A financial analysis on NH-hotels
EXECUTIVE SUMMARY
This report is a financial analysis of the NH Hoteles hotel company from the viewpoint of financial analysts wishing to purchase shares in the hospitability-leisure business. Along with NH Hoteles, we chose two American hotel chains, Hilton and Marriott, and one European chain, Accor as industry alternatives
Our conclusions follow:
·The global travel industry has bottomed out since the dreadful years of 2001 and 2002 and is improving.
·NH Hoteles financial rations do not show great improvement over the past two years, but suggest a solid company that can survive in difficult economic conditions. Public explanations of strategy show that the company is committed to improving these ratios along with general operating efficiency.
·Comparison with companies in the same market sector, combined with the trends in market improvement suggest NH Hoteles' relative financial health make it a strong candidate for acquisition, but the stock price will continue to under-perform its rivals.
· Further analysis will be necessary to identify the possible acquisition price and the relation to the current share price.
TABLE OF CONTENTS
SECTIONTITLEPAGE
IIntroduction4
IIIndustry Background5
IIIOverview of NH Hoteles6
IVPresentation of Financial Reports7
VFinancial Ratios9
VIFinancial Analysis10
VIIComparative Analysis11
VIIRecent Developments14
IXConclusion15
XBibliography17
LIST OF TABLES AND GRAPHS
TYPETITLEPAGE
Graph INH Hoteles Expansion6
Table IFinancial Ratios9
Graph IIROCE12
Graph IIIProfitability 13
Graph IVP/E Ratios14
Graph V2003 Stock Prices14
I.INTRODUCTION
The years 2001 and 2002 were very difficult for both travel industry and global equity markets. In light of these developments, we believe a hotel business with a strong capital structure and cash flow would be in an excellent position to wait out the economic downturn and be in a position to take advantage of weaker rivals and any economic recovery. In terms of fundamental
This report is a financial analysis of the NH Hoteles hotel company from the viewpoint of financial analysts wishing to purchase shares in the hospitability-leisure business. Along with NH Hoteles, we chose two American hotel chains, Hilton and Marriott, and one European chain, Accor as industry alternatives
Our conclusions follow:
·The global travel industry has bottomed out since the dreadful years of 2001 and 2002 and is improving.
·NH Hoteles financial rations do not show great improvement over the past two years, but suggest a solid company that can survive in difficult economic conditions. Public explanations of strategy show that the company is committed to improving these ratios along with general operating efficiency.
·Comparison with companies in the same market sector, combined with the trends in market improvement suggest NH Hoteles' relative financial health make it a strong candidate for acquisition, but the stock price will continue to under-perform its rivals.
· Further analysis will be necessary to identify the possible acquisition price and the relation to the current share price.
TABLE OF CONTENTS
SECTIONTITLEPAGE
IIntroduction4
IIIndustry Background5
IIIOverview of NH Hoteles6
IVPresentation of Financial Reports7
VFinancial Ratios9
VIFinancial Analysis10
VIIComparative Analysis11
VIIRecent Developments14
IXConclusion15
XBibliography17
LIST OF TABLES AND GRAPHS
TYPETITLEPAGE
Graph INH Hoteles Expansion6
Table IFinancial Ratios9
Graph IIROCE12
Graph IIIProfitability 13
Graph IVP/E Ratios14
Graph V2003 Stock Prices14
I.INTRODUCTION
The years 2001 and 2002 were very difficult for both travel industry and global equity markets. In light of these developments, we believe a hotel business with a strong capital structure and cash flow would be in an excellent position to wait out the economic downturn and be in a position to take advantage of weaker rivals and any economic recovery. In terms of fundamental