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Corporate governance

RISK MANAGEMENT

3.4.3. SENSITIVITY ANALYSIS

Based on reported 2012 data, sensitivity analyses have been (ii) the euro exchange rate against the main operating currencies. performed to measure the impact on EBIT (1) of any changes A sensitivity analysis has also been conducted to assess the in (i) RevPAR (revenue per available room, as calculated by impact on operating profit before tax and non-recurring items multiplying the occupancy rate by the average room rate) and of fluctuations in interest rates.

Sensitivity to RevPAR

A 1% increase or decrease in RevPAR would impact EBIT as follows:

Sensitivity to RevPAR

1% decrease in RevPAR Upscale & Midscale Economy Total

Impact on EBIT €(11.6) million €(7.6) million €(19.2) million

Sensitivity to RevPAR 1% increase in RevPAR Upscale & Midscale Economy Total

Impact on EBIT €8.5 million €5.4 million €13.9 million

In absolute value, a 1% decline in RevPAR has a larger impact which does not affect operating costs and therefore has a on EBIT than a 1% increase. stronger impact on growth in EBIT. The flow-through ratio (1)

for a 1% increase in RevPAR resulting from higher average roomAny rebound in hotel demand initially results in an increase in rates is higher than the flow-through ratio for a 1% increase inoccupancy rates. This feeds through to higher variable costs, RevPAR resulting from higher occupancy rates.

which in turn weigh on growth in EBIT. In a second phase, the stronger demand drives an increase in average room rates,

Sensitivity to exchange rates

A 10% increase or decrease in exchange rates would have the following impact on EBIT:

Sensitivity to exchange rates

EBIT impact of a 10% increase/ Currency decrease in exchange rates

GBP United Kingdom €4.9 million

AUD Australia €3.7 million

BRL Brazil €3.4 million

PLN Poland €2.3 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 an €8-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.