Business Performance:
- Global RevPAR: +15,1% (90% due to ARR increase)
- Ebitda: €293 M (+29%)
- Earnings before Taxes: €101.6 M (+79%)
- Revenues: +16% (€1,738 M)
- Outlook 2016: single medium digit growth in global RevPAR
Strategic transformation:
- Growing focus on Brands as key drivers for value and positioning
- Progress of the Digital transformation, with strong growth of melia.com & melia.pro
- Increasingly management-oriented business model
- 100% achievement of the asset rotation & asset valuation goals
- More quality & profitability of hotels
Internacional Expansion:
- 25 new Hotels signed in 2015 (1 hotel every 2 weeks)
- 13 hotel openings along the period
- Strategic focus on Asia-Pacific, EMEA and the Americas
- Consolidation and increased growth in Cuba
- Challenging plans to open 25 new Hotels in 2016
Balance sheet strengthening:
- Minus €216 M of net debt
- Successful reduction of Financial expenses with savings of €36 M
Gabriel Escarrer Jaume, Vice Chairman and CEO of Meliá Hotels International: “We face 2016, our 60th Anniversary, from a stronger position than ever before, both in terms of the business and our financial position, and proud that we have also seen a significant improvement in our reputation and international recognition, having been acknowledged as the “Best European Hotel Chain in 2015” by the European Hospitality Awards Jury. The Strategic Plan we will present during 2016 aims to further consolidate our brands, our digital commitment, and the competitiveness and positioning of our group."
In 2015, Meliá Hotels International earned a Net Profit of € 40.5 M (€ 36 M Net Attributed Profit), a significant improvement in both cases over the previous year (27% and 18%, respectively), although the two periods are not exactly comparable given that 2015 results are affected by a higher tax rate, the result of the current inspection started in late 2014 on the accounts for 2009 to 2012 inclusive.
Meliá has made provisions amounting to € 33 M to address any potential tax adjustment, and is confident of reaching a satisfactory agreement with the Tax Administration on the basis of the different criteria employed by both parties.
The Company has analysed the potential impact on the years under investigation and does not envisage any changes that would have any significant impact on the consolidated accounts of future years.
Discounting the impact of two extraordinary items, the impairment of the hotel in Puerto Rico (€ 29 M) and provisions for the tax adjustment, Net Profit before tax for the year grew by € 67 M compared with 2014, an increase of over 200%.
For the full year, Meliá generated revenues of € 1,738.2 M (+16%) and EBITDA of € 293.1 M.
These results are due to the consolidation of the improvement in all divisions of the hotel business, generating a record increase of 15.1% in revenue per available room (RevPAR), 15,81% if we exclude Venezuela, a result of both an improvement in the business environment and economy in key markets, as well as brand strategy and product repositioning, and also as a result of a successful sales strategy.
In this sense the Company highlights its Digital transformation process, recording significant progress both in the strategy towards the consumer with the melia.com channel ( +27% Sales) and towards the Distribution partners with melia.pro (+36%), specifically aimed to enhance Sales & relationship with the Travel Agents, who still are one of the essential success factors for Melia, after 60 years of fruitful collaboration.
In financial terms Meliá met its debt reduction goals for the second consecutive year, reaching € 768.8 M, € 216 M less than in 2014 and returning to levels similar to those of 2007, one of the best years in the history of Meliá Hotels International. Together with the reduction in the average cost of debt, this has allowed a satisfactory reduction in financial expenses, generating savings of € 36 M.
2015 was also a record year for international expansion, with a pipeline of 62 new hotels at the end of the year (16,000 rooms), an achievement which is expected to continue in 2016 with the addition of 20 to 25 new hotels, of which two have already been signed in this quarter. 2016 will see the result of years of strong additions, with 25 openings scheduled between January and December in 15 different countries.
Regarding hotels under management – the majority of the hotels added to the portfolio in recent years - the Group saw an increase of € 19.5 M in management fees compared to 2014, including hotels owned, leased and under management to third parties-. This increase is mainly due to higher fees from Cuba (+5.5 M €) and the Mediterranean Division (+4.4 M €). Urban hotels in Spain also contributed € 1.9 M more thanks to the hotels in Madrid.
The Real Estate business provided Melia Hotels International a total revenue of € 69.9 M in 2015, € 61.2 M of which was linked to the sale and valuation of assets. Significant events behind this result included the sale of six resort hotels to the Joint Venture 80% owned by an affiliate of Starwood Capital Group and 20% by Meliá, amounting to € 178.2 M, and the sales of the 875-room Calas de Mallorca resort for €23.6 M and the 450-room Sol Falco in Menorca for €20 mn. Meliá highlights the fact that all of these assets remain under Company management, confirmation of its strategy of alliances and asset repositioning to generate greater value and profitability, all within the "asset-light" strategy of the hotel group. The process further confirms the successful re-launch of the Sol Hotels brand, thanks to the excellent market response and the remarkably improved profitability shown by the repositioned hotels.
With a view to 2016, the group estimates overall RevPAR growth of medium-high single digit figure for the first quarter and a medium single digit figure for the full year.
Improvements in all regions
In the Americas, revenue per available room (RevPAR) increased by 20.6% thanks to a rise in average daily rate (ARR) of 21.3%, affected by the adjustments in the exchange rate of the Venezuelan Bolivar. If the effect of Venezuela is discounted, RevPAR would have increased by 24.6% (3.8% in dollar terms).
Beyond exchange rates, operations in Meliá Hotels International resorts in Mexico (+27.7% RevPAR) and the Dominican Republic (+24.5% RevPAR) generated a solid performance, accredited by the results of key resorts such as the Paradisus Playa del Carmen, with 36 mn USD of EBITDA, or improvements in prices in the Paradisus Cancun (+ 35%) and in general in the Dominican Republic, despite the 80% fall in the number of Russian visitors.
Regarding the outlook for 2016, the Company expects to outperform 2015 thanks to rate increases in resorts, the positive reception of the newly built Meliá Braco Village in Jamaica, and the imminent opening in early March of two flagship hotels in North America: the Innside Nomad New York and the ME Miami.
In EMEA (includes Premium Hotels in Spain),RevPAR in owned and leased Hotels grew by 11.2%, 100% explained by increases in prices, with a notable performance in:
- France, after the unfortunate impact of the attacks of 13 November (-12% revenue in hotels in central Paris), was able to partly offset the fall in RevPAR with better results than competitors who saw reductions of almost 18%. Also of note was the performance of the Meliá Paris La Defense, due to a lower exposure to the leisure segment.
- Germany has achieved a strong performance throughout 2015, ending with an improvement in RevPAR of 6.4%, explained by parallel improvements in volume and average rates, particularly notable in hotels in Dusseldorf.
- Italy saw a very positive year for Melia hotels, especially in Milan - after the renovation of the Melia Milano and the successful opening of the ME Milan Il Duca - and Rome, where the Gran Melia Rome improved RevPAR by 9.3 %, achieving an average rate of 374 euros, in line with the finest hotels in the city.
- Premium hotels in Spain saw an increase of 15% in revenues in the fourth quarter, a quarter in which results are mostly concentrated in urban hotels, all of which was attributable to improved rates. The basis for this growth in major cities were hotels such as the Gran Melia Fenix in Madrid (+ 22%) or the Melia Barcelona Sky (+14%). Among the resorts, however, there was also an extraordinary performance from our flagship hotel Gran Melia Palacio de Isora, with an increase of 23% in 4th quarter RevPAR, and a contribution to Company EBITDA of 17.5 million (+ 20%).
- The UK completed a challenging year, returning to growth in the 4th quarter with a RevPAR increase of 1.4% thanks to the evolution of the Melia White House and, above all, the ME London, which achieved an ARR in the region of 300 Pounds.
Regarding the outlook for 2016, Meliá expects an improvement in Germany and Vienna due to a strong year for trade fairs and congresses, the consolidation of the ME London and the progressive positioning of the Innside Manchester in the UK, as well as positive expectations for hotels in Italy. In France, the spectacular evolution of the Meliá Paris La Defense will offset the slowdown in Paris city centre hotels, still affected by the attacks in November 2015.
In the Mediterranean Division, RevPAR grew by 8.7%, almost all (7.5%) due to price increases. The fourth-quarter growth in the division is focused on the Canary Islands, which in 2015 saw record results for the period, further intensified after the most recent differences between Russia and Turkey, and also after the addition of a new luxury hotel in Tenerife, the Melia Hacienda del Conde. The geopolitical situation in other destinations also had an impact on the hospitality industry in Cape Verde, where Meliá manages about 1,500 rooms.
The concentration of demand enabled hotels to focus on price and also generated an increasing contribution from Meliá.com in the region – with a 50% increase in sales in the 4th quarter – both of which were key factors behind the positive results.
With regard to the outlook for 2016, a positive performance is expected, benefiting from the perception of the Spanish coast and islands as “safe havens” compared to alternative destinations where a situation of instability unfortunately remains, such as in the north of Africa. Performance will also be positively influenced by the renovation and repositioning carried out by the Group in numerous resorts in the Balearic Islands. In the Canary Islands, in addition to the positive impact of the addition of the Sol Costa Atlantis and Meliá Hacienda del Conde on the island of Tenerife, there is also a forecast increase in flights to the islands of Fuerteventura, Lanzarote and La Palma, in all of which the Group has hotels .
The division Spain (City hotels) reports an increase in RevPAR of 13.1%, mainly attributable to the consistent recovery in all market segments which allowed Meliá to maintain its leadership in the most tourist cities, where the Company takes advantage of its experience and expertise in the Urban and Leisure segments, to develop its successful "bleisure" strategy ( business + leisure), focused on both the business and leisure travellers, to optimize occupancy and Average Room rates (ARR).
Madrid kept up the upward trend of recent quarters, with improvements in the leisure, business and MICE (Meetings & Incentives) segments, and especially in the business generated by the airport, which has increased by 55% over the previous year. The centrally located Meliá Galgos, after its renovation, improved results by 25%.
Hotels in northern Spain benefited from atypical weather conditions in the region and increased flight frequencies and better sales management, particularly of note in hotels such as the Melia Bilbao and Melia Zaragoza. In the south there were strong performances from hotels in Marbella, Cadiz, Granada and Seville, which benefited from a good year in terms of events and congresses.
In eastern Spain there was a positive 4th quarter, especially in Catalonia, Valencia and Palma de Mallorca, and particularly noticeable in the MICE segment, with a significant increase compared to 2014 (Meliá Valencia +14.1%, Melia Sitges +11.5%, Melia Palas Atenea +9.6%) and the Alicante area in general. Considering all the City hotels –including the Premium ones- the RevPAR increase reached +17,5%.
Regarding the outlook for 2016, sales in Spain saw improvements in the first quarter, both in first and second tier cities, penalized only by the ski resorts in the Sierra Nevada due to a shortage of snow. The Meliá portfolio in Spanish cities will be further enhanced by ongoing renovations at hotels such as the Melia Lebreros (Seville), Tryp Apolo (Barcelona), and the former Tryp Ambassador, now rebranded as the Gran Meliá Palacio de los Duques. Despite uncertainty about political stability in the country after the elections, we expect a continuation of the recovery of the Spanish domestic market.
International growth and the new Strategic Plan
2015 saw continuity in the growth rate of the Group, with 25 new hotels signed and 13 new openings, representing the addition of 2,167 new rooms to the portfolio in almost all regions, although mainly in Asia Pacific (36% new hotels) EMEA and Spain (40%) and the Americas (24%). For the financial year 2016 Meliá will surpass its historic record of hotel openings, with 25 hotels planned so far - two of which have already opened (Sol Costa Atlantis in Tenerife and Meliá Braco Village in Jamaica) and also two flagship hotels scheduled to open in March in the United States: Innside New York Nomad and ME Miami.
2016 also marks the 60th anniversary of Meliá Hotels International, a date that the Group treasures as a sign of its sustainable leadership and long-term commitment, as stated by its Vice Chairman and CEO at the last FITUR tourism trade fair that: "after consolidating our strengths during the crisis years, today we are even better prepared than ever to deal with the implementation of a new and challenging Strategic Plan, aimed at strengthening our leadership until 2018 and beyond."
The priorities of the Plan include:
- Continue to improve our brands portfolio’s positioning with products and experiences which continue to attract new types of customers and a new generation of travellers.
- Consolidate the transformation of our commercial model through strategic revenue management and enhancing the contribution of the Meliá system, especially through the “Melia Digital” strategy.
- Selective growth to consolidate our presence in key markets, promoting sustainable growth in leisure and urban destinations, using “bleisure” concepts in urban destinations popular amongst leisure travellers.
- Consolidate the real estate role as an owner and developer; enhancing the quality of our portfolio and the value of our assets.
- Build an increasingly competitive organization supported by an internal pool of International talent to help face the challenge of cultural transformation.
- All this will be accompanied by a credit-worthy financial model, that will be able to handle the economic cycles, minimizing the potential risks.
