Q1 2016 RESULTS STOCKHOLM, 21 APRIL 2016 WOLFGANG M. NEUMANN, PRESIDENT & CEO KNUT KLEIVEN, DEPUTY PRESIDENT & CFO 1 I Q1-2016 Results prizeotel Bremen-City, Germany
Offering the full brand scale through expansion into economy segment LUXURY UPPER UPSCALE UPSCALE MIDSCALE ECONOMY Quorvus Collection our collection of luxury hotels Radisson Blu our upper-upscale full-service brand Radisson RED our lifestyle select brand Park Inn by Radisson our mid-scale brand prizeotel our new economy brand DEAL HIGHLIGHTS 49% stake for 14.7m Call Option to acquire 100% in 4 years Closing expected by end April 2016 2 I Q1-2016 Results
# Hotels Economy segment: a highly attractive, profitable and fast growing segment Existing Hotel Supply (Europe) Growth (# Hotels, 2011-15) 5,000 4,000 +88 +197 +417 +286 +45 +534 THE ECONOMY SEGMENT Only 5.6% of the European room supply and 14% of the branded supply Fastest growing segment in terms of # properties Pipeline still moderate with a 15.3% share 3,000 2,000 1,000-2011 2012 2013 2014 2015 SEGMENT KEY DRIVERS Resilience to economic cycles Value for money attitude of new generation Changing guest expectations (affordable trendy products) Growing middle class & low cost carriers Operational efficiency / higher profit margins Higher space efficiency / small footprint (unlocking key locations) Lower development costs Fast development / create scale in key markets 3 I Q1-2016 Results
A small established hotel chain with an innovative urban design, tech-savvy focus, personal-touch and unique team culture prizeotel Bremen 127 rooms Opened: Nov 2009 Ambition: to be the most unconventional economy-design hotel chain and qualitative leader Business model: Mainly leases prizeotel Hannover 212 rooms Opened: Sep 2015 Expansion: Initially targeting Germany, Austria, Switzerland and BeNeLux prizeotel Hamburg 216 rooms (to be extended to 386) Opened: Jun 2014 4 I Q1-2016 Results prizeotel Hamburg St. Pauli 258 rooms Opening: 2017/18
Q1 results were impacted by early Easter, exits, exchange rates and one-offs L/L RevPAR +1.0% ( 64.9) L/L RevPAR growth of +1.0% Rate (+2.5%) improved while Occupancy (-0.9pp) declined Radisson Blu +0.8%, Park Inn +1.4% Drivers: Russia, Ukraine, Ireland, Netherlands, South Africa and Sweden Revenue -4.3% ( 207m) Reported Revenue of 207m down by 9.4m or 4.3% L/L Revenue increased by 1.2% ( 2.6m) Revenue impacted by conversion of one lease in Sweden to franchise, temporary closure for renovation of a leased hotel in Belgium and exchange rates EBITDA - 8.5m (- 9.2m) EBITDA margin decreased to -4.4% (-4.1pp) EBITDA - 9.2m (- 8.5m) Decrease impacted by lower revenue, higher reservations costs, bad debt and central personnel costs EBIT - 12.6m (- 25m) EBIT - 25m (- 12.6m) EBIT margin -12.1% (-6.4pp) Impacted by accrued termination costs related to exit of lease in Bergen/Norway, partly offset by lower write downs and gain on sale of shares in subsidiaries 5 I Q1-2016 Results
Norway Sweden Denmark UK France Germany Russia Lithuania Poland UAE Saudi Arabia South Africa % Change Q1 2016 vs. Q1 2015 (local currency) Market RevPAR development in Q1 mixed across regions & countries NORDICS ROWE EASTERN EUROPE MEAO 30% Occupancy ADR RevPAR 20% 10% 0% -10% -20% -4.8% 2.9% 2.9% -1.3% -3.9% 2.9% 11.2% 6.6% 8.6% -10.4% -11.7% 12.8% Europe sees solid performance (+3.1%) driven by Eastern and Southern Europe Nordics impacted by weak performance in Norway related to early Easter and oil impact on west coast Western European countries show stable RevPAR performance (+1.4%) with the exception of Belgium, France, Switzerland and UK Eastern Europe best performing region (+10.5%) driven by Russia, Slovakia, Romania, and Poland Middle East & Africa impacted by still weak performance in Saudi Arabia and UAE, but good growth in South Africa 6 I Q1-2016 Results SOURCE: Benchmark Alliance, STR Global
Rezidor positive RevPAR development driven by rate improvement L/L Occupancy L/L Average Room Rate L/L RevPAR 10% 8.7% 8% 6% 5.6% 5.9% 4.6% 4.2% 5.7% 6.0% 5.9% 5.4% 5.0% 2.7% 3.5% 4.9% 5.6% 4% 2% 0.9% 2.4% 1.0% 0% -2% -4% Q1 Q2 Q3 Q4 2012 Q1 Q2 Q3 Q4 2013 Q1 Q2 Q3 2014 Q4 Q1 Q2 Q3 Q4 2015 Q1 2016 NOTE: Like-for-like: same hotels in operation during same period last year compared at constant exchange rates 2 of 4 regions reported L/L RevPAR growth: Eastern Europe and ROWE Rate improvement driven by Eastern Europe (at constant rate) Occupancy growth weak across the regions impacted by Easter & fair schedule 7 I Q1-2016 Results
Weaker performance in Nordics and ROWE related to Easter & fair schedule NORDICS ROWE L/L Occupancy L/L Average Room Rate L/L RevPAR L/L Occupancy L/L Average Room Rate L/L RevPAR 25% 25% 15% 5% -5% 4.4% -0.8% 3.9% -4.0% -2.1% 3.8% 9.2% 6.9% -0.5% 15% 5% -5% 4.5% 4.9% 4.8% 4.3% 6.2% 7.0% 9.4% 5.6% 2.2% -15% -15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 Norway: Weak performance mainly due to Easter / holiday season in March and the ongoing oil impact on the west coast Denmark: Occupancy improvement while rate declined Sweden: Equally strong rate & occupancy growth UK & Ireland: Weaker occupancy in UK but very strong Ireland rate development Netherlands: Strong rate growth with occupancy down slightly Belgium & France: Growth via occupancy Germany: Slight growth on rate & occupancy 8 I Q1-2016 Results
Solid improvements in Eastern Europe while Middle East remains weak EASTERN EUROPE MIDDLE EAST & AFRICA L/L Occupancy L/L Average Room Rate L/L RevPAR L/L Occupancy L/L Average Room Rate L/L RevPAR 25% 25% 17.4% 15.3% 15% 5% -5% -15% 4.6% -2.1% -3.3% -5.5% 3.3% 11.9% 10.1% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 15% 5% -5% -15% 6.4% 9.6% 9.5% 5.1% 0.1% -6.3% -4.2% -4.5% -6.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 Russia: Strong improvement driven by rate & occupancy Baltics: Weaker RevPAR development mainly linked to the EU Presidency (Latvia) last year Poland: Strong rate uplift while occupancy declined Turkey: Negatively impacted by events Middle East: Continued drop in demand in Saudi Arabia and rate pressure in UAE Northern Africa: Egypt & Tunisia continue to suffer from recent attacks Southern Africa: Good rate development in South Africa 9 I Q1-2016 Results
Continuous good momentum with 13 new hotels / 1,900 rooms signed SIGNINGS Q1 2016 Q1 2015 Hotels 13 10 Rooms 2,000 2,300 Park Inn by Radisson Valdemare, Riga, Latvia Q1 comments: Portfolio deal with Astor Group adds 3 hotels in Riga, Latvia 3 Park Inn signings in Belgium increase country portfolio by 60% 2 RED s signed in Middle East, Dubai & Jeddah >75% emerging market growth 5 signed hotels expected to open within 12 months Park Inn by Radisson Bruges, Belgium 10 I Q1-2016 Results
Strong quarter for openings with 7 hotels / 1,000 rooms added OPENINGS Q1 2016 Q1 2015 Hotels 7 3 Rooms 1,000 230 Radisson Blu Aleksanteri Hotel, Helsinki, Finland Q1 comments: 100 th franchise hotel opened 2 additions in Finland through Sokos partnership 7 th Radisson Blu for Istanbul & 20 th hotel in Turkey Conversion & semi-conversions fuel growth >35% in mature markets >60% management contracts Radisson Blu Hotel, Abidjan Airport, Ivory Coast 11 I Q1-2016 Results
Radisson Red Roll out good traction with first hotel opened in Brussels on 18 th April Radisson Red Brussels, Belgium Radisson Red Glasgow, UK Radisson Red Cape Town, South Africa Radisson Red Jeddah, Saudi Arabia Radisson Red Dubai, UAE AMERICAS Radisson Red Minneapolis, USA Radisson Red Portland, USA Radisson Red Campinas, Brasil ASIA PACIFIC: Radisson Red Guangzhou, China Radisson Red Bali, Indonesia Radisson Red Jakarta, Indonesia Radisson Red Shenyang, China Radisson Red Mohali, India 12 I Q1-2016 Results
Asset Management remains key through exiting, extending and renegotiating lease contracts Radisson Blu Strand Hotel, Stockholm Extension of lease by 25 years Full renovation & extension by 17 rooms SEK 150m ( 16.2m) joint investment Accounted for as ordinary capex investment Radisson Blu Hotel, Norge Bergen Contract terminated effective 1 Sept NOK 75m ( 8.0m) payment to settle Capex obligations Fully accounted for in Q1 2016 Radisson Blu Scandinavia Hotel, Gothenburg Sale of entity holding the lease Property continuous to be operated under franchise Gain on sale 1.9m Accounted for in Q1 2016 13 I Q1-2016 Results
Asset management: exits & renegotiations significantly contribute to improved EBITDA margin In m Upfront cost EBITDA 2013 2012 14 I Q1-2016 Results EBITDA 2014 EBITDA 2015 EBITDA 2016fc Exit from 7 leases in France 11.5 1.9 1.9 1.9 1.9 Exit from 2 leases in Sweden 0.9 0.8 0.8 0.8 0.8 Exit from a committed management contract 0.9 0.9 0.9 0.9 2013 Lease restructurings (5) 3.9 5.1 5.7 5.7 Exit from one lease 1.9 2014 Lease restructurings (4) 4.5 4.8 4.8 2015 Lease restructurings (3) 1.0 1 0.8 0.8 2016 Exit from one lease 8.0² 0.3 TOTAL 15.3 7.5 13.2 14.9 15.2 Note: 1) Exit/conversion of a lease agreement negotiated in 2015 to contribute 1.2m as of Sept 2016 2) Expected to eliminate negative EBITDA of 1.1m annually as from Oct 2016 Further deals with related exit costs expected (aiming at 10 loss making leases) Restructuring of loss making leases to turn them profitable & renegotiations for leases expiring up until 2020 (extension, exit)
prizeotel Bremen-City FINANCIAL UPDATE KNUT KLEIVEN, DEPUTY PRESIDENT & CFO 15 I Q1-2016 Results
Q1 Results below last year impacted by one-offs, Easter and weak RevPAR in some areas In m Q1 2016 vs LY LFL RevPAR (L&M) 64.9 1.0% Revenue 207.0-9.3 EBITDAR 50.5-10.4 EBITDAR Margin % 24.4% -3.7 pp EBITDA -9.2-8.5 EBITDA Margin % -4.4% -4.1 pp EBIT -25.0-12.6 EBIT Margin % -12.1% -6.4 pp NET INCOME -21.6-8.2 Revenue down 4.3% due to Negative FX impact of 6.4m Conversion of 1 lease to franchise Temporary closure of hotel Timing of Easter Decline in M&E business EBITDA decreased due to Easter, temporary closure of hotel for renovation, decline in M&E business and higher costs for reservations, provisions for bad debts and central personnel EBIT negatively impacted by termination costs of 8.0m, partly offset by lower costs for depreciation and write-downs of net 2.0m and gain on sale of shares in subsidiaries of 1.9m Net income impacted by improved tax situation due to change in jurisdictional mix, exceptional items and tax treatment of certain expenses 16 I Q1-2016 Results
Flow-through negatively impacted by one-offs and weak revenue development Q1-2016 vs Q1-2015 Reported Change FX Hotel Exits New Hotels One-offs Change in Writedowns Change in Central Costs L/L Revenue -9.4-6.4-7.1 1.5 2.6 EBITDAR -10.4-1.6-3.4 1.1-1.6-4.9 EBITDA -8.5 0.2-2.2 1.1-1.6-6.0 EBIT -12.6 0.6-2.0 1.1-6.1 2.6-1.6-7.2 Q1 comments: Hotel exits including Brussels EU and Lyon closed for renovation as well as gain on sale of shares in subsidiaries of 1.9m had slight negative impact on the results New hotels contributed 1.5m in revenues and 1.1m on EBIT One-offs negatively impacted EBIT 8.0m (termination of RB Norge Bergen in Norway) Lower costs for write-downs of tangible assets The increase of central costs is mainly due to higher accruals for personnel costs As L/L Revenue only increased by 1.2% the flow through was weak 17 I Q1-2016 Results
Q1 - Leased Business Nordics impacted by termination of contract, Easter and challenges on the Norwegian west coast Leased Revenue, MEUR Nordics Revenue decreased by 10.0m due to weakening of NOK vs. EUR, conversion of lease to franchise, oil related impact on the west coast of Norway, timing of Easter and decline in M&E business EBIT decreased by 10.6m due to revenue decrease and termination of RB Norge Bergen ( 8.0m). Partly offset by gain on sale of shares of 1.9m 200 150 100 50 0 NO RoWE Total Q1 2016 Q1 2015 EBIT, MEUR Rest of Western Europe Revenue was flat vs last year. L/L RevPAR growth in all key countries except for UK had a positive impact, however offset by weakening of GBP vs EUR and temporary closure of a hotel for renovation EBIT and EBIT margin positively impacted by lower costs for write-downs of fixed assets 0-5 -10-15 -20-25 NO RoWE Total Q1 2016 Q1 2015 18 I Q1-2016 Results
Q1 - Fee Business Fee revenue is down 3.8% due to weak RevPAR development in Middle East, Africa & Others and strengthening of the Euro Rest of Western Europe Fee revenue 0.4m lower than last year mainly due to the RevPAR development in UK 30 25 20 15 Fee Revenue, MEUR Q1 2016 10 Q1 2015 Eastern Europe Fee revenue 0.3m higher than last year. Very strong RevPAR development offset by strengthening of Euro EBIT decreased mainly due to higher provided costs for bad debts 5 0 14 NO RoWE EE MEAO Total EBIT, MEUR 12 10 Middle East, Africa & Others Fee revenue 1.1m lower than last year due to RevPAR and FX development EBIT decreased mainly due to drop in revenue and higher provided costs for bad debts 8 6 4 2 0 NO RoWE EE MEAO Total Q1 2016 Q1 2015 19 I Q1-2016 Results
Strong working capital development Q1 2016 vs Q1 2015 2016 2015 Cash flow before working capital -24.5-12.5 Change in working capital 22.6 5.4 Cash flow from operating activities -1.9-7.1 Investments -19.7-14.6 Free Cash Flow -21.6-21.7 MEUR Mar 31, 2016 Dec 31, 2015 Balance sheet total 462.1 464.3 Net working capital -62.8-53.0 Net cash (net debt) 19.4 41.1 Equity 227.4 246.7 Weak cash flow before working capital due to decrease in EBITDA Change in working capital positive due to changes in accruals and payables Solid step up in renovation of leased hotels The net cash position is positive ( 19.4m) by the end of the quarter 20 I Q1-2016 Results
prizeotel Hannover-City Q&A 21 I Q1-2016 Results