NH Hoteles Strengthens Its Financial Situation And Continues To Drive Its Efficiency Plan

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• NH Hoteles has reacted to this adverse situation with a significant efficiency and cost reduction plan, thereby achieving a decrease in expenses of €74M
• NH Hoteles strengthens its liquidity and ends with a successful capital increase of €221M
• Additionally, the Group props up its financial situation due to the fact that the bank syndicate postpones the measuring of financial debt ratios, agreed with NH Hoteles in the syndicate credit that it signed in 2007, to 31 December 2010

Madrid, 26 August 2009. - The global economic uncertainty, which is behind the situation affecting the hotel industry, continued during the first half of 2009. NH Hoteles has embarked upon a number of initiatives in the past few months in order to alleviate the effects of the slowdown in sales and to provide the Company with more financial flexibility. The action taken represents a competitive advantage in the sector and places the Company in a positive position with regard to the incognitos presented by the current global economic crisis.

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NH Hoteles has developed various initiatives that have allowed the Group to reduce the impact of the slowdown in sales. These actions are part of a global rationalisation plan that has achieved a cost reduction of €74.2M in the first half of 2009, thereby compensating half of the returns drop in comparable hotels in this period.

Furthermore, the action taken by the Group to restructure and adapt to the current situation in all of its main areas of action and development has included cancelling operations that require investment commitments. It is negotiating with hotel owners, looking into possible asset turnover operations and looking very carefully at future openings and additions. Moreover, in line with the Group’s asset rationalisation policy, 5 low-return contracts have been cancelled in Spain and Italy and a planned contract in South Africa has been cancelled.

In July 2009, NH Hoteles ended with a successful capital increase agreed by the Company’s Shareholders’ Meeting. The total amount of the issue, considering an issue rate of €2.25, came to €221M. The 98.6M of new shares went public on 30 July 2009. It is worth noting that the capital increase was oversubscribed after allocation requests were received for new shares to be issued which represent 136.5% of the new shares issued, which means that more than €300M could have been gained.

Furthermore, in July 2009, NH Hoteles obtained authorisation by the majority of entities involved in the syndicate credit that the Company signed in August 2007 to be exempt from complying with two of the financial ratios agreed for financial year 2009.

This exemption refers to the “Financial Debt/EBITDA” and “EBITDA/Financial Expenses” ratios. Compliance with the same will not be resumed until the Group’s Consolidated Annual Accounts corresponding to 2010 are prepared, which will take place during the first quarter of 2011.

In 2007, the Company agreed a syndicate credit for €650M, with 5-year maturity. 34 bank entities participated in this operation and the amount that the financial entities were prepared to concede was double what was finally signed.

The conclusion with the capital increase success and agreement reached with the banks demonstrates the market support for the Strategic Plan implemented by the Company and it allows NH Hoteles to confront the current economic environment more solidly, strengthening the company’s balance structure.

First Half 2009

NH Hoteles has had a turnover of €602.9M in the first six months of this year, 21% less than the previous year; the EBITDA was positive, €36.3M, compared with the losses in the first quarter, €-5.4M, and the Company had a net loss of €-41M. The current situation of global economic slowdown, which negatively affects the RevPAR levels (Revenue per room available), explains the negative results of the first half.

Hotel activity

The first half of the year has showed a major decrease in occupation (14%) in comparable hotels, a decrease of (10%) in prices, resulting in a comparable RevPar drop of (22%). The most noticeable drops were in Spain, Benelux and The Americas. This latter Business Unit was particularly affected as a result of the Swine Flu in Mexico and Argentina, with occupation falls of two digits.

Real Estate activity

Returns in real estate activity have grown by 38%, up to €11.6M, due to the handing over of properties and premises of the Sotogrande property development.

The increase in sales of apartments is due to completion of construction work and delivery of the homes and premises in the “Ribera de Marlin” development. From the beginning of January up to 30 June, deeds were executed for homes totalling €12.9M, proving the good performance of the property development.

On 30 June 2009, Sotogrande had sales commitments yet to be recorded in its accounts totalling €32.6M, which essentially relate to the “Ribera del Marlin” development (€27.8M yet to be executed by buyers in deeds and €4.8M for the moorings in the Marina).

Additions to portfolio and signings of hotels in 2009

Since the beginning of this year, NH Hoteles has added 1477 rooms to its portfolio, which represent 7 new hotels in the Group, 3 extensions to operating hotels and a business training centre. The new openings, a result of previous agreements made, are located in the main countries where the Company has notable presence.

515 rooms are for the opening of four hotels in Spain (Barcelona, Gijón, Madrid and Vizcaya). Worthy of mention among these is the addition of the management of the catering and residential services of management of Telefonica’s Corporate University in Barcelona.

Two new hotels have been opened in Italy, one in Milan with 398 rooms and the other in Livorno. This latter hotel, opened in June, is a five-star hotel and has 123 rooms.

Furthermore, a hotel for leasing with 114 rooms has been opened in Amersfoort (Netherlands). Finally, extensions have been made to two hotels in the Mexican Caribbean (304 rooms) and a 23-room extension has been made in Groningen (Netherlands).

In the first quarter of 2009, NH Hoteles signed 3 projects, 2 of which are already operating in the Netherlands and Italy. The hotel in progress is located in Frankfurt (Germany) and it will have 65 rooms.

The Environment - Consumption and emissions

NH Hoteles sees the Environment as a strategic interest group. The Company focuses on taking an ecological, sustainable approach throughout its business cycle, from the work of planning, designing and building the hotels up to its everyday operations and the service it provides its customers.

In 2008, the Strategic Plan for Sustainability and Energy Efficiency 2008-2012 was launched. This plan aims to find out what impact the chain has on the environment and to set targets for reducing energy and water consumption, CO2 emissions and waste generation. This Plan means that the hotel chain will be four years ahead of the target of the European Union’s 20-20-20 Plan.

Figures for the first half of 2009 show that consumption in all of the areas of interest of the Group has come down considerably. The tables above show that the total savings made by the Company in its urban hotels under ownership or lease agreement during the first quarter of 2009 and compared to 2007.

About NH Hotel Group, part of Minor Hotels

NH Hotel Group, part of Minor Hotels, is an established multinational hotel operator and a benchmark urban hotel chain in Europe and the Americas, where it runs over 350 hotels. Since 2019, it has been working with Minor Hotels on integrating all of its hotel trademarks under a single corporate umbrella brand with a presence in over 50 countries worldwide. Together they have articulated a portfolio of more than 500 hotels operating under eight brands – Anantara, Avani, Elewana, Oaks, NH Hotels, NH Collection, nhow and Tivoli – which between them provide a broad and diverse spectrum of hotel solutions in touch with the needs and desires of today's global travellers.