Earnings Call: Q3 2025

Oct 24, 2025

Summary

Q3 revenue and EBITDA grew YoY, while operating income was reduced by higher non-recurring maintenance expenses. Management expects improved U.S. demand into year-end and winter 2026.

Good day everyone, and welcome to today's Grupo Hotelero Santa Fe third quarter 2025 investor relations call. Please note, this call is recorded. All lines have been placed on mute to prevent any background noise. There will be a questions and answer session after the speaker's opening remarks and instructions will be given at that time. It is now my pleasure to turn the conference over Max Zimmermann. Good afternoon, and thank you for joining us today. My name is Max Zimmermann, Investor Relations and Sustainability Director of HOTEL, and I would like to welcome you to the company's earning webcast for the third quarter of 2025. On the line, we have Francisco Medina, our CEO, and Alberto Santana, our Administration Director. The presentation slides we will follow during this call are available on our webcast, which you can find in 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. 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 Medina, our CEO. Go ahead, Paco. Thank you, Max. Good morning, everyone. In the first nine months of 2025, we posted a 66% occupancy in our portfolio, combined with a 23% EBITDA growth. Additionally, we posted a 26.6% EBITDA margin in the same period. In terms of operating indicators of company-owned hotels, in third quarter 2025, we increased our RevPAR by 3% as we increased our ADR by 5%, which more than compensated a 0.5 percentage point decrease in occupancy. Revenue totaled MXN 737 million in third quarter 2025, up 9% compared to third quarter 2024. EBITDA was MXN 158 million for the quarter, up 10% compared to third quarter 2024. Also, I would like to mention that none of our achievements will be possible without the support of our dedicated employees, experienced management team, and the confidence that you, our investors, have placed in us. Now we pass the call to Max, who will get into our quarterly operational results. Please go ahead, Max. Thank you, Paco. Now, please move to slide 2. Room revenue increased 8% to MXN 353 million in the third quarter of 2025 compared to the third quarter of 2024, driven by higher revenues. Food and beverage revenue increased 13% to MXN 311 million in the quarter compared to the same quarter of last year. Another income, which includes, among other items, event room rentals, parking, laundry, telephone, and leasing of commercial spaces, decreased 14% to MXN 37 million in the quarter. Vacation Club income increased 31% to MXN 14 million, and third-party hotel management fees were MXN 21 million, which were down 10% compared to the same quarter last year. Now, please move to slide 3. Moving on to our key operational metrics. On a consolidated level this quarter, we posted a 1.6 percentage point decrease in occupancy to 62.2%, combined with an ADR increase of 1% to MXN 1,840. RevPAR in the quarter was MXN 1,144, which was 1.5% lower than in the third quarter of 2024. Now, please move to slide 4. As Paco mentioned, EBITDA in the quarter increased 10% to MXN 158 million compared to MXN 144 million in the third quarter of last year, reflecting higher revenues and lower costs in the quarter. Moving on, we posted an operating income of MXN 26 million in the quarter, 64% lower than the MXN 72 million we posted in the third quarter of 2024. This result was mainly driven by non-recurring expenses in the quarter. In terms of net income, we went from an MXN 86 million loss in the third quarter of last year to an MXN 31 million gain in the third quarter of this year. This was driven by a net foreign currency exchange gain, combined with higher profitability. Now, please move to slide 5. Net debt was MXN 1,983 million at the end of the third quarter of 2025, which represented a total debt to EBITDA last 12 months ratio of 2.1 times. This number is lower than it historically has been, and it's been a while since we've been below the MXN 2,000 million mark. Total debt is 100% U.S. dollar denominated with an average cost of 7.4%. Additionally, I would like to mention that over 90% of debt maturities are long-term. Our short U.S. dollar position by the end of the quarter was $121 million, very similar to what it was last quarter, equivalent to MXN 2,225 million. Now, please move to slide 6, and I will pass the call back to Paco, who will finish up the call before our Q&A. Thank you for the information, Max. 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 for the trust and support of our shareholders, and again, to all of 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 Felix Garcia from Appalachia Research. Please, sir, go ahead. Hi, Felix Garcia from Appalachia Research. Thanks for the call and for taking my questions. First, given that a significant portion of your portfolio is exposed to U.S. tourism, how have you perceived the evolution of demand from that market? Secondly, what level of CapEx are you estimating for 2026? Thank you, Felix. Well, the subject of the American market is one of our favorite subjects because as we all know, the decrease of the travelers of the American market has affected the tourism across the board in Mexico. It is mainly because of different reasons of perception of security, the sargassum in the Caribbean, and the internal situation of government and different things such as the economy and other subjects internally in U.S. So, we just returned from Travel Mart, which is the main event for transactions with the main wholesalers and tour operators and online travel agents. We expect that we will see a better close of the year of 2025 and a good winter for 2026. That means we will have a better production of the American market looking forward. In terms of the CapEx, Max, you want to mention the just- Sure. CapEx normally, and we are still in the budgeting process, but CapEx as usually is the case, should be around 4% of revenues for the year, which is normally what we invest in our properties. Very clear. Thank you very much, and congratulations on the results. Thank you, Felix. Our next question comes from Martin Lara from Miranda Research. Please sir, go ahead. Hi, guys. Thank you for the call. I have two questions. The first one is, could you please give us more details about the non-core asset that you sold in Los Cabos after the end of the quarter? The second one is, could you please explain the difference in the performance of occupancy levels in owned and managed hotels? Sure. Thank you, Martin, for your interest in our company. First of all, I would like to say that in the case of Los Cabos, that building, which we call residence building, it was not a strategic asset for the hotel in Los Cabos. Basically, we had 454 rooms, and now we have 327 availability of rooms in Cabos. That represents more than we need in terms of availability for that market, which is the 72% that new level of inventory reflects and represents. These residences, they were not exactly completely normal rooms. They were more like apartments. We decided that it was not strategic, so it was a better idea to sell the building, which we did. In the strategy of 2026, we are considering to do an important remodelation of the hotel, and that was not part of the strategy, basically. The other subject, which is the reduction of the occupancy of the hotels operated compared to our hotels. The three hotels that made the most impact, I would say, first of all, is the one in Paraíso, Tabasco. We had a Hampton Inn in Paraíso, Tabasco, and as you know, the oil situation of Dos Bocas in that area, I will say this way, the party is finished. There is no longer a big investment and production in that area. So the occupancies came from 90% to 35%, 40% right now. I take advantage to mention that contract of 20 years just finished, and we no longer be operating that hotel because the owner decided based on this decrease in the demand to do the operation by themselves, and we understand that. The contract was in the normal finishing of timing. The other hotel that I did not mention are the ones at the Bajío, which is Irapuato, and the other one is in Aguascalientes, that are owned by the same company, and we have just a managing contract there. Basically, the situation there is the security problem that has caused many problems in the area, and the occupancies do not go more than 20% in the case of Irapuato and 35% in the case of Aguascalientes, unfortunately. Okay. Thank you very much. Thank you, Martin. Our last question comes from José Luis Bessis from Actinver. Please, go ahead. Hi, Max, Francisco. Two questions from my side. One is, can you give us more color about the decreases in other revenue from hotels on third-party hotels management fees? The second one, if I may, could you give us more color in the total non-recurring expenses that you posted this quarter? Thanks. Sure. Thank you, Jose Luis. I will mention the first one. I will leave the second one to Max and Alberto. Basically, the situation of the third-party hotels and the decrease in their occupancy, ADR, RevPAR, and at the end, the EBITDA, it was mainly, as I mentioned, because of these hotels in Hampton Inn & Suites Paraíso, Tabasco, the ones at the Bajío, and in some part, our very important hotel in Cancún, which is Krystal Cancún. That decreased a little bit because of the situation of the Caribbean that, as you know, has been affected because of the production of the American market, the sargassum, and security, and just not to leave at the end, not being less important, is the exchange rate. We had an exchange rate for budget of 20.0 and as you know, we are running 18.40, 18.50, which has been affected also the revenues in that area. That is basically the situation of the operating third-party hotels. Thank you, Jose Luis. Getting into the non-recurring expenses, they have to do mainly with, let's call it major maintenance of larger equipment at certain resort hotels, basically chillers. This is normally the best time to give maintenance to those air conditioning units and some other equipment that we have at the hotels after summer and before the winter season. Therefore, it is important, and this year it was higher than it was other years. That is basically what it refers to. Basically what Max was mentioning and Alberto, those were oriented for investments and big maintenance in the back of the house. Exactly. More than investment, some expenses. Expenses. Thank you for your question, Jose Luis. I do not know if that works for you or you have any other comments. Yes, that was very clear. Thank you. Thank you, Jose Luis. Thank you so much, Jose Luis. With no further questions in the queue, I would like to turn the call to the management for the close of this conference. 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 all of our associates for their constant effort, and we expect that you have a great day and great weekend. Thank you, everyone. Thank you. Thank you. You may disconnect.