Annual Results 2016 MELIA HOTELS INTERNATIONAL EARNED A NET PROFIT OF €100.7 MILLION, AN INCREASE OF 180%

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The Circle, reinventing the vacation club

For the Meliá Hotels International Vacation Club, up to now known as Club Meliá, 2016 was a year of transition and transformation. The company’s Strategic Plan saw the reorganisation and integration of management and operations functions, and the optimisation and standardisation of sales processes through digital channels. This also aimed to maximise the efficiency of the Club’s assets, aligning them with the asset rotation strategy, improving inventory management, and concentrating inventory and sales efforts in destinations such as Mexico and the Dominican Republic.

The result is a new concept called “The Circle” to replace Club Meliá, which has already begun to transfer existing customers. In addition to a strong link to the MeliaRewards loyalty programme, The Circle also offers members more flexibility and greater variety, as well as focusing far more on the exclusivity of the experience offered to members. In December, a first stage of the new programme was launched in Punta Cana, Dominican Republic, where the construction of a new 432-unit luxury resort has begun in which The Circle members will have priority.

Improvements in all regions

In the Americas, RevPAR increased by 3.8%, confirming the positive performance seen in the third and fourth quarters, showing a notable improvement in prices even as pressure on occupancy remained. This is largely due to the opening ofInnside New York NoMad, which has become the hotel with the highest average annual rate, in spite of only opening in Q1 2016.

In 2017,performance is expected to be weaker in the Dominican Republic, but more positive in Mexico, benefiting from the re-opening of ME Cancun in March after a renovationand the recent reopening of the Paradisus Los Cabos after an extensive renovation and rebranding, which will increase the contribution of these two-important company-owned resorts.

The EMEA region had a strong performance in 2016, with an increase in RevPAR in the region of 12.4% thanks to the performance of hotels in Spain and Germany, and to the slow but consistent recovery of markets such as the United Kingdom and France in the fourth quarter. Italy (where Milan continued to struggle in comparison to 2015, in which it hosted the Universal Exhibition) and the Middle East, didn’t improve, compared to 2015.

Spain reported a satisfactory performance both in city hotels – with significant growth in properties such as Gran Meliá Colón in Seville and Meliá Barcelona Sky – and in resort hotels, owing to ME Ibiza and the Gran Meliá Palacio de Isora, one of the best resort hotels in Europe. The performance of Gran Meliá Palacio de los Duques in Madrid in the few months since its opening, has confirmed its vocation to become one of the “top” hotels in Madrid.

The region is expected to see positive progress in 2017, that will translate into a high single-digit growth in RevPAR, with a positive year for Germany and a shift in trend in France and the UK, where RevPAR will increase in the first quarter by double digits, and a positive year in Spain, particularly for luxury hotels.

All of the destinations in the Mediterranean region, where RevPAR grew by a notable 42.8%, reported an improvement in results compared to 2015, highlighting the considerable increases in prices in line with the investments in hotel improvements and repositioning the company’s brands. The season was also significantly longer, with a more positive performance from resorts in October, thanks to the strategy of renovation and repositioning not only hotels, but also tourist destinations.

Within the region, the performance of the Canary Islands, especially Tenerife, and Balearic Islands – the latter focused on the summer months, thanks to the repositioning and rebranding of hotels such as the Sol Katmandú Park & Resort in Magaluf, Mallorca, the Sol House mixed by Ibiza Rocks in Ibiza and Mallorca, and the new Sol Beach House resorts in Mallorca, Menorca and Ibiza, with an adult only concept. Finally, Cape Verde recorded an excellent performance, doubling its results with an additional production of €27 million.

In 2017, it will be key for the region to continue to improve rates and the repositioning process in destinations such as Magaluf (Mallorca), having managed not only to change the image and quality of the hotels, but also the customer value proposition and segmentation, and to extend the season’s duration. Currently, the company is working to extrapolate this strategy to other destinations where it has an important presence, such as Torremolinos in Malaga, among others, with the valuable collaboration of the municipality of Torremolinos. Brexit has not yet caused a significant drop in sales through British Tour Operators.

The performance in Spain (city hotels) was generally positive, especially in the summer, with RevPAR improving by 9.4%. Highlights in the eastern Spain region included hotels in Catalonia, Valencia and the Balearic Islands, in part due to the behaviour of the MICE segment and company specialisation in the “bleisure” segment. The company’s experience in resort hotels allows it to maximise the experience and profitability of hotels in cities that have an important leisure component. In central Spain, Madrid reported notable improvements in comparison to 2015, while in southern Spain the hotels in Granada (after the renovation of the Meliá Granada), Seville and Malaga stood out. Hotels in Bilbao, Galicia and Zaragoza also recorded excellent results.

The region expects a positive 2017 in Madrid in the MICE segment, as well as further improvements in hotels in Palma de Mallorca, with the addition of the new Palau de Congressos (Convention Centre) in Palma and its adjacent hotel, the Meliá Palma Bay. Barcelona expects to see a recovery in the MICE segment with the biannual celebration of the Mobile World Congress, and in the south of the country expectations are positive for the Easter break in April and for the ski hotels.

In Cuba, Meliá results continue to improve thanks to a 10.3% improvement in RevPAR largely attributable to improved rates (+17.1%), especially in Santiago de Cuba and Havana.

The improved relations between Cuba and the United States saw the arrival of 14 non-stop daily flights to Havana and new non-stop connections to Varadero, Santiago de Cuba, Holguin, Santa Clara and Camagüey, from Q4 2016. This led to an increase of 176% in North American travellers to 284,000.

The country also met its annual goal of 4 million visitors andhas a positive outlook for 2017

In Brazil, the current political and economic climate had a negative impact on hotel results. As almost all of the hotels are based in cities, they were affected by the slowdown in corporate travel, which also triggered a price war in the hotel industry. However, there is an improvement in inflation and the evolution of emerging markets. Meliá anticipates an improvement in rates and the contribution of a new hotel in Rio, the recently opened Gran Meliá Nacional Rio with 413 rooms.

Asia Pacificsaw positive results, both in terms of the slight growth in RevPAR and the 25% improvement in figures for hotels under management. This was achieved in spite of the major effort in expansion and the renovation of a large number of rooms, which limited the increases in the contribution of affected properties.

Meliá emphasises the importance of its presence in the fastest-growing market both in inbound business (travellers to APAC) and outbound travel from Asian countries to the rest of the world, and has reinforced its corporate offices in Shanghai and in Jakarta. The growth expected by the company – with 14 hotels in operation and 21 new hotels currently in the opening pipeline – will provide consistent growth in profitability and return on investment in the region.
For further press information or images please contact Anita Gryson or Yasmine Najib at LUCHFORD APM
Anita.Gryson@luchfordapm.com / Yasmine.Najib@luchfordapm.com

020 7631 1000