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Meliá Hotels International: First Quarter Results 2015

May 18, 2015 Financial No Comments Email Email

PALMA DE MALLORCA, Spain–(BUSINESS WIRE)–Business performance

  • Net profit attributable improved by 98% and total revenue by 14% thanks to the strong performance of the hotel business and a RevPAR (Revenue Per Available Room) increase of 12%

  • Meliá’s leadership and expertise in the leisure segment also drove a significant improvement of 14.8% in RevPAR for the Company’s Spanish city hotels
  • Club Meliá saw an improvement of 39% in revenue
  • Success and consolidation of major transformation projects for the Sol brand and resort products in Mallorca, Menorca and Ibiza will now continue in the Canary Islands and Costa del SolMHI-Net-Profit_2

Meliá made a profit of €16.2 million between January and March 2015, representing an increase of 98% over the same period in 2014. Revenues reached €359 million, 14% higher than in the previous year, and financial results improved by 27% (€5.3 million) due to the decrease in net debt and improved average interest rates.

Financial results

  • Financial results improved by 27% due to the net effect of the reduced gross debt and improvement in average interest rates
  • The Company maintains its debt reduction guidelines for 2015, based mainly on the sale of a minimum of €200 million of assets and increased free cash flow

Intensification of hotel openings and International growth

  • Meliá has signed 14 new hotels to date, with a special focus on emerging countries
  • 2015 will be an intense year for hotel openings, with eight hotels already opened in the first quarter and plans to open a further eight properties by the end of the year
  • The Company pipeline now stands at more than 60 hotels with over 15,000 rooms; 100% of them to be added under low capital intensive formulas

Digital transformation

  • Technological and revenue management enhancements continue to drive growth of sales through melia.com, which improved by 32.2% compared to the same period last year
  • The Company continues to move forward with the transformation process it began last September, mainly in aspects related to customer experience (including consumers, corporate customers, and hotel owners), advances that are already generating increased traffic and higher conversion rates

MHI-Global-REVPAR_2

The evolution of the global business – with improvements in all regions – is in line with trends in international tourism.

Gabriel Escarrer, Vice-Chairman & CEO, Meliá Hotels International: “Meliá results have certainly gained momentum from a favorable economic environment and positive tourism trends, but the consistent performance and the extraordinary improvement of our results are primarily explained by our strong strategy over the past three years and our commitment and focus on globalization, innovation, digital transformation, quality and excellent management.”

Palma de Mallorca, 13 May 2015. For Meliá Hotels International, the first quarter of 2015 confirms the continuity of the very positive trends in international tourism and the consolidation of the recovery in the domestic Spanish market noted in previous quarters. Following progress in reducing net debt in 2014, Meliá has reduced its burdens and faces 2015 with renewed optimism, doubling net profit and increasing EBITDA by 14% in the first quarter.

Meliá made a profit of €16.2 million between January and March 2015, representing an increase of 98% over the same period in 2014. Revenues reached €359 million, 14% higher than in the previous year, and financial results improved by 27% (€5.3 million) due to the decrease in net debt and improved average interest rates.

The evolution of the global business – with improvements in all regions – is in line with trends in international tourism. In Spain, Meliá has consolidated the recovery in demand, not only in the leisure segment but also in city hotels, which are more dependent on domestic, private and corporate consumption.

REVPAR-in-Spain_2

In Spain, Meliá has consolidated the recovery in demand, not only in the leisure segment but also in city hotels, which are more dependent on domestic, private and corporate consumption.

Business performance by region

Americas:

RevPAR in the region grew by 15.3% overall, and would have risen to 25.5% if the negative impact of the devaluation of the Venezuelan bolivar were excluded. Once again, of note is the performance of the Dominican Republic resorts and Paradisus Playa del Carmen and Cancún (Mexico), with EBITDA improved by 29.4% due to the doubling of direct sales and a 15% improvement in MICE business. With regard to Paradisus Playa del Carmen (La Perla & La Esmeralda), its Ebitda improved by 32.5% USD (64% Euro).

Among the managed hotels, the company highlights the evolution of Meliá Nassau Beach which has tripled its results following a renovation and conversion to an All Inclusive resort.

EMEA:

Hotels in Europe, Middle East and Africa increased RevPAR by 6.5% on average, entirely attributed to price increases. By country, Germany more than offset the absence of some conference activity with the successful performance of the new INNSIDE Wolfsburg and double-digit growth at hotels such as the INNSIDE Dusseldorf Haffen and the renovated Tryp Munich, validating a strategy based on product improvements in Germany. Also of note is the 100% increase in sales from Germany to other Company hotels (outbound flow).

Also noteworthy are the excellent performances of the Gran Meliá Palacio de Isora, in Tenerife, whose contribution to Ebitda increased by 13.2%, and Gran Meliá Colon, recently consolidated by the Group. The ME London hotel continued to strengthen its positioning within the most demanding and competitive world destination, recording RevPAR improvement once again.

Mediterranean:

Resort hotels in mainland Spain and the Spanish islands already began reaping the results of the repositioning of the Sol Hotels brand in the first quarter. The repositioning began last summer and will be extended this summer to five new repositioned hotels: Sol Beach House Cala Blanca, Sol House Trinidad, Sol Guadalupe, Sol Barbados and Sol Palmanova. Product improvements, repositioning, diversification and the segmentation opportunities they create, enhance the value proposition to consumers, which in turn generates higher returns and profitability.

85% of the 10.2% growth in RevPAR between January and March can be attributed to the Canary Islands, particularly to the island of Tenerife and the addition of the Meliá Jardines del Teide, previously under a management agreement. The positive trends in major European source markets were further enhanced by continuing problems in North Africa, especially since the attacks in Tunisia.

MHI-Melia

Technological and revenue management enhancements continue to drive growth of sales through melia.com, which improved by 32.2% compared to the same period last year.

Spanish cities:

Meliá Hotels International increased RevPAR in city hotels to above the average for the market thanks to its expertise in the leisure segment and “Urban Leisure” concepts, allowing hotels to boost leisure travel to urban destinations and maximize occupancy and profitability during the week. Along with a noticeable recovery in the corporate travel segment, the Group’s city hotels recorded a spectacular evolution, a significant rise of 14.6% in RevPAR.

This performance confirms a trend which began last year and is the result of parallel increases in both prices and occupancy, particularly in Seville, Barcelona and Madrid. The first quarter also saw major events such as the Mobile World Congress in February in Barcelona and the Urology Congress in March in Madrid.

International growth and future strategy

So far in 2015, Meliá has added 14 new hotels, all under management or variable lease agreements and 86% outside Spain, with a special focus (71%) on emerging markets. In line with the strategy to strengthen the leisure segment and the Upscale and Premium brands, the signed hotels belong to the ME by Meliá, Meliá Hotels & Resorts, and INNSIDE by Meliá brands, in addition to the resort hotels added to the recently revamped Sol Hotels brands.

This significant growth suggests that the company will exceed its objective to add 30 new hotels in 2015. The Company is also preparing an unprecedented intensification of hotel openings between 2015 and 2018, with more than 60 hotels to be added under the existing pipeline, explained by its strong growth strategy and its focus on international expansion. Year to date, Meliá has already opened eight hotels and has a demanding schedule for both 2015 (16 openings in total) and 2016 (22 openings). The Company has been able to meet this schedule due to excellence, technology and a professional international team (the Company now has more than 42,000 employees worldwide).

Innovating and repositioning products and resort destinations

Meliá will celebrate its 60th anniversary in 2016, and the Group’s commitment to innovation in the tourism sector and its sustainable development, is stronger than ever. Thus, the Company has continued to make progress in the renovation of the resort hotels of the Balearic Islands, the Canary Islands and the Costa del Sol, introducing a real transformation towards higher quality and product differentiation. This process aims to go far beyond simply improving the product and is already introducing a new customer segmentation as well as a much more profitable tourism model, from both social and economic standpoints. In summer 2015, eight hotels with over 3,000 rooms will have been renovated within the Calvia Beach project (Magaluf, Mallorca), following more than €100m investment , plus two hotels in Ibiza (Ibiza and Sol Beach ME House Ibiza) and two more hotels in Menorca (Meliá Gavilanes and Sol Beach House Menorca).

The Company continues to drive the transformation of the resort hotel paradigm through innovative partnerships with tier-one firms, including the agreement announced in the first quarter 2015 for the sale of seven of Meliá’s largest resort hotels in Spain to Starwood Capital Group. This agreement amounted to €176 million and the operation has recently been approved by the European Union’s Merger Control Office.

Meliá Hotels International continues to receive major awards for both business leadership and product quality and innovation. The Company recently obtained prizes from KPMG and El Confidencial for Best Business Practices in two important categories: “Digitalisation” for its ambitious “Meliá Digital” transformation project, and “Eco-efficiency”, which is an area where the Company has made very significant progress. In 2014 a decrease of 6.43% in total emissions was achieved and total investment in energy and water consumption optimization projects totalled €3.5 million.

The masterpiece of the Gran Meliá brand, the Gran Meliá Villa Agrippina Rome, has also been named by the prestigious Condé Nast Traveler magazine as the “Best City Hotel in the World, ahead of the finest hotels in London, Paris, New York or Marrakech.

The Investor Relations Department at Meliá has also been selected by analysts as the “Best Investor Relations Department” in the “Leisure companies” category by the reputed “Institutional Investor” magazine.

Outlook for 2015

For the full year, Meliá Hotels International is maintaining guidelines of a high single-digit increase in global RevPAR, 60% of which will result from increased prices.

In general, the Company considers Easter results to be very positive given the notable growth of 5% in domestic demand in Spain, the most important market at that time of year, which points towards an improved performance in the domestic market for the coming summer season. The Mediterranean division, especially encouraged by the British market, expects bookings to exceed the figures for the 2014 season, currently recording a 14.8% increase in sales already on the books. Meanwhile, in city hotels, the Company expects congresses and groups originating in other European countries to largely offset the absence of major Spanish conferences and events.

In the rest of EMEA, of particular note is the expected positive impact of the Expo in Milan, a city in which Meliá now has two hotels: the historic and newly-renovated Meliá Milano, and the newly-opened ME Milan Il Duca, a new benchmark for luxury hospitality for Milan and for all of Italy.

2015 marks the 25th anniversary for Meliá Hotels International in Cuba, a country in which the Company is a clear market leader with 27 hotels and over 13,000 rooms. The recent normalisation of relations between Cuba and the United States represents the beginning of a process of gradual opening, which will presumably have a very positive effect on the tourism industry.

Gabriel Escarrer, Chairman of Meliá Hotels International, at a celebration of this important anniversary, stated that, “Meliá has always been firmly committed to the sustainable development of Cuban tourism and now, more than ever before, we must continue to drive innovation and competitiveness in our products and strengthen our ties helping to develop new projects and destinations of which Cuba, which we have always seen as the Pearl of the Caribbean, may be proud.”

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