Earnings Call: Q1 2026

Apr 24, 2026

Summary

Q1 occupancy rose to 73%, but lower ADR and weaker demand reduced revenue and EBITDA. Cost cuts of nearly MXN 58 million helped cushion pressure; discounted pricing is expected to continue in Q2 as the Ixtapa acquisition advances.

Good afternoon, and thank you for joining us today. My name is Rodrigo Ancira, Investor Relations Director of Grupo Hotelero Santa Fe, and I would like to welcome you to the company's earnings webcast for the first quarter of 2026. On the line, we have Francisco Medina, our Executive Vice President, and Alberto Santana, our Administrative Director. The presentation slides we will follow during this call are available on our webcast, which you can find our Investor Relations section of our website. Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. Our projections are subject to risks and uncertainties, and actual results may differ materially based on a number of factors. Please refer to the detailed notes in the company's press release regarding forward-looking statements. At the end of the presentation, we will open the call to any questions you may have. Now, I will pass the call to Francisco, our CEO. Thanks, Rodrigo, and good afternoon, everyone. As you know, we began the year facing a more challenging environment, extending from the exchange rate volatility and a slowdown in the tourism activity in Mexico. Together with events that took place in Jalisco during February, which had significant repercussions in our sector in February and March, as well as the war in Iran, which caused a contraction in the U.S. market. We have a solid and resilient business model that enables us to face this type of situation. Regarding the operating indicators across all hotels, during this quarter, we posted 100 basis points of growth in occupancy, reaching 73%. We have an ADR of MXN 2,030 and RevPAR of MXN 1,482. Revenues were MXN 970 million in the quarter, and EBITDA was MXN 266 million. We implemented a variety of initiatives to reduce costs and expenses, which allow us to mitigate the effects of balances, the difference in revenues, lower expenses, and rationalize across our portfolio. The Ixtapa Zihuatanejo acquisition transaction continues to progress as planned. The notification has already been filed with the competition authority, CNA, and we anticipate closing during the second quarter of 2026. Now, I will pass the call back to Rodrigo. Thank you. In room revenue, we see that it decreased 4.4% to MXN 447 million in the first quarter compared to the first quarter of 2025, driven by lower hotel activity. Food and beverage revenue decreased 6% to MXN 383 million in the first quarter of 2026 compared to the first quarter of 2025. Other income, which includes among other items, event room rentals, parking, laundry, telephone, and leasing of commercial spaces, decreased 7% to MXN 45 million in the first quarter compared to the first quarter of 2025. Vacation Club income increased 4% to MXN 13 million, and third-party hotel management fees were MXN 29 million, which were down 9% in the first quarter compared to the first quarter of 2025. Moving on to our key operational metrics. On a consolidated level this quarter, we posted a 1 percentage point increase in occupancy to 73%, combined with an ADR decrease of 5% to MXN 2,030. RevPAR in the quarter was MXN 1,482, which was 3% lower than in the first quarter of 2024. EBITDA in the quarter decreased 16% to MXN 266 million compared to MXN 318 million in the first quarter of last year, reflecting lower revenues combined with operational leverage. Moving on, we posted an operating income loss of 27%, from MXN 240 million in the first quarter of 2025 to MXN 175 million in the first quarter of 2026, driven by the same factors as EBITDA. Net income in the quarter decreased 28%. It went from MXN 160 million in the first quarter of last year to MXN 140 million in the first quarter of 2026. This was mainly driven by the lower operating income. Net debt was $1.6 million at the end of the first quarter of 2026, which represented a total debt to EBITDA last 12-month ratio of 1.9 times. Total debt is 100% US dollar denominated and has an average cost of 7.4%. Additionally, I would like to mention that over 90% of debt maturities are long-term. Our short US dollar position by the end of the quarter was $290,000, equivalent to MXN 5.26 million. Now, I will pass the call back to Francisco to end the call. Thank you, Rodrigo. Lastly, I would like to highlight and express my gratitude to the more than 4,600 associates who have supported the company unconditionally as always. We are especially thankful to the trust and support of our shareholders, and again, to all our tremendously professional and cooperative teams. With that, I would like to open the call for questions and answers. Thank you. At this time, we will open the floor for your questions. Ladies and gentlemen, if you have a question, please use the raise hand function on your Zoom tool. Please make sure that the microphone is turned on. Our first question comes from Martín Lara from Miranda Global Research. Please, sir, go ahead. Hi, guys. Thank you for the call. Only two questions. Could you please explain the ADR reduction in this quarter? And also, why was the tax rate so low in this period? Thank you, Martín, for your questions. Well, I was explaining to you that we reached a level of 73% occupancy, and based on the situation we had for the 22nd of February, that represented a lot of cancellations for the months of February and March. Not only us, as well as the competitive set, means all the hotels and the destinations, had to create volume throughout, reducing the prices and reducing the packages, its rates in all the different destinations, mainly Puerto Vallarta, Los Cabos, and then Cancún and Riviera Maya. That is why we have a level of 73% compared to 72% of last year, which is a good level, but a reduction of 4.5% in terms of ADR. And that will continue in the second quarter based on the slow of the demand that is still contracted mainly in the American market. And talking about the tax reduction, I will pass the microphone to Alberto Santana, our Administrative Director. Thank you. This is just a provision based on what we estimate to have at the end of the year, when the final calculation was made, and also is based on the last year that we have tax similar. So it's just a provision. Okay. Thank you very much. Thank you, Martín. Once again, if you want to make a question, please use the function, raise your hand in your Zoom tool. Our next question comes from Carlos Alcaraz of Altar Research. Please, sir, go ahead. Hello, good afternoon. Thank you for the call, congratulations on the results. I have several questions. I will ask them one by one, if that is okay with you. First, considering the recent changes in the portfolio and the current market environment, how are you deciding between new acquisitions, renovation of existing hotels, and making the balance sheet stronger? Thank you, Carlos, for your questions. Based on the strategy that we had last year, we are implementing the first big CapEx, which will be the acquisition of the Ixtapa Zihuatanejo hotel. As I expressed, we will continue with the end of the transaction, and that was part of the strategy, and the money was a part from the cash of the hotels. The second and third more important investments will continue, which is the Breathless conversion in Puerto Vallarta and Los Cabos. We basically had, as expressed to you, coming from last year, the CapEx support for those investments, and we will continue based on the strategy that we implemented last year and will continue throughout this year. Okay, thank you. Let me move to my next question. You mentioned that the company has started actions to reduce costs and expenses. Looking ahead, what level of cost reduction could we expect? Sure. Let me start saying that the year started out very complicated since January, because we had a big affectation of the main airports in the U.S. for the snow, as you remember, at the last week of January. Since that moment, we started to implement some different actions, mainly starting from the reduction of the staff, which represents 40% of expenses, then operating and indirect expenses. If you see the expenses that we presented are the same expenses from last year. That represents that based on these plans that we implemented in a very good moment since the last week of January, a reduction of 8% of expenses in the first quarter, which represents almost MXN 58 million. Okay, thank you. Very clear. My next question is about your commercial strategy. Are you planning to keep the strategy focused on attracting more guests with a lower ADR during the next quarters? Unfortunately, we will have the necessity to continue next quarter with the same strategy. We are convinced that it's always to have a RevPAR based on a very good ADR and not a high level of volume or occupancy. But the market is very contracted, mainly for the cancellations we have from the 22 of February, and then the contraction of the American market because of the war with Iran. That represents that Puerto Vallarta, Nuevo Vallarta, Los Cabos, Cancún, and Riviera Maya are very contracted, based mainly in the American market. All the hotels have been sending and posted different offers throughout this first quarter. In April, looks the same, and May will be the same. We will have the necessity to get a RevPAR based on a reduction of the ADR, unfortunately. Okay. Finally, which resort hotel regions have shown lower momentum compared to 2025? Could you repeat the question, Carlos? Yeah, sure. Which resort hotel regions have shown lower momentum compared to 2025? Well, it is as we expected, Vallarta, Nuevo Vallarta, because of the situation of the 22 of February. Then the second will be Los Cabos because of the American market. Third, but not least, Cancún and Riviera Maya. Riviera Maya, I am talking about basically Playa del Carmen and Tulum. There, because it is more affected for the necessity of the American market, is where we have expressed the necessity of reducing the prices because of the low of the demand. Okay, perfect. Understood. Thank you very much. Something curious that I would like to add is that the case of Acapulco, it's completely opposite because our hotel ended 70% occupancy compared to 56% occupancy last year, with MXN 1,700 ADRs compared to MXN 1,600 last year. Acapulco doing great. Okay. I understood. Maybe for the national travelers. Exactly. Perfect. Thank you very much. Have a good day. Thank you, Carlos. Thank you. With no further questions in the queue, I would like to turn the call to the management for the close of this conference. Thank you. We would like to thank you for the trust that you have placed in us, and reaffirm our commitment to maximize your investment. We also would like to thank you and all our associates for their constant effort, and I wish you have a great day, everyone. Thank you. You may disconnect.