• Total revenue (1) of $158.1 million, down $4.7 million or 3% from the prior-year quarter; up $0.6 million on a constant currency basis
• Same store revenue per available room (“RevPAR”) down 4% from the prior-year quarter; down 1% on a constant currency basis
• Total adjusted EBITDA of $38.1 million, down $2.8 million or 7% from the prior-year quarter; down 5% on a constant currency basis
• Net earnings attributable to Belmond Ltd. of $8.4 million, a $7.0 million decrease from the prior-year quarter; adjusted net earnings from continuing operations of $4.0 million, a $2.9 million decrease
• In June 2016, announced further expansion of the Company's trains and cruises offerings with Belmond Andean Explorer, a luxury sleeper train scheduled to launch in Peru in May 2017
• In June 2016, refinanced Belmond Charleston Place loan
1) Includes earnings from unconsolidated companies. See Summary of Operating Results table later in press release for detail.
HAMILTON, Bermuda—Belmond Ltd. (NYSE:BEL) (the “Company”), owners, part-owners or managers of 47 luxury hotel, restaurant, tourist train and river cruise properties, including three scheduled to open over the course of the next twelve months, which operate in 23 countries, today announced its results for the second quarter ended June 30, 2016.
Roeland Vos, president and chief executive officer, remarked: “Results for our second quarter were in line with our expectations, with constant currency RevPAR at the bottom of our guidance range, reflecting specific challenges in select parts of our global portfolio. However, we were pleased with the directional performance at a number of properties and benefited from a reduction in central overheads compared to the prior-year quarter. The year-over-year net decrease in our second quarter 2016 adjusted EBITDA was primarily due to an expected decrease in EBITDA at our Italian hotels due in large part to the Biennale art festival in Venice, Italy, which occurs every other year and took place in 2015, and an anticipated lull in demand for our two hotels in Brazil ahead of August’s Summer Olympic Games in Rio de Janeiro.
"During the second quarter, we hosted an investor and analyst meeting in New York at which we unveiled a focused strategic plan to double the Company’s adjusted EBITDA and properties in operation by 2020. The message we provided at our meeting was straightforward: we have successfully repositioned the Company in recent years; we have a solid foundation from which we expect to grow; and we have a clear strategy, with a defined roadmap and ambitious but achievable goals. We intend to execute our strategic plan in a disciplined manner by focusing on three key areas: driving organic growth, continuing to build brand awareness and expanding our global footprint. With nearly half of our growth expected to come from existing properties, organic growth is a vital component of the plan, and, at the investor and analyst meeting, we provided specific examples of operating initiatives already executed or underway. We continue to be engaged in identifying and evaluating revenue-generating, cost-saving and investment opportunities across the globe, and we anticipate bringing additional initiatives to market in the near future. Driving the other half of our growth, our global footprint expansion efforts are also gaining traction, and I am pleased to report that we recently announced a new luxury overnight train experience in Peru, Belmond Andean Explorer, which we expect to launch in May 2017. This additional train product will follow and complement our new luxury overnight train experience in Ireland, Belmond Grand Hibernian, which is scheduled to commence operations in the third quarter of 2016. We are encouraged by the progress we have already made on our strategic plan and will provide regular updates on the achievement of our 2020 aspirational goals as we move forward.
"Looking specifically at the remainder of 2016, we see promising indications of solid growth but acknowledge the inherent uncertainty of recent global events. In particular, we believe that it is too early to assess the full impact on Belmond of the United Kingdom’s decision to leave the European Union, which has led to the recent decrease in the value of the British pound. At a high-level, this decision primarily impacts the Company’s results in two ways: translation of pound-denominated operations and central overheads to U.S. dollars and demand for our luxury travel experiences from British guests. From a translation standpoint, a decrease in the pound is marginally beneficial to the Company’s U.S. dollar reported results due to the fact that the majority of the Company’s central overheads are pound denominated. On the demand side, 13% of the Company’s hotel guests originate from the United Kingdom, although we have not yet seen a material shift in their booking behavior.
"Even with these uncertainties, we expect to have a solid third quarter, driven largely by the benefit of the Olympic Games on Belmond Copacabana Palace in Rio de Janeiro and demand for our European hotels during their peak season. As such, for the full year 2016, we are maintaining our guidance for same store, constant currency RevPAR growth of between 3% and 7%."
Second Quarter 2016 Operating Results
Total revenue for the second quarter of 2016 was $158.1 million, a $4.7 million or 3% decrease from total revenue for the second quarter of 2015. In constant currency, total revenue for the second quarter of 2016 increased $0.6 million over the second quarter of 2015.
Same store RevPAR for owned hotels for the second quarter of 2016 decreased 1% from the prior-year quarter on a constant currency basis as a result of a 1% decrease in average daily rate ("ADR"), with occupancy in line with that of the prior-year quarter.
Total adjusted EBITDA for the second quarter of 2016 was $38.1 million, a $2.8 million or 7% decrease from total adjusted EBITDA of $40.9 million for the second quarter of 2015. In constant currency, total adjusted EBITDA for the second quarter of 2016 decreased $2.0 million or 5% from the second quarter of 2015.
Net earnings attributable to Belmond Ltd. for the second quarter of 2016 were $8.4 million ($0.08 per common share), a $7.0 million or 45% decrease from $15.4 million ($0.15 per common share) for the second quarter of 2015. The year-over-year decrease was largely attributable to a gain on sale of Hotel Ritz, Madrid, Spain of $19.8 million, partially offset by a goodwill impairment of $5.7 million and net tax expense related to the preceding two items of $4.2 million, recognized in the prior-year quarter.
Adjusted net earnings from continuing operations for the second quarter of 2016 were $4.0 million ($0.04 per common share), a $2.9 million or 42% decrease from $6.9 million ($0.07 per common share) for the second quarter of 2015.
Recent Company Highlights
- Announces new luxury train in Peru — In June 2016, the Company announced the launch of South America’s first luxury sleeper train, Belmond Andean Explorer in Peru. The new train, which is expected to launch in May 2017, is set to travel along one of the highest rail routes on earth, traversing the Peruvian Andes from Cusco to Lake Titicaca and Arequipa, on one- and two-night journeys with a maximum of 68 guests. The train is owned by PeruRail, the Company's 50/50 joint venture that engages in passenger and freight train operations, and will be managed by the Company.
- Refinances loan secured by Belmond Charleston Place, South Carolina — In June 2016, Charleston Place LLC, the owner of Belmond Charleston Place, refinanced its $86.0 million loan secured on its real and personal property with an amended $112.0 million loan. The amended loan has approximately three years remaining until maturity with no annual amortization and an interest rate of LIBOR plus 2.35%. The majority of the additional proceeds from this refinancing were used to repay in full a local loan facility with a principal balance of $10.0 million and an accrued interest balance of $16.8 million.
- Expands room product offering at Belmond Miraflores Park, Lima, Peru — In July 2016, the Company commenced operation of eight new junior suites on the third floor of Belmond Miraflores Park. Replacing offices, meeting space and a business center, the new keys increase the hotel's key count by 10% — from 81 to 89.
Second Quarter 2016 Business Unit Results
Owned hotels:
Europe:
For the second quarter of 2016, revenue from owned hotels was $67.0 million, a decrease of $4.8 million or 7% from $71.8 million for the second quarter of 2015. In constant currency, revenue for the region for the second quarter of 2016 decreased $2.7 million or 4% from the prior-year quarter primarily due to a revenue decrease of $3.6 million or 22% at Belmond Hotel Cipriani, Venice, Italy partially due to a challenging comparable period, with revenue for the second quarter of 2015 benefiting from the Biennale art festival, which occurs every other year, and the final receipt of $1.1 million of settlement income related to the 2010 settlement of the Cipriani trademark litigation. Partially offsetting this decline, Belmond Reid's Palace, Madeira, Portugal increased revenue by $0.7 million or 18% due to occupancy growth of 8 percentage points as a result of capitalizing on increased demand for the destination; Belmond Hotel Caruso, Ravello, Italy increased revenue by $0.6 million or 11% due to transient-driven ADR growth of 10%; and Belmond La Residencia, Mallorca, Spain grew revenue by $0.4 million or 8% mainly as a result of improved revenue management coupled with increased demand for the destination, which drove 14% RevPAR growth.
In constant currency, same store RevPAR for owned hotels in the region was in line with the prior-year quarter, as a 2 percentage point increase in occupancy was offset by a 4% decrease in ADR.
Adjusted EBITDA for the region for the quarter of $26.3 million represented a decrease of $3.3 million or 11% from $29.6 million for the second quarter of 2015. In constant currency, adjusted EBITDA for the region for the second quarter of 2016 decreased $2.4 million or 8% from the prior-year quarter mainly due to an adjusted EBITDA decrease of $2.8 million or 36% at Belmond Hotel Cipriani, partially offset by adjusted EBITDA growth of $0.4 million or 20% at Belmond La Residencia; $0.4 million or 19% at Belmond Hotel Caruso; and $0.3 million or 23% at Belmond Reid's Palace.
North America:
Revenue from owned hotels for the second quarter of 2016 was $38.1 million, down $1.6 million or 4% from $39.7 million for the second quarter of 2015. This decrease was largely the result of a $1.0 million or 30% revenue decrease at Belmond Maroma Resort & Spa largely due to the re-opening of renovated hotels in the Los Cabos resort area on Mexico's Baja Peninsula in the second half of 2015 and increased local competition, as well as a $0.7 million or 12% revenue decrease at Belmond La Samanna, St. Martin, French West Indies primarily due to a year-over-year decrease in call volume due in part to concern over the Zika virus. Partially offsetting these decreases, Belmond El Encanto, Santa Barbara, California grew revenue by $0.3 million or 6% mainly due to a 4 percentage point increase in occupancy.
In constant currency, same store RevPAR for owned hotels in the region was down 3% from the prior-year quarter due to a 2% decrease in ADR and a 1 percentage point decrease in occupancy.
Adjusted EBITDA for the region for the quarter was $8.5 million, a decrease of $1.1 million or 11% from $9.6 million for the second quarter of 2015. The year-over-year decline was primarily the result of a $0.9 million decrease in adjusted EBITDA at Belmond La Samanna and a $0.6 million or 69% decrease in adjusted EBITDA at Belmond Maroma Resort & Spa, partially offset by a $0.3 million increase in adjusted EBITDA at Belmond El Encanto.
Rest of world:
Revenue from owned hotels for the second quarter of 2016 was $24.3 million, a decrease of $1.2 million or 5% from $25.5 million for the second quarter of 2015 primarily due to year-over-year currency depreciation. In constant currency, revenue for the second quarter of 2016 increased $0.8 million or 4% over the prior-year quarter principally as a result of revenue growth of $0.8 million or 81% at Belmond Safaris, Botswana, as Belmond Eagle Island Lodge, one of the Company's three safari lodges, was operational in 2016 following a complete renovation that required a planned closure from January to November 2015. Additionally, revenue increased $0.4 million or 24% at Belmond Mount Nelson Hotel, Cape Town, South Africa primarily due to 17% ADR growth that was largely the result of investments the Company made over the past several years in the hotel's room product and meeting and banqueting facilities. Partially offsetting these increases was a combined $0.4 million or 3% decrease in revenue for the Company's two hotels in Brazil largely due to an expected lull in demand ahead of August's Olympic Games in Rio de Janeiro and Brazil's challenging economic situation.
In constant currency, same store RevPAR for owned hotels was up 1% over the prior-year quarter, as a 4% increase in ADR was offset by a 1 percentage point decrease in occupancy.
Adjusted EBITDA for the region for the quarter of $2.1 million decreased $0.9 million or 30% from adjusted EBITDA of $3.0 million for the prior-year quarter. In constant currency, adjusted EBITDA for the region decreased $0.9 million or 35% from the prior-year quarter largely due to a combined adjusted EBITDA decrease of $1.2 million or 51% at the Company's two hotels in Brazil primarily resulting from a decline in revenue coupled with an increase in payroll taxes and inflationary increases to payroll, partially offset by a $0.4 million increase in adjusted EBITDA at Belmond Safaris.
Part-owned / managed hotels:
Adjusted EBITDA for the second quarter of 2016 of $1.3 million decreased $0.9 million or 41% from $2.2 million for the second quarter of 2015 largely due to a $0.4 million or 20% decrease in adjusted EBITDA recognized for the Company's Peru hotels joint venture primarily as a result of a year-over-year decrease in group business at the joint venture's two hotels in Cusco.
Owned trains & cruises:
Revenue for the second quarter of 2016 was $21.4 million, up $1.3 million or 6% from $20.1 million for the second quarter of 2015. In constant currency, revenue increased $2.5 million or 13% primarily as a result of a $2.5 million or 27% revenue increase for the Venice Simplon-Orient-Express train largely as a result of operating six more trips in the current-year quarter.
Adjusted EBITDA for the quarter was $3.6 million, a $0.5 million or 16% increase over $3.1 million for the second quarter of 2015. In constant currency, adjusted EBITDA increased $0.7 million or 23% largely due to a $0.4 million or 15% increase in adjusted EBITDA for Venice Simplon-Orient-Express.
Part-owned / managed trains:
Adjusted EBITDA for the second quarter of 2016 of $5.6 million increased $0.3 million or 6% over adjusted EBITDA of $5.3 million for the second quarter of 2015 as a result of a $0.2 million or 3% increase in EBITDA recognized for the Company’s PeruRail joint venture largely as a result of the joint venture commencing transport of copper concentrate from the Las Bambas mine, which began production at the end of 2015.
Central costs:
For the second quarter of 2016, adjusted central overheads of $5.8 million were $1.9 million or 25% lower than adjusted central overheads of $7.7 million for the prior-year quarter primarily due to reduced legal and professional fees, payroll savings related to a weaker British pound than in the prior-year quarter and other general savings.
Investments
The Company continued its strategy of disciplined re-investment in core assets and projects with attractive forecasted returns. During the second quarter of 2016, the Company invested a total of $16.1 million in its portfolio, including $2.4 million on the Venice Simplon-Orient-Express train mainly for required statutory works and the phased installation of air-conditioning; $1.8 million at Belmond Charleston Place partially for a new high-end sports pub that opened in July 2016; $1.4 million at Belmond La Residence d'Angkor, Siem Reap, Cambodia primarily for a rooms renovation project; $1.3 million on the Belmond Grand Hibernian luxury sleeper train, which is scheduled to commence operations in Ireland in the third quarter of 2016; and $1.1 million at Belmond Mount Nelson Hotel mainly for the renovation of rooms in the hotel's main building.
Balance Sheet
At June 30, 2016, the Company had total debt of $600.3 million and cash balances of $149.9 million, resulting in total net debt of $450.4 million and a ratio of net debt to trailing twelve-months total adjusted EBITDA of 3.7 times, which compared to net debt of $443.9 million and a ratio of net debt to trailing twelve-months total adjusted EBITDA of 3.7 times at December 31, 2015.
Outlook
The Company is providing the following RevPAR and other guidance for the third quarter and full year 2016:
Third Quarter 2016 Full Year 2016 Same store worldwide owned hotel RevPAR growth guidance (1) On a constant currency basis 7% – 11% 3% – 7% In U.S. dollars 8% – 12% 0% – 4% Statement of operations guidance ($ millions) Central overheads $5.9 – $6.9 $23.9 – $25.9 Share-based compensation $1.5 – $2.5 $5.8 – $7.8 Central marketing costs $0.1 – $1.1 $3.3 – $5.3 Depreciation & amortization $13.1 – $14.1 $52.3 – $54.3 Interest $6.9 – $7.9 $28.8 – $30.8 Tax expense $17.6 – $18.6 $25.4 – $27.4 Cash flow guidance ($ millions) Cash interest expense (2) $8.3 – $10.3 $42.1 – $44.1 Cash taxes $6.7 – $7.7 $21.5 – $23.5 Scheduled loan repayments $0.8 – $1.8 $4.4 – $6.4 (1) Projected same store RevPAR growth for the third quarter ending September 30, 2016 and the full year ending December 31, 2016 exclude the operations of Belmond Eagle Island Lodge and Belmond La Residence d'Angkor. (2) Projected cash interest expense for the full year ending December 31, 2016 includes a $14.3 million accrued interest payment related to the June 2016 repayment in full of a local loan facility at Belmond Charleston Place.
To view full financial release and corresponding tables please click the PDF icon or visit:
http://investor.belmond.com/news/2016/08-03-2016-220037943.aspx
