FUTURE OUTLOOK
As is well documented, the evolution of the hotel sector is closely linked to economic activity and tourism, although as a predominantly urban chain, the second factor
is less relevant for NHHoteles.
Forecasts by the World Tourism Organisation (WTO) predict annual growth of 3.8% until 2020. However in 2013, international tourist arrivals grew by 5% reaching
1.087
billion. Despite the economic difficulties experienced worldwide, international tourism figures significantly exceeded expectations, and in 2013, 52 million more
people travelled than in 2012. For 2014, theWTO predicts growth of between 4% and 4.5%, exceeding the existing long-term projections once again.
Furthermore, economic forecastsmade by the InternationalMonetary Fund (IMF) serve as an invitation to leave recent pessimismbehind. Europe, where themain bulk
of the Group’s hotels are located, appears to be coming out of recession. The IMF forecasts growth of 1% for 2014 and 1.4% for 2015, although the growth is expected to
be uneven. This will be weaker in Spain and Italy, although the estimates have been revised slightly upwards (Italy 0.6% and 1.1% for 2014 and 2015 respectively, Spain
0.6%
and 0.8% for the same periods).
Additionally, multinational hotel companies likeNHHoteles, with a significant number of hotels and revenues, a presence inmany countries, with access to international
distribution channels, etc. have recorded financial results in the last few years significantly above the results of smaller companies, with fewer hotels and focused on a
single market, which are far more sensitive to fluctuations in price and occupancy. Likewise, the geographic diversification of the Group makes it possible for countries
like Germany, England, Austria, Switzerland or Mexico, with better economic forecasts for 2014, to offset the less favourable evolution expected in markets such as
Spain and Italy.
The company’s own forecasts for 2014 suggest an increase in room revenue of around 5% for the year as a whole, excluding the sale of assets and contract terminations
in 2013. The second part of the year will be of greater importance given the implementation of a series of initiatives in the Group’s strategic plan. The plan was presented
at the end of last year and lays the foundations for a major change to the business model (portfolio segmentation; redesign of the brand and the “NH experience”;
new sales, marketing and communications plans; strengthening online direct channels; and a new focus on communication with clients, all accompanied by a different
organisational model). The impact of changes to the repositioning plan (investment of around €90million this year), should also lead to better growth during the second
half of the year (with the impact expected to bemore significant on pricing than occupancy). Furthermore, we will continue to reduce our cost base and to implement new
streamlining and efficiency plans. Increased expenditure onmarketing and ITwill be partially offset by the reduction in fees. This year, the Group expects a year-on-year
improvement in recurring EBITDA of around 10%.
SUBSEQUENTDISCLOSURES
On 17 January 2014, Banco Financiero y de Ahorros, S.A. informed the Spanish Securities Market Commission of the sale of 38,834,034 shares, representing its 12.6%
stake in NHHoteles, S.A.
On 28 January 2014, Pontegadea Inversiones, S.L. reported that it had transferred 12,512,971 shares in the Group, which represented 4.059%of the latter’s share capital,
to Tangla Spain, S.L.U., a subsidiary of HNA Group Co. Ltd.
That transfer derives fromHNA Group Co. Ltd. exercising the purchase option granted to it by Pontegadea Inversiones, S.L. on 11 October 2013.
On 24 January 2014, the Argentine Peso was devalued by 12.7% against the euro. At 31 December 2013, the Company had net balances receivable amounting to EUR
5.191
million. The estimated impact of this devaluation, which is not estimated to be material, will be recognised in 2014, pursuant to the applicable legislation.
CONSOLIDATEDMANAGEMENT REPORT
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