Sol Melia Reports 13.6 Percent Rise in First-Quarter Revenues

Sol Melia Reports 13.6 Percent Rise in First-Quarter Revenues

Sol Meliá announced results for the first quarter of 2011 during which the company earned 4.6 million euros compared to a profit of 1 million euros in the same period in 2010, on revenue of 293.7 million euros, compared with 258.5 million euros in the first quarter last year, a revenue increase of 13.6 percent.

EBITDA grew by 28.9 percent to reach 52.3 million euros, up from 40.6 million euros in the same quarter of 2010. These results do not yet reflect the positive trends in occupancy and average prices for the Easter period which fell entirely in April.

For the tourism industry, the quarter has seen general increases in both occupancy and prices, and up to March RevPAR recorded one-digit increases in Europe and the Americas, and double-digit in Asia.

For Sol Meliá, RevPAR increased primarily due to the remarkable performance of the hotels in Latin America, especially Mexico, Puerto Rico and the Dominican Republic; the Canary Islands, with an increase of 24.7 percent; and the major European cities, benefiting from the recovery of the business travel segment. The average rate increased by 4.1 percent overall, with increases in all brands and in 58 percent of the hotels.

With regard to results, both the reporting period and the forecast have seen improvements compared to the final quarter of 2010. While revenues increased by 13.6 percent, it should also be noted that there is an expected impact on 2011 of cost increases such the cost of the sale and leaseback of two hotels, an increase in operating expenses after the sale of the Tryp brand and the franchise agreement with Wyndham Hotel Group, and the potential impact that rising raw material and energy prices may have on margins, especially in food and beverage.

With regard to liquidity, up to March the company extended credit facilities and increased liquidity levels through the signature of new bank loans. The company has also seen successful results in its strategy to increase the proportion of fixed-rate debt during the previous situation of low market interest rates -- currently over 60 percent -- which now allows financial costs to be “protected” in 2011 in an environment in which the Euribor rate is rising.

After having added 78 hotels to the portfolio during the 2008-2010 period, Sol Meliá maintains a strategy of diversification and international expansion focused on markets in which it has competitive advantages, and also new emerging markets with high potential for the group’s brands. The company has already created a new business area for the Asia-Pacific region to support the significant growth planned in the area, especially in China, while also strengthening the corporate structure based in Shanghai.

With regard to traditional destinations such as the Caribbean, Sol Meliá mentions in its report that it will soon open two new and exclusive all-inclusive resorts (one for families with 512 rooms and one for adults with 394 rooms) in Playa del Carmen, Mexico, representing the re-introduction of the Paradisus brand in Mexico, one of the fastest growing destinations. To further strengthen the leadership of the Paradisus brand in the all-inclusive luxury segment, Sol Meliá has also recently announced the forthcoming opening of Papagayo Paradisus Bay, with 300 rooms, opening in Costa Rica in 2013.