First Half Results 2016: Meliá Hotels International
Meliá earns €45 million (+123%), highlighting RevPAR growth of over 17% in Spanish hotels and positive financial developments which have culminated in the company joining the IBEX 35
Global revenue per available room (RevPAR) increased by 9.4%, or by 14.2% when including the overall Company’s portfolio
· Double the Net profits of 2015, which already tripled those of 2014
· Six years of uninterrupted quarterly improvements in RevPAR
· Extraordinary performance from resorts in the Mediterranean and Canary Islands
· Success for city-based "bleisure" hotels (business + leisure) in Spain and EMEA
· Debt reduced by €213 million
· Significant improvement in financial costs
· Increased liquidity of the shares after the capital increase
· (*) Liquidity and company and industry potential key to admission to the selective IBEX 35
Strategic Progress and International Growth:
· 65 hotels in the pipeline with over 16,600 rooms
· Goal remains to sign up 20 to 25 new hotels in 2016
· Successful renovation and repositioning strategy for consolidated resort-based assets
· 10 hotels open in 2016 to date
· Ranked 17th amongst all Spanish companies in corporate reputation and 1st in the travel industry by MERCO index
· Optimistic global forecast for the year based on the expected performance in resorts in the 3rd quarter and urban bleisure hotels in the 3rd and 4th
· Positive though uneven performance in European hotels influenced by the global situation, especially in France after the recent terrorist attacks
· Americas: Strong boost from the new Innside New York NoMad, ME Miami and Meliá Braco Village (Jamaica)
Gabriel Escarrer Jaume, Vice Chairman and CEO of Meliá Hotels International: “In 2016, our 60th anniversary, I am proud to present these extraordinary results for Meliá Hotels International, driven at the operational level by the successful repositioning of our hotels, investment in assets and strategic markets, and a successful sales strategy (with a notable performance from melia.com), and in financial terms by an enviable strength that will sustain our growth in the future, and that has entitled us to become part of the IBEX 35 Spanish stock market index."
01 August 2016: Meliá Hotels International today announced results for the first half of 2016 in which the company reaps the rewards of its renovation and repositioning strategy for major resort assets in the Mediterranean and Canary Islands, as well as the impact of an extraordinary situation in the travel market. The strong results are also due to the positive impact of a debt reduction of 213 million euros on financial costs, after the capital increase to cover the conversion of the convertible bond issued in 2013 and higher cash flow due to the strong business performance.
Together with the successful development of its distribution and loyalty strategy (with melia.com -growing 35.8% over the same period last year- and MeliáRewards as the major platforms), these factors have allowed Meliá to increase operational revenues to €856.3 million up to June, a 5.7% increase over the same period in 2015 after eliminating the impact of a lack of earnings from asset sales. Not including this effect, company EBITDA increased by 9.3% to €134.7 million compared to the first half of 2015.
The Company earned 45 million euros up to June, a 123% increase over 2015, and also achieved that without the sale of hotel assets. Meliá hotels increased RevPAR (revenue per available room) by an average of 9.4% (14.2% if managed hotels are included), 82% of which is attributable to price increases, culminating in the outstanding achievement of six consecutive years of RevPAR improvement in every quarter.
With regard to international expansion, Meliá signed 5 new hotels during the second quarter: the Meliá Almaty in the capital of Kazakhstan, the Gran Meliá Maldives, the Meliá Serengeti Lodge in Tanzania, the Meliá Salamansa, the fifth hotel in Cabo Verde, and the Meliá Pekanbaru in Indonesia. The company maintains its ambitious targets to add from 20 to 25 new hotels over the year, while also facing a challenging schedule for hotel openings which has seen seven new hotels opened recently: the Sol Taghazout (Morocco), the Innside Aachen (Germany) faces the ME Miami, the Sunshine Coast Atlantis (Tenerife), the Innside New York Nomad, Melia Braco Village in Jamaica, Sol Kuta Bali, Sol Calas de Mallorca, Meliá Makassar in Indonesia, and Meliá Yangon in Myanmar.
At the strategic level, highlights also include the notable success of the company in its commitment to enhance, re-brand and reposition core assets, which combines the quality and excellent location of hotels in its portfolio with the ability of Meliá to increase revenues in repositioned properties thanks to its brand strategy and revenue management.
Regarding the outlook for the full year, forecasts made by Meliá Hotels International are generally optimistic. The amount of bookings already made for resort hotels in Spain, as well as the continued positive performance expected from Spanish city hotels, contrast with a certain variability in other cities in the rest of Europe. With regard to the Americas, the company expects to partially offset the slowdown in the first half of the year with a boost in results from the new Innside New York Nomad, ME Miami and Meliá Braco Village in Jamaica.
Overall, the company maintains its RevPAR growth estimate for the year in the medium to high single-digit range, mainly due to price increases.
Business Performance: The performance of the region, with RevPAR slightly below the first half of 2015 (-1.7%), is due to lower occupancy in the resorts in the Dominican Republic and Mexico, reflecting the impact of warmer weather in North America (the USA and Canada are the most important markets) and above average rainfall in the Caribbean. Other factors that had an impact were the depreciation of the Canadian dollar and the economic slowdown in Brazil and Argentina, together with cancellations and delays caused by the Zika virus.
The new Innside New York NoMad and repositioned ME Cabo hotel, however, recorded a spectacular ramp up in both revenue and positioning.
Outlook 2016: After a difficult first semester, forecasts point towards slight improvements in the third and fourth quarters. This will partially offset the inferior performance between January and June, a key semester for the Americas region.
Portfolio and Pipeline: The openings scheduled for 2016 include the Meliá Cartagena in Colombia and the Meliá Costa Hollywood in the United States.
Business Performance: The EMEA region, which includes "Premium" brand hotels (Gran Meliá and ME by Meliá in Spain), registered a positive performance overall, with an increase of 7.8% in RevPAR, ranging from double-digit growth in Italy and Germany to double-digit decreases in France or the United Kingdom, clearly impacted by the attacks in Paris and Brussels, which the company managed to overcome with better results in the second quarter thanks to its successful sales strategy.
In Germany, now the third largest country for Meliá with regard to the number of hotels, highlights include the contribution of the Innside Wolfsburg, Meliá Vienna, Innside Dusseldorf and Innside Munster, and the successful opening of the of Innside Aachen. While the hotels in Rome, Capri and Genoa in Italy reported excellent increases, results were a little worse in Milan due to the comparison with the impact of "Expo 2015" in the city the previous year.
Finally, Premium hotels in Spain achieved excellent results, especially the Gran Meliá Don Pepe, Meliá Sancti Petri, Gran Meliá Victoria and Gran Meliá Palacio de Isora.
Outlook 2016: Regarding the second half of the year, the company is optimistic about Premium hotels in Spain, largely resort hotels or urban hotels in "bleisure" destinations (urban locations with a strong leisure component), which have their peak season in the third quarter, as well as the notable evolution of the repositioned ME Mallorca and ME Ibiza hotels.
With regards to Italy and Germany, a sustained improvement is expected in the third and fourth quarters. In the UK visibility regarding the impact of Brexit is still reduced. Although there have been a small number of cancellations of groups and business trips directly related to the financial sector, at the same time the market is beginning to see the positive impact of the depreciation of the pound on incoming tourism to the UK. Finally, in France the situation is still delicate, aggravated after the recent terrorist attacks.
Portfolio and Pipeline: In the EMEA region there were two successful openings in the first half of the year: the Sol House Taghazout in an "international Mecca for surfers" in Morocco, and the Innside Aachen, both of which have considerable potential. The company also disaffiliated three hotels in Egypt, the Meliá Sharm, the Sol Taba and the Sol Dahab, due to the social and political instability in the country.
The Meliá pipeline in the region includes 23 hotels that will open over the next two years, two of them in the second half of this year: the Innside Frankfurt and Innside Leipzig.
Business Performance: The spectacular performance of the Mediterranean and Canary Islands hotels generated an unprecedented increase of 30.9% in RevPAR, underpinned by demand from major markets such as the UK, Germany and Russia, as well as significant price increases. It should be noted that 50% of total revenues in the region in the first half of the year were generated in the Canary Islands.
The company also notes that the Groups’s strategy is also behind the consistent development of resorts included in the re-branding and repositioning project in Magaluf (Mallorca) known as "Calvià Beach", and others in the Costa del Sol and the Canary Islands, with the attraction of more international leisure brands and new concepts that continue to drive improvements in customer segmentation, image and reputation, and social and economic profitability. In particular, mention must be made of the repositioning of the Meliá Antillas Calvià Beach hotel, which in its first month of operation has exceeded expectations, especially regarding its rate positioning.
Outlook 2016: Forecasts on the books for summer indicate a major improvement and double-digit growth compared to 2015 in all markets. Led by the hotels in Ibiza, with increases of 60% between July and September, there is also a strong performance in the Canary Islands, Andalusia and the Balearic Islands, with a 20% increase. The Division has still not seen any significant impact on bookings from the UK, as a result of Brexit.
RevPAR evolution of the Spanish hotels of the Group
Business Performance: Hotels located in the east of the country (Catalonia, Valencia and the Balearic Islands) an Madrid area, with double-digit growth in RevPAR, boosted the strong results for a region which saw an average RevPAR increase of 10.6%. One of the main contributing factors is company leadership of the so-called "bleisure" market thanks to its experience in holiday resorts, allowing the company to maximize the customer experience in urban destinations by adding a significant tourism and leisure component, which also assists in maximizing revenues. The evolution of direct sales through melia.com, 30% up on the previous year, and the recovery in the Meetings and Events (MICE) segment, with 24% growth, also had a significant influence on the excellent results in the first half of the year.
Outlook 2016: Although the third quarter coincides with the low season in some areas of Spain, especially in Madrid, this effect will be offset by the healthy increase expected in hotels elsewhere in the country, particularly in Catalonia and the Balearic Islands, with a notable increase in average rates. The most important sales channels remain online, including online travel agencies and melia.com, the latter generating 70% of total online sales between June and August.
Business Performance: Consolidated revenues for the Division continued to grow between January and June, exceeding 14 million euros, a 29% increase over 2015. RevPAR grew by almost 10% due to improved prices, mainly in the Meliá Habana and Meliá Cohiba hotels, both located in Havana.
Outlook 2016: With 11.9% more tourists in the first half of the year, in June Cuba reached the figure of 2 million international tourists, and expects to end the year with a total of 3.7 million (a 93% increase over the previous year), mostly from Canada, Germany, UK, United States, France, Italy, Spain, Mexico and Argentina. Although restrictions on American travellers remain in place, the restoration of relations between Washington and Havana announced in December 2014 prompted the arrival of 94,000 Americans. RevPAR is expected to increase by almost 10% for the full year.
Business Performance: The political and economic situation in Brazil complicates the performance of a business affected by decreasing prices, the result of a price war in the hotel industry, and reduced demand for corporate and government travel, a key segment for Meliá’s mainly urban hotel portfolio. A combination of higher wage and energy costs due to inflation are also affecting hotel profitability.
Outlook for 2016 and Pipeline: Although the general situation shows no signs of recovery, the company expects the opening of the Gran Meliá Nacional Rio - delayed until November- to have a positive influence on the performance of the business in the peak season. Meliá has 4 hotels in the pipeline, two of which will open in 2016, the Gran Meliá Nacional Rio and the Tryp Pernambuco.
Asia – Pacific
Business Performance: Hotel performance in Asia has been heavily influenced by exchange rates in different countries as well as new openings and hotel renovations over the last 12 months. In recent years, the company has more than tripled its portfolio on the continent and also renovated existing properties, leading it to expect quantitative and qualitative progress and a notable improvement in results.
Indonesia is the most important destination in the region for Meliá and the company manages more than 3.500 rooms in the country. With 6 hotels already open and 10 more in the pipeline, the company has just announced the opening of the Meliá Makassar in the capital of the island Sulawesi, as well as the upcoming opening of the Sol House Legian, another major tourist destination.
In China the company currently operates two hotels, the Gran Meliá Xian and Meliá Jinan, both with very positive results in the first half of the year in terms of both revenue and positioning, and also has another 6 hotels in the pipeline. Vietnam, Thailand, Malaysia and Myanmar are also home to Meliá hotels in Asia Pacific.
Meliá maintains a positive and sustainable vision of its portfolio in Asia Pacific, and its strategic importance is based on three factors: the huge market on the continent both for hotels within the region and in the rest of the world, a growth model based on formulas such as management contracts which require low levels of resources, and the significant opportunities to improve geographical diversification and company profitability.
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, with more than 370 hotels (current portfolio and pipeline) throughout more than 40 countries and four 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 and the US, as well as maintaining its leadership in traditional markets such as Europe, Latin America and the Caribbean. Its high degree of globalisation, 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 Ranking) and one of the most attractive to work worldwide. Follow Meliá Hotels International on Twitter @MeliaHotelsInt and Facebook meliahotelsinternational. www.melia.com.