For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Grupo Hotelero Santa Fe SAB de CV (MEX:HOTEL) achieved a record fourth quarter in terms of sales and EBITDA, indicating strong financial performance.
Room revenue increased by 20% in the fourth quarter of 2024 compared to the same period in 2023, driven by higher occupancy and ADR.
Food and beverage revenue saw a significant increase of 24% in the fourth quarter of 2024 compared to the previous year.
EBITDA for the fourth quarter increased by 48% to a record MXN266 million, reflecting higher revenues and operational leverage.
The company improved its debt-to-EBITDA ratio from 3.6 times to 3.1 times, with 100% of its debt now dollar-denominated, reducing financing costs.
Negative Points
Overall EBITDA for 2024 decreased by 4% compared to 2023, primarily due to challenges such as the impact of the hurricane on Krystal Beach Acapulco.
The company faced headwinds from lower tourism in Mexico and a stronger Mexican peso, affecting profitability.
There was a slight contraction in profitability despite a slight top-line growth for the year.
The remodeling of Krystal Beach Acapulco due to hurricane damage impacted financial results.
The company experienced a tough start to the year, with results below expectations in the first three quarters.
Q & A Highlights
Q: Considering that 100% of debt is in dollars, do you plan to issue debt in Mexican pesos? Also, could you give us more color on the status of the Acapulco Hotel? A: (Maximilian Zimmermann Canovas, Director - Investor Relations and Sustainability) We feel more comfortable with our debt in dollars due to the lower cost and our natural hedge, as 35% of our revenues are in dollars. Our operational cash flow is almost 90% in dollars, so we don't need to buy dollars with pesos to pay debt. Regarding the Acapulco Hotel, (Francisco Medina Elizalde, CEO) we have completed 95% of the remodeling, with the final floor and ballroom to be finished by February 25. The hotel has been performing well, attracting a lot of the Mexican market.
Q: Could you explain the 3% reduction in sales and administrative expenses in the quarter? Also, why is there a difference in ADR increase between owned and managed hotels? A: (Francisco Medina Elizalde, CEO) The reduction in expenses is due to the extraordinary revenue increase, which stabilized fixed costs. The difference in ADR is due to the performance of specific hotels like the secret saloon and Chartwell Hotels, which had significant ADR increases. (Maximilian Zimmermann Canovas, Director - Investor Relations and Sustainability) We also reduced expenses earlier in the year due to lower-than-expected results, maintaining a lean structure.
Q: What will be the CapEx in 2025? A: (Francisco Medina Elizalde, CEO) We plan for CapEx to be 4% of total revenue, which has increased compared to 2023, leading to an improvement in CapEx for the properties. (Maximilian Zimmermann Canovas, Director - Investor Relations and Sustainability) We expect a good year but do not provide specific guidance.
Q: What drove the 22% year-over-year revenue growth, and is it sustainable? A: (Francisco Medina Elizalde, CEO) The main driver was the increase in ADR, especially after the elections in Mexico and the USA, which boosted demand and prices. We had strong performance in resort hotels and urban hotels, and the reopening of the Acapulco Hotel also contributed. (Maximilian Zimmermann Canovas, Director - Investor Relations and Sustainability) ADR represented more than half of the 22% growth, with occupancy and additional rooms from Acapulco also contributing.
Q: How did the company manage to achieve such strong results despite the challenges faced earlier in the year? A: (Francisco Medina Elizalde, CEO) We focused on yield management and controlling expenses, which allowed us to capitalize on increased demand and ADR in the latter half of the year. The diversified portfolio also helped balance performance across different markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
