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Meliá Hotels International results for the first half of 2021

Increasingly evident recovery in the Americas and China, with a gradual return to normality in resort hotels in the second semester, whilst Meliá still sees a weak performance in urban Spain and Europe. There are currently 253 hotels open, while the company maintains significant flexibility given uncertainty in the outlook for travel.

PALMA DE MALLORCA – Meliá Hotels International has presented results for the first half of 2021 that are still strongly affected by the pandemic and travel restrictions in different markets and destinations. Progress with vaccination programmes and the reduced severity of recent waves of the virus, however, have radically altered the scenario and point towards an incipient recovery, especially in the Caribbean, China and Mediterranean resort destinations. The results for the period remained negative (-151.2 M euros), and the Group closed June with an EBITDA of -62.5M euros excluding capital gains of 64M euros generated by asset sales.

However, it did meet its objective of achieving positive EBITDA in June, and it even anticipated to June the objective of generating positive cash, too (which was forecasted for July).

In general, the hotel business continued to improve as restrictions began to ease over the quarter, in line with the previous quarters, and continued to be dominated by domestic travellers in every region. The Caribbean is the first destination to see growth in international visitors, especially Mexico, where the positive vaccination programme in the USA, its top market, has allowed a rapid recovery in demand. The company remains concerned about the great impact that those urban hotels most dependent on the Corporate and MICE segment in Spain and Europe still have, whose crisis is undoubtedly more structural than in the vacation or hybrid segment (bleisure), in markets such as France ( with hotels such as the Meliá La Defenseor Innside Charles de Gaulle in Paris), and Spain (in cities such as Córdoba, León or Bilbao, and destinations like Tenerife). The impact is also important in Vienna (Austria) and in some destinations in Germany such as Dusseldorf or Munich, which await a prompt resumption of the important trade fairs that usually take place in those cities in autumn.

  • The number of rooms available in the second quarter of 2021 compared to the same period in the previous year increased by +421.4% in owned and leased hotels, and +143.6% taking into account all the Group's hotels. Compared with the same period in 2019, the last “normal” year, the variations were -39.5% and -42.3%, respectively. For information purposes, if the hotels closed due to Covid-19 are considered, RevPAR in the quarter increased by +519.7% compared to 2020, and by -78.3% compared to the same period in 2019. Over the entire first semester, the variation in RevPAR compared to the same period in 2020 was -51.8% (due to the fact that the impact of the virus began to be felt in the 2nd quarter), and -82.3% compared to the first six months of 2019.
  • Regarding occupancy, it reached 28.6% in the second quarter, (+ 14.3% over that registered in the second quarter of 2020), although in the semester as a whole it was below, due to to the positive evolution still registered during the first quarter of 2020. Regarding Prices, the Group managed to maintain an average rate of € 91 in the second quarter, which represents 29.4% more than in the same period of 2020, while the average rate for the first semester was 11.6% below the same period of the previous year.
  • With all this, the company reports in the second quarter an Average Income per Available Room (RevPAR) of 26 euros, (+ 158.7% compared to the same period in 2020), although the RevPAR for the semester is lower than that reached in in 2020, due to the fact that practically the entire first quarter of 2020 elapsed prior to the declaration of the pandemic.

The company’s direct sales channel for end consumers (melia.com) generated 53% of total sales between January and June, which combined with greater efficiency and profitability in the sales strategy to allow the company to resist the impact of the crisis on travel distribution and maintain the level of bookings and occupancy, as well as the Average Room Rate, well above the average in its destinations in the 3 rd quarter.

Despite the fact that there is still a great deal of uncertainty, Meliá has maintained its commitment to open as many hotels as possible based on a minimum financial viability, and currently has 253 hotels open around the world with plans to open up to 303 during the rest of 2021.

Gabriel Escarrer, Executive Vice President and CEO of Meliá Hotels International: “As I predicted at the beginning of the Covid-19 crisis, the recovery will begin (at least in the resort segment) in the third quarter of this year, with the results of the first half of the year still very much affected by the pandemic. Our revenues doubled in the second quarter compared to the first, demonstrating the trend towards improvement, although they are still far from the levels seen in 2019, our last “normal” year (-73.6%). I am particularly pleased to announce that we have a liquidity position of 405M euros, supported by recent asset sales, and that we have achieved our objectives of generating positive EBITDA and positive net cash in June, excluding the capital gains obtained from the sales.

No one can deny the extremely strong impact the crisis has had on our business, nor the commitment to even greater rigour and efficiency it has imposed on us for the coming years. However, great companies are forged in times of great difficulty, and the crisis has also revealed the solid fundamentals on which the tourism industry is based, with the resilience of demand and its sensitivity to progress with vaccinations and improvements in epidemiological data reflected, for example, in the recovery in the number of passengers on flights in the United States, and to a lesser extent in Europe. It has also shown the differential strengths of our Group, and fundamentally our leadership in resort hotels, where the recovery is expected to be strong in the 2nd half of 2021, and our digital and distribution capacity, which gives us an extremely important competitive advantage in a turbulent environment for the industry.”

Strategic growth
Meliá Hotels International detects great expansion opportunities for well-known brands with great distribution capacities, and continued to grow strategically, signing 12 new hotels in 2021 to date, focused on strengthening its vacation leadership in the Mediterranean area, where 10 of the 12 hotels incorporated are located: three resorts in Greece, another three in Malta, two in Sicily and two in Spain (Mallorca and Benidorm). In addition, the company incorporated the Palacio de Avilés hotel, also in Spain, as well as the Innside Qujiang Xian, in the famous Chinese city of the terracotta warriors, where the group already has a significant critical mass, with three establishments.

Regarding the brand strategy, the new additions deepen the growth of the franchise and management portfolio, with the incorporation of its first resorts in Greece (the Cosmopolitan hotel and the Blue Sea Beach), the Playa Esperanza Resort in Mallorca, the hotel Palacio de
Avilés and the Halley Apartments in Benidorm, and three new hotels in Malta, all of them under the “Affiliated by Meliá” formula. Similarly, two of the hotels will operate under the Sol by Meliá brand, two under the Melia Hotels & Resorts brand, and one of them under the Innside by Meliá brand.

Altogether, the Group opened 10 new hotels through June, including three hotels in Europe under the Innside by Meliá brand, including its first hotel in Amsterdam, Innside Amsterdam, the Innside Newcastle and the Innside Luxembourg, as well as the spectacular Meliá Frankfurt City. the Meliá Chongqing in China and the Oasis Marrakech, in Morocco.

Meliá Hotels International has made a positive assessment of the Contingency Plan enabled over the 15 months since the declaration of the pandemic, with cost saving measures that allowed the company to offset by 86% the drop in income compared to the first half of 2020, (excluding capital gains and impairments). Meliá expects to finalize this plan as soon as the growing demand seen in the 2nd quarter becomes fully consolidated over the coming months and the company recovers consistent positive EBITDA and net cash flow. For Gabriel Escarrer,

“The increase in immunity thanks to the effectiveness of vaccines, along with other factors such as the creation of a Covid Certificate in the European Union, have led to the second quarter of 2021 becoming a turning point in this terrible crisis for society in general, and for the travel industry in particular”.

The company continued to accelerate its digital transformation through the Be Digital 360 programme as well as a profound adaptation of its organisational model. It is also adapting its Strategic Roadmap up to 2024, by which time it believes that the potential in the industry prior to the pandemic will have been recovered. The company will continue to prioritise quality, profitable and sustainable growth, the continued enhancement of its sales and distribution capacity, and the evolution of the customer experience based on “total revenue” criteria and health and safety.

Results by region

Spain

  • 128 hotels open, from 8% of hotels to 76% between Q1 and Q2
  • Positive performance of holiday hotels, (whose revenues for Q3 are expected to be -32% below those recorded in Q3-2019) whilst urban hotels continue to struggle
  • 55% of sales through melia.com
  • Better performance in destinations with more domestic (Spanish) visitors (50% of the total) followed by the German and British markets, whose evolution continues to vary weekly depending on travel restrictions
    – Preference for higher category hotels and superior rooms.

EMEA

  • 100% of hotels open in the UK and 96% in Germany
  • Paris registers the worst performance and prospects, due to the absence of international clients, corporate travel, crews and MICE
  • Predominance of the local market and domestic travel
  • Tight restrictions still in Italy in the 2nd quarter

Americas 

  • Mexico: very positive performance in Caribbean resorts given the combination of greater mobility and high vaccination levels in the US market, with 50-66% occupancy (limited by Covid protocols) and with melia.com generating 40% of all revenue
  • Dominican Republic: gradual recovery, with xx% of hotels open and 54% occupancy in June (limited to 70% by Covid protocols).
  • USA: positive evolution of hotels in Orlando and New York.
  • Rest of Latin America: improvements compared to the 1st quarter, with positive performance in Brazil and Iguazu, but strong restrictions still in place in Buenos Aires or Lima.
  • Cuba: continued to suffer the negative impact of the pandemic, with 7 hotels open, one still operating as a hospital, and other major hotels undergoing renovations to take advantage of the low demand.
  • Increase in flights and visitors expected for the 3rd quarter, with the reopening of Canada since July, and a massive campaign to vaccinate the population during the summer, which will presumably drive the reactivation of demand starting in the fall (high season in the region).

Asia

  • China: stable growth from the 2nd quarter, with greater confidence from individual travellers and gradually from the MICE segment, and 60.75% average occupancy.
  • Southeast Asian: the challenges and restrictions due to Covid remain, with strong restrictions in countries such as Indonesia, Malaysia, Thailand and Myanmar and an incipient recovery in several destinations in Vietnam
Co-Founder & Chief Editor - TravelDailyNews Media Network | Website | + Posts

Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.

She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.

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