Meliá Reports Q3 2021 Results

Meliá continues along the road to recovery in the 3rd quarter, increasing revenues (+161.7%) and EBITDA (+329.1%) compared to the same period in 2020, thanks to an optimisation of rates, strict cost control and digital strength that compensated the persistent irregularity in occupancy​

  • The Net Result improved by +64.6% up to September
  • Since June, the company has continued to generate positive cash flow and consolidated the changing trend in the business that began in July
  • Revenue practically doubled in Q2 compared to Q1, and doubled again in Q3, reflecting the increasing demand as we come out of the pandemic and restrictions are relaxed
  • Average occupancy continues to improve every week, although it is still far from the levels seen in 2019
  • Spanish holiday destinations, thanks largely to the domestic market, and the Caribbean have already recovered levels similar to 2019
  • Leadership in resorts and bleisure – which performed better than city hotels – and the company’s positioning in the upscale segment also boosted results​

Gabriel Escarrer Jaume, Executive Vice President and Chief Executive OfficerThe 3rd quarter of 2021 confirms the road to recovery seen towards the end of the 2nd quarter, with a solid but irregular summer season and moderately positive estimates for the 4th quarter, mainly based on a recovery in international travel and the evolution of the Corporate Travel and MICE segments.  Meliá’s leadership in resort hotels and bleisure -urban leisure- also allowed us to benefit from their speedier recovery, offsetting a weaker performance in large cities over the period. 

The lessons learned since March 2020 reaffirm our commitment to health and safety and flexibility (resilience factors that we will continue to apply in the coming months).  They also demonstrate the competitive advantage given to us by our digitalisation, brand positioning (especially our luxury brands and concepts), and our strong focus on improving our efficiency and competitiveness. All of this continues to form part of our strategy for 2022-2024, in which we expect to recover the activity and revenue levels we had prior to the pandemic while consolidating a more efficient, profitable and resilient company, further bolstered by growth focused mainly on management and franchise models “. 

Meliá Hotels International has presented its results for the first nine months of the year, showing a positive overall trend in line with the progressive recovery in the business after the pandemic, which saw a clear turning point from June onwards thanks to the positive summer season in some destinations. Consolidated revenue excluding capital gains reached €290.8M, having increased by +21% compared to the first 9 months of 2020 (-62.4% compared to the first 9 months of 2019), although the increase is +161.7% if only the third quarter is taken into account. On the other hand, operating expenses excluding extraordinary items only increased by 1.8% until September, compared to the same period in 2020, and -48.1% compared to 2019.The Attributed Consolidated Result improved by +64.6% up to September (+86.4% for the third quarter alone), and EBITDA continued to grow to €64.6M (+ 165.3%) for the first nine months after growing by +328.8% in the 3rd quarter. 

Meliá is benefiting from the reactivation of tourism in several important destinations. In the Caribbean results are already near those of 2019. The recovery in Mediterranean destinations and the Canary Islands has still been negatively impacted by travel restrictions in some feeder markets, particularly the UK, where reservations for Spain fell by 73.5% according to Exceltur.

The performance was boosted by the company’s digital capacity, with more than 55% of centralised sales coming through and the MeliaRewards loyalty programme, helping optimise revenue and preserve average room rates. Occupancy levels, however, remain far behind pre-pandemic levels, mainly due to irregular international demand. As a result, in the RevPAR (Revenue per Available Room) for the period, the qualitative component (price) had a greater positive influence than the quantitative component (occupancy), allowing us to predict important improvements in the future as international demand recovers and average occupancy returns to pre-pandemic levels.

Demand is growing at different rates, with destinations that are more accessible and more dependent on domestic and local tourism achieving higher occupancies, even above those of 2019. On the other hand, destinations more exposed to international demand were affected by the slowdown in markets such as Germany and the UK.

Meliá’s results also benefited from its leadership in the resort segment in key Spanish destinations (the segment that has been the first to recover), and its strong positioning in upscale and luxury hotels, where demand has increased above average, with global average rates up to 4% higher compared to the same period in 2019, and rates up to 15% higher in Spanish holiday hotels. 

With regard to financial results, the company has an approximate liquidity level of €439.5Mn, while Net Debt at the end of September stood at €2,811.9Mn, (+€208.1Mn since the end of 2020), caused by the impact of the pandemic and the addition of several lease agreements. Pre-IFRS 16 Net Debt, however, saw a slight reduction (-€2Mn) in the 3rd quarter. The company continues to consider debt reduction one of its top priorities, and therefore continues to assess the possible disposal of assets in addition to the transaction carried out in June.

With regard to portfolio growth, the company has added 16 hotels (with more than 3,600 rooms) to date, with a clear focus on Mediterranean destinations such as Spain, with 4 hotels, Greece and Malta with 3 hotels each, 2 hotels in Italy and one each in Portugal and Albania. The other focus for growth has been Asia, with a new hotel signed in both China and Indonesia. Meliá hopes to continue adding hotels during the year in Spain, Portugal and Albania, as well as in the Caribbean and Vietnam, which may lead to over 6,300 new rooms being added by the end of the year.

The changes in the business environment, growing competitive forces and new market trends reinforce the importance of the company’s digital and management capabilities, leadership and expertise in resort hotels, and the brands and economies of scale the company can offer to companies under the new partnership models. This is reflected in the intensification of current growth and the potential for growth in the portfolio through management and franchise formulas. 

Performance by region – 3rd quarter

In Spain, Meliá ended September with 107 hotels open, including almost all of the city hotels. As in other destinations, recovery is coming at two different rates, more quickly in holiday destinations, particularly those with significant domestic demand (which represented more than 50% of our sales and for which demand this year grew by +3.4% compared to 3Q 2019 according to Exceltur), and more slowly in destinations dependent on the UK market (Calvià in Mallorca, Benidorm, Torremolinos and South Tenerife). The tendency to book at the last minute remains strong, as well as a preference for superior rooms and luxury products, where revenues were +5% higher than in 2019 after a double-digit increase in the average rate compared to 2019 and sales through accounting for 52% of the total. With a view to the 4th quarter, the company sees a growing demand from international travellers for resort hotels, highlighting the importance of the Canary Islands over the coming months. With regard to city hotels, the limited visibility and last-minute booking trends continue, as well as a dependence on the recovery of the MICE segment. The numbers at the beginning of October and the outlook for the Corporate Travel segment do, however, point towards a certain optimism.

In the EMEA region (Europe, Middle East and Africa), the company had 82 hotels open at the end of September and was seeing an incipient recovery in most markets, particularly in Italy, where the relaxation of restrictions caused a rebound in demand in all destinations. In France, the company has 6 hotels open and has seen a certain reactivation in leisure and bleisure travel in October. In Germany, despite the positive domestic demand in hotels with a bleisure component and the slow recovery of the Corporate Travel segment, a travel ban in most companies and the absence of large trade fairs and MICE groups continued to hamper the recovery, although expectations are positive for the leisure and business segments for the 4th quarter. Regarding the UK, the restrictions made it difficult for international travellers to visit London in summer, although domestic guests (more than 95% of the total, thanks to the so-called “staycations”) boosted results in Manchester, Liverpool and Newcastle. The outlook for the 4th quarter is better, thanks to a certain recovery in international travel and the MICE segment. 

In the Americas, Mexico became the first country to recover pre-Covid revenue levels, with a very positive performance in individual traveller segments that offset the weakness of the MICE segment. The luxury lifestyle portfolio in the country will be boosted with the recent reopening of the fully renovated ME Cabo. Visitors from the US represented 78% of guests in the absence of travellers from LatAm, Europe and Canada, which are expected to reactivate demand from November after the recent lifting of restrictions. The Dominican Republic continued to experience some difficulties in recovering the number of flights to the destination, with a very strong dependence on the US market, which, like the Canadian market, has recently reopened, although with certain concerns about the Delta variant.

As for hotels in the USA, Orlando had higher revenue than in the 3rd quarter of 2019, with 89% of guests from the US, while New York expects to reactivate the Corporate Travel segment with people returning to their offices and with the leisure segment pending the reopening of the border on November 8 (for which Meliá has launched a strong sales campaign). In other Latin American countries with borders closed until September, the company continued to grow revenues thanks to domestic demand in each country, with further growth expected after the reopening of borders in the 4th quarter. Cuba, with 12 hotels open, saw discreet growth in the 3rd quarter after the announcement of a restart to travel from Canada. This is expected to continue in the 4th quarter with greater availability of flights and more travellers after the official reopening of borders on November 15.

In Asia Pacific, Meliá hotels in China suffered the impact of various virus outbreaks in August and September, although the country expects a greater reactivation of the MICE segment for November and December. Vietnam will gradually reopen hotels up to the end of 2021, and Thailand, highly affected by the absence of international demand up to September, will reopen three hotels up to December as the country lifts quarantine requirements on a significant number of nationalities. In other countries in the region, a reopening of international markets is not foreseen until the 2nd half of 2022