Earnings Call: Q2 2025

Jul 25, 2025

Summary

H1 revenue rose 23.6% and EBITDA 31.3%, with portfolio occupancy at a seven-year first-semester high. Q2 EBITDA grew 31%, while management cited softer May–June bookings and FX uncertainty, and expects city occupancy to keep rising in H2.

Good day everyone, and welcome to today's Grupo Hotelero Santa Fe second 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 question 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 to Max Zimmerman. Good afternoon, and thank you for joining us today. My name is Max Zimmerman, Investor Relations Director of Hotelero, and I would like to welcome you to the company's earning webcast for the second quarter of 2025. On the line, we have Francisco Medina, Executive Vice President and CEO, and Alberto Santana, our Administration Director. The presentation slides we 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. 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 Medina, our CEO. Go ahead, Paco. Thank you, Max. Good afternoon, everyone. Let me start saying that in the first half of 2025, we posted a 68.4% occupancy in our portfolio. The highest first semester occupancy in the past seven years for Grupo Hotelero Santa Fe. Additionally, we posted a 20.8% EBITDA margin in the semester. In terms of operating the carriers of company-owned hotels, in the first semester, we increased our RevPAR by 12.5%, and we increased our ADR by 10.5%, with a 1.3 percentage point expansion in occupancy. Revenue total, MXN 1,778 million per semester, up 23.6% compared to the first semester of last year. EBITDA was MXN 512 million for the semester, up 31.3% compared to the first semester of last year. Also, I would like to mention that none of our achievements would be possible without the support of our dedicated employees, experienced management team, and the confidence that you, our investors, have placed in us. Now I will pass the call back to Max, who will get into our quarterly operational results. Go ahead, Max. Thank you, Paco. Getting into our quarterly operational results, room revenue increased 22% to MXN 388 million in the second quarter of 2025 compared to the second quarter of 2024, driven by higher revenues. Food and beverage revenue increased 24% to MXN 340 million in the quarter compared to the same quarter of last year. Other income, which includes, among other items, event room rentals, parking, laundry, telephone, and leasing of commercial spaces, increased 31% to MXN 43 million in the second quarter of 2025 compared to the same quarter of last year. Vacation club income increased 29% to MXN 13 million, and third-party hotel management fees were MXN 25 million, which were up 1% in the quarter compared to the same quarter of last year. Now, please move to slide 3. Moving on to our key operational metrics on a consolidated level this quarter. We posted a 1.3 percentage point decrease in occupancy to 65%, combined with an ADR increase of 8% to MXN 1,969. RevPAR in the quarter was MXN 1,277, which was 6% higher than in the second quarter of 2024. Now, please move to slide 4. EBITDA in the quarter increased 31% to MXN 194 million compared to MXN 148 million in the second quarter of last year, reflecting higher revenues and lower costs in the quarter. Moving on, we posted an operating income of MXN 92 million in the quarter, 23% higher than the MXN 75 million we posted in the second quarter of 2024. This result was mainly driven by higher revenues combined with lower costs. In terms of net income, we went from a MXN 134 million loss in the second quarter of last year to a MXN 217 million gain in the second quarter of 2025. This was driven by a net foreign currency exchange gain combined with better profitability. Now, please move to slide 5. Net debt was MXN 2,098 million at the end of the second quarter of 2025, which represented a total debt to EBITDA last 12 months of 2.3 times. Total debt is 100% US dollar denominated with an average cost of 7.4%. Additionally, I would like to mention that over 92% of debt maturities are long-term. Our short US dollar position by the end of the quarter was $122 million, equivalent to MXN 2,305 million. Now, please move to slide 6, and I will pass the call back to Paco, who will finish up the call before questions. Thank you, Max. Lastly, I would like to highlight and express my gratitude for 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 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 Carlos Alcaraz of Appalachia Research. Please, sir, go ahead. Carlos, thank you very much for the call and for taking my questions. First, I would like to ask about the growth in ADR. Was it driven by a price increase strategy or by a change in the mix and categories of hotels. My second question is about city hotels. How has occupancy performed, and what is your outlook for the second half of the year. Thank you, Carlos. Let me take those two good questions. First of all, I would like to start saying that the strategy of the first semester for the increase in the ADR, it was both. One part was the increase of the different packages we have in the all-inclusive hotels, besides the city hotel, plus the combination of the different segments of the market that we provide more importance to the production of the website that has now the reduction of the percentage of the commissions that we have, such as the case of the OTAs. Basically, it was a combination of both. The second question is about the occupancy that we have in the city hotels. I would say that it was a very good occupancy compared to last year, mainly with the production of the Hyatt Regency in Xulha, which has been very successful, and as well, the other city hotels that have increased the occupancy compared to last year. The perspective of the second semester is that we will continue with the same trend of maintaining an increase of occupancy compared to last year. Perfect. Thank you very much for your answers, and congratulations on the results. Thank you, Carlos. Our next question comes from Martín Lara of Miranda Global Research. Please, sir, go ahead. Hi. Thank you for the call, and congratulations for these results. I have two questions. You opened the Krystal Beach Acapulco a year ago. What has been the performance so far? The second question is, could you please explain the difference in occupancy levels between owned and managed hotels in this quarter? Sure, Martin. Thank you for the questions. The performance of the Krystal Beach Acapulco has been incredibly successful. Basically, we knew since the beginning, and that was basically the strategy of open the hotel as soon as possible, which you are totally right. We opened the hotel in July last year. We were considering that some of the major big hotels in Acapulco were not going to be still being a player, such as the Dreams, the Copacabana, Elcano, and so forth. Some of the sets that we have, the compared set of the hotels in Acapulco, they will be no longer competitors because they decided not to continue with their properties. So basically, that is one of the main issues that we consider, and it was working perfectly because we had a tremendous and successful first semester from this year. The second question about the difference of occupancy levels between owned and managed hotels in this quarter. It depends on the hotel because we have a very good result in owned hotels. In some of one or two hotels were not spectacular, but regular. But in the case of the managed hotels, we have some very good results, and others were regular. So the mix of that, I would say that we were almost the same level of increase in the owned hotels and in the managed hotels at almost the same increase compared to last year. Great. Thank you very much. Thank you, Martín. Again, to ask a question, please use the raise hand function on your Zoom tool. Please make sure that the microphone is turned on. Our next question comes from Jose Luis Besis of Actinver. Please, sir, go ahead. Hi, Max. Paco here, Jose Luis from I have two questions on my side. First, if you could provide a little bit more color on the cost efficiencies that you mentioned before that impacted margins at the gross level and also in the operating level, in EBITDA levels. If you could provide us some perspective for the second half of the year regarding FX levels, if you are seeing that these levels are impacting international demand for your hotels, and what are your expectations about this? Thanks. Thank you, Jose Luis. In terms of your second question, we normally don't give forward-looking statements. Talking about FX is always difficult, like having a crystal ball. What I can tell you is that when the FX rate is higher, meaning closer to the 20 peso level, normally that brings more Americans to our tourist destinations in Mexico because it's cheaper for them. Now it's a little bit more expensive with the peso at the 18, 19 peso levels. So we normally always are hoping for a higher exchange rate because that means that we will have more Americans, and also we will have more pesos. Remember that Americans pay in dollars. However, those dollar rates are based on the peso levels. So that is always something that affects us. I think that the foreign exchange is going to be affected by a lot of macro situations, including political situations and everything related to trade, which has recently emerged. So we will be seeing the effects that that could have on our portfolio. On the first question, you were asking about a little bit more color on the better cost base that we have. Did I understand that correctly? Yep. Cost efficiencies on the OpEx. I'm sorry? The cost efficiencies on the OpEx. If you want me to say the question, I will do it, Max. Yes, please go ahead. Okay. Thank you, Jose Luis, for the question, and it is a very interesting question because when we came to the point of the month of April, we had extraordinary results compared to last year. But in the pickup of reservation, we started to see a decline in May and June. So what we did is to establish a program, a plan of reduction in cost, basically including salaries and wages, direct costs, operating expenses, and indirect expenses in every single hotel with a lot of details. But the main point of that plan was not to affect the experience of the client. So basically, what we do, we were controlling all those expenses. We did a plan in every hotel and being very careful of not affecting the experience of the client, which we achieved because, as you can see in the semester, we had very good results in terms of cost efficiency, and we did not reduce our very good qualifications of the different platforms of the experience of the client. Perfect. Very clear. Thank you, Paco. Thank you, Max. Thank you, Jose Luis. Thank you, Jose Luis. With no further questions, I would like to give the floor to the management to close the conference. Thank you very much. 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 the constant effort, and have a great day, everyone. Have a great weekend. Thank you. Have a good one, guys. This concludes today's conference call. You may disconnect.