Meliá Hotels International: First Half Results 2014

PR Newswire

PALMA, Majorca, August 1, 2014 /PRNewswire/ --

Meliá: record increases in EBITDA (+35%) and RevPAR (+11%) thanks to the strength of the hotel business and leadership in the resort segment  

The company earned 6.3 million € (-39% compared to the same period in 2013) due to lower capital gains from real estate deals 

 

Excellent performance of the hotel business

Significant improvements in the margins of all business units (+242 basic points)

Success of melia.com sales channel (+29%)

Increase in the resort segment, which Meliá has managed to transfer to city hotels thanks to its expertise in maximising leisure travel

Notable contribution from recent additions to the portfolio: Gran Meliá Palacio de Isora (Spain), ME London and Paradisus de Playa del Carmen

Revenue management and the Melia Rewards loyalty programme as relevant drivers

Four full years of Meliá reporting successive quarterly increases in RevPAR

 

Financial management

Net debt reduced by 80 million € since March 2014 and now stands at 1,162 million €, due to:

• Improved performance in all business units

• Cash-flow generated by asset sales

Balance sheet also affected by:

• Incorporation of 29 million € of debt due to the consolidation of Colon Verona, (owner of Gran Meliá Colón)

• Impact of 20 million € due to the devaluation of the Venezuelan bolivar

The company remains committed to reducing debt throughout 2014

 

Expansion strategy

12 new hotels signed in 2014, 3 of them already open

Company maintains a commitment to add from 25 to 30 new hotels this year

The quality of recent additions demonstrates the trust owners place in the brands and the strength of Meliá hotel management

Increase of 10% in pipeline compared to 2013, standing at 61 hotels with over 16,500 rooms

 

Positive outlook for 2014

Forecasts point to a RevPAR growth of a medium-high single digit for the year, mainly due to price increases

Reasons for optimism: the expectations of a positive summer season, the consolidation of projects such as Calvià Beach, Sol Katmandú Park & Resort, and the openings of ME Mallorca and ME Ibiza

Company remains cautious about the negative evolution of hotels around Madrid-Barajas Aitport

Significant contribution of the third quarter, with approximately 40% of annual hotel EBITDA

 

Gabriel Escarrer, Vice Chairman and CEO of Meliá Hotels International:

"The results of the first half of 2014 and forecasts for the rest of the year confirm the global recovery of the resort hotel business, in which Meliá is a market leader, and substantiate our strategies for globalisation, revenue management, loyalty and customer relations. All of this together with the success of melia.com, the strong positioning of our brands, and the strength of our global sales organisation, allows us to maintain trust and create value for hotel owners and investors worldwide".

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Evolution of Underlying EBITDA 1H 2014 vs. 1H 2013

million euros 2014 2013 increment %
Reported EBITDA 113.8 119.7 -5%
Underlying EBITDA 98.5 73.1 35%

Meliá Hotels International today announced results for the first half of 2014 in which the hotel industry showed signs of greater strength, mainly thanks to sustained economic growth in numerous markets which is reflected in the favourable trends in the resort hotel business, especially in the Caribbean and Mediterranean. Particularly noteworthy was the evolution of the recent additions to the company portfolio, such as the Paradisus resorts in Playa del Carmen, and the Gran Meliá Palacio de Isora, major commitments which are already delivering success for Meliá in their early years of operation.

The numbers reflect positive developments in the hotel business, in which a global increase in revenue per available room (RevPAR) of 11% over the period - majoritarily due to price increases - has led to improved operating margins and a 35% increase in EBITDA, excluding capital gains from asset rotation which were less than in the same period in 2013. Net profit was 6.3 million, 39% less than in 2013.

Amongst the reasons for the positive numbers, the company cites its leadership and positioning in the resort hotel segment, (the segment with the best results) and its ability to optimise the management of its city hotels, in which the company is well above industry averages. Also behind these results is the strength of its global sales organisation and a strategy focused on revenue management and innovation oriented to enhance customer relationships, with a growing contribution of the Meliá Rewards loyalty Program. Meliá  specially highlights the extraordinary growth of melia.com, a sales channel which continues to register record numbers, (+ 29% in the first half of the year) complementing the privileged relationship and collaboration held by Meliá with the main International Travel Agencies and Tour Operators.

Meliá also took the opportunity to announce a new and important step in its growth in Latin America with the signing of an agreement through which the company will operate (under Management Contracts)  five new Innside hotels in Venezuela, to be built by Franco Biocchi Zurita, beginning with the Innside Punto Fijo, (already in the Meliá pipeline and with a signed management contract). The agreement is an excellent opportunity for this successful city hotel brand in a market in which Meliá already enjoys high recognition.

Improvements in all divisions  

By market, the company highlights the spectacular improvement of business in the Americas, where revenue per available room (RevPAR) increased by 19%, in large part thanks to the success of the Paradisus resorts in Playa del Carmen (+44%) and the Paradisus Cancun (+22%), validating the Company commitment to the brand and its strong positioning in the market. Equally successful has been the introduction of Meliá to the English-speaking Caribbean through the Meliá Nassau Beach, which will be refurbished and rebranded once the renovation project has been completed, joining the multi-million dollar Baha Mar tourism and leisure development. The first phase of this renovation project will be completed December 2014 making Meliá Nassau Beach the only all-inclusive resort on Cable Beach, The Bahamas. On the downside, there was a poor performance from the Gran Meliá Caracas in the second quarter of the year, with occupancy falling due to social instability in the country.

With respect to EMEA there has been an overall improvement of 3.8% in RevPAR, including important increases in Germany (+4.3%), UK (+7.4%), France (+8.7%) and Greece (+34.3%). There has also been a sustained increase in the ME Europe hotels, (+16.7%), especially ME London which, after an increase of 47% in RevPAR, is now the second-ranking hotel in the company in terms of RevPAR and Average Room Rate. In only its second year of operation, the hotel has also become a market leader in the London hotel, dining and nightlife scenes.  

The Mediterranean region, which also includes the Canary Islands, recorded an excellent performance, with RevPAR up 17.4% compared to 2013, especially in the Canary Islands. In the other beach destinations in which the second quarter is of lesser importance, there were major improvements in April thanks to the Easter holidays. By market, Meliá notes that the slowdown in the Russian (due to ruble devaluation) outbound market was offset by the positive evolution of the Spanish domestic market.

To accompany this improvement and respond to the needs of modern travellers with better segmentation and value proposals, Meliá has made major changes in its Sol Hotels & Resorts brand, leader in the resort segment, which has created four new concepts: Sol Hotels, Sol Katmandú Park & Resort, Sol House and Sol Beach House, with innovative concepts that enhance quality and reposition the traditional "sun and beach" hotel, with a greater focus on guests and brand value which has generally been absent from an increasingly "commoditised" hotel segment.

Finally, the performance of the Spanish City area was highly satisfactory, where, despite the negative market context, Meliá reached 5.1% increase in RevPAR in the semester (+10% in the 2nd quarter) thanks to an excellent strategy and to the boost provided by Easter and the May bank holiday. The main achievements in this segment were undoubtedly the increase of 4.5% in revenues from business travel and 3% in the Meetings & Events segment, whilst. 80% of the cities in which Meliá operates in Spain registered positive figures, with only four secondary cities still struggling.

Of note are the problems that still beset the hotels around Madrid-Barajas Airport, where the general decrease in demand in the city is exacerbated by the situation of the airport and several  airlines, which has led to reduced revenues from air crews and passengers. The Company shows a big concern for this situation, that directly affects 4 hotels.

A key driver of this successful performance in a business travel segment which is still suffering the economic situation in Spain, is the expertise of Meliá in the leisure travel segment, which has helped improve occupancy and prices by maximising the number of leisure visitors to city hotels and improving the value proposals of city hotels to both leisure and business travellers.

Calvià Beach: innovation and commitment  

One of the most prominent focuses for investment and innovation in the first half of 2014 has been Calvià Beach, a project which aims to achieve the sustainable repositioning of Magaluf, a mature resort destination on the southeast coast of Mallorca. Meliá Hotels International began the project three years ago and in its third stage (2014-2015) hotels have been rebranded, such as  the ME Mallorca (as well as the ME Ibiza, in Ibiza) which are revolutionising the resort concept in the luxury lifestyle segment in two leading Mediterranean destinations. The Sol Katmandú Park & Resort has also been rebranded with the facilities of both the park and the hotel extended and fully integrated. This autumn the construction of a pedestrian boulevard will begin which will make the street that runs parallel with the beachfront more accessible and attractive, allowing Meliá to extend its renovation of hotels and commercial premises to areas separate from the beachfront.

The investment of over 80 million euros is already paying off in terms of quality, average room rates and profitability, greater market diversification, enhanced image and the creation of employment. The positive results have restored hope in the recovery of a superior quality tourism, more sustainable over time, and more attractive to families, for a mature destination which still retains enormous potential as a top holiday destination. Thus, the evolution until June shows how the Calvia Beach hotels increased their RevPAR by an average 31% versus that period 2013, whilst their occupancy levels rose by 7,4%,  with noteworthy examples such as the ME Mallorca doubling its RevPAR and with a 63% occupancy increase, or the Sol Katmandu Park & Resort, with a 20,5% occupancy increase and a 33,3% RevPAR increase.

Debt: evolution and deleveraging forecast 

Meliá Hotels International reduced its net debt by 80 million euros in the second quarter to 1,162 million euros, progressing towards its commitment to reduce debt for the year, thanks mainly to the contribution of the business units and the cash-flow generated by asset sales. On the downside, there were extraordinary impacts from the incorporation of 29 million euros of debt after the consolidation of Colón Verona (owner of the Gran Meliá Colón) and a 20 million euros impact of the devaluation of the Venezuelan bolivar.

As reiterated in its report, Meliá will continue to deleverage its balance sheet thanks to improvements in business, positive prospects for asset sales, (keeping the commitment for selling by a minimum amount of 100-125 m€ in 2014)  and the impact of the possible conversion of bonds due in December 2014, for 200 million euros.

In this regard, the Vice Chairman and CEO of Meliá, Gabriel Escarrer declared that, "in the future, and together with the organic growth of the business and the improvement in profitability, the company balance sheet will continue to strengthen in parallel with the reduced capital intensity of its business model, benefiting from the major global demand for high quality hotel assets, which will generate opportunities for disposals at interesting multiples. "

Outlook for the year 

The current bullish trend in the markets, including the Spanish market thanks to the recovery of domestic demand, with a summer season in Spanish resorts which is expected to better 2013, added to the significant contribution of the third quarter to annual results- about 40% of total hotel EBITDA - allows the company to remain optimistic about results to year end, with an estimated RevPAR growth of a medium-high single digit for 2014. The Company remain cautious about the evolution of City Spain hotels, specially focusing on Madrid and the influential area of Madrid Barajas Airport.

Results to date (with a 29% increase in sales at melia.com) confirm the company's successful distribution strategy, focused on enhancing its direct sales channels, guest relations and innovation via the launch of new products and services which allow us to differentiate our brands and maintain our position at the forefront of technology and the creation of experiences.

About Meliá Hotels International 

Founded in 1956 in Palma de Mallorca (Spain), Meliá Hotels International is one of the largest hotel companies worldwide as well as the absolute leader within the Spanish market. At present, it operates and distributes more than 365 hotels throughout 40 countries and 4 continents under the brands: Gran Meliá, Meliá Hotels & Resorts, Paradisus Resorts, ME by Meliá, Innside by Meliá, Tryp by Wyndham and Sol Hoteles. The strategic focus on international growth has allowed Meliá Hotels International to be the first Spanish hotel company with presence in key markets such as China, the Arabian Gulf or the US, as well as maintaining its leadership in traditional markets such as Europe, Latin America or the Caribbean. Its high degree of globalization, a diversified business model, the consistent growth plan supported by strategic alliances with major investors and its commitment to responsible tourism are the major strengths of Meliá Hotels International, being the Spanish Hotel leader in Corporate Reputation (Merco 2013).

For more information:
Communication Department
Tel: +34-971-22-44-64
comunicacion@melia.com 
http://www.meliahotelsinternational.com
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