Meliá Hotels International Reports 23.3 Percent YTD Profit Increase
Meliá Hotels International generated 1,458.2 million in revenue up to September, five per cent more than in the same period in 2016. Net Profit increased by 23.3 per cent over the same period in the previous year, with an improvement in EBITDA of 7.8 per cent excluding capital gains.
The business model based on managed hotels has seen an increase in EBITDA of 9.2%, thanks to an increase in fee revenues. The situation in Catalonia, the Venezuelan Bolivar exchange rate, the hurricane in Puerto Rico and the closure of several airlines in Europe had a negative impact on performance.
- Five per cent increase in total revenues thanks to 6.1 per cent growth in Revenues Per Available Room (RevPAR) as a result of price increases
- 7.8 per cent increase in EBITDA and a 42 basis point increase in EBITDA margins, excluding capital gains
- Melia.com continues to grow, with sales up by 17.9 per cent for the period
- Optimisation of the digital distribution strategy developed by IDISO
- Outstanding performance of the Gran Meliá Palacio delos Duques resort in Madrid (voted Best Hotel in Europe2017)
Expansion and management model:
- Meliá Hotels International will sign more than 30 new hotels during the remainder of 2017, having already signed 23 new hotels in the first nine months of the year and with four more to be signed in Asia in October. The company has recently opened the Meliá Iguazu in Argentina and is preparing the opening of the Meliá Serengeti Lodge, in Tanzania, and ME Sitges, in Spain, later this year
- The pipeline (hotel agreements signed and in the process of opening) currently boasts a global offering of over 17,000 rooms in 70 hotels, representing 18 per cent of the current portfolio. 93 per cent of these hotels will be added to the Meliá Hotels International portfolio under management agreements
- Meliá Hotels International has obtained more than 70 international awards and nominations to date for its hotels and their service attributes in 2017
- Slight increase of €10.2 million in debt in the third quarter, bringing the total debt to €584.1 million. Meliá Hotels International makes a commitment to maintain Net Debt/EBITDA ratio at between 2 to 2.5 in the medium term, with the company expecting to end 2017 below a ratio of two
- Increase in financial expenses due to negative exchange rate differences, despite the reduction in the average interest rate from 3.6 per cent to 3.3 per cent
Forecasts for the end of the year:
- The Company expects a significant contribution in the fourth quarter of 2017 and throughout 2018 from hotels currently in the opening process and from new additions to the portfolio
- Meliá Hotels International expects to achieve results in line with the market consensus, although it assumes that unexpected events such as hurricanes in the Caribbean, the evolution of the United States Dollar against the Euro, and uncertainty in Catalonia (where Meliá Hotels International operates 12 hotels) will have an impact on operations
Gabriel Escarrer, Executive Vice President and Chief Executive Officer, Meliá Hotels International, commented: “The first nine months of 2017 confirm the strength of the company despite a less favourable business environment. Despite these challenges, the positive results in urban and resort hotels in Spain, excellent performance of major projects such as the Gran Meliá Palacio de los Duques in Madrid and ME London, and the trends in sales driven by the company’s digital strength make us optimistic about the outlook.”
Meliá Hotels International presents its results for the first nine months of the year, reflecting the achievements of the brand strategy, product repositioning and sales strength. The results showcase the brand’s growth potential in the third quarter in spite of the impact of global events such as hurricanes, political tensions in Catalonia, unfavourable exchange rates between the United States Dollar and Euro as well as the Venezuelan Bolivar.
Meliá Hotels International generated €1,458.2 million in revenue up to September, five per cent more than in the same period in 2016. Net Profit increased by 23.3 per cent over the same period in the previous year, with an improvement in EBITDA of 7.8 per cent excluding capital gains. The Company highlights the improvement of 42 basis points in the EBITDA margin thanks to cost optimisation and actions to improve sales efficiency, an area on which the Company will continue to focus.
Financial results show that the Net Debt/EBITDA ratio remained stable between 2 and two and 2.5 after a slight increase of €10.2 million in debt in the third quarter. Results were also affected by the negative impact of fluctuations in the United States Dollar to Euro exchange rate. The Company offset this by reducing average interest rates to three point three per cent and extending amortisation periods.
The hotel business remained the most important driver of company growth in a quarter in which there were no capital gains from asset sales. RevPAR increased by six point one per cent on a global level, attributed entirely to price increases. There were significant increases in Spain, where overall RevPAR increased by 12.3 per cent after an increase of eight point one per cent in resort hotels and 17.8 per cent in city hotels.
Meliá Hotels International is pleased with the nine point two per cent increase in EBITDA in managed hotels, making them a fundamental driver of value creation for the company in the medium term while also ensuring profitability for hotel owners and partners.
Club Meliá, a business area that Meliá Hotels International restructured in 2016 under a new brand concept named The Circle, saw a turning point in 2017, generating EBITDA growth over the previous year and a very positive outlook for 2018. The third quarter of 2017 saw a 28 per cent growth in memberships when compared to the previous year, in spite of the complex market conditions created by the hurricanes that shook the region in September, especially in Punta Canawhich accounts for 60 per cent of the business. Average prices and profitability also grew consistently thanks to the restructuring of offices and resources, digitalisation and, above all, the optimisation of synergies between the hotel business and the vacation club. As Gabriel Escarrer, Vice President and CEO, Meliá Hotels International assures: “Our Club Meliá business has an excellent outlook, especially after work is completed on The Circle – a new, all-inclusive resort perfectly integrated with its environment which we will open in Punta Cana. The resort will provide a range of benefits and unique, personalised experiences for the most discerning of travellers.”
In regards to Real Estate, Meliá Hotels International reports that there were no capital gains on asset sales in the third quarter when compared to the €2 million generated in the same period in 2016. Meliá Hotels International will continue to analyse opportunities to generate value through the sale of non-strategic assets in Spain and will work with top-level partners to strengthen Joint Ventures in order to reposition its hotels with the aim to multiply their contribution to the Meliá Hotels International system.
Meliá Hotels International continues to meet its international expansion objectives in full. To date, the Company has added 27 hotels to its opening pipeline in the markets it considers of greatest interest and with the greatest guarantees. Additions include two hotels in Vietnam, two in Malaysia, two in China, two in Thailand, three in Portugal, two in Spain, one in Argentina, two in Italy, two in the French Antilles, one in Albania and eight in Cuba. Meliá Hotels International expects to announce more additions before the end of 2017.
Results by region (third quarter)
Fee revenues by region:
+ 1.2 per cent RevPAR
+ 7.9 per cent fee revenues
Milestones: Positive evolution, although negatively affected by exchange rates (Venezuelan Bolivar to the United States Dollar and United States Dollar to the Euro) and by cancellations after the hurricanes in September (six point nine per cent less revenue compared to September 2016) with a considerable impact on some destinations. Puerto Rico was the destination most affected by the hurricane, with operations interrupted for a number of months due to severe infrastructure issues in the country.
Melia.com sales: +19.1 per cent
Outlook 2017: October sales could be slow due to the continued impact of the hurricanes, although the situation in Puerto Rico may boost other destinations such as Punta Cana in the high season (first quarter 2018). The company expects a positive performance in November and December and high single-digit growth for the fourth quarter, as well as a significant improvement in margins.
+ 0.4 per cent RevPAR
+ 12.7 per cent fee revenues
Milestones: Positive results are thanks to consistent recovery in countries such as France and the United Kingdom, as well as the growing importance of the business-leisure segment in cities with tourism potential.
Germany performed well while the United Kingdom and France also experienced a clear recovery. Italy registered a strong quarter while premium and city hotels in Spain saw significant growth, driven mainly by the Gran Meliá Palacio de los Duques in Madrid (named Best Hotel in Europe at the International Hotel Awards), the Meliá Barcelona Sky (until the recent impact of political tension in Catalonia) and a more even evolution in the resort hotel segment.
Melia.com sales: + 16 per cent
Outlook 2017: The favourable economic environment is expected to continue to drive demand from the main feeder markets for both resort and city hotels, while in Spain the company is monitoring the impact of the political tensions in Catalonia after an increase in the number of cancellations.
+ 8.5 per cent RevPAR
+ 24 per cent Fee revenues
Milestones: A positive third quarter thanks to the increase in overseas visitors to Spain (a two point two per cent revenue growth) offsetting the slow recovery of destinations such as Greece or Turkey and the growing popularity of vacation home rentals. The Balearic Islands suffered from the aggressive last-minute discounting offers in competing destinations and major growth in vacation home rentals, with Menorca (five point five per cent revenue growth) seeing the highest growth thanks to a focus on selective tourism. The Canary Islands almost equalled the excellent revenues registered in the third quarter of 2016 despite having several hotels under refurbishment, including the Meliá Gorriones and Meliá Salinas. The hotels on the Spanish mainland coast increased revenues by a total of six point five per cent.
Melia.com sales: + 21.5 per cent
Outlook: Market dynamics in recent months allow Meliá Hotels International to remain confident about the region, with the expectancy of a positive fourth quarter both in the Canary Islands and on the Mainland coast. This is thanks to a shift in demand towards September and October, with Cape Verde is expected to have a strong winter season.
SPAIN – CITY HOTELS
+ 14 per cent RevPAR
+ 14.7 per cent fee revenues
Milestones: The positive performance continues thanks to the evolution of the MICE and business leisure segments in cities such as Madrid, Barcelona, Palma and Seville, where Meliá Hotels International has worked hard to position itself as the market leader. Madrid increased revenues by eight per cent with a positive impact from the MICE segment, while Andalusia, the Balearic Islands and Catalonia evolved favourably – the latter seeing an increase in revenue of 10 per cent. In the north and east of Spain, Meliá Hotels International benefitted from the healthy domestic market, with an eight per cent increase in room revenues.
Melia.com: + 12.9 per cent
Outlook: Spanish cities are expected to continue to benefit from the growing number of tourists in Spain, although an unquantifiable negative impact is expected due to recent events in Catalonia. This is particularly prevalent in hotels located within Catalonia where many corporate travellers and the MICE business may be transferred to alternative cities.
-10.9 per cent RevPAR
– 3.2 per cent fee revenues
Milestones: Negative impact in the third quarter due to Hurricane Irma and the restrictions on travel to Cubaannounced by the Trump Administration. Prior to the hurricane season, Melia.com sales had increased by 18 per cent in July and 11 per cent in August. The rapid response of the Cuban government to the hurricane allows Meliá Hotels International to expect a rapid return to normal, even in the destinations most affected such as Cayos and Varadero.
Melia.com sales: + 20.3 per cent
Outlook 2017: As a result of the hurricane, Meliá Hotels International had to close some hotels for repairs. The Company is pleased to report that all of the hotels will be fully operational for the beginning of the high season (first quarter of 2018).
– 8.1 per cent RevPAR
+ 45.1 per cent Fee revenues
Milestones: Lower occupancy rates combined with fact that several hotels are still in the opening process led to a fall in RevPAR for hotels in the Asia Pacific region. The strong portfolio growth in the region, now present in seven of the most dynamic countries in Asia, will allow the Company to achieve scale and increase profitability in the medium term.
Melia.com sales: + 41.4 per cent
Outlook 2017: Meliá Hotels International announced the signing of five new hotels in October. This growth and the positive market dynamics, with travellers very receptive to the service culture and attributes of its brands, are factors which allow Meliá Hotels International to expect a greater contribution to sales and profit from this region in the future.
+ 2.9 per cent RevPAR
+ 49.9 per cent fee revenues
Milestones: The government has introduced measures to combat corruption and boost growth to restore public confidence, increase transparency and generate expectations of a faster recovery in the coming months. Meliá Hotels International reports an improvement in performance (+12.4 per cent RevPAR) on a country-wide level, not including the Gran Meliá Nacional Río, where operational delays mean that 40 per cent of rooms and the Convention Centre are still pending delivery by the hotel owners – both key factors in attracting the MICE segment.
Melia.com sales: + 13.6 per cent
Outlook 2017: Meliá Hotels International expects an increase of seven per cent in RevPAR for the fourth quarter compared to 2016 thanks to improvements in hotel operations in Sao Paulo, especially in October and November, and also the events scheduled for December. Meliá Hotels International also reports its concern regarding the Gran Meliá Nacional Rio, which is not yet operating at full capacity.
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, operated under the brands: Gran Meliá Hotels & Resorts, Paradisus by Meliá, ME by Meliá, Meliá Hotels & Resorts, INNSIDE by Meliá, Sol by Meliá and TRYP by Wyndham.