Meliá Hotels International results improved by 74% up to September, driven by the positive summer season in Spain, asset repositioning, and the growing strength and diversification of its business model.
Meliá Hotels International announced results for the first nine months of the year, boosted by the positive impact of demand in a positive summer season in Spain, and also reaping the rewards of the strategy to renovate, rebrand and reposition some of its most emblematic resort hotels in recent years. Taken together, these hotels saw RevPAR increases of 40%. Meliá’s experience and leadership in the leisure segment also contributed to its success in city hotels in Spain, which saw remarkable growth in revenue per available room of 11% in the third quarter.
The Company recorded a net profit of €92.2 million, a 74% increase over the first nine months of 2015, an increase that rises to 130% if the effects of extraordinary items are eliminated, such as the €48 million of capital gains and impairment of Puerto Rico, which both impacted the results for the same period in 2015.
Meliá once again highlights the strong performance of the hotel business as the most important factor behind results which do not include any capital gains from asset sales in the third quarter. With regard to the close of 2016 and 2017, the Company expects to complete the sale of some non-strategic assets in the portfolio to strengthen the model of using joint ventures as a driver for the transformation of assets which require large investments, also positively contributing to the quality of the properties operated under the different brands, and the intensification of the Company business model fundamentally based on hotel management. In this regards, the Company informs that on 4th November 2016 Meliá Hotels International sold the 246-room Sol Parque San Antonio resort, located in Puerto de la Cruz (Canary Islands, Spain). The transaction amounted to 8 million euros in cash and generated capital gains of approximately 4 million euros which will be included in fourth quarter 2016 results.
Financial results also had a positive influence, with a significant reduction in debt (€240 million less than in December 2015) combining with a consistent reduction in the average interest rate, which fell to 3.6%, generating savings in finance costs of €20.5 million. The reduction of net debt to €528.8 million was made possible by the amortization of the convertible bond and increased cash flow from the business, all of which contributed to improved financial ratios, such as the ratio of Net Debt / EBITDA (excluding capital gains) that the Company expects to maintain between 2.5 and 3 times.
Regarding international expansion, Meliá Hotels International continued to add hotels in emerging markets in which it already operates, such as Indonesia, with the addition of the Meliá Lombok Tangkong, the Meliá Bintan, and the Meliá Pekanbaru; Qatar, with the Innside Doha; Vietnam, with the Meliá Ho Tram Meliá; Cabo Verde, with 4 hotels, the Meliá Salamansa and Meliá Lusophony complex; and Tanzania, with the Meliá Serengeti. The Company also added hotels that open up new markets, such as Kazakhstan, with the Meliá Almaty, Iran with the Gran Meliá Ghoo, and the Maldives, with the Gran Meliá Maldives.
Gabriel Escarrer, Vice Chairman and CEO: “Business results through September were boosted by the impact of positive tourism trends in Spain which our Company has been able to maximize thanks to our experience and leadership in the resort hotels segment and the successful strategy to renovate, rebrand and repositioning some of our most emblematic assets. In addition, intense debt reduction and improved financial results have put us in an excellent position to take on the growth we expect in the short, medium and long term.”
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