- Net profit reached €20,3 million, 224 per cent more than in the first half of 2014
- Notable growth in profit margins throughout the business (+323 basic points)
- Total revenue up by 19,2 per cent to €839 million
- 19 consecutive quarters reporting RevPAR’s growth
- Improvement in Global RevPAR of +11,5 per cent based mostly on price increases in all regions, with Spanish cities at the head (+12 per cent)
- Underlying EBITDA improved by 22,1 per cent, 43 per cent if capital gains from asset sales are included
- Meliá.com continues its persistent upward trend, increasing sales by 27 per cent to date
- Financial results improved by 45 per cent over the first half of 2015 thanks to the debt reduction and the lower financial costs
- Net debt reduced by €118,2 million compared to December 2014
- Objective achieved to maintain net debt to underlying EBITDA ratio below 3.5X
- From January to June share price increased by 33 per cent
- The company signed 14 new projects and there are 61 hotels currently in the pipeline
- Nine hotels were opened between January and June, including the spectacular Meliá Doha, ME Milan Il Duca and Meliá Paris La Défense
- Expansion through low capital-intensive formulas (100 per cent of the additions in the period) confirms the company focus on a management business model
- The company continues to add projects in Cuba with the signing of a new Meliá hotel in Varadero
Outlook for the year
- Positive outlook for Spain and Europe, with the favourable impact of the appreciation of the dollar and pound sterling
- Figures predict a good summer season, outperforming 2014
- Notable developments in the company’s Spanish city hotels, especially in Madrid and Seville
- Maintains guidance of healthy single-digit growth in RevPAR for the full year 2015
Gabriel Escarrer, Vice Chairman and CEO at Meliá Hotels International said: “The results from January to June confirm the positive business performance of Meliá Hotels International. Together with our strength in the Caribbean the results reflect the fruits of economic recovery and our successful sales strategy in major European cities, especially in Spain. Looking ahead, Meliá is working towards a new Strategic Plan for 2016-2018, which will allow us to continue to lead in a constantly changing industry, both in the resort and new “urban resort” areas, and to continue to make progress in the company’s digitalisation.”
Meliá Hotels International has announced excellent results for the first half of 2015. In particular, the company highlights positive growth in the main European and American feeder markets and verifies the recovery of the Spanish market. Along with this encouraging situation and the favourable effect of the appreciation of the dollar and the pound sterling, Meliá attributes the positive developments to the company’s strategic focus on revenue, direct sales and customer loyalty (Meliá Rewards programme) together with hotel renovations and rebranding.
The company earned €20,3 million in the first half of the year, a 224 per cent increase compared to the same period in 2014, with a growth of 19 per cent in total revenue and 22,1 per cent in underlying EBITDA, which increased by 43 per cent if the greater capital gains from asset sales during the period are included.
The growth in sales on melia.com (+27 per cent to date), powered by the increasing digitalisation of the business through the “MeliáDigital” project, has made it the company’s most important sales channels. It also complements the business generated through close cooperation with the most important travel agencies and tour operators.
This quarter has welcomed a strong recovery in profit margins, with overall growth of 323 basic points, improved in all business areas, as well as the reduction of net debt, allowing the company to meet its financial deleverage objective and continue to alleviate financial costs. Financial results improved by 45 per cent and free cash flow grew by €30 million compared to the first half of 2014.
Reinforcing the company’s strong international growth, Meliá highlighted the important rate of new hotel openings (nine openings so far in 2015 and 14 new hotels signed for future openings). The company’s portfolio currently totals 377 hotels (with nearly 98,000 rooms), of which 316 are currently operating and 61 are signed and in the process of opening. The company is continuing to grow in Cuba, where it expects to have 15,000 rooms in operation by 2018.
Improvements in all divisions
The Americas saw excellent RevPAR growth of 30 per cent excluding the impact of the change to SIMADI exchange rate of the Venezuelan Bolivar. This was due to the positive performance of the business and the appreciation of the Dollar against the Euro. Also of note was the growth of sales through melia.com which under the company’s “MeliáDigital” project increased by 36 per cent compared to 2014.
By country, Mexico continues to do well with RevPAR growth of 34,6 per cent thanks to the persistent growth of Paradisus Playa del Carmen, Paradisus La Perla and Paradisus La Esmeralda and the renovations at Paradisus Cancun. The resorts in the Dominican Republic also saw a significant improvement (+28,2 per cent) in RevPAR, 95 per cent due to price increases. Also of note is the successful management of direct sales and US online travel agency sales to offset the collapse of the outbound Russian market.
Finally, developments at the Meliá Nassau in the Bahamas have doubled its results compared to last year after a major renovation and conversion to an all inclusive resort.
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The region recorded healthy growth of 7,8 per cent in RevPAR thanks entirely to price increases, which included an improvement of 7,1 per cent in hotel revenues in Germany, especially Berlin which benefited from the hosting of the Champions League football final, and other hotels that continue to perform well, such as INNSIDE Wolfsburg and Tryp Munich. Also of note is the 100 per cent growth of outbound sales of German customers to company hotels in other regions.
Paris has performed well following the opening of Meliá Paris La Défense in March 2015. Other hotels in the city have also experienced consistent price improvements. Italy saw increases in the first half of the year of 20 per cent in average revenue per room, largely thanks to the impressive growth of Gran Meliá Rome, with record rates and double-digit improvements in RevPAR as well as Meliá Milano, where RevPAR grew by 15 per cent as a result of the Universal Exhibition and the successful opening of ME Milan Il Duca.
In the UK, Meliá opened its first INNSIDE hotel in Manchester in the second quarter of 2015. The market saw a significant improvement in RevPAR of more than 15 per cent at ME London, despite the slight decline in demand from the rest of Europe due to the Pound Sterling’s appreciation.
Premium hotels in Spain benefited from company strategy in the luxury travel segment with a 10 per cent increase in RevPAR, boosted by the excellent performances of Gran Meliá Palacio de Isora in Tenerife (with double-digit growth), Gran Meliá Colón in Seville and Gran Meliá Don Pepe in Marbella, where RevPAR increased by more than 30 per cent. Gran Meliá and ME by Meliá hotels in Madrid and Barcelona continue to see double-digit growth in RevPAR, especially in Madrid. Meliá is pleased to report the successful growth of luxury resorts in the Balearic Islands: ME Mallorca, ME Ibiza and Meliá de Mar.
The growth of luxury hotels is mainly due to an increase in direct sales through melia.com and other channels, calculated at 25 per cent, as well as the increasing penetration in large luxury travel networks.
As for the Mediterranean division, RevPAR increased by 7,8 per cent, primarily due to a 95 per cent improvement in prices. The trend seen in the first quarter continued in the Canary Islands, with an 8 per cent increase in RevPAR, and 12,8 per cent in Spanish mainland coastal hotels, especially Meliá Atlántico Isla Canela with an increase of 19,9 per cent.
In May, the Balearic Islands saw a slight decline in occupancy due to renovation works before the rebrand (Sol Beach House Ibiza, Meliá Gavilanes, Sol House Trinidad) and the fall of the less price-sensitive Russian market, although growth has boosted since July. For the region as a whole, Meliá highlights the recovery of the Spanish market and the recovering strength of the British market which have offset the decline in Russian demand, as well as the spectacular growth of melia.com, which grew between 26 and 30 per cent depending on the destination.
Spanish cities continue on an upward trend, with 12 per cent improvements in RevPAR in the first half of the year, 65 per cent of which is down to price increases, an improvement distributed evenly amongst the different segments, and with growth of 14 per cent in sales through melia.com.
Madrid (+10,2 per cent) and Seville (+20,2 per cent) recorded the best growth in RevPAR (with a gradual improvement in performance from hotels near Barajas Airport in Madrid), and Barcelona is also recovering its positive trend.
Higher asset valuation
The company has also presented the results of a new asset valuation, carried out by Jones Lang Lasalle, last undertaken in 2011. According to the results the Hotels and Real Estate Assets included in Meliá Hotels International’s balance sheet, has a market value of €3,555 million as of 30 June 2015.
The report describes the increasing quality of company assets, with a 16 per cent growth in the average room price, now rated at €195,384, thanks to the improvement of the hotel portfolio over recent years. During this time Meliá has maintained a strategic focus on factors, such as location, physical condition and brand suitability.
This has strengthened the company’s ability to enhance the qualitative expansion of its portfolio through management contracts and expanding its presence and reputation in the most important markets.
Corporate Social Responsibility
Throughout the first half of the year, Meliá Hotels International has made significant progress in the responsible management of natural resources, achieving significant success with its “SAVE” internal energy efficiency programme. The company has reduced CO2 emissions from hotels by between 7 per cent and 15 per cent thanks to the installation of energy efficient systems and products, and remains committed to the development of projects in hotels in Europe under the ESCO model, which will represent a reduction of about 15 per cent of CO2 emissions.
Sustainable construction is another priority with the gradual introduction of sustainable standards in Meliá’s business model, as demonstrated by the ME Ibiza, which was completely renovated in 2014 and recognised as one of the best sustainable hotel renovation projects at the ReThink Hotel Awards in 2015.
Moreover, Meliá has just announced the extension of the agreement with Endesa to supply 100 per cent of the electricity used by its hotels and corporate offices in Spain from renewable sources (wind, hydro or solar), and Meliá has joined the “Committed to the Climate” campaign. Promoted by the Spanish Ministry for the Environment, the campaign aims to seek greater urgency in implementing plans to combat climate change at the next UN Climate Summit in Paris. To date, 102 of its hotels have been awarded a “Greenleader” certificate by TripAdvisor.
With regards to society, Meliá maintains a focus on the protection and promotion of children, as well as the employability and social integration of people with disabilities. The company retains its partnerships with prestigious organisations such as UNICEF, Prince of Girona Foundation, SERES Foundation, ONCE Foundation, and with universities such as Rey Juan Carlos I and Balearic Islands University.
Meliá is actively involved in the project “Together for Employment”, sponsored by Accenture Foundation, which joins companies, non-profit organisations and public administrations in order to promote employability of young people at risk of social exclusion.
As part of its Social Responsibility policy, Meliá presented its Annual Report & CSR 2014 following the guidelines of the Integrated Reporting Council, which provides a framework for reporting company strategy and its impact on different stakeholders, while also respecting the reporting criteria of the Global Reporting Initiative (GRI-G4).
This strong focus on commitment to society and the environment, together with the financial, labour, sales policy and internationalisation aspects have helped Meliá Hotels International to be named the travel company with the best corporate reputation in Spain for the third consecutive year. Meliá is in 18th position in the MERCO ranking of all Spanish companies from all sectors and industries.
Forecasts for the year
The main indicators for the quarter point towards a new record summer season, especially in the resort hotels in the Canary Islands, Costa del Sol and Mallorca, where recorded sales already show a significant increase compared to last year. The growth in demand for resorts in these regions has benefited from the economic recovery in Spain. Markets such as the UK and Germany have also experienced an increase in demand following the regrettable attacks in Tunisia as well as the political situation in Greece. In Mallorca, sales have recovered and are expected to surpass 2014 thanks to positive last minute sales after a somewhat erratic start to the season.
Positive growth has also been noted in Meliá hotels in major European countries, Italy and Germany in particular. Paris and London have seen recovery in their respective markets. It is estimated that city hotels in Spain will see significant growth in sales in the third quarter compared to 2014, except for the month of September, during which 2014 saw numerous events and conferences.
Looking at the year as a whole, forecasts point to a healthy high single-digit growth in RevPAR, with more than two thirds attributed to price increases.