Q2-2013 Results Wolfgang M. Neumann, President & CEO Knut - - PowerPoint PPT Presentation

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Q2-2013 Results

Wolfgang M. Neumann, President & CEO Knut Kleiven, Deputy President & CFO July 17, Brussels

Radisson Blu Hotel, Istanbul Pera

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0,7% 0,1%

• 0,5%

3,3% 0,2%

• 2%

0% 2% 4% 6% 8% 10% 12%

Europe Eastern Europe Northern Europe Southern Europe Western Europe

Percent change from May YTD 2012

EUROPE : +0.7%

8,3% 9,7% 5,4%

• 0,8%
• 2%

0% 2% 4% 6% 8% 10% 12%

Middle East/Africa Middle East Northern Africa Southern Africa

Percent change from May YTD 2012

Growth of GDP, constant prices (Source: World Bank) Current Projections (%) 2013 Europe 0.0 Germany 0.6 France

• 0.1

United Kingdom 0.7 Sweden 1.0 Norway 2.5 Central & Eastern Europe 2.2 Russia 3.4 Turkey 3.4 Sub-Saharan Africa 5.6 South Africa 2.8 Nigeria 7.2 Middle East & North Africa 3.1 Saudi Arabia 4.4 United Arab Emirates 3.1

The macro-economic climate in Europe remains fragile and emerging economies are driving growth

Market RevPAR Performance May YTD 2013

MIDDLE EAST/AFRICA : +8.3%

Source: STR Global

• Modest, positive expectations for GDP growth in Scandinavia;

emerging economies continue to be growth drivers; challenging outlook for Euro zone

• RevPAR growth profile reflects similar pattern with the Middle

East & North Africa being the key drivers

Q2-2013 Results 2

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Q2 2013: Rising RevPAR, Rising Margins

• 6.0% L/L RevPAR growth, driven by occupancy rise
• 8.8% L/L RevPAR growth in Nordics, boosted by Easter

effect

• 16.6% fee revenue increase, with Middle East and Africa

leading the recovery

• Strict cost control and the 2012 terminations of unprofitable

leases led to solid conversion of revenue to EBITDA

• 54% Q2 EBITDA improvement, and 81% in H1
• 124% EBIT improvement
• 9 MEUR Free Cash Flow improvement in H1

Q2-2013 Results 3

14% EBITDA Margin

+4.5pp

68.7 RevPAR

+6.0%

(L/L) €26m EBIT

+€15m

€35m EBITDA

+€12m

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Performance growing steadily since 2009 and nearing 2008 peak; accelerating due to Route 2015 initiatives

Q2-2013 Results 4

• 25
• 20
• 15
• 10
• 5

5 10 15 20 25 30 35 40 2013 2012 2011 2010 2009 2008

MEUR

H1 Historical Performance

EBITDA EBIT

• H1 typically the weaker half of the year,

due to Easter effect and slow months of January and February

• Portfolio in 2008 included 50,100 rooms

in operation, compared to 74,600 today

• After 5 years, there is still a 5.2 MEUR

EBITDA and 8.0 MEUR EBIT gap, reflecting the slow pace of the recovery

Peak EBITDA: 37.3 MEUR Peak EBIT: 24.2 MEUR

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More resilience due to shift in business model and launch of Route 2015

REVPAR (EUR)

73 71 69 59 61 67 72 77 74 58 62 63 67

• 20

20 40 60 80 100

EBITDA (MEUR)

52 33 24

• 12

18 44 61 87 71 5 32 35 51

• 20

20 40 60 80 100

• Gradually becoming more resilient due to shift in business model
• RevPAR 15% below the 2007 peak (20% adjusted for inflation)
• EUR 1 change in RevPAR = MEUR 6-8 change in EBITDA (ca 85% from leases)

Q2-2013 Results 5

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6.5% 3.0% 2.3% 3.2% 5.6% 5.9% 4.6% 4.2% 5.7% 6.0%

• 2%

0% 2% 4% 6% 8% 10%

L/L Occupancy L/L Average Room Rate L/L RevPAR

6 consecutive quarters of occupancy-driven RevPAR growth and increased market penetration (RGI)

Q2-2013 Results 6

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Middle East and Africa continue to surge; Nordics up substantially due to Easter effect

Q2-2013 Results 7

NORDICS

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013

EASTERN EUROPE REST OF WESTERN EUROPE MIDDLE EAST & AFRICA

10.0% 2.4%

• 1.2%

2.3% 1.7% 1.8% 0.8% 3.4% 0.7% 8.8%

• 5%

0% 5% 10% 15% 20%

L/L Occupancy L/L Average Room Rate L/L RevPAR

8.6% 10.7% 4.4% 1.5% 3.1% 2.0% 3.6% 2.2% 1.2% 4.2%

• 5%

0% 5% 10% 15% 20%

L/L Occupancy L/L Average Room Rate L/L RevPAR 11.5% 19.1% 15.3% 17.3% 12.2%11.9% 6.1% 5.7% 4.0% 1.2%

• 5%

0% 5% 10% 15% 20%

L/L Occupancy L/L Average Room Rate L/L RevPAR

• 6.1%
• 27.8%
• 12.8%
• 4.2%

10.8% 17.1% 13.0% 7.9% 20.5% 13.5%

• 30%
• 20%
• 10%

0% 10% 20% 30%

L/L Occupancy L/L Average Room Rate L/L RevPAR

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013

/ *omparable Managed & Leased Hotels with 3rd Party RGI data

2012 2013 YTD May

Revenue generating initiatives and synergies with Carlson have powered substantial growth in market penetration (RGI)

Q2-2013 Results 8

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Q2 Highlights:

• Park Inn expansion in Sub-Saharan Africa (Kigali,

Abuja) and Middle East (Oman, Bahrain)

• 3 projects to open within 12 months
• Extension of the profitable Radisson Blu Aarhus,

Denmark lease

Hotel signings in line with 2012, with continued focus on fee-based growth in Emerging Markets

Park Inn by Radisson Abuja Kaura, Nigeria

100%

Fee-based

>75%

Emerging Markets

>65%

Park Inn Q2 2013

Q2-2013 Results 9

SIGNINGS Q2 2013 Q2 2012 H1 2013 H1 2012 Hotels 11 11 16 17 Rooms 1,800 2,500 2,900 3,900

Park Inn by Radisson Kigali, Rwanda

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Hotel openings reflect a mix of Mature and Emerging Markets, with emphasis on conversions

Q2 Highlights:

• Conversions: Park Inn Glasgow City Centre (former
• ffice building), Radisson Blu Hotel Bremen
• Opening of our 4th hotel in Istanbul and 7th in Turkey

(Radisson Blu Hotel Istanbul Pera)

• 90% fee based (some additional rooms added to

existing leased hotel)

10 Q2-2013 Results

OPENINGS Q2 2013 Q2 2012 H1 2013 H1 2012 Hotels 3 5 8 9 Rooms 770 1,300 1,700 2,200

50%

Mature Markets

90%

Fee-based Contracts

88%

Radisson Blu Q2 2013

Radisson Blu Hotel, Bremen Park Inn by Radisson Glasgow City Center

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Contract Type Brand Region Pre-2003 2003 - 2007 2008+

• Lease driven growth in

Nordics

• Single brand strategy
• Focus on “home markets”
• Fast expansion in RoWE
• Growing the Park Inn

brand

• Switch to Asset Light

Strategy

• Focus on Emerging

Markets

Our focus on Emerging Markets and Asset Light growth go hand in hand

11 Q2-2013 Results

34% 44% 22% 27% 45% 28% 10% 69% 21%

Leased Managed Franchised

65% 32% 3%

Radisson Blu Park Inn Others

48% 52% 99% 1% 43% 30% 16% 11% 9% 65% 18% 8% 9% 29% 38% 25%

NOR RoWE EE MEAO

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19% 40% 25% 16%

NOR RoWE EE MEAO

4% 13% 38% 47%

NOR RoWE EE MEAO

16% 34% 28% 22%

NOR RoWE EE MEAO

In Operation Q2 2013

337 Hotels 75,000 rooms 100 Hotels 20,000 rooms

Pipeline Q2 2013

400-440 Hotels 90-95,000 rooms

Total Rezidor Portfolio Q2 2013 – by 2015/16

50%

Emerging Markets

50%

Mature Markets

Our efforts have resulted in a primarily fee-based portfolio with a greater presence in Emerging Markets

22% 54% 24%

Leased Managed Franchised

92% 8%

Leased Managed Franchised

18% 62% 20%

Leased Managed Franchised

12 Q2-2013 Results

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RANK COMPANY 2013 HOTELS 2013 ROOMS 1 INTERCONTINENTAL 4,602 676,000 2 HILTON 3,992 652,000 3 MARRIOTT 3,672 639,000 4 WYNDHAM 7,342 627,000 5 CHOICE 6,198 497,000 6 ACCOR 3,515 450,000 7 STARWOOD 1,121 328,000 8 BEST WESTERN 4,024 312,000 9 HOME INNS 1,772 214,000 10 CARLSON REZIDOR 1,077 166,000 RANK 2012 COMPANY 2013 HOTELS 2013 ROOMS 1 ACCOR 2,396 258,000 2 BEST WESTERN 1,312 90,600 3 INTERCONTINENTAL 574 89,200 4 GROUPE DU LOUVRE (*) 974 70,400 5 CARLSON REZIDOR (**) 255 51,800 6 NH HOTELES 347 50,800 7 WHITBREAD 641 50,700 8 HILTON 205 46,600 9 MELIA 195 44,700 10 MARRIOTT 245 44,600

SOURCE I MKG Hospitality 2013 (*) Louvre Hotels Group + Concorde Hotels (**) Rezidor + Park Plaza + Radisson Edwardian

10th Largest in the World 5th Largest in Europe

The combined Carlson-Rezidor presence gives us international exposure and critical mass

13 Q2-2013 Results

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Financial Update

Knut Kleiven, Deputy President & CFO

Radisson Blu Hotel, Istanbul Pera

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Q2 Highlights:

+10 MEUR in revenue:

• 16 MEUR in L/L revenue

growth compensated for negative FX impact (-1.6) and 9 lease terminations (-7.3)

• 17% increase in fee revenue

+15 MEUR in EBITDAR:

• 10 MEUR higher revenue
• 4 MEUR operating expenses

+12 MEUR in EBITDA:

• Reduced rent payments from 9

lease terminations +15 MEUR EBIT

• 3 MEUR reduction in write-

downs

• High tax rate due to losses

which are difficult to utilize

Strong revenue increase and solid conversion led to the best H1 performance since 2008

Q2-2013 Results 15

MEUR Q2 2013 Q2 2012 H1 2013 H1 2012 Revenue 248.9 238.9 456.0 445.8 EBITDAR 97.0 82.3 155.6 140.7 EBITDAR Margin % 39.0% 34.4% 34.1% 31.6% EBITDA 34.9 22.7 32.1 17.7 EBITDA Margin % 14.0% 9.5% 7.0% 4.0% EBIT 26.2 11.7 16.2

• 0.8

EBIT Margin % 10.5% 4.9% 3.6%

• 0.2%

Financial Net

• 0.9

0.2

• 1.1

0.0 Tax

• 7.9
• 5.7
• 8.9
• 7.1

NET RESULTS 17.4 6.2 6.2

• 7.9

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Flow-through Q2 2013 vs Q2 2012 L/L growth driving EBITDA and EBIT improvement

Q2-2013 vs Q2-2012 Reported Change FX Hotel Exits New Hotels One-offs 2012 Change in Marketing Net Spend L/L Revenue 10.0

• 1.6
• 7.3

2.6

• 16.3

EBITDAR 14.7

• 0.5
• 1.2

0.8 2.3 1.0 12.3 EBITDA 12.2

• 0.2

0.4 0.8 1.5 1.0 8.7 EBIT 14.5

• 0.1

0.4 0.8 4.2 1.0 8.2

Q2-2013 Results 16

• FX effect minimal, but could have a larger impact in the coming months
• Hotel exits had positive impact on margins
• One-offs in 2012 relate to the exit from a management agreement and write downs
• f fixed assets (both in RoWE)
• Healthy flow through in the L/L portfolio

/

9 MEUR Free Cash Flow improvement in H1

2013 vs 2012 Q2 2013 Q2 2012 H1 2013 H1 2012 Cash flow before working capital 33.1 20.8 21.2 5.3 Change in working capital

• 18.1
• 19.1
• 14.6
• 16.0

Cash flow from operating activities 15.0 1.7 6.6

• 10.7

Investments

• 12.8
• 4.2
• 20.6
• 12.2

Free Cash Flow 2.2

• 2.5
• 14.0
• 22.9

Q2-2013 Results 17

• Positive development in cash flow from operations
• Working capital improved over 2012
• Higher maintenance and investments in leased hotels

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Nordics:

• Strong RevPAR growth from Easter effect
• All three key countries reported RevPAR

growth, with Norway leading at 13%

• 2 leased hotels converted to franchises

Q2 Leased business Stable revenue, but increased EBIT due to exits

Q2-2013 Results 18

Rest of Western Europe:

• Revenue stable, despite 7 leases

converted to management

• Improvement across all countries, except

Belgium

• EBIT margin increased by 4 p.p., due to

exits and fewer write-downs, reaching break-even level

50 100 150 200 250 NO RoWE Total

Leased Revenue MEUR

Q2 2013 Q2 2012

• 6
• 4
• 2

2 4 6 8 10 12 14 NO RoWE Total

EBIT MEUR

Q2 2013 Q2 2012

/

Q2 Fee business Emerging markets continue to drive the growth

Q2-2013 Results 19

5 10 15 20 25 30 35 NO RoWE EE MEAO Total

Fee Revenue MEUR

Q2 2013 Q2 2012 5 10 15 20 25 NO RoWE EE MEAO Total

EBIT MEUR

Q2 2013 Q2 2012

Eastern Europe:

• Continued positive RevPAR development
• Russia leading recovery with 8% RevPAR

growth

• Declines in Poland and Ukraine due to

Euro 2012 Middle East, Africa & Others:

• 14% L/L RevPAR growth led to 16%

improvement in fee revenue

• Strongest performing region, with

significant growth in South Africa, UAE and Saudi Arabia

• 26% EBIT improvement

Rest of Western Europe

• EBIT 2012 negatively impacted by 1.5

MEUR write-down

/

3pp EBITDA margin expansion in H1 in line with Route 2015 Goals

Q2-2013 Results 20

Assumes RevPAR growth covers inflation

• Revenue initiatives
• Fee based room

growth

• Cost savings
• Asset management /

deleveraging

• CapEx

Profitability Target EBITDA margin of 12% over a business cycle Balance Sheet Small positive average net cash position Dividend Policy Approximately one third of annual after-tax income to be distributed to shareholders

Rezidor’s Initiatives

FOCUS AREAS EBITDA MARGIN UPLIFT OUR FINANCIAL TARGETS

+ Market Recovery over and above inflation 6-8% + Asset Management

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Q&A

Park Inn by Radisson Amsterdam Airport Schiphol