Rezidor Hotel Group released its first quarter earnings on April 21 and saw a total revenue decrease of 4.3 percent to approximately $233.71 million, compared to $244.3 million in the first quarter of 2015.
Earnings before interest, tax, depreciation and amortization (EBITDA) was down $10.4 million. Like for like revenue per available room (RevPAR) was up 1 percent thanks to an increase in average room rate and lower occupancy numbers.
“The first quarter is usually weak, and this year was further impacted by some distressed and challenged markets,” President and CEO Wolfgang Neumann said in a statement. “Despite this the company has continued to gain market share. Revenue and earnings have been negatively affected by the conversion of a leased hotel to franchised, the closure of a leased hotel for renovation, the less favorable timing of Easter and termination costs for a lease in Norway.”
This news comes at a challenging time for Rezidor, which is dealing with what Neumann referred to as several “fragile markets,” among them France and Belgium, where the company has its European headquarters. The group has six hotels in Paris and three hotels in Brussels, adding a fourth just this week with the opening of its first Radisson Red hotel.
The Millennial-friendly, 149-studio Radisson Red Brussels hotel opened on April 18, just weeks after terrorist attacks struck the city’s airport and a metro station. Rezidor first announced the brand in 2014 with the intent to open its first property by 2015. Another 14 properties are currently under development, and by 2020, the company expects to have 60 Radisson Red hotels worldwide.
Overall, RevPAR in Western Europe was up in most markets with the exception of France (down 6 percent) and Switzerland (down 1.9 percent).
In March, the company was also rumored to be up for sale, with France’s AccorHotels and China’s HNA Group reportedly eyeing the company, which was valued at $2 billion. Accor later denied those reports.
Also in March, the company announced its acquisition of a 49-percent stake in a German economy hotel startup called Prizeotel for $16.6 million, with the rights to purchase the remaining 51 percent of the company within four years. Prizeotel, which has three properties in Germany and other hotel in its pipeline, is known as a designer budget hotel, and marks Rezidor’s entry into the economy market.
“This acquisition ideally complements our brand portfolio, now reaching from economy to luxury, and allows us a fast-paced entry into an increasingly attractive sector,” said Neumann.