Meliá Hotels International posts promising growth

by | Nov 28, 2017 | Chains, General News

Meliá Hotels International has presented results for the first nine months of the year that are generally in line with market consensus. The third quarter is traditionally very important for the company due to its contribution to annual revenues, and 2017 has once again seen a strong summer for Spanish and Mediterranean resorts, as well as a very positive performance from city hotels in Spain. RevPAR (Revenue Per Available Room) increased by 12.3% in Spanish hotels, with an even better performance in city hotels (+17.8%) than in resorts (+8.1%).

The company reported that the 11 hotels operated in Catalonia have been affected by political tensions in the region whose impact is currently still impossible to fully quantify. The company believes that the impact will be partially mitigated by the diversion of groups that have cancelled their events in Barcelona to other hotels we operate in other regions in Spain.

The growth in revenues (+5%), EBITDA (+7.8%, excluding capital gains) and global RevPAR (+6.1%) are evidence of the positive trend in performance. Global RevPAR has now registered 29 consecutive quarters of growth. Another very important aspect is financial management, where Meliá has continued to reduce debt, currently standing at €584 million, with a Net Debt to EBITDA ratio below two, generating a healthy balance sheet that strongly reinforces company strategy.

As Meliá states in its quarterly report, the positive performance of the hotel business was the main lever for the 23.3% improvement in net revenues. Notable activities include brand strategy and product repositioning, where the company has continued to see important results in 2017 from projects such as the repositioning and rebranding of the Gran Meliá Palacio de los Duques in Madrid (named Best Hotel in Europe), the hotels in Magaluf such as the Meliá Calviá Beach, and the hotels in Torremolinos, Ibiza, Menorca and the Canary Islands.

Meliá’s digital leadership, commercial strength and efficient distribution were key drivers of results. Melia.com has become the company’s most important sales channel, and saw sales grow by 17.9% up to September. The company’s commitment to a business model increasingly focused on management has successfully achieved an expansion pipeline in which 89.2% of all the hotels have been added under management agreements. Management fee revenues also increased above average, rising by 12.7% on a global level.

In terms of international expansion, the company will have signed up more than 30 new hotels before the end of the year, including such emblematic hotels as the Meliá Iguazu or Gran Meliá Venice, both of which will be added to the portfolio of extraordinary hotels in premium locations the company already manages throughout the world. On the recent tour of Asia Pacific by our senior management team, the company signed up five new hotels in China, Malaysia, Thailand and Vietnam, reaffirming its strong commitment to a region which has shown the highest rate of growth in the company hotel portfolio.

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