Sol Melia Earnings Rose by 19 Percent in 2007

Sol Melia has announced company results for the financial year 2007 including a net profit of 161.9 million euros. Revenues increased by 7.2 percent to 1,347 million euros and EBITDA, although affected negatively by the devaluation of the dollar, rose to 349 million euros, a 7.1 percent increase over 2006.

With these results, the company ends an historical three year process, during which it has achieved the objectives of its 2004-2007 Strategic Plan; a reduction in company debt, an increased contribution from the Vacation Club business which now stands at 10 percent of group EBITDA, favorable asset disposal and acquisition policies, and an annual average increase of 5 percent in revenues per available room (RevPar).

With the announcement of these results, Sol Melia has now met market expectations for 22 consecutive quarters, in spite of the fact that the volatility affecting stock markets has meant that this has not always been reflected in the strength of the company’s share value.

In 2007, the company finalized the implementation of its previous Strategic Plan, with important achievements in both financial and business areas, achieving a reduction in debt levels of 350 million euros and an average increase in revenues per available room (RevPAR) of 5.3 percent.

EBITDA margin increased by 280 base points meaning that there was a spectacular growth in ROCE of 490 base points over the period.

These favorable results are basically due to the performance of the Sol Melia Vacation Club which contributed 10 percent of EBITDA for the period, and achievement of objectives with regard to asset rotation, particularly with regard to the favorable difference between the multiples of disposals and the acquisition of strategic assets.

With regard to the investment and divestment policies, Sol Melia added superior quality rooms more in line with brand standards and removed from its portfolio rooms that did not come up to standards.

Together with the new additions, the company made improvements in 95 hotels, investing 430 million euros, of which 225 were invested in renovating 40 owned hotels and 205 million in improvements to 55 hotels owned by third parties.

In 2007, Sol Melia exceeded its objective of raising an annual amount of 100 million euros in revenues through asset sales, and also focused new acquisitions on assets which conform to Brand Equity strategies with the strategy for repositioning and enhancing the value of the Sol Melia brands.