HOTEL released 3Q21 figures showing significant improvement due to higher hotel demand, higher rates and solid operating leverage, in line with expectations
Although occupancy and EBITDA remain below pre-pandemic levels (-6.1pp and -26.0% vs. 3Q19), the improved industry performance confirms our favorable view for the company
Continued good dynamism in the hotel sector. HOTEL's 3Q21 results showed relevant advances due to a better demand behavior, coupled with an easy comparable base ─until August 2020 the company already had all its hotels open after the major impact of the pandemic in 2Q20─. Thus, revenues presented an increase of 158.3% to MXN 463 million (-9% vs. 3Q19), favored by an occupancy in owned hotels (those that contribute the most to revenues) of 51.2% (+28.5pp y/y vs. 3Q20), as well as by an annual increase in the average rate of 19.5% to MXN 1,352, so the effective rate was placed at MXN 692 (+169.6% y/y). Thus, the higher operating leverage was reflected in an EBITDA of MXN 103 million (vs. MXN -29 million in 3Q20), with a margin of 22.3%, better than expected. On the other hand, at the net level, the majority loss of MXN 38 million (vs. MXN -45 million in 3Q20), derived from foreign exchange losses, partially offset by higher operating income. Finally, the ND/EBITDA ratio was 10.4x vs. 20.6x in 2Q21, which we expect to continue decreasing as figures improve. For the quarter, the FV/EBITDA multiple decline from 59.7x to 23.4x. The favorable outlook is confirmed. Our expectations are that the greater dynamism of hotel demand, as a result of the economic recovery and the progress in the vaccination process, should be reflected in a continued pace of recovery in the industry, and in better results for the company in the coming quarters. Thus, we ratify our positive outlook for HOTEL, while considering its low marketability.