Carlos Berdegué Sacristán.
Little more than a decade ago, when his father died, Carlos Berdegué Sacristán had in his favor, faced with the challenge of running El Cid Resort alone, the fact that it was a consolidated hotel complex.
But he also carried a heavy responsibility: to fill the shoes of the strong figure of his father and founder of the group, Mr. Julio Berdegué Aznar.
According to the annual reports of Grupe (name of the holder of the shares of El Cid), Carlos is the company’s general director since 1987. However, Mr. Julio was the chairman of the Board of Directors and founder of the group, and it was said that he actively led his businesses until the last day of his life.
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In an interview for the magazine Gente Sinaloa , last May, Carlos said that it was his father who had trained him to lead the hotel group, and recalled that, upon his death, he succeeded him as president of the Board of Directors, in 2007 Thus, he added the two main positions and accumulated all the powers of decision.
El Cid Resort is a family business. Carlos and his three brothers, directly and indirectly, own 75% of the shares.
The Berdegué family was part of the Republican exile that General Lázaro Cárdenas welcomed in our country when he was president, in 1939, at the end of the Spanish Civil War. “Don Julio”, as he was known in Mazatlan, Sinaloa, was only nine years old when he arrived in Mexico.
He qualified as a biologist, built a fishing business emporium, supported, at the beginning (as he claimed), in the savings he accumulated as manager of a packing company; and then it was reconverted to the hotel business. He was in jail for a few months, accused of smuggling of cod, although a judge dismissed the case and released him, because those alleged acts, as he assured in an interview with the Noroeste newspaper, never happened.
Don Julio Berdegué is considered one of the drivers of the development of Mazatlan. He was a prominent member of his community and is part of recent Mazatlan history. As Chairman of the Board, he left a consolidated and well-managed company, small but profitable, with modest but stable returns.
El Cid is a small company compared to the big hotel chains: it sells 127 million dollars (mdd) a year, which come mainly from its hotels and timeshares (which, together, contribute 90% of total revenues), located in Mazatlan (Sinaloa) and in Cozumel and Cancún (Quintana Roo).
The comparative reference presented in this analysis is made up of the 10 largest hotel chains in the world, of which the smallest one is 1,800 million dollars a year, and the largest, some 6,000 million.
The return on capital invested (Roic) of El Cid Resort, an average of the last three years, is 4.4%. With that modest rate, Carlos is more profitable than five of the 10 global hotel giants. It is more profitable, for example than Hyatt (3.8%), but less than Marriott (13.1%), both with headquarters in the United States.
The evolution of the profitability of capital in the current decade is favorable for the El Cid CEO. In a five-year period, the Roic rate increased by 57%. The percentage can be misleading because it starts from a low base of comparison: profitability went from 2.8% in the 2011-2013 triennium to 4.4% in the 2016-2018 average. In percentage points, the growth does not look so great: 1.6 points of increase.
Carlos Berdegué surpassed, in profitability, his father. During the last 13 years, with Don Julio Berdegué in the presidency, El Cid had obtained an average return on capital of 2.8% (1994-2006). Carlos, in 12 years of operation, and in the absence of his father, reaped a rate of 3.2% (2007-2018), a very slight improvement, but with an upward trend, because the average of the last three years, as we saw, was 4.4%.
An indicator of the degree of efficiency of the operation is labor productivity, that is, to compare the income with the number of employees.
We confronted El Cid with the largest Mexican hotelier, Grupo Posadas, and it turned out that the team led by Carlos Berdegué Sacristán is more productive, because it generates $ 33,600 of income for each person employed, compared to 28,300 of a said competitor.
In addition, while the average productivity of the top ten is much higher, of $ 254,000, El Cid, in a surprise result, is more productive than the American chains Marriott (29,700) and Hilton (22,200).
Administrative expenses as a proportion of revenues may, at times, show the ability of managers to fulfill this function, saving resources, without affecting the quality of the services of the business.
In this sense, for every $ 100 that the group enters, it allocates 8.4 to administrative expenses, while the largest US chain, Marriott, spends $ 19.8; while the average of the top ten disburses 21.9 (these figures are averages of the last three years).
The ability of Ebitda to pay off the debt shows that the firm is financially healthy (the Debt / Ebitda ratio is 3.3).
However, the ability to negotiate with banks to obtain lower rates is a task to improve, because the payment of interest in proportion to the cash generated is too high, compared to what is paid in the industry.
The indicator called interest coverage reveals that the flow generated by the operation (Ebitda) in El Cid is only three times higher than the interest paid, while the world hotel average is 3.5; the one in Latin America, 4; and, in the 10 hotel giants, 8.4 times (a higher indicator means that the company pays less interest).
The growth of the El Cid group during the last five years was equivalent to 5.4% per year (annual growth rate composed of revenues expressed in dollars). The average of the top ten is 8.4%, with two companies that reduced revenues. El Cid is an explosive growth trend, but it is good.
However, an increased risk has arisen in the housing market: new business models based on digital technologies, such as Airbnb, the platform that allows anyone to rent their house or room to the public user, and that in Mexico offers more of 70,000 properties, compared to about 770,000 hotel rooms available in the country (Inegi, December 2016).
Among the risk factors of El Cid’s latest annual report, not even online platforms are mentioned; it merely clarifies, in a footnote, that the risks listed are not the only ones that exist and that those not mentioned could have significant effects on the results … An enigmatic assertion.
If it were explicit, it would surely recognize the danger that, for the traditional hotel industry, digital models mean, especially its vertigo to impose changes.
Source: All the numerical and graphic information of this analysis was elaborated with data of S & P Capital IQ, of the stock exchanges and commissions of values and of the companies. Forbes
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