Valuation of Rezidor Hotel Group AB

Carlo Parlato

Student thesis: Master thesis

Abstract

The purpose of this thesis is to determine the fair value of Rezidor Group AB share, as of 15 March 2017. Rezidor was recently acquired by HNA Tourism Group, and is considered an established hotel firm in Scandinavia, one of Rezidor's most promising markets. Together with deep roots in the rest of Western Europe countries, Rezidor is exposed to an interesting future to screen. In order to execute a strong valuation of Rezidor, the thesis has undertaken three documented strategic frameworks: PESTLE Analysis and SWOT analysis to scan the environment of Rezidor and Five forces analysis of Porter. The PESTLE analysis examines the macro-environment drivers that currently are in place. Porter's Five Forces identified the factors that nowadays are shaping the hotel industry. At the company level, the SWOT analysis included the key findings that are showing a picture of Rezidor current environment and will help to define Rezidor's future. The findings gave an opportunistic outlook for Rezidor, where an increased propensity to travel and a high-expected GDP growth within Rezidor's home markets are contributing factors. Finally, Rezidor has proved to be ready for future challenges, through adapting quickly to new economic scenarios and with consciousness in new investments. 6 Furthermore, through a systematic approach, Rezidor's financial condition was reorganized through a deep financial analysis of Rezidor's historical and current performance. After 2009, the revenues have grown throughout the years analyzed, where Rezidor have recovered well from the financial crisis. Essential ratios such as ROE and ROIC, P/E, EV/EBIT, EV/EBITDA have been benchmarked against Rezidor's main competitors, Scandic and Pandox, where Rezidor has not over-performed its competitors. A breakdown of Rezidor's business segments and geographical presence revealed a stable growth of revenue streams, allocated to the most promising markets of Rezidor, the Nordics and Western Europe, within the Room segment. Rezidor's future was forecasted based on the findings from the strategic and financial analysis, allocating the revenues growth rate to each geographical area to generate a dependable predictor of Rezidor’s growth. Using the Discounted Cash Flow and Economic Value Added valuation models, the value per share was set to EUR 3,512. The result was further tested and benchmarked through multiples comparison, concluding that the valuation of Rezidor Group AB was well executed. The thesis recommendation for Rezidor’s share is set to sell.

EducationsMSocSc in Service Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2017
Number of pages83