Hoteles City Express announces 2Q19 Results with a 6.4% RevPar growth for its Established portfolio

MEXICO CITY, July 17, 2019 /PRNewswire/ -- Hoteles City Express S.A.B. de C.V. (BMV: HCITY) ("Hoteles City Express" or the "Company"), presents its results for the second quarter of 2019 ("2Q19").  All accounting figures have been prepared in accordance with International Financial Reporting Standards ("IFRS") and are presented in Mexican pesos ("$").

Summary of Relevant Operating and Financial Information (2Q19)

• At the Chain level, the Average Daily Rate ("ADR") increased 4.4% and Revenue per Available Room ("RevPar") increased 2.6% versus 2Q18, to $1,012 and $592, respectively. The Chain's occupancy in 2Q19 was 58.5%.

• Total Revenues were $804.9 million, a 13.6% increase compared to the same quarter in 2018, due mainly to an increase in the number of Installed Room Nights at the Chain level and to ADR growth.

• Operating Income was $141.3 million in 2Q19, a year-over-year decrease of 1.0%. The latter is mainly explained by the absorption of the increase in room inventory coupled with an increase in depreciation expense as a result of the adjustments corresponding to IFRS 16.

• EBITDA and Adjusted EBITDA were $255.1 million and $257.0 million, respectively. EBITDA and Adjusted EBIDTA margins during the period were 31.7% and 31.9%, respectively.

• Net Income for the period was $22.7 million.

• At quarter end, the Chain was operating 152 hotels, an increase of 13 new units compared to the 139 hotels that were operating at the close of the same period in 2018. The number of rooms in operation at the close of 2Q19 was 17,226, an increase of 9.8% versus the 15,691 rooms operating at the close of 2Q18.

Adjusted EBITDA = Operating income + depreciation + amortization + non-recurring expenses (pre-opening expenses for new hotels).

Comments from Mr. Luis Barrios, Chief Executive Officer of Hoteles City Express:

"We are pleased to announce our second quarter results that reflect solid performance and renewed momentum. Although Mexico's political and economic environments remain tenuous due to various domestic and international factors, we are encouraged by the progress we have made since the first quarter, when market conditions became challenging.

Sexennial transition periods in government have historically been accompanied by pauses in public investment that often result in slower business cycles in Mexico.  Having a defensive property portfolio with geographic, sector and market diversification has always been our company's key competitive advantage, and the early part of the year was no exception.

By the end of the second quarter of 2019, Hoteles City Express's performance was solid, with positive trends across the economic corridors where we have a presence. More favorable business conditions in the Southeast, Northeast as well as Gulf corridors are primarily being driven by exports to the United States, with which Mexico has become the leading trading partner, despite economic volatility during the renegotiation of the USMCA. The result has been a healthy trade balance and, consequently, a strengthening of our hotels located in these regions.

During the quarter, our consolidated portfolio generated a solid 2.6% increase in RevPAR to deliver another double-digit gain in Total Revenues. Our strategies and commercial efforts related to the differentiation of our variety of brands and products, as well as our ability to capture more than 80% of reservations through our own sales channels, have enabled us to optimize our average daily rate and help continue reporting a healthy mix of performance indicators.

Hoteles City Express's productivity, as measured by Adjusted EBITDA, was 9.1%, compared to the same period last year. We continue to maintain strict cost and expense controls to help offset rising energy costs, which we can begin mitigating in the fourth quarter, when our Energy Acquisition and Supply Contract is expected to become fully effective. Additionally, we remain confident that the rapid expansion of our innovative operating, distribution and marketing platform will continue to improve profitability and result in greater operating leverage in the long term.

Regarding our expansion plan, we continue to focus investments in areas with clear growth trends, to enhance market diversification as well as tap current and future demand for lodging. As of the date of this report, we have more than 30 projects in development and we keep working hard in order to achieve our yearend goals, primarily focusing under the City Express Plus brand, which allows us to spread risk by entering deeper primary and secondary markets. Although we have encountered delays related to permits and government procedures, in locations such as Guadalajara and Mexico City, which may show an opening delay of 3-5 hotels, we are focused on resolving them as quickly as possible and achieving our annual expansion goals, as we have consistently done in previous years.

With 152 hotels in more than 70 cities across Mexico and in select markets in Latin America, Hotels City Express is the lodging chain with the greatest geographic diversification and most widely accepted brand in the region. We remain confident that executing strategies focused on commercial agility, investing with discipline, operating adaptably, and differentiating our products will allow us to continue growing efficiently and profitably to generate more value for our shareholders. Thank you for your continued trust in our company."

Conference call replay will be available for 30 days: 
U.S.: 1-877-344-7529/ International: 1-412-317-0088
Code: 10132951

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 152 hotels located in Mexico, Costa Rica, Colombia and Chile, 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 coming years.

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 (Dan McGoey), GBM (Eugenio Saldaña), 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://cityexpress.com/es/inversionistas/

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