- Meliá announces a Net Profit of €96.8Mn (-23.7%), affected by lower capital gains and the travel crisis in the Dominican Republic compared to results in 2018
- Slight increases (+ 0.2%) in global RevPAR for owned and leased hotels
- The company highlights its resilience to an increasingly complex business environment and proves the robustness of its business model following the Thomas Cook crisis
- Trends remain positive in Spain (+2.3%) thanks to an excellent performance in city hotels and the resilience of resorts in spite of competition from Turkey and North Africa
- Results continue to improve in European hotels with a dynamic performance in the United Kingdom in spite of the uncertainty created by Brexit, with a 11,5% RevPAR increase at the ME London hotel
- The group was named the most sustainable hotel company in the world in 2019 in the ranking prepared by RobecoSam for the Dow Jones Sustainability Index, thus consolidating its sustainable investment profile
- The company expects a moderately positive year end and a recovery in 2020 in the Dominican Republic, the Canary Islands and Palma de Mallorca thanks to a large number of major events
Business performance to September:
- Revenues excluding capital gains remained stable (-0.3%)
- RevPAR (Revenue per Available Room) grew in Spain, Asia and EMEA and decreased in the Americas and Cuba
- EBITDA excluding capital gains reached €373Mn (-3.7%)
- Significant growth for MeliaPro (+19.5%), the online portal for travel professionals and meeting organisers
- Melia.com increased sales by 1.7% and sales for future dates are up 10.6% over 2018
- The company is the best hotel company in the Dominican Republic, with 3 of its hotels in the top 10 in TripAdvisor, and well positioned to benefit from the recovery in the destination
- After the announcement of the share buyback up to a maximum of €60m, the Net Debt/EBITDA ratio will be slightly above 2X at the end of 2019
- Net Financial Result improved by 8.7% compared to the same period in 2018
Industry leader in sustainability
- Meliá was named the Most Sustainable Hotel Company in the World in 2019 in the Corporate Sustainability Assessment made by the sustainable investment agency SAM
- The company achieved the highest rating in climate strategy and the best rating in the industry in aspects such as human rights, talent development, code of ethics and risk management
- The company expects a slight improvement in global RevPAR in the final quarter of the year
- After growing by 16.4% up to September, average room rates in Barcelona have begun to suffer the effects of renewed instability and conflict in the city
- With a view to 2020, the company sees an improvement in the destinations most affected in 2019, chiefly the Dominican Republic, where Meliá is excellently positioned to benefit from the expected recovery, the Canary Islands and city hotels in Palma
Gabriel Escarrer, Executive Vice President and CEO: “Over the first nine months of 2019, the Meliá Hotels International business performance was affected by the situation in certain destinations, especially the Dominican Republic, where false information amplified by sensationalist media in the US had a particularly significant impact on demand from groups. The information has now been discredited by the US State Department. Outstanding performances in the third quarter in major European cities such as Milan, London and Paris, and in Spanish cities (+9.2% RevPAR) accompanied the resilience shown by Spanish destinations in the Mediterranean (-1% RevPAR despite the increased competition from Turkey and North Africa especially for the Canary Islands) to help neutralise the temporary slowdown in business across the Atlantic.
Both when faced with geopolitical situations and with crisis such as the bankruptcy of Thomas Cook, our company has once again seen the benefits of a more diversified business model supported by a strong direct sales channel, with melia.com continuing to grow on a global level up to September (+1.7%) and currently generating more than 30% of our sales. Without any doubt, the digital transformation that we are implementing will help us consolidate our leadership in the Mediterranean, the Caribbean and, increasingly, in Southeast Asia, through profitable and sustainable growth.”
Meliá Hotels International presented results today for the first nine months of the year which clearly reflect the complex business environment created by several geopolitical concerns (such as Brexit, Cuba or renewed instability in Catalonia) but which also remain remarkably strong in the face of these circumstances. The company managed to cushion the effects of the 32% fall in RevPAR in the third quarter in the Dominican Republic to achieve relatively stable revenues (-0.3%), with the company’s Spanish resorts also successfully resisting growing competition in Turkey and North Africa with only a slight fall in RevPAR (-1%) despite the relative slowdown in the most affected destinations in the Canary Islands.
The company achieved revenues of €1,388 Mn up to September, similar to the same period in 2018 after excluding capital gains, and EBITDA excluding capital gains fell by -3.7%. Net Profit was €96.8 million, 23.7% lower than in the first 9 months of 2018, also affected by reduced capital gains compared to 2018 and, above all, by a weaker performance in destinations such as the Dominican Republic due to the circumstances already mentioned. With three hotels among the top ten in Punta Cana according to TripAdvisor, Meliá is well positioned as the leading company in a destination that still has enormous potential, and which after allaying doubts about its reputation caused by unsubstantiated news reports is now embarked upon an intense repositioning campaign to restore its leadership in the Caribbean.
Meliá’s financial results improved by 8.7% compared to 2018, with net debt standing at €655.7 million (+ €48.2 million since December). The company recently announced a share buyback up to a maximum of €60 million which will allow it to acquire up to 8,500,000 shares (3.7% of shareholder equity), demonstrating its confidence in the medium-term outlook for the business which, despite specific issues in certain parts of the world, retains strong fundamentals. For the Executive Vice President and Chief Executive Officer of the Group, “the sharp decline in recent months in our share price is due to an over-reaction in the market to certain signs of decline in the travel industry whose causes are temporary and non-structural, ignoring the sustained growth in demand and investment in the industry as well as the strength of the US economy, the leading market for Caribbean destinations where Meliá is a major player”.
The company also believes that the extensive renovation of its hotels in the Mediterranean and Caribbean over recent years, together with its significant digital transformation, the strength of its brands and its management ability, places it in an excellent position to achieve selective and consistent growth.
Meliá Hotels International was named the Most Sustainable Hotel Company in the World in the latest Corporate Sustainability Assessment carried out by the sustainable investment agency SAM on more than 4,700 companies in all industries in order to prepare the prestigious Dow Jones Sustainability Index. The accolade acknowledges the company’s significant commitment to environmental concerns (naming Meliá a global best practice in environmental strategy), social concerns (obtaining the best rating in the industry in human rights, talent development and occupational health) and ethical corporate governance (the highest ratings in the industry in aspects such as code of ethics and risk management).
As Gabriel Escarrer states, “the strategy and performance of companies, particularly travel companies, has to be fully aligned with the United Nations Sustainable Development Goals, as neither our customers nor our employees, nor indeed any of our stakeholders, would choose us if we were not a responsible company. As leaders in our industry, we have to set an example and be an active agent in bringing about social change.”
The company indicates certain events and data that point towards a more positive business performance such as the confidence shown by the British market after the avoidance of a hard Brexit and an increase in sales of company hotels to date of almost 15% in the British market after the World Travel Market event held in London this week. The positive outlook for the UK as an incoming market after improvements in all the company’s hotels in London, confirm the success of company strategy in the UK, and especially the successful repositioning of the recently renovated Meliá White House and Meliá London Kensington.
In Spain, forecasts for the Canary Islands are positive, after overcoming the impact of the recovery of Turkey and North Africa in 2019 and neutralising the impact of the Thomas Cook bankruptcy thanks to the company’s early-booking sales strategy and a rebound in last-minute sales, resulting in bookings 4% above the previous year and a better summer 2020 season expected in the British market. In the Balearic Islands, after a slight slowdown in the third quarter (-1.9% compared to 2018), the company expects a very consistent improvement in hotels in Palma and Calvià thanks to growing demand from groups and congress organisers that will have a positive impact on all the company’s hotels in the city. To date, the Palma Convention Centre managed by Meliá has increased the number of International events by 162% in 2020 versus 2018, confirming the positive trend for the segment and the confirmation of Palma as a leading MICE destination.
In America, the region most affected in 2019 by various issues, the company see a clear road to recovery after an inflection point in the third quarter. On the one hand, the repositioning strategy implemented by the local authorities and travel companies in the Dominican Republic, accompanied by strong investments and renovations made by hoteliers, is expected to reposition the country as a key Caribbean destination by the first half of 2020. On the other hand, the strong company commitment to the Paradisus Los Cabos resort made in 2019 will begin to bear fruit according to current forecasts and the group business that has already been contracted to date.
Gabriel Escarrer is thus able to affirm that “although we remain prudent, Meliá Hotels International sees clear improvements in the three areas that have had the biggest impact on our results in 2019: the Canary Islands, where business has already begun to rebound, the city of Palma which is gearing up for a fantastic season in the MICE segment, and most especially in the Dominican Republic, where false news reports caused a fall in business even greater than that experienced in real crisis situations such as hurricanes or health alerts. After hitting rock bottom in the third quarter with a 32% drop in RevPAR, the recent admission by the US Government that the news was false has given way to a powerful campaign that is expected to bring about a rapid recovery in the region.”