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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 IVPE Ratios14 Graph V2003 Stock Prices14 IINTRODUCTION 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 analysis we are looking for a moderate gearing ratio sustainable liquidity ratio and moderate to good ROCE and asset utilization ratios Our analysis of NH Hoteles share price started with the articulation
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