Belmond's (BEL) CEO Roeland Vos on Q2 2016 Results - Earnings Call Transcript

| About: Belmond Ltd. (BEL)

Belmond Ltd. (NYSE:BEL)

Q2 2016 Earnings Conference Call

August 4, 2016 10:00 AM ET

Executives

Amy Brandt - Vice President, Corporate Finance and Investor Relations

Roeland Vos - President and Chief Executive Officer

Martin O’Grady - Executive Vice President and Chief Financial Officer

Analysts

Joe Greff - JPMorgan Chase

David Katz - Telsey Advisory Group

Jeff Bronchick - Cove Street Capital

Operator

Thank you for standing by and welcome to the Second Quarter 2016 Earnings Conference Call for Belmond Ltd. At this time all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. [Operator Instructions] I must advise you this conference is being recorded today.

I’d now like to hand the conference over to your first speaker today, Amy Brandt, Vice President of Investor Relations. Please go ahead.

Amy Brandt

Thank you, Sarah. Good morning, everyone, and thank you for joining us today for the second quarter 2016 earnings conference call for Belmond Ltd. We issued our earnings release last night. The release is available on our investor relations website at investor.belmond.com as well as on the SEC website. On the call with me today are Roeland Vos, President and Chief Executive Officer; and Martin O’Grady, Chief Financial Officer.

Before we get started today, I would like to read out our usual cautionary statement under the U.S. Private Securities Litigation Reform Act of 1995. In the course of our remarks to you today by Belmond’s management and in answering your questions, they may make forward-looking statements concerning Belmond such as its earnings outlook, its three-point growth strategy including future investment plans and other matters that are not historic facts and therefore involve risks and uncertainties.

We caution that actual results of Belmond may differ materially from these forward-looking statements. Information about factors that could cause actual results to differ is set out in yesterday’s news release, the company’s latest annual report to shareholders and the filings of the company with the Securities and Exchange Commission.

Management will be using certain non-GAAP financial measures today to analyze the second quarter operating performance of the company. You can find reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measure in the earnings release we issued last night.

I will now hand the call over to Roeland.

Roeland Vos

Thank you, Amy, and good morning, everyone. We’re pleased to have you join us for a discussion on our second quarter results and for an outlook for the remainder of the year.

Before we begin, I wanted to extend a hearty thank you to those of you who joined us whether in person or over the phone or via the webcast for our Investor and Analyst Meeting that we held in New York on June 1. This meeting for us presented a great opportunity to engage in open dialogue with our investors and the analysts and we thank you for your candid questions and your candid feedback. We look forward to keeping you informed on everything we are doing, specifically on the progress that we are making on our strategic plan.

Turning to the agenda for today’s call, I will speak about our second quarter results, our revised full-year guidance, and the potential impact of a few relevant global and regional events. I will then provide an update on some of our progress on the strategic plans that we presented in June. Martin will then give you more detail on the second quarter results and take you through our third quarter and full-year RevPAR guidance.

As you will have seen in earnings release, our second quarter same-store constant currency RevPAR was in line with the guidance that we provided in our first quarter earnings release, coming in at the lower end of the range with a year-over-year decrease of 1%. This decrease largely reflected specific challenges in certain parts of our portfolio, mainly in Venice and at our Brazilian hotels.

We believe that many of the reasons for the year-over-year decrease were specific to the second quarter, including the lack of Biennale art festival in Venice and an anticipated lull in demand for our Brazilian hotels leading or actually due to the leading up to the Olympics that are coming in the third quarter.

Looking forward, we are currently seeing very strong signs of growth for the third quarter due to, in large, part the August Olympic Games in Rio de Janeiro and a good peak summer performance for our European hotels. As such, we have maintained our full-year 2016 same-store constant currency RevPAR guidance of between 3% and 7% growth.

We are aware that recent global and regional events, including the potential impact of the UK’s decision to leave the European Union, as well as security concerns in Western Europe have created some uncertainty. However, we have not seen any meaningful impact to overall demand and our current forecast therefore supports our guidance.

Before moving on to an update on our strategic progress, I would like to touch on how Brexit could potentially impact our business. Although, I will point out that we have not yet seen any material signs of impact on our business and believe it’s too early to draw any meaningful conclusions. What we do know is that, Brexit has already led to a decrease in the value of the British pound.

At a high level, we think about our exposure principally in two ways. First, that would be the translation into U.S. dollar results, and second, is the demand from our British customers. On the translation side, we have a bit of a natural hedge, in that our central costs are largely pound denominated and translated into a lower U.S. dollar amount. These savings then are slightly offset by a lower EBITDA translation of our UK operations. As such, a decrease in the British pound at this point in time is net neutral to a marginal benefit to our U.S. dollar reported results.

On the second exposure, though demand, 13% of our hotel guests are British. Though as I’ve just stated, we have not seen any material changes in our guest behavior in their overbooking or travel behaviors. So overall, no major variances in our numbers as a result of Brexit.

Given all of the information that we currently have, we believe that the strong results that we are expecting for the third quarter should be realized and that the full-year 2016 should be another year of solid constant currency revenue and adjusted EBITDA growth.

Let me move on to an update on our strategy. And for those of you who missed our June Investor and Analyst Meeting, a replay of the webcast is available on investor.belmond.com. At this meeting we unveiled our detailed strategic growth plan, which we believe helps you better frame the meaningful growth opportunities that we have at Belmond.

We structured our presentation to provide some context about the evolution of our company, how we have in many ways repositioned ourselves over the last few years to illustrate how this has laid the solid foundation that we have today and then to share our strategy, providing a defined roadmap for its execution going forward.

Our strategic plan is focused on three growth pillars: driving organic growth, building brand awareness, and expanding our global footprint. In addition to elaborating on what each of these focus areas mean and providing detail on some of the related initiatives, we gave long-term aspirational goals. Most notably, an ambitious plan to double the number of properties in operation and double adjusted EBITDA, both by the year 2020. That means taking adjusted EBITDA from approximately $120 million in 2015 to between $226 million and $256 million in five years time. We appreciate and, in fact, anticipate it that there would be some skepticism around our aggressive plan.

However, as Philippe, Martin and I noted at the meeting, we are confident in our plan and we expect to deliver against it. This is in many ways a new management team with a renewed focus and one simple goal, aggressively execution of the strategic plan to drive long-term shareholder value.

Now with that said, let me provide a brief update on some of the early progress that we’ve made on our three focus areas starting with driving organic growth. This is a vital component of our growth plan as we expect it will deliver nearly half of the adjusted EBITDA growth for 2020.

I will now provide an update on a few of the operating initiatives first of all that we discussed with you in June. Improving our website is a near-term priority with an opportunity to significantly grow our revenues by increasing our conversion rate and capturing greater customer demand. In an increasing digital age, having a user-friendly dynamic space where we control our content and can best influence travel decisions is absolutely essential.

As mentioned at our Investor Meeting, when we rolled out the Belmond brand in 2014, we created our new website by pulling together separate product websites and laying a new – newly designed interface atop of an old technical platform. We did not rebuild at this time the site from scratch to bring it into the new technology. And as a result, usage of the site is not truly intuitive, in fact, it’s oftentimes confusing. And that means that we are missing opportunities to capture existing demands or we are encouraging people to book through other channels when website is the most cost efficient channel that we have available.

As a near-term step to improve our website, we hired a specialized agency that benchmarked our website and identified 10 areas for optimization. Starting in March, we implemented and began executing on a plan to improve on these 10 action points and we’ve already begun to see some of the results.

For the second quarter of 2016, we saw a 5% year-over-year increase in website traffic and a 6% uplift in the number of transactions booked, showing the improvement in our conversion ratio. We also saw a 16% increase in revenue generated through the site as compared to the second quarter of 2015. Now these are solid improvements from a relatively quick change that we have recently started executing on although, of course, it’s still early days and there’s still a lot of work to be done.

Another meaningful part of driving better performance of our existing properties is with disciplined capital allocation, disciplined capital allocation through reinvestment in our portfolio. We have been focused on the execution of projects already underway while also identifying new ideas that generate incremental EBITDA with strong returns and enhanced asset value.

To give you a few examples, our second quarter CapEx included investment in a new upscale sports bar called Meeting at Market at the Belmond Charleston Place in South Carolina. We opened this new food and beverage two weeks ago and it is quickly beginning to fill a void in the product offering for this important hotel, actually our largest EBITDA producer, as well as for the downtown Charleston market.

This project entails converting a previously leased retail space in a prime location that has been generating minimal rental revenue into an upscale sports bar. Also during the quarter we invested in a project to convert administrative offices, meeting space and a small business center on the third floor of the Belmond Miraflores Park in Lima, Peru into eight junior suites.

These new keys opened at the end of July, increasing the hotel’s key count by some 10% from 81 to 89. With a total project budget of approximately $1.1 million and an expected payback between three and four years, this project is another prime example of repurposing underutilized space to drive incremental EBITDA.

In addition to these two projects, we also invested during the second quarter in the renovation of the majority of the rooms at the Belmond La Residence d’Angkor in Cambodia, in the phased installation of air-conditioning on the Venice Simplon Orient-Express, the renovation of rooms in the main building at the Belmond Mount Nelson Hotel in Cape Town, and in the development of the Belmond Grand Hibernian Train which we expect to launch in the next month.

Moving on then to our second focus area, continuing to build brand awareness. In order for Belmond to become the brand of choice in our specific niche, it is essential that we bring the brand to life. To achieve this goal, we need to get the input and the buy-in from our teams in the field. Therefore, we have been working very closely with our leaders from across our business to set brand priorities and to identify and develop our signature programming. Those programs – those experiences that will truly differentiate us from the competition, which will then be piloted and tested and after that the expectation is to launch some of them in the first-half of 2017.

We continue to believe that PR opportunities, particularly those that attract significant media attention are some of the most efficient ways to engage with our customers and increase awareness for the brand. One such example is our recent involvement in one of the UK’s biggest cultural events, the Annual Chelsea Flower Show in London.

For the first time, a carriage from the Belmond British Pullman train was a central feature of this high profile event. And a a result, our train and the Belmond brand in turn received considerable television coverage via the BBC, reaching at least a total audience of approximately 5 million people.

On an even larger world stage, we have the opportunity to build awareness of the brand at the upcoming 2016 Summer Olympics in Rio, with many of the broadcasting and sporting events taking place close to the Belmond Copacabana Palace, which is located at the center of the Copacabana beach.

Our hotel will serve as a landmark for high-profile international media who will be in town for several weeks during the games, and we have identified targeted, branded activities to leverage the increased guest flow and the global exposure. To do that, we commissioned an award-winning artist who created a Belmond-inspired imagery for a lighting installation to be projected across the hotel’s facade. They created artwork that will be showcased in the hotel’s lobby and around the building and a unique Belmond in-room amenity for all of the guests during this period of time.

While the Olympic opening ceremonies officially only take place tomorrow, we recently hosted a launch event for the light projection, which in less than a week has generated significant media coverage, including 6.4 million social media impressions and a one-minute spot on a Brazilian television program with nearly 8 million viewers. We expect that this stepped-up attention for our historical hotel and at the same time the Belmond brand will continue to build over the course of the games over the coming weeks.

That brings me to our third focus area, expanding our global footprint, which as noted at our Investor Meeting we expect to drive approximately half of our strategic growth from here. Giving our admittedly aggressive targets, I’m pleased to report that in June, we announced our first new product since providing this goal to double the number of properties in operation by 2020. It is the Belmond Andean Explorer, a 68-passenger train, which will offer one and two-night journeys on one of the highest rail routes on earth, traversing the Peruvian Andes.

With a scheduled launch in May 2017, it will become South America’s first luxury overnight train and will follow and complement the upcoming launch of our Belmond Grand Hibernian train here in Ireland. Both new trains provide opportunities to leverage our vast train experience and further our legacy as one of the world’s greatest luxury train operators. We’re also making progress on getting the right team in place to execute on our footprint expansion.

As we recently hired a second director of development who will be focused on the European market based in London office starting in September. And we are in the process of finalizing with someone to be based in the Middle East. Additionally, as a result of our publicly unveiling of the strategic plan in June, we believe that we have been raising profile and gaining traction in the development world with the industry getting our very clear message that we are in expansionary mode. We expect that combining this increased awareness with our expanded development resources should translate into additional deal announcements as we go forward.

So in conclusion, our second quarter showed good performance in certain regions, but was impacted by a number of challenges that we believe were largely isolated to the second quarter. Our early look at the July results and forecast for the remaining two months of the third quarter indicate that we expect to see healthy third quarter growth with the Summer Olympics in Rio and an expected strong peak season at our European resort hotels to be the large drivers.

Despite the inherent uncertainty and risk in some recent global and regional events, we continue to see solid signals for the remainder of the year. As such, we have maintained our full-year 2016 RevPAR guidance range of between 3% and 7% year-over-year growth.

And with that, I would like to turn the call over to Martin to provide some more detail on our second quarter results and our RevPAR guidance. After Martin speaks, we will be happy to answer your questions during the Q&A.

With that, Martin, all yours.

Martin O’Grady

Thank you, Roeland, and good morning, everyone. I will now take you through the detail of our second quarter results and then some color on how the rest of the year is shaping up. And please note unless I state otherwise all of the figures I provide will be on a constant currency basis.

Our second quarter results were a mix a positive performances in select parts of our portfolio and a few largely anticipated challenges, which netted to total revenue of $158.1 million for the quarter, a slight increase $600,000 over the prior-year quarter.

On the hotel side, same-store owned hotel RevPAR decreased by 1%, whereas owned trains and cruises revenue was up by 13%. Total adjusted EBITDA for the second quarter of 2016 was $38.1 million, which was a 5% decrease from the second quarter of 2015. On a high level our second quarter 2016 adjusted EBITDA performance reflected a good number of healthy operational performances across the portfolio, including at our Safari Camps in Botswana, the Venice Simplon-Orient-Express train, our two owned hotels in the United States and a number of our resort destinations in Europe.

Additionally, we reduced our second quarter 2016 central overhead and share-based compensation for combined year-over-year savings of $2.5 million, or 24%. Offsetting these year-over-year EBITDA improvements, we experienced a year-over-year decline at Hotel Cipriani in Venice, which faced some anticipated challenges that were in large part related to the second quarter of 2015 being a challenging comparable period. If we exclude the impact of Hotel Cipriani, our total revenue for the second quarter increased 3% over the prior-year quarter and adjusted EBITDA also increased by 3%.

So looking at the regional performance, our European owned hotels revenue decreased 4% and adjusted EBITDA decreased 8% from the prior-year quarter. Both variances are largely related to the performance of Hotel Cipriani in Venice, which I – as I just noted had a challenging comparable period last year where it benefited from the Biennale art festival that takes place every other year in Venice, as well as the World Expo 2015 in Milan or the world fair, and both of those helped drive increased visitation to Italy.

Additionally, in the second quarter of 2015, we received the final payment of $1.1 million of settlement income related to the 2010 settlement of a Cipriani trademark litigation case. With that said, there was certainly a number of bright spots in Europe. Belmond Reid’s Palace in Madeira, Belmond Hotel Caruso in Ravello, Belmond La Residence in Mallorca all of which drove revenue and EBITDA growth largely as a result of capitalizing on increased demand for those destinations and leveraging revenue management strategies to drive greater RevPAR growth.

For our owned hotels in North America, revenue decreased 4% and adjusted EBITDA 11%. Year-over-year growth at Belmond El Encanto in Santa Barbara, and the hotel continues to mature, was offset by year-over-year declines at Belmond La Samanna and Belmond Maroma resorts and spa. At Belmond La Samanna, we did not receive many cancellations due to Zika, but anticipated bookings did not materialize we believe due primarily to Zika concerns. And Belmond Maroma has been negatively impacted in 2016 by the reopening of renovated hotels in the Los Cabos resort market in late 2015, as well as some increased local competition.

In our rest of world region, owned hotel revenue increased 4% whereas adjusted EBITDA decreased 35%, as compared to the prior-year quarter. Our strongest performance in that region was Belmond Safaris in Botswana and Belmond Mount Nelson in Cape Town. The safaris benefited from strong results for Belmond Eagle Island Lodge, which was opened in the second quarter of 2016, but was closed for the majority of 2015. And Belmond Mount Nelson Hotel continued to benefit from the investments we have made in the property over the past few years, including the phased rooms renovation and last year’s refurbishment of the hotels meeting and banqueting spaces.

Additionally, the hotel benefited from a weaker South African rand, which stimulated incremental demand for Cape Town that we captured through effective yield management strategies. Offsetting the growth out of Africa, however, our two Brazilian hotels saw year-over-year declines in the second quarter largely as a result of the anticipated lull in demand ahead of the Olympic Games and because of the country’s weak economic environment. Additionally, adjusted EBITDA declines for these two hotels were greater than the revenue decreases due in part to an increase in local taxes and inflationary payroll increases.

Turning to our owned trains and cruises segment, we saw good year-over-year growth for the second quarter. Revenue was up 13% and adjusted EBITDA up 23%. The largest drivers of the growth were the Venice Simplon-Orient-Express train, which booked six more trips in the current-year quarter and drove a higher average rate per berth and the Belmond Royal Scotsman train in Scotland, which also increased trips by two and average rate per berth.

For our part owned and managed train segment, revenue was up 1% and adjusted EBITDA was up 5% for the second quarter of 2016, as compared to the second quarter of 2015, primarily due to growth from our Peru rail joint venture. And overall, we had a steady quarter with positive performances that were offset by a few challenges in select parts of our portfolio. We’re now looking ahead to our third quarter, which we expect should show solid year-over-year growth. I will come back with some more color on the third quarter guidance in the next few minutes.

Our balance sheet, June 30, 2016, we had total debt of $600 million, total cash including restricted cash was $150 million, resulting net debt of $450 million and net leverage of 3.7 times. Our $105 million corporate revolver remains undrawn, so including the revolver but excluding restricted cash, our total cash availability was $250 million at the end of the second quarter, and that provides strong liquidity for the initial stages of growth as laid out in our strategic plan. Our fixed to floating interest rate split was 48% fixed to 52% floating, and our weighted average interest rate was 4.3%, and our weighted average debt maturity was 4.4 years.

Now, during the quarter we refinanced our bank loan on Charleston Place. The loan was increased by $26 million from $86 million to $112 million and was used to repay a $10 million development loan from an affiliate of the city of Charleston and accrued interest on this loan of $16.8 million. We agreed an early repayment discount of $4 million and have made provision of $2.8 million for a related tax indemnity to our original investment partners and that leaves a net gain of $1.2 million, which has been adjusted out of our second quarter net income.

The increased bank loan had a modest increase in the interest rate margin from 212 to 235 basis points and the loan still matures in August 2019. This was an important restructure for Belmond but also for the city of Charleston. For Belmond, it removed an $86 million cap on bank borrowings on the asset and that asset could now provide additional liquidity as it allows us to seek a further increase above the one, $12 million balance should we seek to do so, possibly of another $30 million to $40 million.

For the city of Charleston, it provided nearly $23 million of funds that the city has now earmarked for other community development needs. And note that, although, broadly this was a cash-neutral transaction, there was a shift on our balance sheet from other liabilities to debt and the gross debt increased by $16 million and the corresponding impact to net leverage was 0.1 times.

Now, turning to our outlook for the third quarter of 2016, our constant currency guidance for the same-store RevPAR growth for the third quarter of 2016 is 7% to a 11%. As you would expect, one of the largest drivers of our expected third quarter year-over-year growth is the performance of Belmond Copacabana Palace in Rio as a result of the August Olympic Games.

As such, I will start our regional discussion by taking you through the rest of the world region, where growth is expected to come more from rates than from occupancy. Belmond Copacabana Palace is expected to be the largest driver of growth for the region in the quarter and there too, the growth is driven mostly by rate as you would expect than by occupancy.

Looking at the EBITDA impact to Belmond Copacabana Palace, as we indicated on our last earnings call, we anticipate that the Olympics will help deliver a net adjusted EBITDA benefit for the third quarter of approximately $4 million for the hotel as compared to the prior quarter. And due in part to the lull in demand that we experienced in the second quarter and that we anticipate experiencing after the Olympics in the fourth quarter, we are currently projecting that the year-over-year uplift to the hotel’s adjusted EBITDA for the full-year would be approximately $3 million.

Moving to our European hotels, we are projecting solid growth for these hotels during their peak summer seasons with RevPAR growth expected to be driven more by occupancy than rates. We are forecasting the greatest year-over-year RevPAR growth at Belmond Grand Hotel Europe in St. Petersburg, Belmond Reid’s Palace in Madeira, and Belmond Villa Sant’Andrea in Sicily.

Grand Hotel Europe is expected to benefit from increased sales efforts to Asian markets, Belmond Reid’s Palace from increased demand from Madeira and, which of course, continues to benefit from displacement from other markets and also Belmond Villa Sant’Andrea from the four new keys opened earlier this year.

In North America, we are also expecting that third quarter RevPAR growth will be more occupancy than rate-driven, with the largest forecasted growth coming out of Belmond El Encanto in Santa Barbara and Belmond Charleston Place. We expect Belmond El Encanto, which recorded RevPAR growth of 9% in the second quarter should see another quarter of growth as the hotel continues to mature. And we’re projecting that Belmond Charleston Place will see good RevPAR growth in the third quarter, largely as a function of a forecasted increase in group business as compared to the prior-year quarter.

So when we look at all those regions combined, we are forecasting same-store worldwide RevPAR growth in the third quarter of 7% to a 11%. And overall RevPAR growth is expected to come more from rate than occupancy due in large part to the exceptional ADR growth we are projecting for Belmond Copacabana Palace during the Olympic Games. We are projecting slightly higher overall growth for the third quarter on a U.S. dollar basis with RevPAR growth of between 8% and 12%.

So turning to the full-year 2016, and as Roeland noted, we are maintaining our constant currency guidance for the same-store worldwide RevPAR growth at 3% to 7%. In total, we expect growth to come from both rate and occupancy but driven slightly more by rate. Looking region by region, we are expecting an overall moderate increase in RevPAR for our European segment, and that’s really been driven by the peak summer season.

As we indicated on our last call for our Europe region, we are forecasting the largest RevPAR increases will be at Belmond Reid’s Palace for the reasons I’ve already mentioned, La Residencia, where we have been steadily increasing our percentage of U.S. clients over the last few years through targeted marketing efforts there and Belmond Villa Sant’Andrea we have these additional four keys I mentioned.

For the North American segment, we continue to expect that full-year RevPAR will be driven largely by projected growth at Belmond Charleston Place and Belmond El Encanto. Charleston has been performing very well following the 2015 completion of our three-year rooms refurbishment and other EBITDA enhancing projects at the hotel.

Additionally, it’s worth noting that we are forecasting the hotel should benefit from the comparison to the fourth quarter of 2015. And that’s when a hurricane hit the city of Charleston in October 2015, and that led in part to $1.1 million decrease in adjusted EBITDA for the hotel for the fourth quarter of 2015 as compared to the fourth quarter of 2014. We are expecting a similar rate of growth at El Encanto as a result of the factors I noted there a minute ago, expect it to slightly offset the growth from these two hotels. However, we’re forecasting a year-over-year RevPAR decline for Belmond Maroma due largely to the hotels in Los Cabos.

Turning to the rest of world, we anticipate this region will deliver our strongest year-over-year RevPAR growth for the full-year due to the Olympic Games this month. So again, when we look at all the regions combined, we’re anticipating full-year 2016 same-store worldwide RevPAR growth of 3% to 7%. In U.S. dollar terms, our same-store RevPAR guidance with full-year growth is between 0% and 4%, and the divergence from our constant currency guidance is being driven primarily by projected weaker South African rand, ruble and the real when we compare the forecasted 2016 average rate to the 2015 average rate.

And now looking at the impact of currency and EBITDA for the full-year of 2016, we’re projecting that the dollar total adjusted EBITDA growth will be negatively impacted by approximately $0.5 million to $1.5 million as a result of all of the year-over-year currency movements. And this range is net of an approximately $1 million benefit resulting from the forecasted year-over-year depreciation of the average British pound rate.

The total expected adjusted impact on EBITDA of $0.5 million to $1.5 million compares favorably to what we said on the last earnings call and there we said between $1.5 million to $2.5 million. It also compares very favorably to 2015, where of course, we experienced a very negative currency impact of approximately $18 million.

Our expectation of the negative currency impact to our full-year 2016 result has come down a little bit since the last earnings call. Really there has been a modest strengthening in the projected average exchange rates for the Brazilian real and ruble and, of course, the benefit from the British pound weakening.

So that concludes our prepared remarks. Before I hand back to the operator for Q&A, we would like to request that you limit your questions to two per person. Thank you very much. Operator?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And the first question is from the line of Joe Greff.

Joe Greff

Good morning, everybody.

Roeland Vos

Hi, Joe, how are you?

Joe Greff

Martin, I know you gave us the net EBITDA impact from the benefit of the Olympics. What’s the net RevPAR growth benefit on a constant currency basis?

Martin O’grady

Do you have that, Amy, on the schedule?

Amy Brandt

For the quarter.

Martin O’grady

For the quarter. I’m sorry. For the whole quarter it’s 5 points I would say.

Joe Greff

Got it. And then net between the lull before and after would the net impact be?

Martin O’grady

Sorry Joe, a few people talking. What we want to just add to that first part, Joe, is a 5 point impact on the third quarter. But for the full-year, it’s a 2 point impact.

Joe Greff

2 point impact. Okay, great. And then, Roeland, maybe you can just talk about with respect to footprint growth, and I know it’s really early days here. But just the conversations you are having with folks that you’re looking to buy assets from, what’s the profile of some of those assets, what geographies and just if you can talk about the pace of those conversations that would be helpful? And that’s all. Thank you.

Roeland Vos

Yes, more than happy to do that. It’s – we have been focusing on the areas that we have been talking about, first of all, trying to get the people in place. And as I mentioned, we were good on the way to hire one person, which will start in September here in London to cover the European market, which will be our number two in that position.

We are also at the point of hiring somebody to be based in Dubai, which will from there cover the Middle Eastern market and focusing also on markets like the Indian Ocean. We are still in the process of hiring somebody for Asia-Pacific. Our initial plan was to put somebody in Bangkok, but the market has – or we have not been able to find the right quality of talent there.

So we have shifted to plan to put somebody in Singapore and we are working on that. And for Latin America and for the Americas, we have not started the search process yet, but we will do that very soon. That was planned to start at the beginning of 2017.

But as far as the discussions are concerned, I myself have been involved in many of those discussions together with James. And we have had a large number of, I would call very positive and very receptive discussions with individual owners, where we’ve been looking at opportunities. A number of them were clearly outside of our range, and I think part of doing a good development is being able to step away from certain deals early on.

But a number of them were also serious and within the boundaries that we have described to you from a financial and from a brand point of view in our strategic plan, and we are working very hard on seeing how we can get some of those over the line. Without giving dates or giving deadlines on them, I think that the feedback has been positive. And I feel comfortable that as we step up our efforts that there will be a number of opportunities, both in the acquisition component as well as in the management range. And then, of course, the trains that we have been adding as a separate component of the overall growth strategy. Did that sort of answer your question, Joe?

Joe Greff

Perfect. Yes. Thank you, guys.

Roeland Vos

Thank you.

Operator

Thank you. The next question is from the line of David Katz. Please go ahead.

David Katz

Hi, afternoon all or good morning.

Martin O’grady

Hi.

Roeland Vos

Hi, David.

David Katz

I wanted to, and I know you gave out a lot of information on from a high level some of this may be obvious. But what I’m trying to get at is the many opportunities or operational opportunities you have to drive revenue and profitability improvement. Separate and apart from what may occur with the Olympics, I’m trying to get a sense for how much of that has occurred and how much we reasonably could or should expect to see in terms of revenue and EBITDA growth this year? From the discussions you have around the web and other procurement and just other fixes or low-hanging fruit is probably a good way to describe it.

Roeland Vos

Yes, I think that when we did our presentation in New York, we gave an overview of what would help us shift the growth opportunities in our existing hotels and how can we drive organic growth. Underneath there, we gave you a few examples, but there is a whole list of tens of initiatives that have started and we already actually started even before we came to New York.

I think that the ones that I mentioned are around the website which we consider to be an opportunity that we could work on very quickly and get quick results. Another one that I could mention just as an example, and not that that is going to change in the majority our numbers for the second or third quarter. But we spoke about the German language speaker and the fact that we could not book over the website until the second quarter of this year.

Since we introduced it in April, we saw a lift of the German language speaker bookings of 7% year-over-year, which even though those numbers per se might not be so big, altogether these are bits and pieces that add up. And once that we start seeing all those little bits getting together then it start making sense and you will start seeing good results.

We have been working very hard as well with the teams on the way of getting our capital lined up, making sure that we go back into our hotels figuring out where the opportunities are, where we can do similar things as was Martin describing for the Peru property adding new rooms, adding new opportunities, reconverting underutilized space. And there is no rocket science there, but it’s certainly something that will help us get through the results.

What we will do is, the overall list of individual activities together with Philippe, we will make sure that we’ll keep you posted as those individual bits and pieces come through where we stand and how you can keep us accountable against them.

David Katz

Understood. So as we think about how the quarters may roll out with 3Q obviously being the high season, and then 4Q and 1Q tending to be much lighter, what we might realistically be talking about is, seeing some more meaningful impact from these next year in 2Q and 3Q. Is that a fair way to think about it?

Roeland Vos

I think that’s a fair way to think about it. And I also think that lines pretty much up with the timeframes that we have set in order to get some of those activities on the road and where the kick-in will come would be – it might start early, but the financial impacts will be Q2 and Q3 of next year in many cases.

David Katz

Understood. And if I can just follow-up the prior question and answer, again, as we think about the next two to four quarters it sounds like, and I want to make sure I’m hearing correctly, it sounds like we should expect to see some either contracts or transactions to occur within the next two to four quarters just based on what you know today?

Roeland Vos

Well, I think it’s hard to speculate on when deals get signed. But what we know today is, that there is a number of transactions that we’re working on that I would consider to be serious enough that I would hope to be able to announce those over the coming quarters.

David Katz

That’s fair. Thank you very much.

Martin O’grady

Thanks, David.

Roeland Vos

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Jeff Bronchick. Please go ahead.

Jeff Bronchick

Good morning guys.

Roeland Vos

Hi, Jeff.

Jeff Bronchick

Just a question, so Roeland, your former boss just filed a 4.9% stake in the company. And I’m just wondering have you talked to him? How might, since I think he will be unemployed pretty soon, how might he play a role in the company on a Board level or any conversations you’ve had with him that you think is interesting?

Roeland Vos

Listen, Jeff, I don’t want to speculate on any intentions or anything around Barry, as we’ve all seen that he filed a 13G and, as such, will be taking a passive position. As far as the way of us communicating with individual shareholders, we have a policy and I think it’s wise to stick to that, not to comment on any individual communication with shareholders like we would do with all of you.

Obviously, for Barry certainly like for any other investor, we love to have communications with our investors. And we have had those in the past with any of our investors. And we look forward to maintaining those relations and the same would apply for Barry.

Jeff Bronchick

Thank you.

Roeland Vos

Pleasure.

Thank you. [Operator Instructions] As there appear to be no further questions coming through, I will hand back to the speakers.

Amy Brandt

Thank you very much, Sarah, and thank you, everyone, for joining us today. We look forward to speaking with you next quarter.

Operator

Thank you. That does conclude the conference for today. Thank you for participating and you may now disconnect.

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