Hoteles City Express Announces Second Quarter 2017 Results with ADR growth of 15.8% and Operating Income Increase of 23.9%

• At the Chain level, Average Daily Rate (“ADR”) and Revenue per Available Room (“RevPAR”) increased by 15.8% and 11.5% in comparison with 2Q16, to $940 and $567, respectively. Chain occupancy in 2Q17 was 60.3%.
• Total Revenues were $609.3 million, which represents a 22.5% increase with respect to the same quarter in 2016, primarily due to a 14.0% increase in the number of Installed Room Nights at the Chain level, as well as a 11.5% increase in RevPAR
• Operating income was $111.0 million in 2Q17, an increase of 23.9% over the same quarter the year before.
• EBITDA and Adjusted EBITDA were $197.4 million and $201.9 million, respectively, reflecting year on year increases of 20.2% and 20.9%. EBITDA margin and Adjusted EBITDA margin for the period came to 32.4% and 33.1%, respectively.
• Net Income for the period reached $44.2 million. Net Income margin was 7.3% for the quarter.
• At the close of the quarter, the Chain was operating 125 hotels; an increase of 16 new units compared to the 109 hotels operating at the close of the same period in 2016. The number of rooms in operation in 2Q17 was 13,951, an increase of 14.0% in comparison with the 12,236 at the close of 2Q16.
• Since the closing of the 2Q17 to the date of the this report, the Company has announced the opening of 3 additional units, reaching a total portfolio of 127 hotels, City Express Junior Puebla Angelópolis, City Express Altamira hotels and the expansion of City Express Mérida hotel.

Comments by Luis Barrios, CEO of Hoteles City Express:

“We announce our results for the second quarter of the year, which were characterized by robust operating, financial and profitability performance.

In a period marked by receding uncertainty and strong economic fundamentals which justify our investment thesis in Mexico and Latin America, the hotel industry continues to be underpinned by a positive demand cycle. Demand generators such as consumption, exports and service, trade and industry activities remained strong, specifically in the northern border corridor of the country, the Bajío corridor and locations with exposure to diverse economic activities such as metropolitan areas. Our hotel portfolio continues to benefit from a broad diversification of markets and geographies.

Regarding our commercial performance, the quarter was characterized by the refinement of our price optimization models, which enabled us to maintain double digit growth in RevPAR at the Chain level.

Consistent with the yield management strategy we have implemented since the third quarter of 2016, ADR increased by 15.8% in 2Q17, while RevPAR grew by close to 12%.

With Total Revenues growing by over 20% and an Adjusted EBITDA margin of more than 33%, 2Q17 was once again marked by profitable growth dynamics. In addition, these results highlight the importance of our Operating Company and proprietary room distribution platform which was responsible for over 80% of rooms sold in the quarter, enabling us to minimize commission payments to third parties and maximize margins at the property level.

Regarding our cultural transformation efforts, we continue to strengthen our training, coaching and empowerment programs for employees, emphasizing decision making at the point of closest proximity to the guest. We remain confident that these efforts, combined with the innovative use of technology and databases we have developed within the Company, will help us consolidate our position as the best integrated platform for digital marketing, operation and hotel distribution in Mexico and Latin America.

Finally, regarding the 2017 development plan, as of the date of this report we have commenced operations in all of our planned hotels. Our development program remains on track, and we are confident of reaching a total inventory of more than 15,000 rooms and 140 hotels in the coming months. We will continue to take advantage of our healthy cash position to maximize the utilization of our land bank and optimize the Company’s global ROIC.

As always, we will redouble our efforts to ensure that the first half of the year is just the beginning of another period of profitable growth for Hoteles City Express, and as always, we are grateful for your support and trust. “

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. Founded 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 127 hotels located in Mexico, Costa Rica, Chile and Colombia, 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;” furthermore, in October of 2014, Hoteles City Express completed a follow on with the aim of accelerating its growth in new hotels in the short- and medium-term.

HCITY has formal coverage, notes and analytical assessments by the following financial institutions and analysts: Actinver (Pablo Duarte), Bank of America Merrill Lynch (Carlos Peyrelongue), Citigroup (Alejandro Lavín), GBM (Héctor Vázquez), 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 further information, please visit our website: https://cityexpress.com/en/investors/

Disclaimer:
The information presented in this report contains certain forward-looking statements and information regarding Hoteles City Express, S.A.B. de C.V. and its subsidiaries (jointly, “the Company”), which are based on the understanding of its management, as well as assumptions and information currently available to the Company. These statements reflect the Company’s current vision regarding future events and are subject to certain risks, factors of uncertainty and assumptions. Many factors may cause the results, performance or current achievements of the Company to be materially different with respect to any future result, performance or accomplishment of the Company that might be included, expressly or implicitly, within such forward-looking statements, including, among other things: changes in general economic and/or political conditions, governmental and commercial changes at the global level and in the countries in which the Company does business, changes in interest rates and inflation, exchange rate volatility, changes in business strategy and various other factors. If one or more of these risks or uncertainty factors should materialize, or if the assumptions used prove to be incorrect, actual results could differ materially from those described herein as anticipated, estimated or expected. The Company does not intend to assume, and does not assume any obligation whatsoever to update these forward looking statements.

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