Grupo Hotelero Santa Fe, S.A.B. de C.V. (HOTEL) Earnings Call Transcript

[Operator Instructions] It is now my pleasure to turn the call to the management.

Good afternoon, and thank you for joining us today. My name is Rodrigo Ancira, Investor Relations Director of Hotel, and I would like to welcome you to the company's earnings webcast for the third quarter of 2026. On the line, we have Enrique Martínez, our Chief Financial Officer. 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. 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 Enrique, our CFO.

Thank you, Rodrigo. During the third quarter, we continue to operate in a challenging environment, with softer demand in our main markets, both international and domestic, and elevated exchange rate volatility. We have a solid and resilient business model that allow us to face this type of situation. Regarding the breaking indicators of our owned hotels. During the quarter, occupancy was 59%, 1.3 percentage points below the third quarter of 2025 with an average daily rate of MXN 1,727 million and a RevPAR of 1,080. Revenues were MXN 703 million in the quarter, and EBITDA was MXN 129 million. We continue to implement a variety of initiatives to reduce costs and expenses, which allowed us to keep operating income broadly stable at MXN 37 million despite the decrease in the revenue. The net result for the quarter reflects a MXN 80.5 million noncash foreign exchange loss from the depreciation of the peso against the U.S. dollar of our dollar-denominated debt. On a year-to-date basis, the company remains profitable with a net income of MXN 50 million. The integration of Ixtapa-Zihuatanejo acquired in June is progressing as planned. Now I will pass the call back to Rodrigo.

Thank you. Could you please go to Slide 2. Room revenue decreased 2.4% to MXN 345 million the third quarter of '26 compared to the third quarter of 2025, driven by a lower occupancy rate. Food and beverage revenue decreased 8.5% to MXN 284 million in the third quarter compared to the third quarter of '25. Other income, which includes, among other items, event room rentals, parking, laundry, telephone and leasing of commercial spaces, increased 13% to MXN 42 million in the third quarter of '26 compared to the third quarter of '25. Vacation Club income decreased 2% to MXN 14 million and third-party hotels. Management fees were MXN 18 million, which were down 14% in the third quarter of '26 compared to the third quarter of '25. Total revenue was MXN 704 million, 4.5% below the third quarter of '25. Now if you could please go to Slide 3. Moving on to our key operational metrics. On a consolidated level this quarter, we posted a 2.5 percentage point decrease in occupancy to 59.7% combined with an ADR decrease of 2.8% to MXN 1,790, RevPAR in the quarter was MXN 1,068 which was 6.6% lower than in the third quarter of '25. Now please move to Slide 4. EBITDA in the quarter decreased 18% to MXN 129 million compared to MXN 158 million in the third quarter of last year, reflecting lower revenues combined with operational leverage. Moving on, operating income increased 3.6% from MXN 26 million in the third quarter of 2025 to MXN 27 million in the third quarter of 2026, as lower operating costs and expenses, lower nonrecurring expenses and lower depreciation offset the decrease in revenue. The net result in the quarter was a loss of MXN 96 million as compared to a net income of MXN 31 million in the third quarter of last year. This was mainly driven by a noncash foreign exchange loss of MXN 80 million from the 3.2% depreciation of the peso against the U.S. dollar during the quarter. Year-to-date net income was MXN 50 million. Now please move to Slide 5. Net debt was MXN 2,455 million at the end of the third quarter of 2026, which represented a net debt-to-EBITDA last 12 months ratio of 3.1x. Total debt is 100% U.S. dollar denominated and has an average cost of 7.3%. Additionally, I would like to mention that over 90% of the maturities are long term. Our short U.S. dollar position by the end of the quarter was $150 million, equivalent to MXN 2,708 million. Now I will pass the call back to Enrique to end the call.

Thank you, Rodrigo. Now please move to Slide 6. 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 thank you for the [indiscernible] support of our shareholders and again to all of our tremendous professional and corporate teams. With that, I would like to open the call for questions and answers. Thank you so much.

[Operator Instructions] For our first question coming from Carlos Alcaraz from Apalache Research.

I have 2. First, could you give us more color on the investment time line for the hotel conversions in Punta Cancun and Playa del Carmen. And second, how has your Quintana Roo being performing. And congratulations on the results.

Thank you. Thank you. The full transition is projected to take around 18 months with fee competition targeted ahead of the upcoming seasonal cycles. This renovation and brand alignment measures are being expected, executed in blocks. This ensures that the auto remains operational with additional room inventory pool, minimizing the negative impact of our near-term EBITDA. We are both properties second half of 2028. On the other hand, October is experiencing the typical traditional dynamics of the auto shoulder season showing sequential stabilization, but remaining highly price sensitive. Following the dips of several across major beach markets in Atos and September demand in stable due to the corporate groups and early international winter bookings. We are expecting better performance from December and third quarter 2027 is looking better in our booking pace and reservations.