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Twelve month ending December, 2011
- RevPAR Like-for-like increased by 3.7% to EUR 65.4 (63.1). Like-for-like Occupancy was 63.9% (63.6).
- Revenue increased by 10.0% or MEUR 78.5 to MEUR 864.2 (785.7). On a Like-for-like basis Revenue was unchanged.
- EBITDA was MEUR 35.1 (31.5), and EBITDA margin was 4.1% (4.0).
- Loss after tax amounted to MEUR -11.9 (-2.7).
- Basic and diluted Earnings Per Share amounted to EUR -0.08 (-0.02).
- Cash flow from operating activities was 14.1 (47.6). Total available cash at the end of the period, including unutilised credit facilities, amounted to MEUR 104.8 (MEUR 129.3 in Dec 2010).
Other developments
- A write-down of fixed assets of MEUR 9.9 combined with a MEUR 8.5 write-down of deferred tax assets was recognised in the quarter, as a result of lowered market growth expectations following an intensified asset management review in light of the continuing financial uncertainty.
- Circa 1,600 new rooms were added into operations in the fourth quarter and ca 5,800 during the year.
- Circa 3,200 rooms were signed in the fourth quarter and ca 9,600 during the year. All of the new rooms signed during the year were managed or franchised.
- The Board of Directors proposes no dividend (EUR 0).
Comment from the CEO
Revenue growth and EBITDA improvement, supported by new hotels
“The hotel market continued to improve in the last quarter of the year. Eastern Europe consistently showed very strong RevPAR growth and the negative trend in the Middle East and North Africa slowed down. However, the deceleration in Western Europe, caused by the instability in the Euro zone, continued during the last three months of the year and remains a concern for the future. As a result, our L/L RevPAR grew by 3.2%, a small improvement on the previous quarter. Our revenue increased by a healthy 6% in Q4, with almost all of this growth coming from newly opened leased hotels. The new leases, mainly located in the Nordics, performed above expectations and contributed positively to our EBITDA and EBITDA margin. The margin growth was also helped by additional high-margin fee revenue and one-offs in the fourth quarter of last year. Our net result was, however, negatively affected by write-downs of fixed and deferred tax assets relating to our leased hotels in Western Europe, mainly in the UK. These writedowns were the result of revised GDP expectations for the UK and the Euro zone, and also stemmed from a review of our portfolio following a decision to intensify the focus on asset management. At the end of the year, we established a separate Asset Management department to further optimise our current portfolio of leased hotels in terms of increasing profitability and reducing the leverage of the company. Looking ahead, we will focus on improving profitability, both in absolute terms and relative to the industry. In December, we announced our ‘Route 2015’ strategy – a raft of initiatives to improve our EBITDA margin by 6 to 8 percentage points by 2015, assuming that market RevPAR growth covers inflation. We aim to achieve this mainly by putting stronger emphasis on revenue generation, together with our partner and brand owner Carlson, through greater and more aligned global synergies. To facilitate this ambition, in January 2012, Carlson and Rezidor announced their collaboration to jointly go to the market and do business together as the ‘Carlson Rezidor Hotel Group’”.
Kurt Ritter, President & CEO
Market Development
The recovery of the European hotel market continued during the last three months of the year. However, industry data showed a very mixed performance between countries and also between the months. Overall the growth in the mature Western and Nordic markets slowed down even further in the last quarter of the year, impacted by the continuing economic instability in the Euro zone. On an aggregated level, industry numbers show an accumulated RevPAR growth in Europe of 6% for the year. The growth is a result of a 3.2 % increase in occupancy and a 2.7 % increase in pricing. Eastern Europe, however, has witnessed a significant recovery throughout the year after being hit hard by the recession in 2009. Russia and the Baltics were the key growth drivers of the region. The Middle East and Africa have experienced a significant drop in RevPAR during the year. This is mainly due to the political turbulence in Bahrain, Egypt, Tunisia and Libya and the fact that South Africa hosted the Soccer World Cup in 2010. The RevPAR development was still negative in the fourth quarter but has clearly improved since the beginning of the year. Some cities in the region, such as Dubai has also benefited from the turmoil, with strong performance in occupancy levels.
Summary of Q4 results
Total revenue increased by 6.6%. Like previous quarters during the year, the increase was almost entirely coming from new hotels. Like-for-like revenue came in below last year, mainly as a result of a weak RevPAR development for some leased hotels in ROWE and a lower demand for conferences and less fairs compared to Q4 last year. The weak revenue development in like-for-like hotels was however compensated by lower costs in these hotels, mainly due to some exceptional costs in Q4 last year, leading to a margin improvement in Q4 this year. In addition, the new hotels contributed positively to both profit and margins. Consequently, EBITDA increased by MEUR 7.2 and the EBITDA margin by 300 bps. However, MEUR 9.9 in write-downs of fixed assets, mainly related to the UK, was recognised in the quarter. The write-downs were the result of lowered market growth expectations due to the financial uncertainty and a review of the hotel portfolio as a result of an intensified asset management focus. For that same reason, deferred tax assets of MEUR 8.5 were also written down during the quarter. As a consequence of these write-downs, EBIT fell by MEUR 3.1 and the EBIT margin by 190 bps, and the group reported a net loss for the quarter.
RevPAR
Fourth quarter, 2011 Although overall like-for-like RevPAR improved by 3.2% versus the same period last year, individual markets results varied significantly. Three of the four geographic segments reported a like-for-like RevPAR growth in the fourth quarter. The biggest growth was noted in Eastern Europe with +17.3% followed by Nordics (+2.3%) and then ROWE (+1.5%). In MEAO the RevPAR declined by 4.2% based on the impact of events in Bahrain, Egypt and Tunisia. Adjusted for these three countries, like-for-like RevPAR for the group grew by 5.5%. Eastern Europe posted the highest increase in both occupancy and rate of any region with a 10.3% increase in occupancy and a 6.3% increase in AHR. The significant increase in Eastern Europe was mainly driven by occupany (+10.3% -the highest of any geographic area), but also the AHR noted a healthy growth (+6.3% -also the highest of any geographic area). The Baltics, Poland, Russia and Turkey were the key growth drivers. In the Nordics, the positive development was driven by Norway as both Denmark and Sweden were negatively impacted by higher congress volumes in the fourth quarter last year and by renovation works this year. In ROWE, the positive development was a combination of AHR (+0.8%) and Occupancy (+0.7%). In the Netherlands and France, the growth continued to be generated by AHR, while it was occupancy driven in Germany and the UK. For MEAO, the unrest in Bahrain, Egypt and Tunisia continued to have a heavy impact on the RevPAR development and offset the positive developments in Saudi Arabia, South Africa and the UAE.
Twelve month ending December, 2011
All customer segments in Eastern Europe, the Nordics and ROWE noted an increase in occupancy compared to 2010. However, the impact of the events in the Middle East resulted in only a marginal increase in occupancy (+0.5%) for the group. Combined with a 3.2% increase in AHR, like-for-like RevPAR grew by 3.7% during the period. Adjusted for the three troubled countries in the Middle East and North Africa, like-for-like RevPAR grew by 6.3%. The strongest development was seen in Eastern Europe.
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