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