- The Group has also published a new asset valuation showing a Global Net Asset Value of 4.386Mn€ (+23.2% versus June 2015’s asset valuation)
- The Company expects healthy growth in Mediterranean resorts in the summer season, compatible with the recovery of Turkey and North African destinations
- The Company remains committed to Spain, with 3 new hotels open up to June in Sitges, Estepona and Calvià
Meliá earned 61.8 million euros up to June (+7.2%) thanks to the strength of the business and expects a better third quarter than last year
Third quarter forecasts:
Gabriel Escarrer, Executive Vice President and CEO of Meliá Hotels International: "The first half of 2018 was positive for the travel industry, although the international environment continues to present important challenges. Faced with these challenges, the strength and resilience of our hotel business allows us to present positive results for the first semester, especially in constant currency terms after excluding the impact of dollar/euro exchange rate changes which had a particularly strong impact in the first quarter (high season in the Americas). We can confirm a positive forecast for the third quarter, and it is particularly comforting to note that growth in our Mediterranean resorts has not been affected by the recovery of destinations in North Africa and Turkey, ensuring a sustainable growth model over the coming years."
Meliá Hotels International has presented results for the first half of 2018, showing earnings of 61.8 million euros, 7.2% higher than the same period in 2017. Company revenues are generated in dollars in a large part of the business and the depreciation of the dollar has had a significant impact on results. In the first quarter, high season in the American travel market, the euro lost 15% of its value against the dollar. Excluding these exchange rate differences, total revenues remained relatively stable, showing a slight increase of 0.5%, and EBITDA excluding capital gains improved by 7.4%. In constant currency terms, RevPAR (Revenue per Available Room) increased by 4.6% thanks to improvements in both occupancy and prices.
The Group also highlights a 109 bps improvement in the Ebitda ex-capital gains, in constant currency terms, and confirms its goal of 150 bps improvement at the end of 2018.
Meliá also continues to enjoy a robust financial situation having reiterated its commitment to keeping the Net Debt/EBITDA ratio to around 2x and having reduced net debt by 13,3 million euros in the first half of the year while also lengthening debt maturity periods. Earnings Per Share (EPS) increased by 7.2% up to June.
The basis for this resilience is the strength of Meliá's underlying hotel business, which continues to grow the portfolio of hotels through consistent international expansion focused on luxury and upscale hotels in the most dynamic markets in line with the Company’s Strategic Plan. Growth is being achieved through low capital intensive formulas, allow greater agility and lower leverage and generating important returns for owners and shareholders. Meliá has signed up 10 hotels until June, all of them under management contracts, and plans to open 12 more managed hotels before the end of 2018, except for the Gran Reserve at Paradisus Palma Real -which is an owned property- .
In line with brand strategy, Meliá also continues to reposition hotels, and has now renovated and repositioned more than two thirds of its portfolio, investing more than 600 million euros with partners over the last 6 years in Spain, and generating extraordinary results in terms of positioning and profitability. Another objective of the Company’s strategy is to achieve excellence in the MICE segment (Meetings, Incentives, Congresses and Events). This was strongly reinforced by the opening of the Palma Convention Centre and adjoining hotel Meliá Palma Bay in 2017. After a very positive performance in its first year, exceeding the goal with 9,4 Mn€ Revenue, the new Convention complex has already made Palma a key destination for Spanish and international congresses and events.
Positive news for the semester also includes the excellent market response to the latest Company development in Magaluf, The Plaza by Meliá, which is the final piece in the jigsaw of the extensive renovation and repositioning carried out by the Company in the destination. The project has changed the dynamics and tourist development model in Magaluf, laying the foundations for superior quality, profitable and sustainable tourism in a destination where Meliá holds a dominant position with more than 3,800 owned rooms. In its first month of operation, the new hotel has exceeded financial objectives and become a "positively disruptive" force for the destination.
As an essential part of its strategy and cultural change, Meliá is focused on a profound transformation and adaptation to the digital environment in the industry and has become one of the most active and pioneering companies on the international stage. The Group is using digital tools and technologies such as Big Data and Artificial Intelligence to drive greater efficiency while also enhancing processes and developing its people and talent. Meliá has also been named one of the most influential hotel chains in social networks, a fundamental driver of digital success.
The Company expects to end 2018 with 70% of its sales through digital channels, of which a significant part comes through the direct B2C channel, melia.com, which has increased sales by almost 100% over the last three years from 337 million euros in 2016 to over 600 million forecast for this year.
The Company has also made a major commitment to its B2B channel, MeliaPro, created to enhance and optimise digital relationships with key business partners such as travel agencies in the Digital environment. Results have been extremely satisfactory with sales through MeliaPro estimated to see growth of more than 50% between 2016 and 2018.
Results by region - first semester
- 4,6% in Euros
+ 6,4% in USD RevPAR
(+) Positive contribution of hotel launches: Paradisus Los Cabos, Innside New York Nomad and ME Miami, despite the impact of the depreciation of the dollar
(+) The Caribbean (Mexico, Dominican Republic and Jamaica) see important growth
(-) Negative impact of Venezuela and hurricanes in Puerto Rico
Outlook Q3: Expected to improve on results for the previous year, strongly affected by hurricanes Irma and María.
(+) France recorded the strongest growth (+21.7% in RevPAR) followed by Italy (11%) and other markets.
(-) Slight decrease in RevPAR in UK due to the Pound depreciation and in Germany, where the absence of some trade fairs and the bankruptcy of Air Berlin neutralised the strong performance of newly launched hotels.
Outlook Q3: positive expectations in all markets thanks to the economic situation and political stability supported by new sales campaigns.
+ 4.2% RevPAR
(+) Strong demand in Spain despite Easter falling in March, the weather which penalised the second quarter and the recovery of competing destinations such as Tunisia and Turkey, with the best results in the Balearic Islands (+5.5%)
(+) ME Sitges Terramar, Sol Marbella Estepona-Atalaya Park and Calvià Beach The Plaza, new and successful hotel additions.
(+) Cabo Verde sees a positive performance.
Outlook Q3: High season in Spain and 4.1% sales growth in advance bookings compared to 2017 (60% attributable to occupancy and 40% price). The recovery of alternative destinations in the tour operator segment is compensated by higher demand through melia.com and OTAs in Spanish destinations.
+ 8.1% RevPAR
(+) Significant improvements in results throughout the country thanks to the recovery of group and individual corporate travellers and the strong contribution of recently repositioned hotels.
Outlook Q3: positive forecast for Madrid hotels with increases in demand from both leisure and MICE segments expected to compensate poorer results in Barcelona, where prices continue to fall despite the occupation’s resilience, regrettably showing a trend toward a tourist model of lower quality.
General reduction of RevPAR due to the combination of numerous factors:
(-) Delay in the resumption of sales by some tour operators after the 2017 hurricanes
(-) Reduction of US visitors to the three hotels in Havana due to US Government restrictions and lower flight capacity after the bankruptcy of Air Berlin
Outlook Q3: The Company sees a change in trends and market perception once the situation in the island has been fully normalised after the hurricanes of last year, in which the Company is closely collaborating with the Cuban authorities. The new hotels the Company will open this year: Meliá Internacional, Paradisus Los Cayos and Meliá San Carlos, will further strengthen the leadership of Meliá and the image of Cuba as a safe and renovated top international destination.
- 4,6% RevPAR
(+) RevPAR increased by 18,3% on a like-for-like basis, but global RevPAR is affected in the short term by the negative impact caused by the large number of newly launched hotels that have yet to get up to full speed to make a strong contribution
(+) melia.com increased sales by 47.5% in the second quarter
Outlook Q3: Positive evolution expected in what is high season for the region thanks to robust market dynamics. A special contribution is expected from China and Bali, as well as the consolidation of Vietnam as a key market where Meliá will become one of the leading international hotel operators after the opening of new hotels in Ho Chi Minh, Hanoi and Ha Long.
New asset valuation
We have published the results of the new valuation of our property assets, which has been prepared by JLL, the leading independent appraiser of the market. In this sense, the GAV (Gross Asset Value) increased + 23.2% compared to the valuation of June 2015, to € 4,386Bn. Within this value, € 3,758Bn are included referring to property assets that consolidate globally, and € 628Mn do so through the equity method. However, it must be said that the value of the latter is an estimate, since the valuation is being carried out at present and will not be ready until the end of September.
On the other hand, updated NAV (Net Asset Value) per share is € 15.2 per share, which compares with € 12.5 the last valuation of June 2015 and therefore implies an increase of + 21.3%.
Internationalization is one of Meliá Hotels International’s most relevant strengths, with a current Group pipeline (hotel agreements signed and in the process of incorporation) that comprises 63 hotels with 16,000 rooms (85.3% of them under management agreements).
Up to June, the Company has signed 10 new hotels in Vietnam, Thailand, China, Portugal, Dubai, Morocco and Montenegro, all of them under management formulas. Over the same period, Meliá has opened 11 hotels, in Cuba, Spain, Vietnam, Dubai and Portugal. Another 12 hotels are scheduled to open by the end of 2018 in Cuba, China, Vietnam, Indonesia, Peru, the Dominican Republic, Montenegro, and Mozambique, all of them also under management contracts, except for the Grand Reserve at Paradisus Palma Real (Dominican Republic), which is an owned property.
IN 2018, the Company’s growth will be focused mainly on three regions: the Caribbean, with 9 hotels to be opened ( 7 in Cuba, 1 in Peru and 1 in Dominican Republic), Asia-Pacific with 7 hotels (4 in Vietnam, 2 in China and 1 in Indonesia), and Spain, where the Group has already opened three resorts.
Meliá Hotels International also reports the most important progress made in terms of corporate responsibility in Environmental, Social and Corporate Governance issues.
The Group has been actively combating climate change for more than 10 years, increasing energy and water efficiency and securing 100% of energy from renewable sources in countries such as Spain and Italy.
Since the approval of the Sustainable Development Goals by the United Nations in 2015, Meliá has prioritized the goals that are best aligned with its business activity to make them an integral part of Company strategy. This mostly affects the availability and responsible management of water, guaranteeing access to safe, sustainable and modern energy sources, promoting sustainable infrastructures and communities, contributing to a sustainable production and consumption model, and adopting measures to combat climate change and its effects.
The objectives that Meliá has defined for itself up to 2020 include reducing water use per stay by 8%, achieving 70% green energy use, sustainability certification for 52% of hotels, generalizing sustainability clauses and codes in agreements and relationships with suppliers, ensuring 90% of suppliers are local, and reducing CO2 emissions by 18.4% per stay.
In particular, Meliá has announced that it will completely eliminate single-use plastic in all of its hotels and corporate offices throughout 2018.
As a leading company in a key industry which is very labour-intensive, Meliá focuses on:
- Helping achieve the highest degree of quality and professionalism in the industry by supporting and cooperating with universities and tourism and business schools.
- Promoting employability and training for people at risk of social exclusion, working with important partners such as the "First professional experience" project with the Pinardi Foundation and the "Incorpora" programme with the La Caixa Foundation.
- Supporting diversity and equal opportunities, where an example can be found in the fact that 65% of Revenue Managers are now female, and the increasing proportion of women in the Managers’ pool talent of the Company.
- Contributing to protecting children by renewing the alliance with UNICEF and committing to raising at least €400,000 every year for the organisation, among other actions and programmes.
In terms of governance, the Company highlights the publication of a new integrated report for 2017 including a stronger materiality analysis with greater transparency, information and visibility for its different stakeholders, plus the publication of new corporate policies, such as those on human rights, privacy or control.
Meliá also highlights the approval of its first Supplier Code of Ethics, together with a new Responsible Procurement policy.
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