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Meliá Hotels International Earns €36.7 Million up to September after a Third Quarter with RevPAR Growth in All Divisions - Meliá Hotels International has ended September 2012 with an increase in EBITDA of 4.3% (11.5% underlying EBITDA) and net profit of 36.7 million euros, representing a decrease of 4.1% over the same period last year -
Meliá Hotels International Earns €36.7 Million up to September after a Third Quarter with RevPAR Growth in All Divisions


NewswireToday - /newswire/ - Palma de Mallorca, Spain, 2012/11/07 - Meliá Hotels International has ended September 2012 with an increase in EBITDA of 4.3% (11.5% underlying EBITDA) and net profit of 36.7 million euros, representing a decrease of 4.1% over the same period last year -

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• EBITDA reaches €184.2 million, 4,3% more than in 2011;
• The company increases global RevPAR by 8% in the first 9 months;
• Operating Profits generated outside Spain expected to be above 80% at year end;
• Strong international growth continues, with 11,000 new rooms to be added (14% of the current portfolio).

In the hotel business, the average rate increase offset a slight decline in average occupancy levels, RevPAR ending in owned and leased hotels with growth of 8% through September.

Financial results saw a lower contribution of the Real Estate area in the period compared to the same period in 2011 (-3.9 million €) and the impact of the non-securitization of the Club Meliá customer portfolio (-3.5 million €) compared to 2011. If these factors are not taken into account, EBITDA would have grown by 11.5% during the nine months, with an EBITDA margin improvement of 62 basis points.

The positive development of the resort hotels that the company operates in the main tourist destinations in the world, with a healthy increase in RevPAR of 6.1% in the third quarter (and 11.3% to September) mainly due to increases in price, meant that revenue per available room - RevPAR – for the company during the first 9 months rose by 8%.

Meliá diversification, both geographically and by product segment, remains a key strength to understand the continued positive results of the business: the company gets 80% of its operating profit from outside Spain, mainly in Latin America, Europe and Middle East, and its hotel portfolio, with 60% of resort hotels compared to 40% of city hotels, benefited from the strength of international demand in the leisure segment, even in Spain. In the sales area, Meliá also highlights advances in electronic commerce, with a notable improvement in online agencies and tour operators, as well as the growing importance of direct sales channels, which up to September 2012 contributed 134 million in sales, This is 13.5% above the previous year. For 2013 is expected to see increases of 39% in this area.

The two-track strategy implemented by the company has accelerated the growth and improved results outside Spain, while at the same time applying an anti-crisis strategy in markets most affected by the slowdown, as noted by Gabriel Escarrer, Vice Chairman and CEO of the company,"Meliá in Spain generates only 20% of its operating profit, of which 65% is in the quite strong leisure segment, while the remaining 35% is produced in the cities. These cities - except for Barcelona, which due to its high leisure component is trending very positively - make up what we call urban Spain. It is in these more problematic cities where we must focus our contingency plan, while maximizing our strategy and results in other divisions and markets. "

Continued commitment to internationalization
Currently, the Meliá hotel pipeline includes 34 hotels with approximately 11,000 rooms, 92% in the Upscale and Premium categories. Of these new properties, 91% are located outside of Spain and 58% of them in emerging markets, reinforcing the Meliá presence in countries like Brazil, China and Indonesia.

In the next few weeks the ME London hotel will open, becoming one of the leading European hotels designed by Foster & Partners in the business and entertainment heart of London. This spectacular and vibrant hotel will have a positive impact on boosting the international positioning of the premium brand ME by Meliá (which next year will open another hotel in Vienna), strengthening the Company Groups business, attracting alternative feeder markets and reaffirm the support of preferred partners.

To facilitate this expansion and further globalise the business, the company has adapted its organization to the growing importance of the different regions and reinforced its main hubs or corporate offices in major markets.

The fact that 100% of the 34 hotels in the pipeline Meliá will be added under management, lease and franchise agreements also confirms the hotel's commitment to strengthen its business model as a "hotel manager" and supports the company's management maturity and the confidence that its hotel brands offer investors and hotel owners.

Innovation and Corporate Responsibility
Meliá Hotels International has strengthened its commitment to various interest groups through the adoption of a new Code of Ethics as well as deepening the strategic alliance with UNICEF for child protection and the prevention of sexual exploitation of children, which has already achieved outstanding results. Since the beginning of the alliance in May 2011, the Company has managed to exceed the initial targets set for the first three years of the agreement. More than one year in advance, the Meliá commitment will be further reinforced, both with regard to the active involvement of hotels as well as raising awareness of customers in all markets in which it operates.

In its quest to extend its commitment to sustainability to its various stakeholders, in 2012 the company has launched a process of integrating sustainability criteria in its supply chain, the first step being the launch of a pilot assessment of suppliers based on sustainability criteria in two key countries: the Dominican Republic and Mexico.

With the aim of strengthening the cultural dimension of the company through the enhancement of the cultural, artistic and historical heritage of the different environments and cities where the company operates, Meliá has also developed an innovative sales strategy that incorporates the cultural resources and values of the environment of different hotels.

On the other hand, commitment to its investors has recently led to Meliá amortising its Preferred Shares through an innovative swap deal for Ordinary Bonds, obtaining an acceptance of the offer of 76.4%, representing an issue of bonds with a total value of €76.4 million maturing in July 2016. The responsible and attractive alternative developed by Meliá to approximately 4,000 holders of Preferred Shared, also reported significant benefits to the Company, primarily in reducing the average cost of debt improved ratios and capital gains.

In order to further strengthen the integration of sustainability principles into its business operations, Meliá Hotels International has expanded its alliance with EarthCheck, a leading certification programme in Sustainable Tourism. Throughout 2012, four hotels have received EarthCheck certification, in addition to six other hotels that already hold certification and which in the last decade have recorded savings of €1.3 million in energy costs and 500 million litres of water. The hotel company is also certified as a Biosphere Hotel Company by the ITR, and the alliance further strengthens its commitment to responsible tourism.

Finally, Meliá recalls the significant progress made in the project of renovation and repositioning of a mature tourist destination located on the southwest coast of Mallorca, Magaluf: the Calvià Beach Resort project, based on the creation of an innovative hotel and leisure complex out of the renovation of obsolete hotels and creating new spaces for leisure lifestyle, has completed its first phase and recovery has already begun in the area, highlighting the following achievements: 1) Integrating the area in its environment and increase the appreciation from local residents and outbound markets. 2) Creating jobs and improving business confidence levels. 3) Attracting new markets and customer segments. 4) Improved image of the destination, in safety and international positioning.

Performance by region:

1) Americas:
In America RevPAR grew by 28.8% (+17.4% in dollars) in the first nine months of the year with an increase of +37.2% in the third quarter. In spite of it being the low season. the strategy of enhancing less price sensitive market segments enabled outstanding results in countries like the Dominican Republic, where innovative business management will allow record levels in 2012 at some hotels such as the Paradisus Palma Real. Mexico also saw positive results thanks to the hotels in Cancun and Playa del Carmen, where resorts such as Paradisus La Perla and La Esmeralda exceeded expectations and maintained an excellent price positioning, in line with their product excellence. Venezuela and Puerto Rico also showed very positive development, especially thanks to the dynamism of local markets and their good position within them.

2) EMEA:
This division saw an overall increase of 5.4% in RevPAR, largely due to improved rates of around 7.1%. By country, the best performance was observed in France, with an increase of 14.1% in the nine months, the United Kingdom, with +11%, and Germany, with a 6.9% increase. The performance of the Meliá White House in London was notable due to the summer Olympics, where RevPAR grew 43%, above its competitor set.

3) Premium Europe:
After a third quarter of significant increases in this segment (+6.9%), the Premium hotels in Europe recorded an improvement of 2.4% in overall RevPAR, mainly due to the behaviour of the individual leisure segment in the third quarter, due to high exposure to international feeder markets of products such as the Gran Meliá Don Pepe (Marbella) or the Meliá de Mar (Mallorca.), and the good start in international hotels like Gran Meliá Roma.

The worse results came from the Meliá Salinas resort in Lanzarote, which aims to reverse this trend by repositioning the brand and hotel operation, including transformation into an adults-only hotel, already carried out with remarkable success by hotels such as the Meliá de Mar.

In city hotels, the best performance was recorded in those hotels with a mixed leisure and business market such as the Gran Meliá Victoria (Mallorca) or hotels like the Gran Meliá Fenix in Madrid, with a high exposure to the international business segment

4) Mediterranean:
Resorts in Spain observed a healthy evolution of RevPAR (+3.2%) thanks to improvements in prices which offset the slight decline in occupancy rates. By region, the Balearic Islands led the growth, with an increase in its average revenue per room of 10% (and results close to the historical figures of 2007) followed by Alicante and Malaga, all characterized by heavy exposure to international demand .

The business strategy of the company, linked to increased penetration of source markets such as Russia and Scandinavia, especially noticeable in the new products such as Calvià Beach Resort in Magaluf (Mallorca), along with continued instability in Egypt and other destinations in the eastern Mediterranean, are behind the results. This only partially offset the decline in domestic demand, especially obvious in second-tier destinations. The worst performance was observed by the resorts in the Canary Islands, affected by changes in the operation - now under management contract – in the Sol Tenerife, 522 rooms, and the effect of the comparison with 2011, an extraordinary year in the Canary Islands due to the Arab Spring.

5) Urban Spain:
From January to September, the RevPAR of city hotels in Spain fell slightly (-1.4%) after a slight improvement in the third quarter (+0.6%), a result that was possible thanks to the leisure segment benefiting hotels with a mix of business and leisure clientele. The demand remained weak for the rest of the hotels located far from the coast, compounded by the summer recess in business activity. This development was partially offset by the strength shown by the hotels in Barcelona, with a RevPAR increase of 5.1%.

The division reported an improvement in the individual business segment contribution, attributable to alternative markets such as Latin America and Asia, in contrast to the business groups segment, which saw poor results.

Outlook and conclusions
From the expected evolution in the most important markets and the current rate of reservations in segments such as MICE and especially business groups, Meliá expects a very positive first quarter for 2013 in Latin America and the Caribbean, where the period coincides with the high season, no doubt supported by the consolidation of a product as successful as the Paradisus resorts in Playa del Carmen (Paradisus La Perla and Paradisus La Esmeralda).

In Spanish holiday resorts, the ongoing negotiations with major European tour operators indicate slight increases in rates for the summer of 2013, and although it is early to say emphatically, there is particularly strong growth in bookings from our direct sales channels. The results of the World Travel Market tourism fair in London, the most important for the British market, which ends today, also point to a positive season, with a the good performance of the Russian market and the Eastern countries, while still observing a weak demand on the Spanish, French and Italian markets.

The company is much more cautious about the outlook for the Spanish cities, where it will focus heavily on leisure segments and maximizing opportunities with key accounts and international clientele, mainly with a view to the Upscale market in Barcelona, a city marked by its leisure segment and which remains an important strength.

With respect to major European cities, the macroeconomic situation in the Euro zone and UK requires the company to be prudent despite positive developments, focusing on expanding and developing a strategy based on customer accounts in London, Paris and major cities in Germany.

Finally, and in global terms, as noted earlier, the company expects a significant improvement in the contribution of e-commerce (online tour operators and travel agencies) and especially from its own direct sales channels.

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Written by / Agency / Source: Sol Meliá Hotels & Resorts


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Meliá Hotels International Earns €36.7 Million up to September after a Third Quarter with RevPAR Growth in All Divisions

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