Meliá Hotels International Reveals Third Quarter Results 2014

Meliá Hotels International has announced results for the first nine months of the year. In a positive context for international travel, especially for the resorts segment in Spain, the company recorded a net attributable profit of €34.9 million, 56 percent more than in the same period in 2013.

All of the figures indicate the positive development of the hotel business, with an overall 12.6 percent increase in RevPAR (revenue per available room) being especially satisfactory considering that 70 percent of it is generated by price increases above the increases in occupancy.

This has caused an improvement in all operating margins and generated underlying EBITDA growth of 20 percent (after discounting capital gains from asset rotation that were lower than during the same period in 2013).

Among the reasons for this positive development, especially in the third quarter in which hotels in the Mediterranean Division (including Canary Islands) generate most of their operating profit, the Group clearly indicates its leadership and record results in the resort hotels segment, and its consequent ability to optimize the management of city hotels through offering alternatives for leisure travel in the city.

Meliá Hotels International also attributes its extraordinary progress in sales through its direct channels, particularly melia.com which grew by 24.1 percent to October. Increased sales were seen in all regions, with outstanding results in the new ME hotels in Europe, where online channels generate nearly 90 percent of sales thanks to a notable contribution from melia.com.

Meliá continued to make progress with its internationalization strategy, focusing on the 17 hotels added to date in markets such as Latin America, the Middle East, Asia Pacific and the US. The company is optimistic and has revised upwards its forecast for RevPAR growth for the full year, which now indicates global growth in the low double digits.

With regard to finance, the company reports a reduction to September of €61m in debt, after a reduction of €65m compared to the debt reported at the end of the first half of the year, all in spite of certain factors that made debt reduction more difficult such as the devaluation of the Bolivar and others.

Debt has been reduced mainly through an increased contribution from the business units, receipts from asset sales, and the conversion of €18.5m of Convertible Bonds, all areas in which Meliá will continue to focus to achieve its debt reduction targets for the end of the year. Regarding the cost of debt, the company expects it to remain at slightly less than 5 percent during the year.

Meliá Hotels International is once again able to report an improvement in all regions, included Spanish city hotels. The company has seen another extraordinary performance in the Americas over the first nine months of the year, with an increase in RevPAR of 19.7 percent, 76 percent of which is down to price improvements. This growth largely came in the first half of the year when demand at resorts in the Dominican Republic and Mexico is at its peak.

The trend in Paradisus resorts in Mexico also remains very positive, especially in the Paradisus La Perla in Playa del Carmen, where positive occupancy and success in the business groups segment allowed an increase of 36.3 percent in RevPAR. This is also true of the Paradisus Cancun, which saw a 21 percent improvement in RevPAR one year after its rebranding. The region also saw the largest increase in sales through direct channels, especially melia.com, which stood at 38 percent in the Americas.

In second place, the ME Europe hotels increased RevPAR by 23.5 percent, partly related to the rise in sales through melia.com, and also to the remarkable evolution of the brand hotels in Europe: +19.4 percent in ME London, with record revenues in September, and +20.2 percent in Madrid. Moreover, there was a fantastic performance from the recently renovated and rebranded hotels, with a 43 percent increase in ME Mallorca in Magaluf and a 203 percent increase in ME Ibiza, which until last year operated under the Sol brand.

Third place was taken by the quintessential holiday destinations in the Mediterranean region, which primarily includes the resorts in the Balearic and Canary Islands, as well as on the mainland Spanish coast. The region recorded an exceptional 13.7 percent increase in RevPAR due to the positive trend in prices and occupancy rates in a good season for Spanish holiday tourism, with 52 million visitors to September (7.4 percent increase).

Especially positive was the performance of the hotels in the Balearic Islands, including the hotels in the Calvià Beach project to reposition the destination of Magaluf, which significantly increased their contribution to Company operating results, or on the mainland coast the Meliá Atlántico Isla Canela, with a 19 percent increase in RevPAR.

The Vice Chairman and CEO of Meliá, Gabriel Escarrer expressed the satisfaction of the entire Company with the positive summer season and the fact that recovery is becoming a consistent reality in Spain, showing that "our evolution in different markets once again shows the value of the strategic, cultural, and technological transformation Meliá Hotels International has been working on since the beginning of the recent economic crisis. This has allowed us to weather the crisis and grow stronger during its most difficult years. This now allows us to current recovery process with consolidated strengths such as our broad segmentation and strong international presence, and our powerful business strategy with an increasingly greater focus on the digital world."