INTERVIEWOSCAR CALVILLO, CHIEF EXECUTIVE OFFICER
In your opinion, what was the most outstanding item for the year?
During 2015, two very important things happened at Fibra Inn. First, we strengthened our management team and second, we implemented new technological platforms and we redesigned the company’s internal processes. This included managing our current business model that serves the significant number of hotels in the portfolio as well as the challenges of the future. This management model is based on a detail-oriented operating platform focused on critical performance indicators. In this manner, senior management can focus its full attention on the company’s strategic matters. These activities are yielding results; we have already seen outstanding operating performance reflected in the revenue and NOI increases.
What can you say regarding the company’s financial performance and its most important indicators?
The company increased its dividend payment, now basing it on a larger number of CBFIs outstanding due to the capital subscription that took place in 2014. Fibra Inn experienced an excellent revenue growth performance as a result of our ability to increase the average daily rate by operating global brands, which are recognized by our clients. The company’s strategy is based on long term vision, where the priorities lie in maintaining occupancy while, at the same time, raising this rate. This allows us to have an upside in terms of growth as well as increase margins with higher sales.
Discuss the competitive landscape for the hotel industry during 2015.
Hotel competition is unique to each location and we believe that we have the flexibility to make decisions that are in accordance with the business environment at each of the cities in which we operate. Fibra Inn is extremely analytical when it comes to visualizing the potential at each property. We have several examples:
- There are hotels in the portfolio that operate with a leading room rate at each location, in a very competitive market. This is the result of having a very strong product that is well managed.
- On the other hand, there are hotels that operate in locations where there is a lot of room for economic growth, where demand is growing and guests are willing to pay room rates that are 25% higher than normal.
- There are other properties in which we invested in the addition of rooms and that are already showing results, with revenue increases after the initial 6-month stabilization period.
- Likewise, other properties have undergone a conversion to a more highly-competitive brand in a market where we have detected potential; and the results reflect this.
- Similarly, there are other markets in which we are consolidating our presence, as we believe these locations have great potential, where there are limited hotel offerings but growing demand.
- Lastly, there are very stable markets, where there is a constant solid performance.
During 2015, two major
ACTIONS were taken
that were of utmost
importance for Fibra Inn.
First, we strengthened
our management team and
second, we implemented
new technological
platforms and we
redesigned the company’s
internal processes.
What is Fibra Inn’s growth strategy?
Our strategy is improve performance of existing properties and to make intelligent acquisitions in markets with potential for growth, operating and converting hotels to recognized brands and taking advantage of our unique operating platform. This strategy has yielded results; we have experienced an outstanding performance, increasing sales, growing and improving the NOI margin. In Fibra Inn we are able to grow revenues based on the rate increases while at the same time maintaining occupancy levels. In the long term, this gives us the potential to continue growing organically. Additionally, we invest in top-of-the-line systems and training for the proper Revenue Management, which is the foundation for the operation of our hotels.
What can you tell us about the acquisitions and developments that Fibra Inn completed?
At Fibra Inn we have focused on growth via the acquisition of hotels, in order to maintain the level of holder distributions. Hotel construction can be made by third parties, who are able to develop properties according to the specifications required by Fibra Inn. These third parties absorb the risk inherent to the stabilization period; which enables the company to avoid having idle capital on its hands. During 2015, each of the acquisitions we concluded followed these strategies:
- The Hampton Inn by Hilton Hermosillo has a unique format that operates under a strong brand. The hotel is planned out according to optimal space layouts that do not limit the functionality and makes an efficient use of the square meters of construction. Although this is a select service hotel, it has a bar and offers evening food service.
- With the acquisition of the two hotels in Guadalajara, Fibra Inn consolidated its presence in this city. On the one hand, we entered a new business line ---the extended stay segment, which was not previously being addressed by the company --- with the Staybridge Suites hotel. The extended stay business line, which offers lodging for periods longer than five days, has higher profitability levels and has a more efficient cost structure than other lines. On the other hand, with the well-priced acquisition of the Arriva Express, Fibra Inn has the opportunity to convert this property, located in a very desirable area, to a global brand.
- The hotels acquired in Chihuahua were strategic acquisitions as they are located in an area with strong growth potential that also consolidates our presence in that state.
Our job in terms of the operation of the company is focused on customer service. That is the reason that a hotel real estate investment trust is so particular, as our challenge grows each and every day. As a result, our opportunity is to improve operating performance 365 of the year.
What are the opportunities for Fibra Inn to improve hotel operating indicators and its NOI margin?
We are seeking to increase revenues of our portfolio by significantly increasing the average daily rate. The hotel industry is very dynamic. Our sales force has the daily responsibility to go out into the field and sell the hotels as well as position the brands that we operate within the market. Our job in terms of the operation of the company is focused on customer service. That is the reason that a hotel real estate investment trust is so particular, as our challenge grows each and every day. As a result, our opportunity is to improve operating performance 365 of the year. We must strengthen those hotels where we believe we can improve the current operation or the performance left by the previous owner, and in some cases, relaunch properties in specific markets.
How is Fibra Inn unique in terms of being an investment opportunity in competition for raising equity?
As an investment in the markets, Fibra Inn seeks to reach an attractive profitability over the investment in the assets by increasing dividends. That is, we seek that the CBFI reflects fair value and as well as growth. On the other hand, as a real estate investment, Fibra Inn has solid fundamentals: clarity of its business strategy and a specialized management team that understands the market environment and the needs of our guests.
