Gabriel Escarrer: "Our confidence in the future is based on Meliá’s ability to maintain the 7.9% increase in RevPAR achieved in 2012, largely thanks to the increased rates allowed by our international presence and the excellent positioning of our hotels"
- Internationalisation: "Continuing our international growth, we have recently signed our first hotel in Saudi Arabia, the Gran Meliá Riyadh, and five Innside by Meliá hotels in Chile."
- Two-speed strategy: "Thanks to a two-speed approach, Meliá has seen strong growth in the most dynamic markets helping to mitigate the worst impacts of the ongoing crisis in Spain".
- "Responsible" success: "We are proud of the Calvià Beach project in Mallorca which combines all of our company values and which, after a first season with improvements in occupancy and average rates, job creation and the attraction of more affluent visitors to a mature destination, foresees an excellent performance for 2013 ".
- Market confidence: "Thanks to our diversified business model, supported by the value of our assets and our brands, we have restructured our debt and will continue to develop our asset rotation policy".
- Outlook 2013: "we expect to see further strengthening of the already excellent results in Latin America and the Caribbean, (specially regarding the gorgeous Paradisus resorts in Playa del Carmen, México) and continuity in the consolidation of urban hotels in European capitals, especially the "Premium" hotels such as ME London and Gran Meliá Rome Villa Agrippina".
- Spain: "Spain has enormous challenges to restore trust and productivity to create new jobs, and measures such as the increase in airport taxes or tourist VAT are examples of what not to do to achieve that"
The Chairman of Meliá Hotels International made the remarks during his speech to the Annual General Shareholders Meeting 2013, highlighting the importance of international expansion for the company, adding as an example the opening of a first hotel in Saudi Arabia, the Gran Meliá Riyadh, and a framework agreement for 5 Innside by Meliá hotels in Chile."
Escarrer began by explaining the Meliá strategy that has bolstered its business model in recent years: international operations which now generate 84% of operating profit, well-positioned products in both the upscale resort (e.g. Paradisus Resorts in Playa del Carmen) and city markets (e.g. ME London or Gran Meliá Rome), and the growing replacement of feeder markets in crisis with emerging markets such as Russia, Brazil, Latin America or Asia, promoting what he called the "outbound business". "As emerging countries also become tourist feeder markets,” he explained, “the Company is developing strategies to raise brand awareness and attract customers to compensate waning demand from traditional source markets."
Five key factors for effective management:
Escarrer summarized five major factors thanks to which, as he explained, "Meliá has weathered the crisis better than the average of its competitors and can look towards the future with optimism":
The first, its internationalization strategy, in which he highlighted the presence of the chain in 39 countries, making it one of the most international of all Spanish companies, and the pipeline of hotels to be added in the future which already includes 48 hotels with more than 14,000 rooms, 95% outside Spain and in the upscale and luxury categories, as clear evidence of the strategic areas defined for Company growth. He also highlighted the fact that 100% of the hotels in the pipeline will be added under management, lease or franchise agreements, consolidating the Company’s position as an excellent choice for the management of international hotels.
The second key factor was, in the words of the Meliá Chairman, the two-speed approach which has enabled the Company to combine strong growth, margin maximization and strategic initiatives in the most dynamic and emerging markets, with the maintenance of a short-term contingency plan in Spain and other markets. As a result, the Company's average RevPAR grew by 7.9% compared to an average of 4.9% in its competitive set.
With respect to Spain, Escarrer emphasised the difference between the healthy resort business (Balearic and Canary Islands and the Spanish mainland coast) and cities with high leisure components such as Barcelona, with the rest of the city hotel segment which remains depressed, especially in the second-tier cities, which foresees a worse evolution than in 2012. He also described Meliá’s efforts to boost its powerful e-commerce and loyalty strategies, as competitive advantages to increase exposure to international business travellers and urban leisure weekend visitors.
The third key for Escarrer is the strength of the Company's RevPAR (revenue per available room) almost entirely due to price increases. This was made possible by the strength of its brands and its successful positioning in markets such as Latin America, with increases of up to 47% in rooms prices from a year earlier, (the new Paradisus Resorts in Playa del Carmen, Mexico, achieved an EBITDA of $11 million during its first year of operation, that will be more than doubled in 2013). In Europe, London and Rome, with products like the ME London and Gran Meliá Rome Villa Agrippina, achieved the highest average rate in the whole Company after only one year of operation.
Market confidence in the Meliá business model was the fourth key factor highlighted by Gabriel Escarrer as he thanked shareholders for their support, recalling the positive share performance in 2012 and the market response to the 200 million euro convertible bond issue, which saw excess demand of 225 million euros and was fully subscribed in just three hours at an interest rate of 4.5% which helps reduce overall borrowing costs. The President reiterated the Group's desire to maintain disposals through its asset rotation policy, supported by a gross asset valuation of 3,314 million euros.
Finally, before assessing the prospects for 2013, Escarrer described progress in talent management, Corporate Social Responsibility and sustainability as key to Company management, internationalization, and retaining a strong team with strong values, a high degree of motivation and commitment. In particular, he was proud of the CalviàBeach project, launched last year by Meliá Hotels International in Mallorca in the mature tourist resort of Magaluf, which in just one season has made significant progress in quality, the positioning of the destination, financial results and the creation of employment.
The project won the Merit Award 2012 from the Ministry of Tourism and will continue with strong momentum this season thanks to the public-private partnership and the integration of a hotel and theme park to form the Sol Katmandu Park & Resort, the pedestrianisation of the boulevard parallel to the beach, and the growing penetration of new feeder markets and attraction of prestigious international brands to the area.
Escarrer ended his presentation to shareholders predicting that in 2013 emerging economies and European cities would continue the trend of 2012 with the Company focusing its efforts on corporate and international clientele, and continued efforts to develop the business in Asia-Pacific to ensure participation in the extraordinary tourism development in a region (China is now the leading international travel market) in which the Meliá portfolio has doubled in just two years.
In Spain, results and market sentiment to date indicate that the summer season will be better than 2012 in the leisure segment, while the urban segment will see a slight slowdown. Given these forecasts, Escarrer noted that Meliá hotels International will continue to benefit from its balanced product portfolio (urban hotels 49% and resort hotels 51%), and the fact that it enjoys great strength and market leadership in Spain and abroad in the resort business.
