Q3-2008 RESULTS 3 November 2008 Kurt Ritter, President & CEO Knut Kleiven, Deputy President & CFO 1 Puneet Chhatwal, Chief Development Officer
EUROPEAN MARKET GOING INTO NEGATIVE 10 5 % change 0 -5 -10 3 3 4 4 5 5 6 6 7 7 8 8 3 4 5 6 7 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - - - - - p p p p p p n y n y n y n y n y n y a a a a a a a e a e a e a e a e a e J M S J M S J M S J M S J M S J M S Series1 Series2 Series3 Occupancy Average Room Rate RevPAR (2) SOURCE: STR Global – Seasonally adjusted RevPAR for Europe
MARKET DEVELOPMENT Change in market trend in Q3 Fall in occupancy and slow down in rate growth Credit crunch is likely to delay room openings Profit targets cut across the sector Growth opportunities in a softer market (3)
REZIDOR HIGHLIGHTS Slowdown in Europe reflected in Q3 figures – Flat L/L RevPAR development – RevPAR negatively affected by FX Cost savings - MEUR 20 on annual basis Growth focus: emerging markets and fee contracts Signings at record levels – ca 85% of pipeline fee based and over 60% in emerging markets Sound financial position - no debt and refinancing risk Radisson SAS “Most Improved Brand of the Year” by BDRC Uncertain global environment - difficult to predict future development (4)
BUSINESS DEVELOPMENT BUSINESS DEVELOPMENT 5
CREDIT CRUNCH IMPACT ON GROWTH Difficult to fund hotel projects – UBS Investment Bank: hotel transactions down 62% in EMEA in H108 – Jones Lang LaSalle: global sales of hotel properties down 70% – Lodging Econometrics: Construction starts at lowest level in five quarters LTV’s down at least 10 percentage points; spreads widening Anticipated surge in distressed properties seeking buyers or international branding (6)
BUSINESS DEVELOPMENT HIGHLIGHTS SIGNINGS YTD 08 – by BRAND 50,000+ rooms in operation 6% Radisson Nearing 75,000 rooms in 34% operation and under Park Inn development Others 60% 350+ hotels in operation or under SIGNINGS YTD 08 – by REGION development Nordics 7% Record year for Signings 24% ROWE 30% Ca 4 bn EUR of investment in MEAO pipeline, 0% financed by Rezidor 39% EE 63% in Emerging Markets (7)
SIGNINGS - ALREADY SURPASSING 2007 SIGNINGS Q308 Q307 YTD08 YTD07 ROOMS 2,884 1,641 10,027 6,239 MANAGED 69% 87% 77% 69% LEASED 5% 13% 11% 21% FRANCHISED 26% 0% 12% 10% Ca 60% of Rezidor’s Pipeline under construction – 100% of pipeline 2009 under construction (8)
OPENINGS 2008 Rooms Opened Rooms Opened Hotel Openings 25 by Region by Brand 5000 5000 20 4000 4000 15 3000 3000 10 2000 2000 5 1000 1000 0 0 0 YTD 08 YTD 07 YTD 08 YTD 07 YTD 08 YTD 07 MEAO ROWE EE NO Radisson Park Inn Others YTD08: 86% Fee Based (calculated by number of rooms) OPENINGS Q308 Q307 VAR ROOMS 1,564 544 +188% (9)
PARK INN – THE EMERGING BRAND ROOMS BY BRAND - 30 SEPTEMBER 2008 IN OPERATION UNDER DEVELOPMENT 23,000 rooms 52,000 rooms 1% 6% OTHERS OTHERS 27% 34% 34% 72% 60% (10) NOTE: % based on number of rooms
SEIZING OPPORTUNITIES IN EMERGING MARKETS ROOMS BY REGION - 30 SEPTEMBER 2008 IN OPERATION UNDER DEVELOPMENT 23,000 rooms 52,000 rooms 9% 11% 24% NO MEAO NO 33% MEAO 18% EE 27% ROWE 34% 47% 31% ROWE EE NOTE: % based on number of rooms (11) NO: Nordics; ROWE: Rest of Western Europe; EE: Eastern Europe; MEAO: Middle East, Africa & Others
MANAGING THE RISK ROOMS BY CONTRACT TYPE - 30 SEPTEMBER 2008 IN OPERATION UNDER DEVELOPMENT 23,000 rooms 52,000 rooms 5% 22% FRANCHISED FRANCHISED 48% 14% MANAGED LEASED 30% 81% LEASED MANAGED (12) NOTE: % based on number of rooms
FINANCE 13
CHANGE IN MARKET TREND IN Q308 REVPAR GROWTH IN EUR MID-MARKET FIRST CLASS 11.3% 9.4% 11.7% 7.1% 5.6% 6.7% 6.2% 3.0% 1.6% -1.0% -0.9% -2.0% -1.6% -5.3% -6.7 % -6.7% NO ROWE EE ME NO ROWE EE ME H108 Q308 H108 Q308 SOURCE: STR Global (14) NOTE: Eastern Europe Mid-Market excludes Russia & CIS (no data available)
REVPAR DEVELOPMENT BY BRAND L/L REVPAR PER BRAND IN EUR Q308 Q307 VAR YTD08 YTD07 VAR 89.0 89.2 -0.2% 89.6 84.8 5.7% 55.4 55.2 0.4% 50.1 47.7 5.0% 81.4 81.7 -0.4% 80.9 76.8 5.3% TOTAL REVPAR PER BRAND IN EUR Q308 Q307 VAR YTD08 YTD07 VAR 83.7 88.6 -5.5% 85.0 84.5 0.6% 50.3 55.2 -8.9% 47.3 48.2 -1.9% 75.7 81.3 -6.9% 76.0 76.6 -0.8% (15) NOTE: Like-for-like (L/L): same hotels in operation during the previous period compared at constant exchange rates
L/L REVPAR & REVENUE DEVELOPMENT REVPAR ANALYSIS Q308 YTD08 L/L GROWTH -0.4% 5.3% FX IMPACT -3.8% -3.8% NEW OPENINGS -2.7% -2.3% REPORTED REVPAR GROWTH -6.9% -0.8% REVENUE ANALYSIS Q308 YTD08 L/L REVENUE -3.2% 4.2% FX IMPACT -3.6% -2.8% NEW OPENINGS 2.5% 2.0% REPORTED REVENUE GROWTH -4.3% 3.4% (16)
REVPAR FOR EBITDA BREAK-EVEN AND SENSITIVITY EUR 77 80 73 72 71 69 67 70 61 40% buffer 59 60 EBITDA 50 break-even point at EUR 55 40 30 20 * 2000 2001 2002 2003 2004 2005 2006 2007 RevPAR for EBITDA break-even expected at ca EUR 55 EUR 1 change in RevPAR expected to impact EBITDA by ca MEUR 5-6 on an annual basis * Rezidor introduced the Park Inn brand in Europe in Jan. 2003 (17) NOTE: Leased and managed hotels
INCOME STATEMENT HIGHLIGHTS Q308 Q307 VAR YTD08 YTD07 VAR IN MEUR OPERATING REVENUE 192.5 201.0 -4% 591.3 571.9 3% EBITDAR 70.8 74.9 -5% 211.6 203.7 4% EBITDA 20.0 25.9 -23% 57.3 58.1 -1% PROFIT AFTER TAX 10.1 15.1 -33% 24.9 29.0 -14% EBITDAR Margin % 36.8% 37.3% -50 bps 35.8% 35.6% 20 bps EBITDA Margin % 10.4% 12.9% -250 bps 9.7% 10.2% -50 bps EPS (EUR) 0.07 0.10 -30% 0.17 0.19 -11% COST RATIOS Q308 Q307 VAR YTD08 YTD07 VAR F&B 1) 28.8% 30.9% 210 bps 26.4% 26.8% 40 bps PERSONNEL COSTS 2) 35.4% 32.7% -270 bps 35.0% 33.8% -120 bps OTHER OPERATING EXPENSES 2) 18.7% 20.4% 170 bps 20.1% 21.4% 130 bps PROPERTY INSURANCE & TAX 3) 2.0% 1.9% 10 bps 1.8% 1.8% 0 bps RENT 3) 30.6% 28.5% 210 bps 30.2% 29.6% 60 bps NOTE 1: % of F&B Revenue NOTE 2: % of Operating Revenue (18) NOTE 3: % of Leased Hotel revenue 1) % of F&B Revenue 2) % of Total Revenue 3) % of Leased Hotel Revenue
REVENUE SEGMENTATION IN MEUR Q308 Q307 VAR YTD08 YTD07 VAR LEASED 169.5 175.7 -4% 521.8 503.7 4% FEE 20.7 21.9 -5% 61.8 57.7 7% OTHER 2.3 3.3 -30% 7.7 10.5 -27% TOTAL REVENUE 192.5 201.0 -4% 591.3 571.9 3% LEASED Q308 FEE Q308 LEASED YTD08 FEE YTD08 94 9 268 270 24 23 254 234 89 81 82 8 19 17 7 6 9 10 4 3 9 9 3 3 NO ROWE NO ROWE EE ME NO ROWE NO ROWE EE ME Q308 Q307 YTD08 YTD07 Q308 Q307 YTD08 YTD07 (19)
EBITDA SEGMENTATION IN MEUR Q308 Q307 VAR YTD08 YTD07 VAR LEASED 12.7 19.5 -35% 45.5 43.6 4% FEE 14.7 17.1 -14% 40.1 39.8 1% OTHER 3.5 0.7 400% 4.7 6.0 -22% EBITDA BEFORE CENTRAL COSTS 30.9 37.3 -17% 90.3 89.4 1% CENTRAL COSTS -11.0 -11.4 -4% -33.0 -31.3 5% TOTAL EBITDA 20.0 25.9 -23% 57.3 58.1 -1% LEASED Q308 FEE Q308 LEASED YTD08 FEE YTD08 42 16 13 14 8 38 13 13 14 5 5 5 7 7 7 6 2 4 2 2 2 6 4 -1 NO ROWE NO ROWE EE ME NO ROWE NO ROWE EE ME Q308 Q307 YTD08 YTD07 Q308 Q307 YTD08 YTD07 (20) Like-for-like: same hotels in operation during the previous period compared
EBITDA MARGIN SEGMENTATION YTD08 YTD07 VAR IN MEUR Q308 Q307 VAR LEASED 7.5% 11.1% -360 bps 8.7% 8.7% 0 bps FEE 71.2% 78.2% -700 bps 64.9% 68.9% -400 bps TOTAL EBITDA MARGIN 10.4% 12.9% -250 bps 9.7% 10.2% -50 bps LEASED Q308 FEE Q308 LEASED YTD08 FEE YTD08 84% 80%84%81% 17% 16% 71%75%77%76% 71%71% 17% 19% 79% 66% 68% 61% 59% 53% 4% 2% 2% -1% NO ROWE NO ROWE EE ME NO ROWE NO ROWE EE ME Q308 Q307 YTD08 YTD07 Q308 Q307 YTD08 YTD07 (21)
BALANCE SHEET HIGHLIGHTS IN MEUR 30 SEP 2008 31 DEC 2007 TOTAL EQUITY 198 201 BALANCE SHEET TOTAL 401 413 NET CASH 47 48 INVESTMENTS IN INTANGIBLE & TANGIBLE ASSETS 23 46 (during the period) LIQUIDITY HIGHLIGHTS IN MEUR 30 SEP 2008 31 DEC 2007 UNUTILISED OVERDRAFTS 119 96 CASH & EQUIVALENTS 28 51 TOTAL AVAILABLE LIQUIDITY 147 147 (22)
HEDGING FOR TURBULENCE Cost saving program Shift in business model – Annual cost savings of MEUR 20 – More fee based revenue with full effect as of H209 – Contracts with financial commitments less frequent COST SAVINGS MEUR – Faster ramp-ups and focus on conversions PURCHASING CONTRACTS 8 FIXED COSTS REDUCTION 12 Strengthened foothold in emerging markets TOTAL 20 – 40% of portfolio CAPEX flexibility • A multi-brand portfolio – ca 220 Radisson SAS – ca 120 Park Inn Downside capped (23)
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