of the call, please visit our website www.gsf-hotels.com/investors

About Grupo Hotelero Santa Fe

HOTEL is a leading company in the Mexican hotel industry, centered on acquiring, converting, developing and operating its own hotels as well as third party-owned hotels. The Company focuses on strategic hotel location and quality, a unique hotel management model, strict expense control and the proprietary Krystal® brand, as well as other international brands. As of year-end 2018, the Company employed over 3,500 people and generated revenues of Ps. 2,065 million. For more information, please visit www.gsf-hotels.com

Contact Information  
Enrique Martínez Guerrero Maximilian Zimmermann
Chief Financial Officer Investor Relations Director
inversionistas@gsf-hotels.com mzimmermann@gsf-hotels.comm