A Stronger Euro Pummeled Sol Meliá in 2003

Spanish hotel chain Sol Meliá reported this week that the strengthening of the European common currency hobbled its results in 2003 –a tough year for the leisure industry worldwide. The company, though, managed to snap back steadily from the fourth quarter on and prospects for 2004 are still looking good.

The Spain-based giant said that revenues in 2003, following deductions from interests, taxes, depreciations and amortizations (known locally as the EBITDA Index) fell 4.7 percent to 222.3 million euros ($281.8 million). Would have a fixed exchange rate been in place, revenues would have grown 4.5 percent, instead.

The EBITDA Index for the fourth quarter of last year accrued 6.9 percent after enduring a 7.1 percent slide in the first three quarters of 2003, the company’s front office said.

“Those are good results that come to underscore the recovery that the company staged down the stretch in a year in which earnings kept on dropping steadily,” explained an analyst with Venture Capital, a stock market company.

Sol Meliá’s stocks closed with 2.04 percent gains, at 7 euros a share, at the Madrid Stock Exchange. The company’s shares have inched up a whopping 20.1 percent so far this year.

Sol Meliá also reported a 2.2 percent plunge in revenues last year to 987.8 million euros. However, the hotel chain posted better forth-quarter numbers after dragging an 8 percent deficit through most of the year.

Sol Meliá owns 350 lodgings in 30 countries and has strongholds in Spain, Latin America and the Caribbean.

Sol Meliá is pinning the blame for lower benefits in the first quarter on the de-acceleration of western economies, the war in Iraq and the SARS outbreak. Nonetheless, the company said it had begun to bounce back in the summertime season.

“The rebound in the fourth quarter of 2003 unveils good expectations for Spanish vacationers, for urban Europe and for the Caribbean in 2004,” the report concluded.