Hoteles City Express Results

Hoteles City Express Announces 2Q18 Results with Revenue Growth of 16.3% and Operating Income Growth of 28.6%

Total Revenues were $708.8 million, which represents a 16.3% increase with respect to the same quarter in 2017, primarily due to a 11.9% increase in the number of Occupied Room Nights at the Chain level, as well as a 1.7% increase in RevPAR

Hoteles City Express

Hoteles City Express S.A.B. de C.V. (BMV: HCITY), announced today its results for the second quarter of 2018.  The figures have been prepared in accordance with International Financial Reporting Standards and are presented in Mexican Pesos ("$").

Financial and Operating Highlights (2Q18)

  • At the Chain level, Average Daily Rate ("ADR") and Revenue per Available Room ("RevPAR") increased by 3.2% and 1.7% in comparison with 2Q17, to $969 and $576, respectively. Chain occupancy in 2Q18 was 59.5%.
  • Total Revenues were $708.8 million, which represents a 16.3% increase with respect to the same quarter in 2017, primarily due to a 11.9% increase in the number of Occupied Room Nights at the Chain level, as well as a 1.7% increase in RevPAR
  • Operating Income was $142.8 million in 2Q18, an increase of 28.6% over the same quarter the year before.
  • EBITDA and Adjusted EBITDA were $236.3 million and $235.5 million, respectively, reflecting year on year increases of 19.7% and 16.6%. EBITDA Margin and Adjusted EBITDA Margin for the period came to 33.3% and 33.2%, respectively.
  • Net Income for the period reached $69.1 million. Net Income margin was 9.7% for the quarter.
  • At the close of the quarter, the Chain was operating 139 hotels, an increase of 14 new units compared to the 125 hotels operating at the close of the same period in 2017. The number of rooms in operation in 2Q18 was 15,691, an increase of 12.5% in comparison with 13,951 at the close of 2Q17.

Operating and Financial Highlights

2Q18

2Q17

2Q18 vs 2Q17

6M18

6M17

6M18 vs 6M17

% Change

% Change

Operating Statistics for the Chain

Number of Hotels at the End of the Period

139

125

11.2%

139

125

11.2%

Number of Rooms at the End of the Period

15,691

13,951

12.5%

15,691

13,951

12.5%

Number of Installed Room Nights

1,414,086

1,264,080

11.9%

2,792,804

2,504,951

11.5%

Number of Occupied Room Nights

840,753

762,291

10.3%

1,644,596

1,452,065

13.3%

Average Occupancy Rate (%)

59.5%

60.3%

-85 bps

58.9%

58.0%

92 bps

ADR($)

970

940

3.2%

973

948

2.6%

RevPAR($)

576

567

1.7%

573

550

4.3%

Consolidated Financial Information (Thousands of Pesos)

Total Revenues

708,759

609,341

16.3%

1,394,881

1,180,649

18.1%

Operating Income

142,767

111,032

28.6%

285,223

220,902

29.1%

Operating Income Margin

20.1%

18.2%

192 bps

20.4%

18.7%

174 bps

Adjusted EBITDA

235,519

201,932

16.6%

476,515

398,008

19.7%

Adjusted EBITDA Margin (%)

33.2%

33.1%

9 bps

34.2%

33.7%

45 bps

EBITDA

236,261

197,398

19.7%

473,114

391,159

21.0%

EBITDA Margin (%)

33.3%

32.4%

94 bps

33.9%

33.1%

79 bps

Net Income

69,090

44,212

56.3%

119,377

82,629

44.5%

Net Income Margin (%)

9.7%

7.3%

249 bps

8.6%

7.0%

156 bps

Adjusted EBITDA = Operating earnings + depreciation + amortization + non-recurring expenses (pre-opening expenditures of new hotels).

Comments by Luis Barrios, CEO of Hoteles City Express:

"With solid performance indicators, the opening of 14 hotels over the last 12 months and a diverse inventory of more than 15,600 rooms in 4 countries and more than 70 cities in Latin America, Hoteles City announces its second quarter 2018 results.

Our portfolio of hotels benefits from an appropriate mix of geographic, industrial, and market diversification, which allow us to continue to show results along the different economic corridors where we are present. In particular, the hotels located along the border and north corridors of Mexico, as well as within metropolitan markets, continue to perform well.  As well, the hotels in the Gulf of Mexico and those within the hydrocarbon extraction areas are today registering more than 18 months of growth in RevPAR and delivering double-digit growth in this metric as compared to the same period of the previous year.

As a counterbalance, despite continuing to grow our chainwide RevPAR at healthy rates, which include a significantly higher base of comparison (more than 15% growth in the last 24 months), in this quarter we noted certain temporary effects in specific markets that marginally affected the performance of our portfolio, primarily that of our Established Hotels. We are confident that given the operational agility and commercial ability that we are known for, we will be able to reinforce the operational indicators of this portfolio and continue our strategy of market penetration in Mexico and the region in the coming months.

In terms of our financial indicators, Hoteles City Express again recorded profitable growth by expanding Total Revenues by more than 16% and Adjusted EBITDA by 17%, while continuing to show expansion in the operating leverage of our company. This is the result of completing the deployment of our transformation and empowerment efforts across all levels of the organization, our culture of real time operations and decision-making and, our commercial and distribution advantages at the local level.

Regarding our Development Plan, during 2Q18 we opened the City Express Comitán hotel in Chiapas and City Express Gustavo Baz in the State of Mexico, both in Mexico. With these properties we are one step closer to achieving our openings goal for 2018.

Finally, but no less importantly, on June 18 we announced the disbursement of an unsecured bank financing vehicle for $1,200 million and the rescheduling of the initial public offering of Fibra STAY. With the disbursement of the line of credit, we have guaranteed the financing of the 2018-2020 development plan. We will continue to include the results of the FSTAY portfolio in our quarterly reports, so that we will be ready to execute the transaction in an agile manner as soon as the appropriate market conditions are in place.  Given the current macroeconomic and geopolitical environment, we believe in hindsight that the decision to reschedule the offering preserved value and was in the best interest of all of our shareholders.

We are grateful for your continuing confidence and will continue working to consolidate our position as one the highest growth and most profitable companies in our industry in Latin America, investing to generate medium and long-term value."

About Hoteles City Express:

Hoteles City Express is the leading and fastest-growing limited-service hotel chain in Mexico, in terms of number of hotels, number of rooms, geographic presence, market share and revenues. Founded in 2002, Hoteles City Express specializes in offering high-quality, comfortable and safe lodging at affordable prices via a limited-service hotel chain geared mainly towards domestic business travelers. With 139 hotels located in Mexico, Costa Rica, Chile and Colombia, Hoteles City Express operates five distinct brands: City Express, City Express Plus, City Express Suites, City Express Junior and City Centro, to serve different segments of its target market. In June 2013, Hoteles City Express completed its IPO and began trading on the Mexican Stock Exchange under the ticker symbol "HCITY;" furthermore, in October of 2014, Hoteles City Express completed a follow on with the aim of accelerating its growth in new hotels in the short- and medium-term.

HCITY has formal coverage, notes and analytical assessments by the following financial institutions and analysts: Actinver (Pablo Duarte), Bank of America Merrill Lynch (Carlos Peyrelongue), Citigroup (Alejandro Lavín), GBM (Héctor Vázquez Montoya), ITAU BBA (Enrico Trotta), J.P. Morgan (Adrián Huerta), Morgan Stanley (Nikolaj Lippman), Santander (Cecilia Jiménez), Signum Research (Armando Rodriguez) and UBS (Marimar Torreblanca).



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