The combination of favourable market conditions and the Company’s successful strategy, were key to the strong results that consolidate leadership in the Mediterranean and the positive trend in all markets.
RevPar evolution by region
An overview on MHI’s results include:
- In the first nine months, Meliá Hotels International share price increased by 40.5 per cent
- The Company is committed to strengthening its balance sheet without adversely affecting the intensity of growth via low capital-intensive formulas
- Robust improvement in Mediterranean resorts and palpable recovery in Spanish cities, with RevPAR rising in all regions by 28 per cent
- Average revenue per available room (RevPAR) increased by 11 per cent, due to 85 per cent growth in average room rates
- Net Profit increased by 133 per cent
- Melia.com revenues grew by 25 per cent up to September 2015, a key factor in revenue management
- 17 hotels signed to date in 2015, with a total of 15,150 rooms in the pipeline, the highest number in the history of the Group
- Intensive schedule of hotel openings for the end of 2015 (11) and 2016 (15) respectively
- Cuba continues to be a focus for strategic growth, with the company committed to strengthening its leadership and bonds with the destination
- Successful tour of senior management through Asia Pacific, with the addition of hotels in Indonesia and an important strategic alliance to enter the Thai market
Outlook for 2015 – 2016
- The group expects to end 2015 with double-digit growth in global RevPAR
- 2016 is expected to maintain the growth trend in the main feeder markets for Spain and the Mediterranean
- The Company will present its 2016 – 2018 Strategic Plan
Gabriel Escarrer, Vice Chairman and CEO at Meliá Hotels International: “The nine month financial results for the Group, up to September 2015, confirms the strong fundamentals in the hotel business and the evident success of Meliá Hotels International’s competitive strategy, by raising profitability in our hotels through innovation and the personalisation of the customer experience. Stabilising the Company’s financials, strengthened the Group while it has continued to grow and position itself as one of the leading hotel management companies in the world.”
Meliá Hotels International presented results today for the first nine months of the year, reflecting a favourable performance in the Mediterranean summer season, as well as the continued improvement of city hotels in Spain. The Company recorded a net profit of €52.9 million, a 51 per cent increase over the same period in 2014.
The Company highlighted the results of its recurring operations, doubling those of the same period in 2014, with a solid performance of the hotel business and real estate management as the most important factors. The business achieved an overall increase in average revenues per available room (RevPAR) of 11 per cent, 85 per cent of which can be attributed to price increases, and an improvement in EBITDA and EBITDA margin of 28 per cent and 209 basis points, respectively.
The results of the Real Estate department has contributed to debt reduction objectives and the improvement of the value and quality of Meliá Hotels International portfolio; through the sale of six resort hotels in February 2015 to a joint venture, 80 per cent owned by Starwood Capital and 20 per cent by Meliá Hotels International, with the Company continuing to operate the hotels.
The Group continued to strengthen its international expansion, with 17 new hotels signed in 2015 to date, with a major focus on the Asia Pacific market. This was cemented following the recent tour of the continent by senior MHI executives, with several new hotels signed and an announcement of the Company’s entry into Thailand with the opening of up to 5,000 rooms over the next few years. The Company pipeline has reached a record high, and now includes 63 hotels with 15,150 rooms.
Meliá Hotels International continues to strengthen its balance sheet thanks to positive cash-flow generation, and in the most recent quarter reduced net debt by €29 million to €840 million. Key financial ratios also continue to improve, with the Company achieving its commitment to maintain the Net Debt/EBITDA ratio below 3.5 and also control its EBITDA/net interest expense ratio thanks to the efforts to reduce financial costs.
Portfolio evolution in Asia – Pacific (including pipeline)
Improvement in all regions
In the Americas there was a healthy RevPAR increase of 4.8 per cent.
By country, the best performance came from Mexico, with an increase of 7.4 per cent in RevPAR in dollar terms due to Paradisus Cancun improving revenues by 30 per cent after its rebranding to a Paradisus Resorts. Paradisus Playa del Carmen also generated an estimated 2015 EBITDA of 36 million US dollars with higher expectations for 2016.
Hotels in the Dominican Republic increased RevPAR by 5.3 per cent thanks to price improvements, as well as overcoming the fall of 80 per cent with demand from the Russian market. Amongst the hotels under management, the Company highlights the performance of Meliá Nassau in the Bahamas, which has doubled results after a renovation to an “all inclusive” experience.
EMEA (+ Premium Europe)
RevPAR in owned and managed hotels in EMEA increased by 10.3 per cent, which can be attributed to an increase in average prices. By country:
- Italy has seen record RevPAR growth of 19.7 per cent thanks to improvements in all hotels, in particular Meliá Milano has seen 48 per cent growth in revenues due to room renovations and Expo Milano 2015. The launch of ME Milan Il Duca also had a major impact on the city, with Gran Meliá Rome continuing to show an upward trend in revenue, with an increase of 13 per cent to date
- Germany, recorded significant improvements compared to 2014, overcoming the decrease in 2015 major trade shows. Highlights include INNSIDE Wolfsburg with an increase in RevPar by 45 per cent, Tryp Munchen and Berlin hotels have seen a RevPAR growth of between seven and eight per cent in all cases
- United Kingdom, where results were boosted by the strength of the pound sterling, a marked improvement in RevPAR was seen including an increase of 25 per cent at ME London. The launch and successful positioning of INNSIDE Manchester as a leading hotel in the city has exceeded initial revenue forecasts for September and October 2015
- France continues to grow, fundamentally due to the strong performance of newly opened Meliá Paris La Défense, which opened in March 2015, in terms of revenue and competitive positioning
- Spain – Premium hotels, which includes some of the luxury Meliá-brand hotels and all of the ME by Meliá and Gran Meliá hotels improved overall RevPAR by nine per cent, due to MHI’s strategy in the luxury market. In particular the luxury resort of ME Ibiza, Spain, in the third quarter increased RevPar by 38 per cent, with an average rate of €500 between June and September 2015. Other key hotels include Gran Meliá Palacio de Isora (+ 12 per cent), Gran Meliá Don Pepe (+ eight per cent) and Meliá de Mar (+ nine per cent). In urban luxury hotels there were also consistent improvements, with an overall 21 per cent RevPAR increase at Gran Meliá Colon, eight per cent at Gran Meliá Victoria, six per cent at Gran Meliá Fenix and 11 per cent at Meliá Barcelona Sarriá
The summer season saw a sharp increase in tourism demand, both from the domestic Spanish market and overseas markets. They were boosted by a number of internal factors, such as the recovery of the economy and employment in Spain, along with external factors including the fall in oil price, dollar and pound exchange rates, as well as the unfortunate instability of competing sun and beach destinations in the Mediterranean and North Africa.
Due to these market conditions, there was a 6.4 per growth in RevPAR in resort hotels in the Mediterranean through a strong commitment to product innovation and enhanced customer experiences. The Group highlights the evolution of average revenues in newly-renovated hotels such as Meliá Cala Galdana in Menorca up by 49 per cent, Sol House Aloha in Malaga increased by 38 per cent, Sol Beach Menorca grew by 27 per cent and Sol House Trinidad up by 22 per cent. The renovation and rebranding of Sol Hotels & Resorts has seen significant changes in its target market segmentation, which has led to important price increases and a higher percentage of early bookings.
The most popular destinations were in the Balearic Islands, with an outstanding performance in both Ibiza and Mallorca, where the Company saw a marked improvement in the segmentation and hotel performance in the Magaluf – Calvià Beach Project.
Spain (city hotels)
The 11.2 per cent improvement in Spain is attributable to a recovery in all of the different customer segments, both in business and leisure travel, as well as the Company’s strategy to boost travel to Spain from the major markets in the EMEA region. The most notable increases were in Madrid, as demand continues to grow both in business and leisure travel, with particularly strong and sustained growth in the Group segment.
In other Spanish regions, improving sales through melia.com and the optimisation of the business strategy have favoured a positive performance, together with an intense programme of reforms, brand changes and the renovation of city hotels.
Meliá Hotels International maintains a strong commitment to reduce its net debt, one of the most important objectives in its strategic plans since 2011. In this regard, compared with December 2014, Group debt has been reduced by €146.6 million.
In the latest 2015 quarter, debt reduction of €29 million was achieved through improvements in cash-flow. The debt reduction has also resulted in €32 million lower financial expenses due to the lower gross debt and improved average interest rates when compared to the first nine months of 2014.
In the upcoming months, the Company has just announced further disposals of resort hotel assets, which will continue to be managed by the Group, as in the joint venture with Starwood, maximising opportunities in the economic cycle and strengthening the value of its brands, innovation, and excellence as a management company, with no impact on the nine month financial results.
Strong growth in Asia
The Group is now present in 41 countries, and its international growth strategy has seen a significant boost in recent years thanks to strong growth in Asia, both in China and in the major markets in Southeast Asia. In recent years, Meliá Hotels International has nearly quadrupled its portfolio in the region, with 32 hotels currently open or already signed up for future incorporation.
In China, the Company has two existing hotels and is preparing to open a further six over the next two years. While in Indonesia the Group signed its thirteenth hotel, INNSIDE Bandung, due to an impeccable 30 year track record in the country.
The company has just announced a strategic alliance with the leading business conglomerate in Thailand, TCC Land assets, with a commitment to open 3,000 to 5,000 rooms in the country over the coming years.
Outlook for 2015/2016
In view of the third quarter results, Meliá Hotels International has revised its estimate for global RevPAR, increasing growth for the year, forecasting double-digit growth, justified by price increases.
For Q4, forecasts expect a strong performance in the Canary Islands (Mediterranean division) due to the persistent instability in competing destinations. Stronger sales in city hotels in Spain, supported by major conferences in Madrid and Seville, several sports events, and the Spanish Constitution public holidays in December have also strengthened the projection.
In EMEA, the Company expects to grow in Europe based on strong demand for European destinations and growth in local transient business. In the Americas, favourable conditions are expected to increase year end, in addition to the positive impact of Meliá Jamaica’s December 2015 opening.
Looking ahead to 2016, the Company bases its projection on analyst consensus and expects sustained growth in the major feeder markets for Spain and the Mediterranean, and also predicts a positive performance in America due to strong trends for demand. The growth of the Group’s business in the Americas will also be strengthened by three important openings of Meliá Jamaica, December 2015, ME Miami and INNSIDE New York in Q1 2016.
Gabriel Escarrer, Vice Chairman and CEO of Meliá Hotels International said: “2015 has been the beginning of a new stage of growth, in which we have begun to reap the rewards of the years spent focusing on financial rigour and globalisation, all made possible by brands which offer a completely renewed and differentiated value proposal to new customer segments. From 2016 onwards, our new Strategic Plan will undoubtedly allow us to maximise these strengths.”