In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance.
OVERALL: BETTER - HOT's results came in above the high of company guidance. The outperformance was driven by better results across all segments of their business: owned, leased, and consolidated JV, fees and higher contribution from Bal Harbour.
Here is the report card evaluating actual results against management's previous assertions.
- FY 2012 OUTLOOK
- SLIGHTLY BETTER: HOT raised RevPAR by 1% and lowered some below the EBITDA line items, however, the raise on Adjusted EBITDA and EPS for the year was basically a carry-through of the beat in 1Q
- SUPPLY OUTLOOK
- SAME: Supply continues to be tight and will remain so in the near future.
- SG&A GROWTH:
- WORSE: SG&A growth was taken up by 1% on the low end of HOT’s guidance range. In the quarter SG&A was up 20% YoY or 11% excluding the $3-4MM of non-recurring items and a $3-4MM reversal the company guided to in 4Q. 11% is a lot higher than prior guidance of +3-5%.
- RENOVATION IMPACT:
- SAME: About $5MM in the Q
- EUROPE
- BETTER: 2Q12 will be better than 1Q12. Booking windows are returning back to normal. REVPAR is tracking at +4% in April they expect it to come in at +4% in 2Q
- CANADA
- SAME: Canada remains sluggish as it dragged North America REVPAR by almost 200 bps. The strong Canadian dollar has had a negative effect on their big box hotels in Toronto.
- MEXICAN RESORT RECOVERY
- BETTER: HOT's earlier optimism played out well in 1Q as their Mexican resorts 1Q REVPAR grew 17% as US travelers returned
- CORPORATE RATE NEGOTIATIONS
- LITTLE WORSE: Corporate rates are trending up 6%, on the low end of previously given "mid to high single digit" guidance.
- GROUP TRENDS
- SAME: Group was up 5% in 1Q. Management had indicated previously that the group pace was going to be in the mid-single digits in 2012.
- TRANSIENT TRENDS
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SAME: "Transient rates continue to climb as momentum remains robust"
- REVPAR OUTLOOK BY REGION
- SAME: Latin America is still expected to be the strongest RevPAR growth region followed by Asia, NA, Europe and ME&A in last place
- FX IMPACT
- SAME: HOT still expects the dollar will be a headwind to pull down REVPAR by 200bps
- NORTH AFRICA AND JAPAN RECOVERY
- SAME: HOT saw big jumps in March RevPAR as the region started to lap some easy comps.
- VACATION OWNERSHIP TRENDS
- SAME: Business remains stable with interval sales and revenues up. HOT reaffirmed its 2012 cash flow target of $125 million
- BAL HARBOUR:
- BETTER: Raised EBITDA forecast by $20MM, which mostly reflects $18MM of higher than expected EBITDA in 1Q12. The company also increased the project’s cash flow expectation by $50MM to $300MM for 2012
- CASH TAXES
- SAME: “Cash taxes in 2012 will be approximately $100 million."
- CAPEX GUIDANCE:
- SAME: “$575 million in 2012, $200 million in maintenance and IT capital, and $375 million in ROI projects.”
- COST GROWTH:
- SAME: "Holding the line on costs" remains HOT's mottoo