Hoteles City Express Announces Fourth Quarter 2017 Results with Revenue growth of 24.3% and Adjusted EBITDA growth of 42.7%

MEXICO CITY, Feb. 14, 2018 /PRNewswire/ -- Hoteles City Express S.A.B. de C.V. (BMV: HCITY) ("Hoteles City Express" or the "Company"), has released its results for the fourth quarter of 2017 ("4Q17"). The numbers were prepared in accordance with International Financial Reporting Standards ("IFRS"), and are presented in Mexican pesos ("$").

Summary of Relevant Operating and Financial Information (4Q17)

• At the Chain level, the Average Daily Rate ("ADR") and the Revenue per Available Room ("RevPAR") increased 4.7% and 6.6% over 4Q16, to $927 and $580, respectively. Chain occupancy in 4Q17 was 62.6%, which is 112 basis points higher than occupancy in 4Q16.

• Total Revenues were $686.0 million, which is a 24.3% increase over the same quarter in 2016, due mainly to a 13.1% increase in the number of Installed Room Nights at the Chain level, in combination with growth of 6.6% in the RevPAR.

• Operating Income was $154.4 million in 4Q17, which is a 50.8% increase over the same quarter of the prior year.

• EBITDA and Adjusted EBITDA were $249.5 million and $257.5 million, respectively, which in turn resulted in increases of 43.5% and 42.7% over the same period in the previous year. EBITDA and Adjusted EBIDTA margins during the period were 36.4% and 37.5%, respectively. This is the highest level of this metric in the Company's history for comparable periods.

• Net Income for the period increased to $115.6 million. Net Income margin was 16.8% in the quarter.

• At the end of the quarter the Chain was operating 135 hotels, an increase in 12 new units over the 123 hotels that were operated at the close of the same period in 2016. The number of rooms in operation in 4Q17 was 15,228, an increase of 11.1% over the 13,702 rooms operating at the close of 4Q16.

Summary of Relevant Operating and Financial Information (12M17)

• At the Chain level, occupancy at the close of the year was 60.2%, with an ADR of $934 and RevPAR of $562, which are increases of 10.9% and 8.3%, respectively.

• Total Revenues consolidated in December 2017 were $2,508.4 million, a 23.1% increase over the same period in 2016. This is a result of the 11.1% increase in the number of Occupied Room Nights at the Chain level, the 8.3% increase in RevPAR, and 37.0% growth in revenues due to Hotel Administration.

• Operating Income was $511.3 million during 2017, which is a 37.4% increase over 2016.

• EBITDA and Adjusted EBITDA were $859.0 million and $878.9 million, which is a growth of 29.5% and 29.0%, respectively, compared to the end of 2016. In turn, EBITDA and Adjusted EBIDTA margins were 34.2% and 35.0%, respectively.

• Net Income for the period was $286.4 million, which is an 8.3% increase over 2016. Net Income margin was 11.4% at the close of 2017.

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

"Our results for the fourth quarter and full-year 2017 show operating and financial strength.

In a year that started out with volatility and put the Mexican economy to the test, the hotel industry continued to demonstrate robust market dynamics, experiencing sustained growth and vigorous demand for quality rooms at affordable prices. At the consolidated level, Hoteles City Express increased Total Revenues and Adjusted EBITDA by more than 23% and 29%, respectively.

Growth of more than 10% in the average rate and more than 8% in the effective rates are reflections of an operating, distribution and digital marketing platform that is best in its class. As we expected, the yield management platform and the efforts to release installed capacity through higher prices, were successful. Today the gap in occupancy levels is non-existent, as it reached levels of 62.6% during 4Q17, more than 100 bps higher than those reported during the same quarter of 2016.

Supported by the transformation to a real-time operating culture, empowerment at all levels of the organization, and technology development in point-to-point processes, Hoteles City Express is ready to capture the benefits of an infrastructure that is able to operate more than 200 hotels without significant increases in the cost basis. Evidence of this is the fact that the company's EBITDA during the year grew 1.3 times more quickly than Total Revenues.

During 2017 we put more than 1,500 rooms into operation, and we completed our entire development plan, operating 136 hotels today and 140 in the coming weeks. For 2018, we reinforce our commitment towards profitable growth, as we work on a plan to add between 15 to 21 new hotels before the end of the year.

Finally, we recently announced our intention to create a lodging REIT under the name FSTAY. The launch of this vehicle is a watershed for the company in several different ways, we believe it will be a vehicle that fully supports investor interests, as it will be the best in its class in terms of corporate governance. Furthermore, the company believes that this vehicle will be a catalyst to create greater transparency in the value of its assets, to establish a mechanism for continuous development without any dilution in value for investors, and to strengthen its development capacity so that it will be able to put more hotels into operation per year.

This step also marks a change in our model of communicating with the market, in which our investors will be able to validate the performance of that portfolio and to compare it with the rest of the company, which has lower levels of stabilization, thus showing the potential for incremental value of Hoteles City Express over time.

It is worth mentioning that currently the Company has sufficient flexibility to adopt any other strategic alternative to achieve the previously discussed objectives, options like increasing leverage based on the credit facilities currently in-placed and taking advantage from the already created trust structure continue to be other ways to accomplish future growth.

Today more than ever, and now with an additional, and potentially public vehicle, we will maintain our commitment to new shareholders to continue being the best alternative for profitable growth in the market. Thank you for your trust."

Conference Call Details:

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

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. Created 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 136 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," and in October 2014, Hoteles City Express completed a follow-on share issuance with the aim of accelerating its growth in new hotels in the short- and medium-term.

HCITY has formal coverage, notes and analytical assessment by the following financial institutions and analysts: Actinver (Pablo Duarte), Bank of America Merrill Lynch (Carlos Peyrelongue), Citigroup (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).

For more information, please visit our website: https://www.cityexpress.com/en/investors

Disclaimer:
The information presented in this report contains certain forward-looking statements and information regarding Hoteles City Express, S.A.B. de C.V. and its subsidiaries (jointly, the "Company"), which are based on the understanding of its management, as well as assumptions and information currently available to the Company. These statements reflect the Company's current vision regarding future events and are subject to certain risks, factors of uncertainty and assumptions. Many factors may cause the results, performance of current achievements of the Company to be materially different with respect to any future result, performance of accomplishment of the Company that might be included, expressly or implicitly, within such forward-looking statements, including, among others: changes in general economic and/or political conditions, governmental and commercial changes at the global level and in the countries where the Company does business, changes in interest rates and inflation, exchange rate volatility, changes in business strategy, and various other factors. If one or more of these risks or uncertainty factors should materialize, or if the assumptions used prove to be incorrect, actual results may vary materially from those described herein as anticipated, estimated or expected. The Company does not intend to assume and does not assume any obligation whatsoever to update these forward-looking statements.

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