Spanish 
English VISION AND STRATEGY
OUR VISION
ONE DAY, WHENEVER ANYONE PLANS A TRIP OR A MEETING IN A CITY, FOR BUSINESS OR PLEASURE, THEY WILL ALWAYS ASK THEMSELVES: “IS THERE AN NH HOTEL AT MY DESTINATION?”
NH Hotel Group wants to be the consumers’ chosen destination, offering them memorable experiences that go far beyond their expectations and make them feel special.
This vision, shared by everyone that is part of the Company, serves as a performance and commitment guide, while at the same time endeavouring to make NH Hotel Group the best option for investors and owners who wish to grow together with the Group, with a global and flexible proposal, with highly-motivated and proud teams, effective management tools and unique solutions.
In order to maximize the return for shareholders who have placed their trust in NH Hotel Group, the Company offers its investors the best management opportunities with a top level operator in both the urban and in the business segment
OUR CULTURE
NH Hotel Group’s culture, inspired on its vision and a clear calling to serve the customer, is what has set the Group apart in the sector from the very beginning.
In 2017, this culture has made it possible to begin evolving from a management model to a leadership model that incorporates the principles that guide the day-today activities of directors and employees and is reflected in the Company’s eight beliefs:
- We are obsessed with delivering memorable experiences for our customers
- We are proud to serve
- We strive to be the best, even if we are not the biggest
- We are responsible for our results
- We are for our employees. Our employees care for our guests
- We are active in the communities where we live
- We have a young mindset
- We enjoy what we do … and we do everything with a smile
NH HOTEL GROUP STRATEGIC PLAN
NH Hotel Group presented a new Strategic Plan for 2017-2019 at its first Investor Day, a gathering of investors and analysts of the Company that included the participation of the members of the Management Committee and the Co-Chairmen of the Company.
In this way NH Hotel Group is in a position to complete its most profitable two-year period. This year and the next it will reap the fruits of the important competitive advantages obtained following a period of transformation marked by a significant investment in repositioning and in improving the experience which the Group has completed in these years.
The new NH Hotel Group Strategic Plan is based on its current strengths, and is built on six major levers aimed at creating value, and 15 objectives each of which have specific goals.
During the 2017-2019 period, one of the Company’s goals will be to highlight the efforts made in areas related to brand development and segmentation, revenue management, quality and repositioning, while driving its efficiency and continuing with debt reduction.
One of the levers of the new plan is based on continuing the process of concentration on the image of brands in the high-end segment, extending the portfolio of the NH Collection and nhow brands.
| INITIATIVES | GOALS |
| Reinforce premium brands | Successful repositioning of NH Collection Greater weight in upper-upscale segment |
| Customer experience and loyalty |
Exploit and monetize the intrinsic value of the brands Pursue maximum efficiency in media investment Improve the customer experience |
| Advanced pricing with focus on ADR |
Optimization of channel and demand curve Open and dynamic prices Corporate, meeting and event rates |
| Asset management | Contract optimization Asset-light organic growth Repositioning opportunities Asset management |
| Efficiency in DNA | Digital transformation New operating model |
| Efficient cash management to reward shareholders |
Growth in profit Reduction of debt |
FOCUS ON THE PREMIUM SEGMENT: 8 OUT OF 10 RECENTLY SIGNED ROOMS ARE OF THE NH COLLECTION OR NHOW BRANDS
The Company also hopes to increase its geographical expansion both in consolidated destinations and in new regions with potential, always based on strict profitability criteria. In this regard, the new plan envisages the optimization of the Company’s portfolio and strengthening the level of return on its portfolio through an asset-light growth model.
Furthermore, NH Hotel Group expects to increase its management capacity with the application of efficient dynamic pricing strategies linked to big data which will offer the opportunity to continue with sustainable growth in terms of profitability.
With its customers, the aim is to strengthen loyalty based on exploiting the intrinsic value of NH Hotel Group’s brands and constant improvement in the experience.
As far as efficiency is concerned, the Company will concentrate its efforts on resource optimization. In 2017, the Company has already implemented initiatives in this regard such as the new operating model, which has restructured the entire portfolio in three Business Units (Southern Europe, Northern Europe and America), a system which permits rapid adaptation to change and reduces redundancies, facilitating the implementation of initiatives.
| FINANCIAL OBJECTIVES OF THE STRATEGIC PLAN | |||
| EBITDA | 2019 NET RECURRING INCOME | DIVIDENDS | DEBT** (2) |
| 2018E: €260m 2019E: €285-290m 2019 proforma: c. €300m (1) |
c. €100m | 2017: 0,10€ 2018: 0,15€ From 2019: c. 50% recurring income |
2018: between 1,2* and 2,1x |
(1) Pro forma 2019 with contribution of refurbishments and openings in 2018 and 2019
(2) Financial debt excluding IFRS accounting adjustments / * Subject to conversion of debenture
KEY INITIATIVES IN 2017
BRAND
In 2017, the Company continued its commitment to guarantee an excellent service in order to always exceed its customers’ expectations. To this end, NH Hotel Group works under an operational and service promise for each of its brands, focused on maintaining the highest standards of quality, transparency and innovation:
NH HOTEL GROUP BRANDS:
URBAN POSITIONING TOWARDS THE UPPER SEGMENT
THE NH COLLECTION AND NHOW BRANDS AROUSE INCREASING INTEREST IN THE MARKET
This year has represented significant progress in the consolidation of the growth of the NH Collection and nhow brands. This year the Company has continued to invest in the refurbishment and improvement of its portfolio with the opening of NH Collection Grand Sablon in Brussels, NH Collection Eindhoven in The Netherlands or NH Collection Santiago de Chile. Likewise, projects of this brand signed in Santander, Frankfurt, Marseille or Valencia will continue to increase the number of NH Collection hotels. At present, there are 69 hotels open with this brand, with other ongoing projects in Germany, Belgium, Spain, France, Chile and Mexico.
The signing of significant nhow projects to open hotels of this brand in Peru (Lima), Germany (Frankfurt) or the forthcoming nhow Marseille in France, which will open its doors in the second quarter of 2018, will consolidate a presence of 9 hotels of the nhow brand in forthcoming years.
These join the nhow brand’s developing portfolio, which includes symbolic hotels such as the future nhow in Amsterdam, which will be the biggest hotel in The Netherlands with 650 rooms or the nhow London, in Shoreditch - both located in iconic buildings designed by the prestigious architects Rem Koolhaas and Norman poster respectively; or the nhow hotel project in Santiago de Chile. All of these will be added to the portfolio of nhow hotels currently open in Milan (Italy), Berlin (Germany) and Rotterdam (The Netherlands).
AGREEMENT WITH PREFERRED HOTELS & RESORTS
Preferred Hotels & Resorts (PHR) represents the best and most diverse global portfolio of independent hotels, with five distinctive collections that allow customers to create their own inspirations as they travel around the world.
In the last three years, NH Hotel Group has developed an association with PHR with the aim of giving certain of the chain’s NH Collection hotels the added value represented commercially by PHR’s recognition in certain international markets such as the American one. In 2017, a total of 19 NH Collection hotels were ecognized by PHR.
To help assure the highest levels of customer satisfaction, Preferred Hotels & Resorts monitors the Preferred Standards of Excellence™, measured regularly through anonymous inspections carried out by professional experts. PHR also supervises guests’ comments and the online reputation of members with a powerful and personalised reporting dashboard.
NEW NH REWARDS PROGRAMME
In 2018, NH Hotel Group’s loyalty programme is being renewed with the aim of making it one of the most generous in the industry, increasing the benefits for its most loyal customers so that they perceive the added value of the new programme.
Currently, more than 8.4 million customers earn points and redeem them to get, for example, free nights, room upgrades and a higher level of service in the hotel, according to their membership category. NH Rewards members contribute 36% of NH Hotel Group’s revenues and their frequency of use is 40% higher than other
customers. In fact, in 2017 eight out of ten bookings through the NH Hotel Group were made by loyalty programme members.
NEW INSTANT BOOKING TOOL
In 2017 NH Hotel Group has launched an innovative online solution for the booking and immediate payment of venues for meetings and events.
The Company continues to be committed to the use of new technologies as a differentiating element and adds this online tool to its “NH MEETINGS: inspire.create.enjoy”, the Group’s proposal for the meetings and events segment.
Thanks to Instant Booking Tool, which is accessed from http://meetings.nh-hotels.com/, customers can obtain instant information on the prices and availability of meeting spaces and rooms for groups and also book and pay directly online.
In a first pilot phase, the tool has been used with great success in Germany and the Company has already started to implement it for meeting spaces and rooms for groups in NH hotels all over the world.
MOOD ROOM TM
In conjunction with Philips Lighting, in October 2017 NH Hotel Group presented the new Mood Rooms at the NH Collection Eurobuilding hotel in Madrid.
Equipped with the very latest technology, lighting and sound, these rooms create different ambiences that can reflect and adapt to their guests’ emotions. A pioneering concept in the sector which is presented as a real experience for guests.
For the first time, a room is capable of creating environments that adapt to the specific emotions and needs of the guest in search of an experience.
COMMERCIAL AND REVENUE MANAGEMENT STRATEGY BASED ON IMPROVING QUALITY
In 2017 the Company has consolidated its commercial strategy with the focus on improving the service, quality and positioning of the hotels with a notable increase in the number of hotels in TripAdvisor’s Top 10 and Top 30 in the leading cites. This, together with the Open Pricing project, has enabled us to improve the revenue strategy, increasing RevPAR levels by 8% with increases in ADR of almost 5%, which represents a relative growth in RGI of 3.6 percentage points vs. direct competitors.
UNIQUE REVOLUTION IN REVENUE MANAGEMENT
NH Hotel Group is a leader in the field of revenue management, maximizing hotel incomes and the profitability of the business and establishing the following priority actions:
- A Revenue Management team headed by a variety of internationally renowned professionals with vast experience in Revenue Strategy and Hostelry. In turn they have a state-of-the-art NH Revenue Academy to train, develop and retain the team.
- Use of state-of-the-art systems and tools that make it possible to forecast demand, room price, food and beverages and functional area rates, as well as monitor results in real time. All this has made it possible to automate prices in 2017: centralised price recommendation through distribution using different channels, thanks to a tailored revenue administration system (NH Game Changer), which allows Revenue Management teams to offer a manual price only “exceptionally” and focus on strategic tasks.
- Open Corporate Rate (OCR). In a market where dynamism is the key to the future, NH Hotel Group has decided to take a step further this year. OCR lets corporate customers benefit from an unprecedented discount range that will vary according to demand. In this way, all our customers will benefit from exclusive rates. These exclusive rates will always have a guaranteed minimum discount and will be available 365 days a year.
- Meetings & Events Quotation Tool. This tool will provide a strategy focused on M&E customers with a total revenue management vision that offers ad-hoc quotations at an excellent speed and, therefore, an increase in satisfaction levels.NH Hotel Group believes that one of keys for company sustainability is a consistent and continuous training. This year, as in the past 5 years, we have conducted our Global Commercial and Pricing Seminars, con special focus in one of our growth pillars, commercial/revenue management. These seminars aim to align in market trends, new strategies and touching edge technologies to our Hotel General Managers, Marketing and Commercial teams across our 29 countries and hotels.
EXPANSION AND PORTFOLIO OPTIMIZATION STRATEGY
In 2017, the Group has continued with the significant improvement in the quality of the assets and destinations incorporated into the portfolio with the opening of 6 new hotels and 789 rooms during the year. Notable among these new hotels is the opening of the NH Collection Eindhoven Centre in The Netherlands, under the NH Collection premium brand.
NH Hotel Group has a wide, representative and diversified portfolio of 380 hotels operated under lease, management and ownership, the latter with an estimated asset value of 1.9 billion euros at December 2016.
The profound transformation which the Company has carried out, particularly the portfolio optimization strategy implemented between 2013 and 2017, has made it possible to double the operating profit of NH Hotel Group during this period, despite the fact that it currently operates a similar number of rooms to five years ago.
This has been possible thanks to the successful way in which the Company has managed to offset the elimination of non-strategic assets of the Group with the incorporation of new hotels analysed under criteria of profit maximization and medium and long-term sustainability, as well as with the scope of agreements on assets in the existing portfolio aimed at being operated under more flexible and beneficial conditions.
The favourable results of the portfolio optimization process and repositioning, the latter with significant investments to bring it up to the Company’s new standards, and a greater weight of rooms under premium segment brands have resulted in an increase in demand from investors and hotel owners interested in analysing shared growth opportunities and benefiting from the model and the flexibility the Group offers as an international operator.
In 2017, the Group has continued to make significant improvements in the quality of the hotels and destinations incorporated into the portfolio, with the signing of 8 hotels (1,924 rooms) in Europe and Latin America, as well as the opening of 6 new hotels (789 rooms) during the year. These include the opening under the Group’s premium brand of the NH Collection Eindhoven Centre in The Netherlands, as well as other assets in France and Mexico.
At the same time, during this year the Company has promoted a number of added-value operations on the asset portfolio, including the agreement reached in December 2017 with the German property manager Deka Immobilien for the sale and lease-back of the building that houses the NH Collection Barbizon Palace hotel in Amsterdam (The Netherlands), for a gross amount of 155.5 million euros. In addition, in January of the same year the Company reached an agreement for the sale and lease-back of the current NH Malaga (Spain) hotel, as well as for the future acquisition of the extension to that hotel, which NH Hotel Group is executing on the land adjacent to the hotel. This operation, structured in two phases, has been valued in total at 41 million euros.
