FIBRA Hotel Bounces Back: Recent Dividend Distribution Signals Strong Economic Revival

The service sector in Mexico, including the hotel industry, was severely affected by the COVID-19 pandemic. As a result, hotel companies were forced to temporarily close their establishments, leading to a significant impact on their revenues and investments. One such company is FIBRA Hotel, which experienced a slowdown in the second quarter of 2020 due to the reduction in nationwide tourism activities. However, the hotel trust is already showing clear signs of economic recovery, as evidenced by the distribution of dividends to its shareholders during the first quarter of this year. According to data from SiiLA FIBRA Analytics, FIBRA Hotel distributed approximately 98 million pesos in dividends, marking the resumption of dividend payments after a three-year suspension.

During the first quarter of 2023, FIBRA Hotel distributed dividends of 12.50 cents per share or Real Estate Trust Certificate (CBFI). Dividends are the monetary benefits that shareholders receive based on a company's operations. While FIBRAs (or Mexican REITs) are required to deliver annual dividends based on their net fiscal results, the suspension of payments can occur due to resource constraints or decisions made by the board of directors, who are responsible for determining whether to reinvest existing resources for business growth or distribute them among shareholders.

According to SiiLA, the dividends distributed by FIBRA Hotel during the first quarter of 2023 are equivalent to half of the average distributions made by the trust before the pandemic, which were around 23 cents per certificate. Although FIBRA Hotel's distributions have not yet reached pre-pandemic levels, the economic situation of the trust is showing signs of improvement.

In 2020, FIBRA Hotel ceased delivering dividends for the first time in its history. The second quarter of 2020 was particularly challenging, as the trust's revenues were ten times lower than the average since its establishment in 2012. This was because, during that period, the occupancy rate in the trust's hotels was 3.7%, the lowest in its history and well below the previous average occupancy rate, close to 65%.

It would take approximately another year for FIBRA Hotel's revenues to begin recovering. Starting from the second quarter of 2021, the trust started reporting quarterly revenues exceeding 700 million pesos. However, it wasn't until the second quarter of 2022 that the revenues reached pre-pandemic levels, coinciding with the group's hotels achieving occupancy rates equal to or greater than 60%.

Currently, FIBRA Hotel manages 86 hotels with 12,554 rooms, reporting a nationwide occupancy rate of 98%. The company's revenues continue to strengthen as the tourism sector recovers in Mexico, and the dividend distribution demonstrates the recovery of the company’s profit margin. For more information and insights on FIBRAs and other institutional players in Mexico's commercial real estate sector, please visit SiiLA or contact us at contacto@siila.com.mx.