“The hotel market continued to improve in the last quarter of the year. Eastern Europe consistently showed very strong RevPAR growth and the negative trend in the Middle East and North Africa slowed down. However, the deceleration in Western Europe, caused by the instability in the Euro zone, continued during the last three months of the year and remains a concern for the future. As a result, our L/L RevPAR grew by 3.2%, a small improvement on the previous quarter.

Our revenue increased by a healthy 6% in Q4, with almost all of this growth coming from newly opened leased hotels. The new leases, mainly located in the Nordics, performed above expectations and contributed positively to our EBITDA and EBITDA margin. The margin growth was also helped by additional high-margin fee revenue and one-offs in the fourth quarter of last year. Our net result was, however, negatively affected by write-downs of fixed and deferred tax assets relating to our leased hotels in Western Europe, mainly in the UK. These write-downs were the result of revised GDP expectations for the UK and the Euro zone, and also stemmed from a review of our portfolio following a decision to intensify the focus on asset management. At the end of the year, we established a separate Asset Management department to further optimise our current portfolio of leased hotels in terms of increasing profitability and reducing the leverage of the company.

Looking ahead, we will focus on improving profitability, both in absolute terms and relative to the industry. In December, we announced our 'Route 2015' strategy a raft of initiatives to improve our EBITDA margin by 6 to 8 percentage points by 2015, assuming that market RevPAR growth covers inflation. We aim to achieve this mainly by putting stronger emphasis on revenue generation, together with our partner and brand owner Carlson, through greater and more aligned global synergies. To facilitate this ambition, in January 2012, Carlson and Rezidor announced their collaboration to jointly go to the market and do business together as the 'Carlson Rezidor Hotel Group'”.

Kurt Ritter
President and Chief Executive Officer
The Rezidor Hotel Group

Fourth quarter, 2011