CONSOLIDATED MANAGEMENT REPORT 15
FUTURE OUTLOOK
Good prospects for tourism continue into 2015. The World Tourism Organisation (UNWTO) estimates that international tourist arrivals will grow by
between 3% and 4%. By region, growth is expected to be strongest in Asia and the Pacific (+4% to +5%) and the Americas (+4% to +5%), followed by
Europe (+3% to +4%). An increase of +3% to +5% is expected for Africa, while in the Middle East growth will be from +2% to +5%.
The UNWTO also expects demand to continue growing throughout this year, and for the world economic situation to improve despite there still
being many challenges ahead. The price of oil has dropped to a level not seen since 2009 and this should bring down transport costs and boost
economic growth by raising the purchasing power and private demand of oil-importing economies. The Confidence Index developed by UNWTO is also
positive. According to the 300 experts consulted worldwide to create this index, tourism results are expected to improve in 2015, although admittedly
expectations are lower than they were a year ago. Europe strengthens its position as the most-visited region in the world, with arrivals increasing by 22
million in 2014 to reach a total of 588 million. Thanks to these results, tourism remains a positive factor contributing to the incipient, though still weak,
European economic recovery.
While it is true that the macroeconomic scenario of the group’s 2014-2018 Business Plan is based on weak growth in the economies where it operates,
any improvement in world expectations would boost the group’s results.
Moreover, 2015 will be a year of extensive renovations, with more than 30 hotels in the pipeline and investments of nearly €100 million. The plan’s
initiatives are advancing well.
EVENTS AFTER THE REPORTING PERIOD
On 2 February 2015 the conditions were met for the effectiveness of the binding agreement signed by NH Hotel Group, S.A. to acquire a majority stake,
representing 80.77% of the share capital, in Hoteles Royal, S.A. (“HR”), a Colombian entity which is the head company of the Latin American hotel
management group Hoteles Royal, present mainly in Colombia, Chile and Ecuador.
As part of the agreements reached with the vendors, NH undertook to make an offer to buy the remaining 19.73% share capital of HR from the other
shareholders. The offer made was substantially similar to the terms agreed by NH and the vendors of 80.77% of the share capital of HR.
As a result of this transaction, and after the recent sale in Colombia of the hotel NH Bogotá Parque 93 in January 2015, NH has strengthened its
presence in these countries, going from 2 to 21 hotels, and from 259 to 2,379 rooms under management.
The net amount to be paid for 100% of the share capital of HR, discounting the €21.5 million received for the sale of the NH Bogotá Parque 93, is €65.6
million, of which (i) €48.18 million will be paid directly by NH on the formal acquisition of the shares (“Closing Date”) and financed with part of the funds
obtained from the sale of Sotogrande in November 2014; and (ii) €17.42 million will be deferred, to be paid over two years from the Closing Date, while
also being retained as security, as is customary in this type of transaction.
The conditions which were met for the binding agreement mentioned above to become effective include an agreement between NH, the Carlson
Rezidor Hotel Group and the HR Group, whereby the HR Group and Carlson Rezidor agree, among other matters, to dissolve the master franchise
agreement which initially granted a subsidiary in the HR Group the exclusive franchise rights to the Radisson brand until 2018 for much of Latin America,
and to dissolve the international franchise contracts of most of the hotels that had been managed by the HR Group under the Radisson brand which
would remain in HR and be managed in the future under NH brands.
The Closing Date was on 4 March 2015, which was object of the appropriate communication to the market. The Group has yet to allocate the difference
on first consolidation, which will be significantly affected by the exchange rate.
These operations give NH a more appropriate presence in Colombia, and consolidate a substantial presence in certain markets it has identified as
priority markets, acquiring the management of assets in desirable locations, and making considerable progress towards the goals of its Strategic Plan.
