2016 Results-

• Strong momentum across the Group's business units drove revenue growth of 5.7% to €1.47bn and EBITDA growth of 21% to €181m, underpinned by EBITDA margin expansion of 1.6 percentage points compared to 2015
• Outperformance relative to its competitors in the main destinations in which the Group has presence, most notably in Spain and Central Europe, fuelled growth in revenue per available room (RevPAR) of 5.8% in 2016, shaped mainly by growth in the ADR of 4.6%
• The Company's recurring business delivered a net profit for the first time in eight years (€11m), while reported net profit (including non-recurring activity) was €30m higher year-on-year at €31m
• This earnings strength puts NH Hotel Group's Board of Directors in a position to submit a motion for the payment of a dividend from 2016 profits of up to €0.05 per share outstanding at the upcoming Annual General Meeting

- Financial position -

• The Group's financial position improved during the reporting period: leverage has been cut to 4.1x by year-end 2016 (vs. 5.6x at year-end 2015), thanks to a €91m reduction in net debt, in turn shaped by cash flow generation and the ability to finance the hotel repositioning programme with proceeds from the sale of non-core assets
• The Group culminated its refinancing process last year with a bond offering and the arrangement of a long-term credit facility, refinancing its 2017 and 2018 maturities ahead of schedule, simplifying its capital structure and boosting its financial flexibility and liquidity

NH Hotel Group presented its 2016 earnings results today, confirming the positive trend observed of late and successful deployment of phase one of the strategic plan under execution to transform the Company and boost growth and profitability.

Favourable momentum across the Company's main operating markets, outperformance on revenue to its peers and efficient management of the business were the keys to the significant growth in revenue, EBITDA and net profit reported by the Group in 2016.

2016 earnings performance

The compelling revenue growth sustained by NH Hotel Group in recent years continues, with the Company reporting an increase of 5.7% in 2016. The Group reported a total revenue of €1.47bn in 2016, up €79m from 2015, underpinned by an excellent overall performance in core markets such as Spain (+13.5%) and Central Europe (+7.8%). The Italian business unit was hit particularly hard by a tough comp due to the Universal Exhibition hosted by Milan in 2015. Excluding the impact of this non-recurring event, this market would have reported topline growth. In Benelux, meanwhile, where revenue growth was 2.5%, the reduced contribution by the Belgian market continues to be offset by positive momentum in the Netherlands. Lastly, the underlying trend in America remains very positive in local-currency terms in all markets (+26.6%), albeit adversely affected by exchange rates.

The price management strategy deployed last year has translated into growth in revenue per available room (RevPAR) of 5.8%, driven mainly by price growth of 4.6%, topped up by an increase in occupancy of 1.2%. The strategy implemented enabled NH Hotel Group to outperform its direct competitors in its main destinations.

In 2016, Group EBITDA registered growth of 21% to €181m, underpinned by margin expansion of 1.6 percentage points to 12.3%.

Meanwhile, the Company's recurring business delivered a profit - for the first time since 2008 - of €11m. Factoring in net non-recurring items, reported net profit rises to €31m, up €30m from 2015.

Dividend

This earnings strength puts NH Hotel Group's Board of Directors in a position to submit a motion for the payment of a dividend from 2016 profits of up to €0.05 per share (before withholding tax) at the Annual General Meeting. If approved, the estimated payout would amount to €17m.

Improvement in the Group's financial position

Net debt stood at €747m at 31 December 2016, down €91m from year-end 2015, thanks to satisfactory free cash flow generation during the reporting period, as well as the fact that the repositioning investment effort was financed by proceeds from the sale of non-core assets. Accordingly, the Company brought leverage down to 4.1x at the reporting date, from 5.6x at year-end 2015.   

The Company has taken advantage of the progress made on the operating and financial fronts to successfully culminate its refinancing process with a €285m senior secured notes offering and the arrangement of a €250m syndicated revolving credit facility. Thanks to these transactions, NH Hotel Group has refinanced its 2017 and 2018 obligations ahead of maturity, simplified its capital structure and boosted its financial flexibility and liquidity.

This effort was echoed in improved corporate credit ratings from the main ratings agencies, Standard & Poor’s and Fitch, which upgraded their ratings to B (with a stable outlook), reflecting their view that the Group will further lift its business performance while continuing to boost liquidity. Moody's has assigned the Company a corporate family rating of B2, thanks to the healthy progress being made on execution of its business plan, improved liquidity and a focus on asset-light operating formula.

Phase one of the business plan completed successfully

Since the Group began to execute its current business plan three years ago, it has considerably improved its ability to grow revenue and margins, thanks to the investments made to reposition its hotels and generally unlock efficiency gains, among other initiatives.

The €200m repositioning plan is virtually complete, with just seven hotel refurbishments pending completion (five of which are already underway). Between the launch of the plan and December 2016, some 59 hotels have been fully refurbished.

As of early 2017, one in every five of the Group's hotel rooms belongs to its premium brands, NH Collection and Nhow, twice as many as two years ago. And so, with a portfolio populated by more hotels in perfect repair and a growing weight of establishments in the upper-upscale segment, the Company expects the refurbished properties to make an even bigger contribution to revenue and profits in the coming months.

Last year was the year of the international rollout of the NH Collection brand, marked by high-profile refurbishments and openings in leading city destinations in Europe and Latin America, notably in Mexico, Germany, Netherlands and Italy.

As for the portfolio streamlining plan, the Company met the targeted proceeds of €140m, while signing 16 new hotels with 2,114 rooms. All of the new hotels have been signed under lease and management regimes, most of which in the upper-scale segment in large city destinations such as Milan, Venice, Antwerp, Eindhoven, Marseilles, Leipzig, Monterrey, Mexico City and Santiago de Chile.

Like-for-like hotel business performance in 2016 by market

(like-for-like hotel data + hotels under refurbishment)

Spain performed excellently all year long, boosted by business dynamism in cities such as Valencia, Seville and Zaragoza, where revenue rose by 16% on average, outperforming Barcelona and Madrid, which posted topline growth of 13% and 5%, respectively. RevPAR across this business unit as a whole registered like-for-like growth of 12.9% in 2016, driven by growth of 8.6% in the ADR and of 4.0% in the occupancy rate. Revenue in Spain rose by 13.5% to €359m, while EBITDA jumped a noteworthy €12.4m to €33.8m.

In Italy, RevPAR narrowed by 5.9%, affected by the non-recurrence of the Universal Exhibition which took place in Milan in 2015. As a result of this circumstantial factor, revenue declined by 2.8% to €248.6m. Adjusting for the impact of the Expo in 2015, revenue growth would have been 4.9%. EBITDA amounted to €41.9m in Italy.

In Benelux, the adverse impact of the delay in the recovery in Brussels was offset by a strong performance in the Netherlands. As a whole, this business unit reported revenue growth of 2.5% to €291.6m. RevPAR in this region increased 3.7% in 2016, as the drop in occupancy in Brussels due to temporary external factors was more than offset by strong prices in the Netherlands. EBITDA amounted to €48m in Benelux in 2016.

Central Europe stands out for its stellar performance, marked by RevPAR growth of 9.2%, driven by growth in the ADR and occupancy rate of 6.4% and 2.6%, respectively. Revenue in the unit climbed 7.8% higher to €389.5m, in part due to a favourable line-up of trade fairs, marked by the coincidence of events held every two and three years. EBITDA in this business unit amounted to €25.8m.

The underlying trend in the Americas was very positive in local-currency terms in all markets, albeit adversely affected by exchange rate movements. Note that the drop in constant-current revenue in this unit was fully absorbed at the EBITDA level (up 20.5% year-on-year), thanks to the cost control plan in effect in the region and an excellent performance at the Company's flagship establishment in Mexico (the NH Collection Mexico City Reforma), recently re-opened after full refurbishment.

By region, Mexico reported local-currency RevPAR growth of 19.8%, driven by price growth of 17.1%. Mercosur, meanwhile, registered RevPAR growth of 37.0%, underpinned by growth in the ADR of 41.5%. Lastly, Colombia presented revenue growth of 9.9% on the back of growth of 12.0% in the ADR.

Milestones, priorities and outlook for 2017

At the end of January, the Board of Directors of NH Hotel Group unanimously agreed to name Ramón Aragonés, Executive Director of Business and Operations at the time, as the Company's Chief Executive Officer. The Board further resolved to submit a motion for his appointment as Director at the next Annual General Meeting. Ramón will formally be designated CEO at the Board meeting taking place immediately after that AGM.

His ample track record in the sector and in-depth knowledge of the Group, coupled with his strategic vision and leadership and team management capabilities, were key in his selection for the post. With this appointment, the Board is looking to boost the Company's growth potential.

The new revenue management strategy put in place, the upside at the refurbished hotels, the improvements made to the customer value proposition, a more efficient management model and ongoing portfolio expansion and streamlining are among the Group's strategic priorities for 2017, a year in which the Group is targeting EBITDA of €220-225m.

About NH Hotel Group

NH Hotel Group (www.nhhotelgroup.com) is a world-leading urban hotel operator and a consolidated multinational player. It operates close to 400 hotels and almost 60,000 rooms in 30 markets across Europe, the Americas, Africa and Asia, 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.