Equity Analysis /

Minor International PCL: Travel demand takes off in Europe

  • Bullish outlook for the European summer

  • Mixed bag for other hotel regions

  • QSR business should grow YoY but soften QoQ

Bualuang Securities
10 June 2022

We expect MINT’s NH Hotel Group (NHH), an earnings driver, to recover strongly in 2Q22, boosted by strong intra-Europe leisure demand. And NHH expects expanding business travel activity to support its 2H22 performance. Rising inflation has not yet affected travel demand in Europe. MINT is our 2Q22 earnings recovery play.   

Bullish outlook for the European summer

NHH’s hotel performance (42% of MINT’s 1Q22 revenue) in April-May and the outlook for June are in line with our bullish view and NHH’s earnings turnaround story. NHH’s 1Q22 occupancy was 40%; it jumped to 63% in Apr and 70% in May. NHH raised its ADR from €90/night in 1Q22 to €116 in Apr and €125 in May. Demand growth is clearly resilient to substantially higher prices and NHH believes momentum will continue through June. Our NHH 2Q22 revenue assumption is equal to the 2Q19 pre-COVID era number. We forecast a turnaround for NHH to a profit of €44m for 2Q22 (a loss of €77m for 1Q22; a profit of €55m for 2Q19). Our projection assumes some cost inflation.