• Momentum improved substantially as the year unfolded with a significant growth in the ADR and RevPAR in the second half of the year

• All of the Group's markets registered growth in these hotel metrics in 2014, highlighting Spain and Italy with a very positive trend

• The Group's outlook for 2015 remains upbeat: guidance calls for EBITDA growth of around 25% and RevPAR growth in excess of 5%



• The strategic initiatives being implemented under the business plan are being executed rigorously, yielding positive results in year one


NH Hotel Group presented its 2014 results today, reporting bottom-line improvement of 76% in year one of implementation of its business plan. This set of earnings tops the market's expectations in a year marked by investments and the rollout of initiatives designed to transform the Group, including the launch of a new value proposition and price strategy, hotel repositioning and system upgrades.

During this period, recurring revenue rose €12.5 million to €1,265.1 million in 2014, while recurring EBITDA climbed 2.5% higher year-on-year to €126.2 million. This growth is all the more noteworthy considering the lack of contribution by the hotels excluded from the consolidation scope last year and the adverse impact on earnings of exchange rate trends. Stripping out these factors, revenue growth would have been 4.0% and EBITDA growth, 10.1%.

Operating expenses rose slightly, in line with the growth in business volumes, shaped by wage increases negotiated under collective bargaining agreements in Central Europe and the costs related to implementation of the business plan, specifically the reinforcement of the Group's operating equipment, salesforces, website, revenue management tools and marketing efforts. Meanwhile, the Company managed to reduce overall lease expenditure by 2.1%, thanks to lease renegotiations, mainly in Spain and Italy, and strategic exits from non-performing leases, offsetting the impact of rent increases negotiated in prior years and inflation adjustments.

The hotel business performance was shaped by significant growth in the average daily rate (ADR) and revenue per available room (RevPAR) in the second half of the year. Prices rose faster than occupancy throughout the second half, enhancing the Group's RevPAR mix. Note that the revenue growth sustained in the fourth quarter was driven mainly by ADR growth, with this metric up a notable ~5% in November and December.

In all, the ADR increased by 1.7% in 2014, while RevPAR growth came in at 3.6%, driven by the strong momentum observed in the hotel business throughout the year, coupled with the fruits of the strategic initiatives rolled out by the Company under the umbrella of its business plan.


Trend in the main hotel business metrics of NH Hotel Group by quarter:


Recurring net profit (attributable to equity holders of the parent) rose by 47.3%, while consolidated net profit, which includes the Group's non-recurring activities, jumped 76%. As a result, the Group's net loss narrowed from €39.8 million in 2013 to €9.6 million last year.

Business momentum, coupled with strong progress on all the initiatives being implemented by the Group under the umbrella of its business plan, paints a bright picture for 2015: current guidance points to EBITDA growth of around 25% this year, fuelled by RevPAR growth of over 5%.


Consolidated 2014 income statement:

Business plan: first year of the transformation

The key milestones achieved during year one of the Group's transformation include the materialisation of NH Hotel Group's new value proposition, based around a new brand architecture, specifically the NH Collection, NH Hotels, nhow and Hesperia trademarks, and a new, tangible and clearly segmented guest experience.

In parallel, the Company has enhanced the guest experience by implementing a solid operational promise, adding new essentials to the hotels underlying offering (investment: €30 million), known as the Brilliant Basics; these essentials are currently available in the vast majority of the Group's establishments and are helping to improve the guest experience and ultimate feedback.

The overhaul and relaunch of the NH Rewards loyalty programme drove membership to over 4.5 million, 31% of whom signed up last twelve months.

The trend in the quality readings tracked by the Group demonstrate a substantial improvement in guest ratings over the course of 2014, particularly at the hotels which have implemented the first transformation measures, such as the NH Collection Eurobuilding in Madrid (which has jumped from #53 to #10) and the NH Collection Palazzo Barocci in Venice (from #164 to #25).

In the Meetings and Events segment, NH reinforced its leadership by implementing a sector-pioneering suite of technology solutions. For the first time on a permanent basis in the hospitality industry, NH has installed in some of the Group's hotels 3D holographic projection technology and telepresence and interactive collaboration systems that ensure high-impact, high-performance meetings and events.

As for the asset repositioning plan, NH Hotel Group has earmarked €220 million of capex between 2014 and 2016 to renovating and refurbishing the hotels offering the highest potential for price growth. 73% of this investment is going to reposition hotels apt for conversion into NH Collection-branded establishments. This process has already been successfully concluded at establishments such as the NH Berlin Mitte (Germany), NH Collection Palazzo Barocci (Italy), NH Collection Eurobuilding (Spain) and NH Collection Abascal (Spain).

On the growth front, NH Hotel Group added nine hotels to its portfolio in 2014 (4 openings and 5 contracts) and launched its joint venture with the HNA Group in China, where it plans to develop a chain of hotels under the management regime formula. 

Elsewhere, in early February 2015, NH Hotel Group agreed the acquisition of Latin American chain Hoteles Royal. This chain of Colombian origin is strategically focused on the development and management of city hotels. This acquisition will add 20 hotels - and 2,257 rooms - in Colombia, Chile and Ecuador.

Lastly, the process of optimising management and organisational capabilities, particularly in terms of IT systems, is progressing satisfactorily. The Group's new online strategy has delivered a significant reduction in intermediation costs, thanks to the comprehensive revamp of the commercial website. The Group's new, dedicated NH Collection website is also now live.

Hotel business performance by Business Unit in FY14

Spain posted a very strong earnings performance, marked by like-for-like RevPAR growth of 4.8% in the fourth quarter, driven mainly by ADR growth of 3.9%. Madrid and other major city destinations such as Valencia and Seville continue to register strong growth in occupancy levels and room rates. Like-for-like revenue in this market rose by 5.3% in 2014, with notable growth of 8.2% in food & beverage revenue.

Italy, meanwhile, registered an excellent last quarter: RevPAR in this market rose by 6.3%, 60% of which accounted for by growth in the ADR. NH hotels in Milan presented a positive evolution within the overall market, outperforming its peers on price. Like-for-like revenue in Italy rose by 4.2% in 2014 and the outlook for 2015 remains positive.

RevPAR in Benelux registered slight growth in the fourth quarter, as the drop in occupancy caused by the lack of events in 2014 was more than offset by ADR growth of 3.7%. Like-for-like revenue in this market climbed 1.5%, in line with the trend in RevPAR. The outlook is for a strong performance in 2015, particularly in Amsterdam.

Central Europe: Earnings in this unit were broadly flat year-on-year in 4Q14 due to the timing of the congress and event schedule. The Group's hotels in Berlin significantly outperformed those of its competitors in ADR in 2014 as a whole. Like-for-like revenue rose by 1.8% in 2014. Management expects RevPAR to rise in this market in 2015.

In constant-currency terms, the Americas business unit registered region-wide like-for-like RevPAR growth of 24.6% in the fourth quarter, fuelled mainly by significant growth in the ADR of 27.8%. In current values, however, like-for-like revenue growth was just 2.9%, due to weakness in the Argentine currency and the knock-on effect in neighbouring countries.

Both major markets performed well in 2014, particularly in terms of pricing: in constant-currency terms Mexico registered ADR growth of 11.9% last year, while Argentina posted growth of 47.1%. The outlook is positive in both markets.

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 29 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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