Hoteles City Express Results

Hoteles City Express Announces 3Q18 Earnings Results with Revenue Growth of 16%

Total Revenues were $741.1 million, which represents a 15.5% increase with respect to the same quarter in 2017, primarily due to a 9.3% increase in the number of Installed Room Nights at the Chain level, as well as a 5.4% increase in RevPAR

Hoteles City Express

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

Financial and Operating Highlights (3Q18)

  • At the Chain level, Average Daily Rate ("ADR") and Revenue per Available Room ("RevPAR") increased by 5.2% and 5.4% in comparison with 3Q17, to $963 and $599, respectively. Chain occupancy in 3Q18 was 62.2%.
  • Total Revenues were $741.1 million, which represents a 15.5% increase with respect to the same quarter in 2017, primarily due to a 9.3% increase in the number of Installed Room Nights at the Chain level, as well as a 5.4% increase in RevPAR
  • Operating income was $164.2 million in 3Q18, an increase of 20.8% over the same quarter the year before.
  • EBITDA and Adjusted EBITDA were $257.7 million and $259.9 million, respectively, reflecting year on year increases of 18.0% and 16.4%. EBITDA margin and Adjusted EBITDA margin for the period came to 34.8% and 35.1%, respectively.
  • Net Income for the period reached $57.5 million. Net Income margin was 7.8% for the quarter.
  • At the close of the quarter, the Chain was operating 139 hotels, an increase of 9 new units compared to the 130 hotels operating at the close of the same period in 2017. The number of rooms in operation in 3Q18 was 15,691, an increase of 7.4% in comparison with 14,606 at the close of 3Q17.
  • After the end of the third quarter and as of today, the Company announced the opening of 1 more unit beyond the 139 that were operating at the start of September. The hotel commencing operations was the City Express Plus Cancún Aeropuerto.

Operating and Financial Highlights

3Q18

3Q17

3Q18 vs 3Q17

9M18

9M17

9M18 vs 9M17

% Change

% Change

Operating Statistics for the Chain

Number of Hotels at the End of the Period

139

130

6.9%

6.9%

139

130

6.9%

Number of Rooms at the End of the Period

15,691

14,606

7.4%

7.4%

15,691

14,606

7.4%

Number of Installed Room Nights

1,439,936

1,317,750

9.3%

9.3%

4,232,115

3,822,701

10.7%

Number of Occupied Room Nights

896,151

817,934

9.6%

9.6%

2,540,715

2,269,999

11.9%

Average Occupancy Rate (%)

62.2%

62.1%

16 pbs

16 bps

60.0%

59.4%

65 bps

ADR($)

963

915

5.2%

5.2%

969

936

3.5%

RevPAR($)

599

568

5.4%

5.4%

582

556

4.7%

Consolidated Financial Information (Thousands of Pesos)

Total Revenues

741,116

641,762

15.5%

15.5%

2,135,996

1,822,411

17.2%

Operating Income

164,225

135,952

20.8%

20.8%

449,448

356,854

25.9%

Operating Income Margin

22.2%

21.2%

97 pbs

97 bps

21.0%

19.6%

146 bps

Adjusted EBITDA

259,923

223,370

16.4%

16.4%

736,438

621,378

18.5%

Adjusted EBITDA Margin (%)

35.1%

34.8%

27 pbs

27 bps

34.5%

34.1%

38 bps

EBITDA

257,703

218,366

18.0%

18.0%

730,816

609,525

19.9%

EBITDA Margin (%)

34.8%

34.0%

75 pbs

75 bps

34.2%

33.4%

77 bps

Net Income

57,459

88,174

-34.8%

-34.8%

176,836

170,803

3.5%

Net Income Margin (%)

7.8%

13.7%

-599 pbs

-599 bps

8.3%

9.4%

-109 bps

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

Ing. Luis Barrios, Director General of Hoteles City Express Comment:

"In a quarter with favorable news for Mexico - mainly the conclusion of the USMCA and the orderly transition between incoming and outgoing administrations - and with strength in mobility and demand for a geographically diversified product, with exposure to different industries and with high value-price relation like ours, Hoteles City Express presents results with significant operational and financial strength in all fronts of the business.

In the context of a Mexican economy that is growing moderately but steadily, Hoteles City Express maintained robust operating performance thanks, in part, to its presence in markets with above-average growth and to its defensive performance in volatile environments. The favorable evolution of Mexico's northern zone stands out, as well as in locations with good exposure to services and commercial activity, primarily in metropolitan areas. The negative weight of the energy corridor seems to have completely reversed, contributing with a growth of more than 20% driven by both occupancy and ADR.

At the operational level, we maintain our RevPAR growth target above inflation, due to a healthy mix of occupancy and ADR strengthening. Established Hotels, or those with at least 36 months in operation, report occupancy of close to 65% at the end of the quarter along with increases in ADR in line with inflation. As we anticipated, the softness in our portfolio during the previous quarter has dissipated and the specific market dynamics that caused it to have reverted in a more than proportional manner.

From a financial perspective, our emphasis on growing rapidly with high levels of profitability allowed us to generate double-digit increases in Total Revenues and Adjusted EBITDA, the latter growing at a faster pace. The operating leverage of our company generates not only healthy expansion dynamics but also a solid counterweight to increases in certain hotel operating costs, mainly higher energy costs that impacted the hotel industry during the quarter. In the medium term we expect to neutralize these costs thanks to the successful closing of the power purchase agreement that we announced a couple of weeks ago.

Regarding our development plan, we maintain our goal of opening 18 properties in 2018, of which 5 have already been opened and 13 will begin operations within the next 6 months. With sufficient resources to fund our growth, more than 35 projects in development and more than 70 strategic locations identified as of today, we see a robust development pipeline for 2019 and 2020. We are contemplating the opening of between 15 and 20 additional hotels in each of those years.

Today, more than ever, Hoteles City has quite significant potential for appreciation in value, given the robust and profitable growth and the scale we now have compared to the size of our business at the time of our IPO a little more than 5 years ago. The company has almost tripled in size and with very attractive growth perspectives.

We will continue working diligently to realize the true value of City Express Hotels by producing record results quarter by quarter that exceed market expectations and our own. Thank you for your trust."

Conference Call Details:

Hoteles City Express will host a conference call to discuss these results: 

Date: 

Thursday, October 18, 2018

Time: 

11:00 am Eastern time / 10:00 am Mexico City time

Dial-in: 

1-888-317-6003 (from within the U.S.) / 1-412-317-6061 (outside the U.S.)

001-866-6754-929 (toll-free from within Mexico)

Passcode:

5990752

Webcast:

https://services.choruscall.com/links/hcity181018.html

Conference Replay will be available for 30 days:

        U.S.: 1-877-344-7529/ International: 1-412-317-0088

        Passcode: 10124490

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 140 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 (Don Alejandro Lavín), GBM (Héctor Vázquez), ITAU BBA (Enrico Trotta), J.P. Morgan (Adrián Huerta), Morgan Stanley (Nikolaj Lippman), Santander (Cecilia Jiménez), Signum Research (Armando Rodriguez) and UBS (Marimar Torreblanca).

 



Logos, product and company names mentioned are the property of their respective owners.