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Sol Melia Increases Revenues by 13.6% in the First Quarter and Notes Recovery in its Main Markets - Sol Meliá today announced results for the first quarter 2011 during which the company earned 4.6 million euros compared to a profit of 1 million euros in the same period in 2010
Sol Melia Increases Revenues by 13.6% in the First Quarter and Notes Recovery in its Main Markets

 

PRZOOM - /newswire/ - Palma de Mallorca, Spain, 2011/05/12 - Sol Meliá today announced results for the first quarter 2011 during which the company earned 4.6 million euros compared to a profit of 1 million euros in the same period in 2010.

   
 
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• EBITDA improved by 28.9% thanks to the positive business performance, exceeding market expectations;
• The Revenue Per Available Room (RevPAR) grew 11.5% up to March, reflecting an increase in both occupancy and average rates;
• International development plan continue and new rooms to be added now represent 11% of the total portfolio.

Sol Meliá today announced results for the first quarter 2011 during which the company earned 4.6 million euros compared to a profit of 1 million euros in the same period in 2010, on the back of revenues of 293.7 million euros, compared with 258.5 million euros in the first quarter last year. EBITDA grew by 28.9% to reach 52.3 million euros, up from 40.6 million euros in the same quarter of 2010.

These results do not yet reflect the positive trends in occupancy and average prices for the Easter period which fell entirely in April.

The macroeconomic environment continues to offer signs of recovery, albeit at very different speeds depending on the region, and with continued risks associated to rising raw material prices (especially food, energy and oil), to the financial strains in the euro zone, and to the high levels of unemployment. In addition to the improved outlook for Spanish GDP made by the International Monetary Fund in April, the tourism lobby group Exceltur has increased its forecast for Spanish tourism growth from 1% to 2.2 % for the year, due both to improved demand from its main markets and the impact of instability in North Africa.

For the tourism industry, the quarter has seen general increases in both occupancy and prices, and up to March RevPAR recorded one-digit increases in Europe & the Americas, and double-digit in Asia.

For Sol Meliá, Revenue Per Available Room (RevPAR) increased primarily due to the remarkable performance of the hotels in Latin America (especially Mexico, Puerto Rico and the Dominican Republic), the Canary Islands, with an increase of 24.7%, and the major European cities (benefiting from the recovery of the business travel segment).

The average rate increased by 4.1% overall, with increases in all brands and in 58% of the hotels.

With regard to results, both the reporting period and the forecast have seen improvements compared to the final quarter of 2010. While revenues increased by 13.6%, it should also be noted that there is an expected impact on 2011 of cost increases such the cost of the sale & leaseback of two hotels, an increase in operating expenses after the sale of the Tryp brand and the franchise agreement with Wyndham Hotel Group, and the potential impact that rising raw material and energy prices may have on margins, especially in food and beverage.

With regard to liquidity, up to March the company extended credit facilities and increased liquidity levels through the signature of new bank loans.

The company has also seen successful results in its strategy to increase the proportion of fixed-rate debt during the previous situation of low market interest rates - currently over 60% - which now allows financial costs to be “protected” in 2011 in an environment in which the Euribor rate is rising.

International growth and corporate reinforcement
After having added 78 hotels to the portfolio during the period 2008-2010, Sol Meliá maintains a strategy of diversification and international expansion focused on markets in which it has competitive advantages, and also new emerging markets with high potential for the Group's brands.

The company has already created a new business area for the Asia-Pacific region to support the significant growth planned in the area, especially in China, while also strengthening the corporate structure based in Shanghai.

With regard to traditional destinations such as the Caribbean, Sol Meliá mentions in its report that it will soon open two new and exclusive “all inclusive” resorts (one for families with 512 rooms and one for adults with 394 rooms) in Playa del Carmen, Mexico, representing the re-introduction of the Paradisus brand in Mexico, one of the fastest growing destinations. To further strengthen the leadership of the Paradisus brand in the "all-inclusive" luxury segment, Sol Meliá has also recently announced the forthcoming opening of Papagayo Paradisus Bay, with 300 rooms, opening in Costa Rica in 2013.

Regarding emerging markets, the company has just signed a new management contract for a 5 star hotel in Indonesia, Meliá Surabaya, which reaffirms the Sol Meliá commitment to the region. This is also further confirmed by the alliance signed in January with the leading hotel company in China and second largest travel agency in the country, Jin Jiang, which will present important opportunities for both companies in terms of growth, Marketing and Sales, Reservation Systems and Loyalty Programmes.

The strategic agreement, the first phase of which includes implementation in 6 hotels in major cities in China, and 6 hotels in European capitals, will further bridge the gap between cultures and service programmes and encourage the arrival of Chinese tourists to Sol Meliá hotels in Europe.

Conscious of the importance of market diversification, Sol Meliá will also be opening hotels in emerging holiday destinations such as Cape Verde, Zanzibar (Tanzania) and Dubai, through management agreements for hotels already in operation or due to open over the year.

Overall, Sol Meliá is currently preparing to open 30 new hotels, representing a total of 8,465 rooms (11% of the current portfolio of the company.) 88% of the rooms belong to the upper-scale segment, both in the Meliá brand and Premium brands (Paradisus, Gran Meliá and ME by Meliá). With regard to the form of management, 88% of the rooms will be added under low capital-intensive formulas (management, franchise and lease contracts), and 91% are located outside Spain.

Outlook for the year
Despite many reservations being left to the last minute, Easter saw significant improvements in both occupancy and average price, allowing the company to record an increase in RevPAR in April of 10.4% in Spain.

The positive results for the first quarter do not include the Easter holidays, which fell in April, during which both occupancy and RevPAR developed very favourably in spite of the volatile weather. April results will significantly surpass last year's figures, which did not include Easter and which also saw the ash cloud that shut down air traffic for weeks.

For the second quarter forecasts point to continuity in growth, with reservations in Spanish cities more related to domestic consumption, and for the summer, the European tour operators and direct sales channels showing a clear improvement over 2010 in volume and prices, although more time is still required to assess demand from countries such as Spain, Italy and Russia, who tend to book much later.

The importance of this is due to the fact that the third quarter represents about 40% of annual hotel EBITDA.

Finally, the Company reports that it is preparing its new Strategic Plan 2012-2014, which will prioritise its “hotel management company” role, focusing even closer on guest experience, brand equity and brand differentiation, based on the critical enhancement of the talent that exists within the organisation.

After strengthening the Real Estate business area, Sol Meliá (solmelia.com) is now working on enhancing its asset management, optimising the return on capital in owned hotels and ensuring the most efficient asset rotation model. With regard to growth, strategy will continue to prioritise low capital-intensive formulas and the realisation of any acquisitions through joint ventures.

 
 
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Sol Melia Increases Revenues by 13.6% in the First Quarter and Notes Recovery in its Main Markets

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Sol Meliá |
Contact: Communications Department - SolMelia.com 
971 22 44 64 comunicacion[.]solmelia.com
 
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