Meliá Hotels International: Third Quarter Results 2014

PALMA DE MALLORCA, Spain, November 13, 2014 /PRNewswire/ --

The increase in RevPAR (+12.6%) and a positive summer season allow Meliá to increase profits by 56% (34.9m€) and underlying EBITDA by 20% (184m€)

Leadership in resort hotels and a strategic focus on expansion, revenue management and technological innovation, keys to improved results

Excellent performance of resort hotels

• Acumulative increase of 13.7% in RevPAR in Spanish resorts
• Successful results of the competitive repositioning of hotels such as the ME Ibiza and ME Mallorca
• Remarkable progress in hotels in the Calvià Beach project in Magaluf, increasingly seen as a different destination
• The Canary Islands continue to progress, surpassing last year's excellent figures.

Improved profitability

• Healthy evolution of global RevPAR, with an increase of 12.6% (70% explained by higher prices, and 30% by improved occupancy)
• Notable improvement in underlying EBITDA (+ 20%) and operating margins
• Global revenue grew by 9.18%
• The Company has reduced its net debt by 65 million euros since June, and remains committed to further reductions in 2014 via improved sales, asset rotation and possible Bond conversions.
• The Company revises upwards its forecast for 2014 global RevPAR

Sales and management strength

• The focus and efforts made by brands, revenue management and in direct customer relationships leads to 24% growth at melia.com
• The Company will soon present a strong commitment to digital transformation and innovation
• The leadership and expertise in resort hotels allows Meliá to optimise the management of city hotels with leisure alternatives
• The optimization of processes and management systems, together with the brands, guarantee international hotel owners' confidence in the Company

Expansion and new markets

• Melia has added 17 hotels in 2014, a figure expected to increase to 25 by the end of the year, mostly via management contracts, and all through low capital-intensive formulas
• Strengthens its portfolio in the Middle East and Asia Pacific, with the signing of two new hotels in Qatar (Meliá Doha) and Indonesia (Gran Meliá Bintan)
• After its successful debut in the English-speaking Caribbean in 2014, Melia is now preparing the opening of hotels in New York, the city of Miami, and the Florida coast.

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

"The first nine months of 2014 once again confirm the strength of leisure travel, in which our company is an international leader by number of rooms. In addition to the positive evolution during the third quarter, the Company has achieved a dramatic improvement in its global revenue per available room (RevPAR) through its brand diversification and customer and revenue management strategies."

Meliá Hotels International today announced results for the first nine months of the year. In a positive context for international travel, especially for the resorts segment in Spain, the Company recorded a net attributable profit of €34.9 million, 56% more than in the same period in 2013.

All of the figures indicate the positive development of the hotel business, with an overall 12.6% increase in RevPAR (revenue per available room) being especially satisfactory considering that 70% of it is generated by price increases above the increases in occupancy. This has caused an improvement in all operating margins and generated underlying EBITDA growth of 20% (after discounting capital gains from asset rotation that were lower than during the same period in 2013).

Among the reasons for this positive development, especially in the third quarter in which hotels in the Mediterranean Division (including Canary Islands) generate most of their operating profit, the Group clearly indicates its leadership and record results in the resort hotels segment, and its consequent ability to optimize the management of city hotels through offering alternatives for leisure travel in the city.

Meliá Hotels International also attributes its extraordinary progress in sales through its direct channels, particularly melia.com which grew by 24.1% to October. Increased sales were seen in all regions, with outstanding results in the new ME hotels in Europe, where online channels generate nearly 90% of sales thanks to a notable contribution from melia.com.

Meliá continued to make progress with its internationalization strategy, focusing on the 17 hotels added to date in markets such as Latin America, the Middle East, Asia Pacific and the US. The Company is optimistic and has revised upwards its forecast for RevPAR growth for the full year, which now indicates global growth in the low double digits.

With regard to finance, the Company reports a reduction to September of €61m in debt, after a reduction of €65m compared to the debt reported at the end of the first half of the year, all in spite of certain factors that made debt reduction more difficult such as the devaluation of the Bolivar and others. Debt has been reduced mainly through an increased contribution from the business units, receipts from asset sales, and the conversion of €18.5m of Convertible Bonds, all areas in which Meliá will continue to focus to achieve its debt reduction targets for the end of the year. Regarding the cost of debt, the Company expects it to remain at slightly less than 5% during the year.

Improvements in all regions 

Meliá Hotels International is once again able to report an improvement in all regions, included Spanish city hotels. The Company has seen another extraordinary performance in the Americas over the first nine months of the year, with an increase in RevPAR of 19.7%, 76% of which is down to price improvements. This growth largely came in the first half of the year when demand at resorts in the Dominican Republic and Mexico is at its peak.

The trend in Paradisus resorts in Mexico also remains very positive, especially in the Paradisus La Perla in Playa del Carmen, where positive occupancy and success in the business groups segment allowed an increase of 36.3% in RevPAR. This is also true of the Paradisus Cancun, which saw a 21% improvement in RevPAR one year after its rebranding. The region also saw the largest increase in sales through direct channels, especially melia.com, which stood at 38% in the Americas.

In second place, the ME Europe hotels increased RevPAR by 23.5%, partly related to the rise in sales through melia.com, and also to the remarkable evolution of the brand hotels in Europe: +19.4% in ME London, with record revenues in September, and +20.2% in Madrid. Moreover, there was a fantastic performance from the recently renovated and rebranded hotels, with a 43% increase in ME Mallorca in Magaluf and a 203% increase in ME Ibiza, which until last year operated under the Sol brand.

Third place was taken by the quintessential holiday destinations in the Mediterranean region, which primarily includes the resorts in the Balearic and Canary Islands, as well as on the mainland Spanish coast. The region recorded an exceptional 13.7% increase in RevPAR due to the positive trend in prices and occupancy rates in a good season for Spanish holiday tourism, with 52 million visitors to September (7.4% increase). Especially positive was the performance of the hotels in the Balearic Islands, including the hotels in the Calvià Beach project to reposition the destination of Magaluf, which significantly increased their contribution to Company operating results, or on the mainland coast the Meliá Atlántico Isla Canela, with a 19% increase in RevPAR.

EMEA; the region includes the Gran Melia hotels in Spain and other hotels in Europe, Middle East and Africa, and reported a healthy increase of 4,9% in RevPAR through September, almost entirely attributable to improved prices (81%). Particularly of note was the performance of hotels such as the Gran Melia Don Pepe in Marbella, where a successful strategy of diversification and segmentation allowed the hotel to register the highest average rate it has ever achieved in August, and the Gran Meliá Palacio de Isora in Tenerife, which up to September had already achieved an EBITDA of €10m, becoming the highest Spanish hotel contributor to EBITDA. All the hotels in Barcelona and others such as the Gran Melia Fenix in Madrid benefited from important professional conferences, in a context which shows signs of slight recovery in the corporate segment and business groups.

Meanwhile, Paris hotels improved RevPAR thanks to renovation and reform, and also the optimisation of online channels, which have led to an improvement in RevPAR of 9%. Germany, improved by 5.2%, almost entirely attributable to higher prices thanks in part to the celebration of important biannual trade fairs in Dusseldorf, where the Company has strengthened its portfolio, and the Munich Oktoberfest. Meliá Vienna, which has recently been awarded as the Best Hotel Opening of the year by the European hotel industry (European Hospitality Awards 2014) also exceeded the revenue estimates contained in the original feasibility study.

In the UK a stronger strategy through direct channels has also been seen, with melia.com already accounting for 25% of total hotel revenue.

With regards to Spain (city hotels) the evolution up to September confirms a change in trend which is becoming increasingly strong, prompting a rise of 7.8% in RevPAR, 50% of which can be explained by price increases. The trend was particularly noticeable in hotels with a strong component of both business and leisure travel, with hotels like the Meliá Alicante or Meliá Lebreros in Seville with its successful Urban Pool concept proving once again that Meliá expertise in leisure travel can benefit city hotels by attracting leisure break travel. Sales through meliá.com in Spain also increased by around 12% up to September.

Recovery has occurred in general in all the different segments (Individual, Groups, Leisure and Business) with the only negative note being aircrews and airline passengers in transit. This mainly affected the hotels near Madrid airport and in the suburbs of the capital, with the growth in airport traffic being limited to low cost airlines.

Regarding the Group's expansion, the Company's pipeline currently includes 63 hotels (16,800 rooms) all of them under low capital intensive formulas, confirming the Group's strategic shift towards a more management-based business model. This strategic focus, jointly with Melia's impeccable track-record as a Family-owned Company with a sound hotel management expertise, is an additional competitive advantage for the Group's development in huge emerging markets such as Middle East and Asia-Pacific.

The Vice Chairman and CEO of Meliá, Gabriel Escarrer expressed the satisfaction of the entire Company with the positive summer season and the fact that recovery is becoming a consistent reality in Spain, showing that "our evolution in different markets once again shows the value of the strategic, cultural, and technological transformation  Meliá Hotels International has been working on since the beginning of the recent economic crisis. This has allowed us to weather the crisis and grow stronger during its most difficult years. This now allows us to current recovery process with consolidated strengths such as our broad segmentation and strong international presence, and our powerful business strategy with an increasingly greater focus on the digital world."

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).

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