• The average daily rate (ADR) grows in the second quarter, after two years of contraction, 0.8% (2.5% in constant currency terms) on a like-for-like basis, confirming the anticipated shift in the RevPAR mix

• The change in trend is particularly relevant in July, as for the first time, the rise of ADR (2,1% and 3,6% in constant currency terms) is superior to the increase of occupancy levels (+2%) showing an increase of RevPAR of +4.1% (5,7% in constant currency terms)

• First-half 2014 RevPAR like-for-like (revenue per available room) rose 2.54% (4,35% in constant currency terms)

• Positive hotel business dynamics were confirmed across all of the Company's Business Units; personnel expenses were flat year-on-year, despite the increase in activity, while expenses related to implementing the strategic plan were higher as expected

• Recurring net profit rose by 10.8% year-on-year, while consolidated net profit was distorted by the impact of the sale last year of the NH Grand Hotel Krasnapolsky, which continues to be operated by the Company under a management agreement

NH Hotel Group presented today its first-half 2014 results, showcasing the on-going improvement in earnings momentum evidenced in the last quarters of 2013, in line with the Company's forecast.

The positive trend in like-for-like RevPAR in the first half, underpinned by growth in prices (+0.2%) and occupancy (+2.3%), shows a growth in comparable revenues of 2.4% (€13.7 million) despite the negative effect of the exchange rate (€10.0 million). Nevertheless, and as a result of hotels removed from the scope of consolidation (€19.2 million), consolidated revenues fell by €6.6 million (-1.1%).

On a like-for-like basis, the key hotel metrics - occupancy, ADR and RevPAR - registered growth in the first half of 2014. In fact and regarding the positive trend in RevPAR, it is important to highlight that it reflects an improvement in its composition in the second quarter, showing an increase in prices after two years of contraction, thereby consolidating the growth registered in the last 12 months and evidencing the positive impact of implementation of the strategic plan initiatives.

The trend in costs, meanwhile, has been in line with forecast for the first months of the year with flat personnel expenses despite business volume growth while items related to implementation of strategic plan initiatives registered growth.

As a result, recurring Group EBITDA amounted to €45.7m in the first half, down slightly year-on-year, due to the lack of contribution of the hotels that have exited the portfolio, as well as the adverse impact of the exchange rates in Latin America.


It is important to highlight in this respect the investments being made in marketing and IT. These investments encompass important projects such as the overhaul of hotel signage (underway), systems migration, the definition and execution of the new advertising campaign worldwide, the launch of mobile applications and the upgrade and integration of the commercial website.

As for the refurbishment works already completed or underway, the bookings evolution after the re-opening and the expectations on the projects currently under execution, are showing an improvement in consumer perception, with potential ADR growth substantially stronger than that registered year-to-date in the second half of the year. In this sense, it is relevant to mention that a growth in revenue from room sales of 13.5% has been achieved after refurbishment works, despite the short comparable period. During the summer period, 14 hotels began their works and another 23 will begin in the forthcoming weeks.

On the other hand, the negotiations underway with a view to delivering the lease expense reduction target for the year are progressing well, with almost 70% of the target already locked in between agreements already secured and those pending of execution in the months to come. About portfolio optimization, the plan included the exit of 44 hotels during the period 2013-2014. At the end of the first half of 2014, the Company has exited 25 hotels, keeping 13 within the Group thanks to the agreements reached with the owners (better financial conditions or investment commitments). During the second half it is foreseen the exit of the remaining 6.

As for the forecast for the third quarter, the July figures reveal significant growth in occupancy rates (+2%), ADR (+2.1%) and RevPAR (+4.1%), pointing to further consolidation of the upward trend of recent months.

Lastly, recurring net profit rose by 10.8% year-on-year, while consolidated net profit was distorted by the impact of the sale last year of the NH Grand Hotel Krasnapolsky in Amsterdam, which continues to be operated by the Company under a management agreement.

Earnings highlights for NH Hotel Group for the six months ended 30th of June, 2014:

Trend in the main hotel business metrics by quarter in 2013 and 2014:

Significant developments in 2014


Evolution of the Strategic Plan:


• 2014: The guidance for the full year is maintained, which calls for RevPAR growth of between 3% and 5%, shaped by greater momentum in the second half thanks to the launch of a series of revenue-enhancing initiatives contemplated in the strategic plan. Recurring EBITDA is expected to grow by between 5% and 10% year-on-year, excluding the impact of asset sales.

• Repositioning plan: The Company expects to refurbish approximately 41 hotels in 2014, among which the following 4 have concluded the works: NH Collection Palazzo Barocci (Venice), NH Alonso Martínez (Madrid), NH Firenze (Florence) and NH Berlin Mitte (Berlin) reaching an average growth in revenue from room sales of 13.5% during the short comparative period. The most important project - the refurbishment of the NH Collection Eurobuilding in Madrid - is close to completion, with a staggered reopening scheduled from early September.

• Brand management: Guest feedback on the Group's hotels is very encouraging, while the trend in terms of individual hotel positioning (the so-called Popularity Index) in the cities in which NH Hotel Group operates is similarly positive. Overall, the guest feedback score has improved by 0.4 to 8.2, which has in turn driven an improvement in the Popularity Index of 3%. As for the NH Collection brand (23 hotels as of August 1st 2014), the score year-to-date is running at 8.8 (+0.4), evidencing improvement in the Popularity Index of over 30%, with the NH Collection properties commanding 60% of the top 25 hotels in the cities in question. These higher scores are the result of the investments made by the Group in its 'Brilliant Basics' (TVs, mattresses, pillows, showers, hairdryers, amenities, etc.).


• Pricing and revenue management strategy: The "B2C Pricing project", designed to equip the entire NH Hotel Group with a new price and room categorization architecture, all with the aim of fostering a price-led recovery, is in the midst of implementation across the various Business Units. This project is slated for full rollout by December 2014.

• IT infrastructure and support functions: System migration is complete in Spain and Benelux; Central Europe is next, with migration programmed for October. Front-office migration started in Spain in July. In addition and in parallel to the marketing campaign, the website has been revamped and new mobile apps launched. Integration of the new website is progressing as scheduled and work is underway (August and September) on readying and launching the various domains.

• Asset sales and portfolio optimization: In June the Company announced the sale of the NH Amsterdam Centre as part of a sale & lease-back at a value of €52.4m as part of an asset disposal plan designed to generate proceeds of €125m. The Company continues to negotiate on several fronts with talks at varying stages of development.

• Lease expense: Between leases that have already been renegotiated and those pending execution, the Company has locked in almost 70% of its lease saving target for the year, implying annualized savings in the first half of €8.1m, of which €4.4m are permanent in nature.

NH Italy: 
At the Annual General Meeting held at the end of June, the Company's shareholders approved the issuance of 42 million new shares at an issue price of €4.70 (par value of €2 plus a share premium of €2.70 per share) for the acquisition of the outstanding 44.5% of NH Italy held by Intesa Sanpaolo, giving it outright ownership of some of the chain's most valuable properties in Rome, Amsterdam and New York. This will give the Group greater decision-making autonomy and flexibility with respect to the establishments operated by this investee.


Earnings performance by Business Unit

The performance in Spain during the second quarter confirms the trend experienced during the first three months of the year, with growth in occupancy and prices and momentum gathering force from May. These trends drove growth in RevPAR in both quarters. The Madrid, Valencia and Seville markets have all turned the corner and are showing clear signs of recovery, while the Barcelona market remains notably stable. The resort properties continue to perform favorably, driven by growth in demand but also stronger pricing. The outlook for the months ahead is for continued growth in these metrics, underpinned by expectations for growth in business volumes in Madrid and Barcelona in September, as well as the anticipated impact of the promotional campaigns carried out in recent months. 

Italy is the fastest-growing Business Unit, thanks to very considerable growth in prices (+5.6%), significantly higher than in prior quarters and substantially outpacing growth in occupancy (+1.6%), the latter more in line with the recent trend. Revenue strengthened (+3.1%) on the back of a higher ADR. The efforts to better manage expenditure and reduce leases also paid off. The outlook for this market is very promising, with all the key metrics expected to register year-on-year growth for the rest of the year.


The Central European market stands out for its stability, having notched up consecutive quarters of RevPAR growth, driven more in this case by occupancy than by ADR, which narrowed slightly year-on-year. The main German city destinations posted uneven performances due to the timing of trade fairs. Cities such as Cologne, Dusseldorf and Nuremberg were strong in the first quarter, thanks mainly to a number of trade fairs and congresses, whereas others, such as Berlin, fared better in the second quarter, driven by stronger guest demand in the leisure segment.

Benelux, the UK, France and Africa presented much higher ADR growth quarter-over-quarter, although the trend in occupancy was variable in the second quarter. This combined has allowed to keep a positive and stable RevPAR in both quarters. Notably, Brussels and Amsterdam posted excellent performances. The outlook for revenue in the third quarter remains upbeat. 

The Americas registered RevPAR growth of 26% on a like-for-like basis, thanks mainly to a spike in average prices of 22% in constant currency terms.

The Mexican business sustained price growth thanks to the re-segmentation policy as well as significant growth in the local economy. Mercosur, meanwhile, registered widespread growth in the second quarter, with the exception of June, which was affected by the Football World Cup in Brazil.


About NH Hotel Group
NH Hotel Group (www.nh-hotels.com) is Europe's third-ranked business hotel chain. It operates close to 400 hotels with almost 60,000 rooms in 28 markets across Europe, the Americas and Africa, including top city destinations such as Amsterdam, Barcelona, Berlin, Bogota, Brussels, Buenos Aires, Düsseldorf, Frankfurt, London, Madrid, Mexico City, Milan, Munich, New York, Rome and Vienna.

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