2014 Registration Document and Annual Financial Report - page 130

Corporate GOVERNANCE
Risk management
3
3.4.3 SENSITIVITY ANALYSIS
Based on reported 2014 data, sensitivity analyses have been performed
to measure the impact on EBIT of any changes in (i) RevPAR (revenue
per available room, as calculated by multiplying the occupancy rate
by the average room rate) and (ii) the euro exchange rate against
the main operating currencies. A sensitivity analysis has also been
conducted to assess the impact on operating profit before tax and
non-recurring items of fluctuations in interest rates.
Sensitivity to RevPAR
A 1% change in RevPAR would impact EBIT as follows:
Sensitivity to RevPAR
1% decrease in RevPAR
HotelServices
HotelInvest
Total
Impact on EBIT
€(3) million
€(16) million
€(19) million
Sensitivity to RevPAR
1% increase in RevPAR
HotelServices
HotelInvest
Total
Impact on EBIT
€4 million
€11 million
€15 million
In absolute value, a 1% decline in RevPAR has a larger impact on
EBIT than a 1% increase.
Any rebound in hotel demand initially results in an increase in
occupancy rates.This feeds through to higher variable costs, which
in turn weigh on growth in EBIT. In a second phase, the stronger
demand drives an increase in average room rates, which does
not affect operating costs and therefore has a stronger impact
on growth in EBIT. The flow-through ratio
(1)
for a 1% increase in
RevPAR resulting from higher average room rates is higher than
the flow-through ratio
(1)
for a 1% increase in RevPAR resulting from
higher occupancy rates.
Sensitivity to exchange rates
A 10% increase or decrease in exchange rates would have the following impact on EBIT:
Sensitivity to exchange rates
Currency
EBIT impact of a 10%
increase/decrease in
exchange rates
GBP
United Kingdom
€7.8 million
BRL
Brazil
€3.6 million
AUD
Australia
€2.9 million
CHF
Switzerland
€2.5 million
USD
United States, Southeast Asia
€2.4 million
PLN
Poland
€2.4 million
Sensitivity to interest rates
Based on the Group’s net debt and amount of invested cash, a 50-basis point rise in interest rates would feed through to a €12 million
increase in consolidated interest income.
(1) When like-for-like revenue goes up, the ratio of the change in like-for-like EBITDAR/change in like-for-like revenue is known as the flow-through
ratio.
Registration Document 2014
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