Hoteles City Express Announces 4Q18 Earnings Results with Operating Income Growth of 17.5%

MEXICO CITY, Feb. 13, 2019 /PRNewswire/ -- Hoteles City Express S.A.B. de C.V. (BMV: HCITY) ("Hoteles City Express" or the "Company"), announced today its results for the fourth quarter of 2018 ("4Q18"). All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS") and are presented in Mexican pesos ("$"), unless otherwise noted.

Summary of Operating and Financial Results (4Q18)

• At the Chain level, the Average Daily Rate ("ADR") and Revenue per Available Room ("RevPAR") increased 7.9% and 2.6% over 4Q17, to $1,000 and $595, respectively. The Chain's occupancy in 4Q18 was 59.6%.
• Total Revenues were $751.5 million, a 9.5% increase over the same quarter in 2017, due mainly to an increase in the number of Installed Room Nights at the Chain level combined with growth in RevPAR.
• Operating Income was $181.4 million in 4Q18, a 17.5% increase over the prior year's comparable quarter.
• EBITDA and Adjusted EBITDA were $261.2 million and $264.4 million, increasing 4.7% and 2.7%, respectively, compared to 4Q17. EBITDA and Adjusted EBIDTA margins during 4Q18 were 34.8% and 35.2%, respectively.
• Net Income for the period increased to $102.9 million. The Net Income margin was 13.7% in the quarter.
• At quarter end, the Chain was operating 148 hotels, an increase of 13 new units over the 135 hotels that were operating at the close of fourth quarter 2017. The number of rooms in operation in 4Q18 was 16,789, an increase of 10.3% over the 15,228 rooms operating at the close of 4Q17.

Summary of Relevant Operating and Financial Results (12M18)

• At the Chain level, occupancy for the year ended at 59.9%, with an ADR of $979 and RevPAR of $586, which increased 4.8% and 4.2%, respectively.
• Total Revenues for 2018 were $2,887.5 million, a 15.1% increase over 2017. The increase in annual revenues was due to a 9.8% increase in the number of Occupied Room Nights at the Chain level, a 4.2% increase in RevPAR, and a 28.0% increase in revenues related to Hotel Administration activities.
• Operating Income was $630.8 million during 2018, a 23.4% increase over 2017.
• EBITDA and Adjusted EBITDA were $992.1 million and $1,000.8 million, which grew 15.5% and 13.9%, respectively, compared to year-end 2017. For 2018, EBITDA and Adjusted EBIDTA margins were 34.4% and 34.7%, respectively.
• Net Income for the period was $279.7 million, a 2.3% decrease compared to 2017. The Net Income margin was 9.7% at the close of 2018.

Comments by Mr. Luis Barrios, CEO of Hoteles City Express:

"We announced our results for the fourth quarter of 2018, which reflect a solid, agile and profitable operation on all fronts.

"In a year that included episodes of uncertainty and that tested the strength of the Mexican economy, our hotel platform closed the fourth quarter propped up by robust market dynamics, sustained growth and a constant demand for quality rooms at affordable prices.

"Although some specific places in the center of the country during December 2018 experienced a slower pace of economic expansion, the resilience of our portfolio as well as the specific market dynamics that drive the real economy of the places where we are present, again differentiate us positively. In this sense, the border corridor of the north of the country, the metropolitan markets such as CDMX, Guadalajara and Monterrey, the export and agriculture corridor located in the Pacific and the northeastern region of Mexico present more than favorable dynamics, both in demand and supply.

"With this, the commercial expertise that characterizes us and the cultural transformation that we have been implementing during the last 24 months allowed us to record average rate increases of 8% in 4Q18. In the same sense, discounting the effect of the implementation of recently opened rooms, the occupancy of Established Hotels registered levels of 62.3% in 4Q18 with increases even higher than those of the chainwide ADR, dynamic that we have implemented in the past to optimize the effective rate of the portfolio when generating RevPAR growth via price.

"As a result of these efforts, in terms of full year results, Total Income and EBITDA of the Company registered double-digit growth, highlighting the cost absorption capacity of our Hotel Management business, which is growing its sales at consolidated levels of 28% and its costs in a 12%.

"With respect to our 2018 Development Plan, as of the date of this report, we have opened 13 hotels and more than 1,500 rooms, and we are contemplating the opening of 4 additional hotels, most of them under the administration and franchise scheme at the end of the first quarter of 2019, fulfilling our development objective announced at the beginning of the previous year. It is worth mentioning that the development expertise and the strict discipline of cost control of our Company has allowed us to be more than double the size of our chain that we were 5 years ago, going from 72 hotels to the date of our Initial Public Offering to 152 hotels at the close of 1Q19.

"That said, and based on the strength we see locally in the markets to which we are oriented and the capacity of our product to penetrate them in a more than proportional way, during the next twelve months we contemplate the opening of 17 hotels and approximately 2,000 new rooms in locations with robust and diversified demand generators, mainly metropolitan areas (CDMX and Guadalajara) and cities with high potential for economic growth (Mexicali, San Luis Potosí and Mérida). It is important to mention that the discipline in development and the financial and operational flexibility that we have allow us to adjust the pace of growth favoring the generation of cash flow if required.

"With another year of outstanding results, we maintain our commitment to our shareholders to continue to be the best integrated hotel platform in Latin America. "

Conference Call Details:

Hoteles City Express will host a conference call to discuss these results. Details on the call follow:

SOURCE Hoteles City Express S.A.B. de C.V.

Related Links

http://www.cityexpress.com