Meliá Hotels International revenues grew by 4.2% and EBITDA by 13.8%, on a constant currency basis
The Company highlights positive momentum in the Caribbean where it will open more than 3,000 new rooms in Cuba, Mexico, Dominican Republic and Colombia in 2018.
| Business performance (on a constant currency basis):
· Total revenues increased by 4.2% · Global RevPAR grew by 7.4%, 70% of which due to price increases · Growth constant in the Mediterranean and Spanish cities · Group EBITDA grew by 13.8% · Excellent recovery in European cities except for Berlin, due to the lack of flights after the end of operations of Air Berlin · 8.9% growth of Meliá.com with an outstanding 46% growth in the Mediterranean · Healthy evolution of MeliáPro, the booking platform for travel agencies and other professional customers, with an outstanding 30.5% increase on Group’s bookings through MeliáProMeetings
Financial results: · Earnings Per Share increased by 18.9% · Net Debt/EBITDA target ratio for the year remains at 2X · Reduction in financial expenses of €1.6M (-20%) · Reduction of the Average Interest Rate to 3.19% compared to 3.4% in Q1-2017
International growth:
· The company has launched eight new hotels in 2018 so far (four in Cuba, two in Spain and two in Vietnam) · To date, Meliá Hotels International has signed seven new hotels in 2018: three in Vietnam and one each in Thailand, Portugal, Dubai and Morocco · The pipeline for future hotel additions currently includes 63 hotels containing 16,000 rooms as of 31 March 2018, 85% of which are undergoing management agreements
Outlook 2018: · Forecasts for the second quarter continue to suffer the effect of the dollar-euro exchange rate · on a constant currency basis, the forecasts become positive, estimating single-digit RevPAR growth led by hotels in France, Spain and Italy · The company maintains its forecast of significant improvement in margins in 2018 · Excellent performance and outlook for the Calviá Beach project (Magaluf), with a new hotel and shopping mall opening in its 7th season, and very positive performance from the Palau de Congressos Convention Centre and Hotel Palma Bay in Mallorca after their first year of operations |
Meliá Hotels International earned 22.1 million Euros in the first quarter of 2018, an increase of 18.9% when compared to the same period in 2017. The positive performance of the hotel business was negatively affected by the significant depreciation of the dollar, which decreased by 15% in comparaison with the first quarter of 2017, given that a large part of the company’s revenue is generated in United States Dollars despite accounts being stated in Euros.
The depreciation of the United States Dollar caused revenues (€401.1 million) to fall by 2% in Euro terms, even though they increased by 4.2% when exchange rate differences are excluded. EBITDA fell by 1.1% but would have increased by 13.8% on a constant currency basis, accompanied by a 148 base-point improvement in profit margins. The latter is also highlighted across global RevPAR (Revenue per Available Room) where an improvement of 1.6% would have risen to 7.4%, excluding the exchange rate difference.
Meliá Hotels International continues to thrive in its digital transformation strategy, with significant increases in its direct B2C sales through melia.com (+8.9% in the first quarter on a constant currency basis), while B2B sales through MeliáPro increased by 6.9% in the first quarter, highlighting growth in EMEA (+21.4%) and APAC (+18.5). Additionally, the growth of Group business through the new MeliáPro Meetings website increased by 30.48%. Digital campaigns, the optimisation and growing penetration of the website led to significant increases in direct online sales, especially in the Mediterranean, with a 46% increase, the EMEA region by 22%, Asia with 20% and Spanish city hotels by 15.5%.
In terms of financial results there was a minor rise in debt, which rose from €593.7 million in December 2017 to €639.8 million in 2017 with the Net Debt to EBITDA ratio remaining at a multiple of 2. Given the decrease in gross debt and average interest rates (3.19% versus 3.4% in Q1 2017), the company successfully reduced its financial expenses by 20% (€1.6 million).
The share price over the first quarter remained stable with a slight decrease of 0.1%, outperforming the Ibex 35 which fell by 4.4% compared to the same period in 2017. To date, the share price has grown by 7.7% in 2018 while the Ibex 35 has increased by 0.9%. Earnings per share have grown by 18.9%.
Gabriel Escarrer Jaume, Executive Vice President and CEO, Meliá Hotels International, said of the Q1 2018 results: “The Meliá Hotels International global hotel business has had a positive first quarter accompanied by a clear recovery in European cities. This international economic environment combined with our strategy to strengthen our brands internationally, reposition products and firmly commit to digital transformation, boosts our international expansion and allows us to keep consolidating our leadership in the leisure and bleisure (business+ leisure) segments, one of the priorities in our Strategic Plan.”
Looking ahead to the second quarter of 2018, Meliá Hotels International will accomplish its current Strategic Plan and expects the actions taken to achieve greater operational efficiency throughout the system, which will continue to generate significant improvements in profit margin over the year. The measures already in place led to improvements that ranged between 210 base points at EBITDA level in the Americas, 130 base points in Spanish cities and 170 base points in the Mediterranean (including Canary Islands).
Business performance in local currency, on a constant currency basis, in all regions was positive, except for Cuba which was affected by factors such as the temporary closure of hotels after the 2017 hurricanes and the reduction in travellers from the US, only to Havana, following the new restrictions applied by the US Government.
Highlights include the excellent performance of hotels in the Mediterranean and Canary Islands (+6% RevPAR, +46% of sales on meliá.com) despite the closure of some hotels for renovation and the unstable weather over Easter, as well as the recovery of European cities such as Paris (+16% RevPAR, +31% sales on meliá.com) or Italy, where RevPAR increased by 21% and melia.com sales by 23%. The poorest performance in Europe was seen in Berlin, due to the lack of flights triggered by the closure of Air Berlin.
A strong recovery for hotels is forecasted in Brazil due to progressive improvements in the national economy, with RevPAR growing by 9.5% in local currency and sales on meliá.com by 7%. In Asia, there was a positive performance from recently opened hotels such as the INNSIDE Zhengzhou and Meliá Hongqiao in China, Sol House Legian in Indonesia and or Sol Beach House Phu Quoc in Thailand. In a region in which all the hotels are operated under management agreements, total revenue from management fees increased by 22% for the period.
Positive momentum in the Caribbean and Asia
In the first quarter of 2018, Meliá Hotels International reaffirmed its commitment to the one of the world’s most dynamic travel destinations – the Caribbean. In Cuba, the company opened four of the seven hotels that are in the pipeline, which together will add more than 2,150 new rooms to its portfolio. Five of the hotels are located in World Heritage cities such as Camaguey and Cienfuegos, helping the company enhance its activities in the increasingly important multi-destination vacation segment in Cuba, while the other two hotels are major resorts in Cayo Santa Maria (Paradisus Los Cayos) and Varadero (Meliá Hotels & Resorts).
At the end of 2018, Meliá Hotels International will also open the spectacular new Paradisus Playa Mujeres resort with 392 rooms on the coast of Isla Mujeres, just a few kilometres from Cancun, as well as the Grand Reserve in the Dominican Republic with 432 rooms and an exclusive concept for luxury travellers, plus the Meliá Cartagena, the Company’s first hotel in the Colombian Caribbean.
With regards to Asia and the Pacific, Meliá Hotels International, who already operate and are planning to open 44 hotels in the region, will open seven new hotels during 2018 that will represent the addition of over 1,530 new rooms in key countries such as China, Vietnam and Indonesia.