Strong Full Year 2016 Results, with Revenue Growth of 3% and Adjusted EBITDA Growth of 8%, Both on a Constant Currency Basis
Fourth Quarter 2016 Highlights
- Net earnings attributable to Belmond Ltd. of $6.7 million, a $6.3 million increase over the prior-year quarter; adjusted net earnings from continuing operations of $1.4 million, a $1.4 million decrease
- Revenue of $114.2 million, down $8.5 million or 7% from the prior-year quarter; down $7.4 million or 6% on a constant currency basis
- Same store revenue per available room (“RevPAR”) down 6% from the prior-year quarter; down 7% on a constant currency basis
- Total adjusted EBITDA of $16.4 million, down $6.1 million from the prior-year quarter; down $6.8 million on a constant currency basis
Full Year 2016 Highlights
- Net earnings attributable to Belmond Ltd. of $36.3 million, a $20.0 million increase over the prior year; adjusted net earnings from continuing operations of $25.6 million, a $7.3 million increase
- Revenue of $549.8 million, down $1.6 million from the prior year; up $15.0 million or 3% on a constant currency basis
- Same store revenue per available room (“RevPAR”) up 1% over the prior year; up 3% on a constant currency basis
- Total adjusted EBITDA of $128.2 million, up $8.7 million or 7% over the prior year; up $9.8 million or 8% on a constant currency basis
Other Highlights
- Re-opened renovated Belmond La Residence d'Angkor in November 2016
- Appointed Kenneth Hatton to senior vice president, global development, in January
HAMILTON, Bermuda–Belmond Ltd. (NYSE:BEL) (the “Company”), owners, part-owners or managers of 47 luxury hotel, restaurant, tourist train and river cruise properties, including two scheduled for future opening, which operate in 23 countries, today announced its results for the fourth quarter and full year ended December 31, 2016.
Roeland Vos, president and chief executive officer, remarked: "We are pleased with our performance for the full year 2016, delivering 8% adjusted EBITDA growth on a constant currency basis. This strong result was in line with the long-term goals we laid out in our strategic plan and reflected our heightened focus on driving incremental revenue and EBITDA from our existing operations. We successfully leveraged strong demand during peak periods, notably at our European properties during the summer season and Belmond Copacabana Palace in Rio de Janeiro, Brazil, during the 2016 Summer Olympic Games, and continued our disciplined approach of investing in our portfolio to drive additional growth. Largely as a result of these efforts, our third quarter 2016 adjusted EBITDA increased 25% over the prior-year quarter on a constant currency basis. However, our performance for our seasonally low fourth quarter of 2016 did not meet our expectations, primarily due to lower than expected results for our two hotels in Brazil. While we had anticipated a reduction in demand following the Olympics and stemming from the country's difficult economic situation, the actual result was below what we had projected, with fourth quarter 2016 RevPAR coming in lower than our guidance.
"This past year was an important one in terms of setting the strategy for the Company's future and making key steps towards achieving our goals. In June 2016, we announced our strategic plan to double our adjusted EBITDA and properties in operation by 2020 by focusing on three areas: organic growth, brand awareness and global footprint expansion. We made early-but-important progress in 2016 in achieving our long-term goals. During the year, we made strides in evolving our culture, laying the foundation for many of the initiatives that form the basis of our strategic improvements and adding the necessary people and systems to set the stage for our future performance. Our new senior vice president, global development, Kenneth Hatton, recently joined the Company, strengthening our team and taking over this key leadership position. Kenneth brings a wealth of experience in negotiating acquisitions and management agreements and will be a tremendous asset to Belmond. The team and I are excited to have Kenneth on board and look forward to working with him to execute on our footprint expansion goals.
"Looking ahead to 2017, we see positive indications in most of our existing portfolio although we expect that our Brazilian hotels will continue to face difficulties associated with the country's fragile economic environment as well as in comparison to our 2016 results, which benefited from the Olympic Games. With this meaningful headwind, we are projecting that our same store, constant currency RevPAR growth for 2017 will be between 1% and 5%."
Fourth Quarter 2016 Operating Results
Revenue for the fourth quarter of 2016 was $114.2 million, an $8.5 million or 7% decrease from revenue for the fourth quarter of 2015. In constant currency, revenue for the fourth quarter of 2016 decreased $7.4 million or 6% from the fourth quarter of 2015.
Same store RevPAR for owned hotels for the fourth quarter of 2016 decreased 7% over the prior-year quarter on a constant currency basis as a result of a 4 percentage point decrease in occupancy and an average daily rate ("ADR") that was consistent with the prior-year quarter.
Net earnings attributable to Belmond Ltd. for the fourth quarter of 2016 were $6.7 million ($0.07 per common share), a $6.3 million increase over $0.4 million ($0.00 per common share) for the fourth quarter of 2015.
Adjusted net earnings from continuing operations for the fourth quarter of 2016 were $1.4 million ($0.01 per common share), a $1.4 million decrease from $2.8 million ($0.03 per common share) for the fourth quarter of 2015.
Total adjusted EBITDA for the fourth quarter of 2016 was $16.4 million, a $6.1 million or 27% decrease from total adjusted EBITDA for the fourth quarter of 2015. In constant currency, total adjusted EBITDA for the fourth quarter of 2016 decreased $6.8 million or 29% from the fourth quarter of 2015.
Full Year 2016 Operating Results
Revenue for the full year 2016 was $549.8 million, a $1.6 million decrease from revenue for the full year 2015. In constant currency, revenue for the full year 2016 increased $15.0 million or 3% over the prior year.
Same store RevPAR for owned hotels for the full year 2016 increased 3% over the prior year on a constant currency basis as a result of a 3% increase in ADR and occupancy that was consistent with the prior year.
Net earnings attributable to Belmond Ltd. for the full year 2016 were $36.3 million ($0.36 per common share), a $20.0 million increase over $16.3 million ($0.16 per common share) for the full year 2015.
Adjusted net earnings from continuing operations for the full year 2016 were $25.6 million ($0.25 per common share), a $7.3 million increase over $18.3 million ($0.18 per common share) for the full year 2015.
Total adjusted EBITDA for the full year 2016 was $128.2 million, an $8.7 million or 7% increase over total adjusted EBITDA for the full year 2015. In constant currency, total adjusted EBITDA for the full year 2016 increased $9.8 million or 8% over the full year 2015.
Recent Company Highlights
- Re-opens Belmond La Residence d'Angkor following extensive renovation — In November 2016, following a six-month planned closure for renovation, the Company re-opened Belmond La Residence d'Angkor, Siem Reap, Cambodia. The project included the refurbishment of 51 keys, the addition of a new meeting room and updates to the hotel's public areas and restaurants. The all-suite property now features 59 keys, offering guests a peaceful escape moments away from the UNESCO World Heritage site of Angkor.
- Strengthens management team with appointment of Kenneth Hatton to senior vice president, global development — In January 2017, Kenneth Hatton joined the Company as senior vice president, global development, leading the team responsible for executing on Belmond's global footprint expansion. Mr. Hatton brings nearly 20 years of experience with global hotel-related transactions and merger and acquisition activity, most recently serving as Hyatt Hotels Corporation's senior vice president, corporate transactions group, covering Europe, Africa, Middle East and Asia Pacific. Prior to this role, he was a partner at Sonnenschein Nath & Rosenthal LLP (now Dentons), where he led the European operations of the firm's hospitality practice. Mr. Hatton replaced James Simmonds, who previously served the Company in this position.
- Enhances regional leadership with appointment of Robert Koren to vice president, southern Europe — In February 2017, Robert Koren joined the Company as vice president, southern Europe, overseeing the Company's operations in Italy, Spain and Portugal. Mr. Koren brings over 30 years of experience in the hospitality industry, most recently serving as vice president, regional director for southern Europe at Starwood Hotels & Resorts, where he was responsible for more than 60 luxury hotels, since 2004. He previously held various operations and finance positions within Starwood Hotels & Resorts, including vice president of operations for the Luxury Collection and W brands. Mr. Koren replaced Maurizio Saccani.
- Bolsters corporate operations team with appointment of Ariel Bouzas to vice president, project management office — In February 2017, Ariel Bouzas joined the Company as vice president, project management office, reporting to the Company's chief operating officer. Mr. Bouzas most recently served as head of business transformation at easyJet plc and previously held the position of principal at Boston Consulting Group, where he focused on travel and tourism clients.
Fourth Quarter 2016 Business Unit Results
Owned hotels:
Europe:
For the fourth quarter of 2016, revenue from owned hotels was $26.4 million, a decrease of $0.7 million or 3% from $27.1 million for the fourth quarter of 2015. In constant currency, revenue for the region for the fourth quarter of 2016 increased $0.6 million or 2% over the prior-year quarter primarily due to revenue increases of $0.4 million or 7% at Belmond Le Manoir aux Quat'Saisons, Oxfordshire, England, and $0.3 million or 6% at Belmond Reid's Palace, Madeira, Portugal, both of which hotels benefited from 11% year-over-year RevPAR growth.
In constant currency, same store RevPAR for owned hotels in the region increased 2% over the prior-year quarter as a result of a 3% increase in ADR, partially offset by a 1 percentage point decrease in occupancy.
Adjusted EBITDA for the region for the quarter of $1.4 million represented a decrease of $0.6 million or 30% from $2.0 million for the fourth quarter of 2015. In constant currency, adjusted EBITDA for the region for the fourth quarter of 2016 decreased $0.5 million or 24% from the prior-year quarter mainly due to an adjusted EBITDA decrease of $0.5 million at Belmond Hotel Splendido, Portofino, Italy, partially due to a reversal of accrued expenses in the prior-year quarter. This adjusted EBITDA decline was partially offset by adjusted EBITDA growth of $0.2 million or 13% at Belmond Le Manoir aux Quat'Saisons and $0.1 million or 13% at Belmond Reid's Palace.
North America:
Revenue from owned hotels for the fourth quarter of 2016 was $37.6 million, down $0.6 million or 2% from $38.2 million for the fourth quarter of 2015. In constant currency, revenue for the region for the fourth quarter of 2016 decreased $0.4 million or 1% from the prior-year quarter primarily due to a $0.4 million or 13% year-over-year revenue decrease at Belmond Maroma Resort & Spa, Riviera Maya, Mexico, largely as a result of increased competition and decreased group business as compared to the prior-year quarter.
In constant currency, same store RevPAR for owned hotels in the region decreased 5% from the prior-year quarter due to a 2 percentage point decrease in occupancy and a 1% decrease in ADR.
Adjusted EBITDA for the region for the quarter was $7.5 million, a decrease of $0.9 million or 11% from $8.4 million for the fourth quarter of 2015. In constant currency, adjusted EBITDA for the region for the fourth quarter of 2016 decreased $0.8 million or 10% from the prior-year quarter largely as a result of adjusted EBITDA declines of $0.5 million or 10% at Belmond Charleston Place, South Carolina, partly due to costs associated with Hurricane Matthew in October 2016 and increased legal expenses, and $0.3 million or 12% at '21' Club in New York City, mainly as a result of an increase in unionized wages.
Rest of world:
Revenue from owned hotels for the fourth quarter of 2016 was $33.7 million, a decrease of $3.9 million or 10% from $37.6 million for the fourth quarter of 2015. In constant currency, revenue for the fourth quarter of 2016 decreased $6.4 million or 16% from the prior-year quarter principally as a result of revenue declines of $4.3 million or 28% at Belmond Copacabana Palace and $1.7 million or 26% at Belmond Hotel das Cataratas, Iguassu Falls, Brazil, both largely as a result of the negative impact on demand of Brazil's challenging economic situation and a lull following the Summer Olympic Games in August 2016.
In constant currency, same store RevPAR for owned hotels decreased 14% from the prior-year quarter as a result of an 8 percentage point decrease in occupancy and a 2% decrease in ADR.
Adjusted EBITDA for the region for the quarter of $8.2 million declined $4.5 million or 35% from adjusted EBITDA of $12.7 million for the prior-year quarter. In constant currency, adjusted EBITDA for the region decreased $4.9 million or 38% from the prior-year quarter largely due to adjusted EBITDA decreases of $2.8 million at Belmond Copacabana Palace and $1.4 million at Belmond Hotel das Cataratas.
Owned trains & cruises:
Revenue for the fourth quarter of 2016 was $12.2 million, down $4.1 million or 25% from $16.3 million for the fourth quarter of 2015. In constant currency, revenue decreased $2.0 million or 13% primarily as a result of revenue decreases of $0.8 million or 15% for the Venice Simplon-Orient-Express train and $0.6 million or 41% for the Belmond Orcaella river cruiser in Myanmar, both due in part to less demand than in the prior-year quarter.
Adjusted EBITDA for the quarter was $0.2 million, a $2.4 million decrease from $2.6 million for the fourth quarter of 2015. In constant currency, adjusted EBITDA decreased $2.2 million largely due to adjusted EBITDA declines of $0.5 million for Venice Simplon-Orient-Express and $0.4 million for Belmond Orcaella. Additionally, Belmond Grand Hibernian, the Company's new Irish train, which commenced operations in August 2016, recorded a $0.4 million EBITDA loss largely as a result of seasonality, as the train concluded its 2016 operating season in mid-October for what will be its annual winter closure period. The train is expected to commence its 2017 operating season in April.
Management fees:
Management fees for the fourth quarter of 2016 were $4.3 million, up $0.8 million or 23% over $3.5 million for the fourth quarter of 2015 primarily as a result of a $1.0 million or 49% increase in management fee income from the Company's PeruRail joint venture largely as a result of the joint venture's freight operations.
Share of pre-tax earnings from unconsolidated companies:
Adjusted share of pre-tax earnings from unconsolidated companies for the fourth quarter of 2016 of $5.0 million increased $1.1 million or 28% over $3.9 million for the fourth quarter of 2015 largely for the same reasons described above for management fee growth.
Central costs:
For the fourth quarter of 2016, adjusted central overheads of $6.9 million were $0.2 million or 3% higher than adjusted central overheads of $6.7 million for the prior-year quarter mainly due to increased information technology expenses.
Investments
The Company continued its strategy of disciplined re-investment in core assets and projects with attractive forecasted returns. During the fourth quarter of 2016, the Company invested a total of $14.6 million in its portfolio, including $2.9 million at Belmond Charleston Place partially for a renovation of the hotel's banqueting and related facilities; $1.6 million at Belmond La Residence d'Angkor, mostly for renovation of the hotel; $1.4 million at Belmond Mount Nelson Hotel, Cape Town, South Africa primarily for the renovation of rooms in the hotel's main building; $1.3 million at Belmond Grand Hotel Europe, St. Petersburg, Russia, largely on the refurbishment of the hotel's ballroom; and $1.0 million on the Venice Simplon-Orient-Express train mainly for required statutory works.
Balance Sheet
At December 31, 2016, the Company had total debt of $591.1 million and cash balances of $156.0 million, resulting in total net debt of $435.1 million and a ratio of net debt to trailing-twelve-months total adjusted EBITDA of 3.4 times, which compared to net debt of $443.9 million and a ratio of net debt to trailing-twelve-months total adjusted EBITDA of 3.7 times at December 31, 2015.
To view full financial release and corresponding tables please click the PDF icon or visit: http://investor.belmond.com/news/2017/02-27-2017-220113976.aspx
