Melia Hotels Profits Up by 24 Percent, Exceeding Market Expectations

Meliá Hotels International today presented results for the first half of 2012 within a framework in which the International Monetary Fund has revised downwards its economic forecasts.

In the Travel & Tourism Industry, institutions such as the World Travel and Tourism Council have also posted a moderate downgrade, even though leisure trends remain comparatively robust, with Spain in particular showing an increase of 2.9 percent in international visitors and of 5.6 percent in their expending, along with significant increases in the main feeder markets such as Germany or France and also in alternative feeder markets such as the United States or Russia.

Within this context, the Company highlights the positive performance in the first half of the year, showing a consolidated EBITDA of 105 million Euros, an increase of 0.2 percent over the same period in the previous year. This performance was offset by the lower contribution from the Real Estate division (€38.0 million in 2012 vs. €43.2 million in 2011) and the non-securitization of the customer portfolio in Club Meliá, which in the same period in 2011 generated revenues of €3.5 million. Excluding the latter two effects, EBITDA and EBITDA margin improved by 15.5 percent and 121 base points, respectively.  Net profit reached 10.6 million euros.

The results are explained by the positive performance of the hotel business, which has seen RevPAR (revenue per available room) increase by 8.5 percent after an acceleration during the second quarter attributable to the 11.1 percent increase in prices. The expected mid-single digit growth in the Mediterranean Division in the third quarter, together with a robust performance in Latin America, may maintain the trend in RevPAR´s evolution for the third quarter.  

The trend in the second quarter reflects the duality of the situation inside and outside Spain, with the business evolving at two different speeds. Positive signs in the Caribbean thanks to the strong business performance in both leisure and business travel, particularly in groups, and In European cities, Meliá notes positive developments taking into account the strong demand for Trade Fairs and Congresses, especially in Germany, the Olympic Games in London, and changes in the segmentation of some key hotels with a greater weight in corporate accounts.

Regarding Spain, the company expects positive growth, especially in the Balearic Islands and on the mainland coast, already seen in June and July, and attributable to the behavior of European feeder markets which offset the weak demand in domestic demand, where room nights fell around 9 percent to June.

Meliá anticipated this situation way in advance, with higher sales from the most dynamic markets such as the German, Russian and the Scandinavian, and Latin American countries like México, Brazil and Argentina, thanks to its globalization process, which is not only based on the opening of hotels in key markets, but also on an effort by sales teams to boost sales in alternative feeder markets.

By Division, in America RevPAR grew by 25.5 with the improvements in results during the semester mainly attributable to the progressive recovery in consumption in the US, the improved performance of the MICE segment, growing arrivals from Latin American markets, and higher arrivals from Europe to the Caribbean.

The best figures are coming out of the Dominican Republic and Mexico, with the latter led by the evolution of the hotels in Cancun and also by the new Paradisus La Perla and La Esmeralda resorts in Playa del Carmen.

To date in 2012, Meliá has opened 5 new hotels (702 rooms) including two successful new resorts in Mallorca (Balearic Islands), the Meliá Dubai, the Marina Palace in Bulgaria, and the much-awaited opening of the Gran Meliá Rome.

In September, the spectacular ME London will be inaugurated and is expected to make an important contribution in the medium and long term not only as the flagship of the ME by Meliá brand, but also for the entire company.

Meliá remains confident about a positive summer season especially in destinations such as the Balearic Islands and mainland Spain. The booking position, considering the main UK and Central European Tour Operators and company owned channels, point towards mid-single digit growth versus the previous year. In the Spanish feeder market, the Company remains confident about achieving results above last year thanks to the better performance of Online Travel Agencies and company owned channels.

In overall terms, to conclude, Meliá forecasts a scenario of growth and maximization of profit and margins in the international arena, while in Spain, (that represents only a 20 percent of the operating profit) more rigorous cost control will be applied in headquarters, hotels and the vacation club business.