Hotusa: 130 million losses and pending an oxygen balloon of 240 million


2020 was a real annus horribilis for tourism companies and Hotusa did not escape that rule. The annual accounts presented by the Catalan hotel company to the stock market regulator dissect one of the most difficult periods of its more than four decades of history, with a drop in turnover that reached 76% as a result of the confinements and the closure of establishments. The year ended with net losses of more than 130 million, compared to profits of almost 68 million achieved in the previous twelve months. All this despite the implementation of intense measures to reduce costs and achieve liquidity. Last September, it asked the rescue fund of the Sociedad Estatal de Participaciones Industriales (SEPI) for an oxygen balloon of 240 million, which is still pending resolution.

The effect of the coronavirus on tourism, and particularly the hotel business, was a blow to the waterline of Hotusa. The chain, which runs 200 hotels mostly through the Eurostars and Exe brands, saw its revenue fall from almost 1.27 billion in 2019 to less than 310 million last year. Despite expenses falling ostensibly - procurement fell from 790 million, in 2019, to 193 million and salary payments fell from 108 million to 58 million - operating profit was inevitably negative at 127 million (down from a positive 124 million two years ago). Losses before tax rose to almost 156 million.

The company's annual report admits that "the outbreak of the covid-19 pandemic and the measures taken by governments in countries around the world to mitigate the spread of the pandemic have significantly affected the group", particularly through hotel closures for extended periods of time. But Hotusa estimates that the 103 million in liquidity it had at 31 December and the plan presented in this regard are "sufficient to cover its operating needs" during the current financial year. Of this 2021, the managers of the chain expect "a recovery of sales and an almost full opening" in the second part of the year. But they admit that even so the production capacity will be "between 40% and 50%" of what they had in 2019 and will not be fully restored at least until 2023.

That is why the company "expects to continue in losses during the 2021 financial year" and "to be able to return to profit by the end of 2022". The report gives an account of the tools with which the management of the hotel group seeks to ensure its survival. The first of these is to obtain additional funding, for which talks with financial institutions are cited. In 2020, the parent company of the hotel group and its subsidiaries have already requested credits for more than 104 million to different banks in the lines guaranteed by the ICO (Official Credit Institute). More than a third of that amount was offered by Santander through two loans. In addition, several subsidiaries requested loans from the Institut Català de Finances for a combined value of 15 million. Debts with credit institutions last year rose to 847 million, compared to 757 million in 2019. However, debt maturing in the short term fell compared to the previous year, from 87 million to 74 million.

Million-dollar bailout

In parallel, the company began the process to obtain money from the SEPI rescue fund. The annual report does not detail the amount requested, but it does specify that it will be used "to cover the liquidity needs that may occur in the next two years [referring to 2021 and 2022]". It also states that the company "is eligible and meets all the requirements" for obtaining the aid. Sources familiar with the process put the requested bailout at more than 240 million, which is still pending resolution. That amount makes it one of the highest of those who have asked for tourism companies. Among those already resolved, the largest is the 475 million granted to Air Europa, followed by the 320 million of Ávoris (the company that merged the travel agencies of Barceló and Globalia groups).

Another mechanism that Hotusa has to weather the crisis is the renegotiation of leases. A large part of the hotels it manages are not its own buildings and it pays a lease for them. The memory ensures that there is additional room to negotiate more downward rents. Last year, agreements with property owners led it to save some 23 million euros, paying a total of 79 million in operating rents. The two largest, the accounts point out, are those paid by the Eurostars Madrid Tower, a hotel located in one of the four skyscrapers that close the Paseo de la Castellana in the north of the capital, and the Eurostars Grand Marina, another hotel in a landmark building, in this case in the port of Barcelona. Together, they accounted for an expenditure of 14 million last year. In the need to find liquidity, Hotusa has also resorted to the sale of some of its own establishment, as cited in the events after the closure with a hotel in Madrid that sold on March 4 this year and for which it obtained more than 13 million.

Among other measures cited by the company to preserve its financial position, include the reduction of capital expenditures and marketing or freezing non-essential hiring. In the personnel chapter, the accounts point out that "virtually the entire workforce" was already affected by temporary layoffs (ERTE) in 2020. The estimated cost savings of these temporary layoffs, which are reported in the section on government aid, is 59 million euros. This circumstance makes it impossible for the company to consider distributing dividends charged to last year, according to the annual accounts.


Related Businesses
    - - Customer

    Copyright © 2021 by CreditRiskMonitor.com (Ticker: CRMZ®). All rights reserved.  You are not permitted to use this report or the information contained herein for any purpose not expressly permitted by CreditRiskMonitor.com, Inc. Except as expressly permitted by CreditRiskMonitor.com, Inc., you are not permitted, in whole or in part, to copy, alter, correct, adapt, translate, enhance, lease, sell, sublicense, assign, distribute, publish, otherwise make available to any third party, or prepare derivative works or improvements of this report or any of the information contained therein. You are not permitted to reverse engineer, disassemble, decompile, decode, or adapt the software, algorithms or other processes used to prepare this report, or otherwise attempt to derive or gain access to the source code of same. You agree not to remove, alter, obscure, combine or otherwise change any disclaimers, trademarks, copyrights, other intellectual property rights, proprietary rights, or other symbols, notices, marks, or serial numbers on or relating to any copy of the report or on marketing or other materials that CreditRiskMonitor.com, Inc. may provide to you. You will not use this report in any manner or for any purpose that infringes, misappropriates, or otherwise violates any right of any party, or that violates any applicable law.  
    The FRISK® scores, agency ratings, credit limit recommendations and other scores, analysis and commentary are opinions of CreditRiskMonitor.com, Inc. and/or its suppliers, not statements of fact, and should be one of several factors in making credit decisions.  Any reliance you place on the information in this report is strictly at your own risk. Except as expressly provided by CreditRiskMonitor.com, Inc., no warranties or representations of any type, including without limitation of results to be obtained, merchantability or fitness for a particular purpose, are made concerning any part of CreditRiskMonitor.com, Inc.’s service, including without limitation the FRISK® scores.  The information published above has been obtained from sources CreditRiskMonitor considers to be reliable.  CreditRiskMonitor.com, Inc. and its third-party suppliers do not guarantee or validate the accuracy and completeness of the information provided in this report, the underlying information input to create the FRISK® scores, and specifically do not assume responsibility for not reporting any information omitted or withheld.  By using this website, you accept the Terms of Use Agreement
    Contact Us: 845.230.3000
    Fundamental financial data concerning public companies may be provided by Refinitiv (click for restrictions)
    Tuesday, October 26, 2021