Sol Meliá Reports 2008 Profit of 51.2 Million Euros

Sol Meliá announced results for the 2008 financial year which reflect the negative impact the global economic crisis is having on the travel industry and which are also affected by their comparison with the record results achieved in 2007.

The Majorcan hotel company remains confident with regard to the outlook for the future, thanks to the sensible management in recent years of company debt, the enhancement of brand equity, a rigorous cost optimization program, and the contention of investment, all of which will allow the company to deliver on its commitments and maintain its market leadership throughout this period of uncertainty.

Between January and December 2008, Sol Meliá revenues reached 1.279 billion euros, 5.3 percent less than the previous year, producing a net profit of 51.2 million euros, 68.4 percent less than 2007.

EBITDA decreased by 26.5 percent to 256.7 million euros, while RevPAR (revenues per available room) fell by 3.2 percent. The large part of the reduction in profits is due to the global economic crisis, which was even more intense in the last quarter of the year; the slowdown in Spain over the summer season due to the weakness of demand in the British and Spanish markets; the depreciation of the pound sterling and the dollar; and a reduction in seat capacity by airlines.

The situation was further affected by an almost total absence of revenues from asset rotation, with 3.8 million euros from the sale of the Tryp Los Bracos in the fourth quarter compared to the 43.1 million euros achieved throughout 2007. If exchange rate differences and asset rotation figures were subtracted from results for the year, EBITDA and net profit would have only decreased by 17 percent and 48.4 percent, respectively.

In the fourth quarter of 2008, the company renewed 100 percent of its lines of credit and transferred several loans to fixed-rate agreements to benefit from the reductions in interest rates.

Sol Meliá said it has implemented a Cost Efficiency Program including the adaptation of its business units and corporate offices to market conditions which is expected to generate up to 35.6 million euros of savings in 2009.

As far as the outlook for 2009 is concerned, Sol Melia said the global recession and uncertainty in credit markets make it difficult to foresee progress over the coming months.

All indicators point to a greater impact on the business in the first half of the year, with a certain degree of improvement over the second half of the year thanks to factors which will have a gradual positive influence such as the reduction in interest rates, depreciation of the euro and the stability of oil prices.