first quarter results 2015 - Meliá Hotels International

FIRST QUARTER RESULTS 2015
m eliah o te l s i n t e r n a t i on a l . co m
ME Milano Il Duca | Italy
FIRST QUARTER 2015
(Million Euros)
mar-15
mar-14
REVENUES
359,0315,9 14%
EBITDAR
84,074,413%
EBITDA
60,353,114%
EBIT
37,131,617%
TOTAL FINANCIAL PROFIT (LOSS)
(14,5)
(19,9)
27%
EARNINGS BEFORE TAXES
20,6
8,7
136%
RESULT FROM CONTINUING OPERATIONS
12,3
7,1
72%
2,9
0,0
12311%
NET PROFIT
15,2
7,2
112%
NET PROFIT ATTRIBUTABLE
16,2
8,2
98%
EBITDA ex capital gains
60,3
53,1
14%
RESULTS FROM DISCONTINUING OPERATIONS
Operational Ratios
REVPAR
66,959,9 12%
EBITDA MARGIN
16,8%
16,8%
-2 bp
EBITDA MARGIN (ex - capital gains)
16,8%16,8%
-2 bp
Net Profit Attributable to Parent Company has almost doubled compared to the same
period last year thanks to healthy RevPAR growth of 11.8% and the significant improvement
in financial results (+27%)
Business performance
•Total Revenues improved by 13.6% due to the excellent performance of the hotel business, which saw a RevPAR increase of 11.8% helped by
the appreciation of the USD and in spite of the impact of the Venezuelan bolivar.
•Spanish city hotels recorded an increase in RevPAR of 14.8%. Among the key drivers behind this positive performance are Meliá´s leadership and
expertise in the leisure travel segment.
•Melia.com continue with its consistently positive performance, with YTD growth of 24.2% compared with same period last year.
•The EBITDA increase (+13.5%) and the significant improvement in financial results (+27%) allow Net Profit Attributable to Parent Company to
increase by 98% compared with the same period last year.
Debt Management
•Net debt increased compared to December 2014 by €15.5 million reaching €1.002 million, with the first quarter of the year being the weakest
quarter in the year for Cash Flow from Operating Activities. Of note was the better performance of free cash flow generation compared with
the first quarter 2014.
•The Company maintains its commitment for 2015 to deleverage the balance sheet, partially thanks to asset sales of minimum €200 million and
also an improvement in Free Cash Flow Generation over the year.
•Regarding the asset sales, it is worth mentioning that the Company has received the authoritation for the agreement with Starwood Capital
Group from the European Competition authorities.
Development strategy
•Year to date the Company has signed 14 additional hotels with emphasis on emerging markets, to reach a total pipeline of 62 hotels (14,322
rooms), 82% under management and 18% under lease agreements.
•YTD the Company has opened 8 new hotels, all of them under low capital intensive formulas: Me Milan (Italy), Meliá Paris la Defense (France),
Innside Manchester (United Kingdom), Meliá Doha (Qatar), Tryp Belo Horizonte (Brazil), Meliá Ibirapuera (Brazil), Meliá Campione (Italy) and
Tryp Castellon Center (Spain).
•For 2015 the Company expects to open one hotel every three weeks.
Outlook 2015
•Easter sales, which its impact will be included in the 2Q, were very positive, especially with regard to stays by Spanish guests which grew by
5% over the previous year. This indicator often anticipates the trends for Spanish demand for the summer months. Sales on the books for the
summer season are currently 14.8% higher than last year.The consolidation of key projects as Calvià Beach, Katmandu Park & Resort (Majorca),
the second year of operation of the ME Mallorca and ME Ibiza, and the Yield Management strategy, allow the Company to be confident about
results for the summer season being above last year’s figures.
•Of note is also the expected performance of the second and third quarter of the hotels in Milan - the Meliá Milano and the recently added
ME Milan - which will benefit from the Expo 2015 to be held in the city, and the great performance of the Gran Meliá Palacio de Isora and the
Paradisus Resorts in Playa del Carmen - La Perla / La Esmeralda.
•After a strong first quarter, the Company maintains its guidance of healthy high single-digit growth in RevPAR for the full year 2015, explained
more than 60% by prices increases.
3
OPERATIONS REPORT: EVOLUTION PER AREA
There is a positive performance in all areas of the hotel business. In overall terms, RevPAR for owned and leased hotels
increased by a healthy 11.8% due to a 9.8% increase in Average Room Rate (ARR) and a 1.8% increase in occupancy
rates, and in spite of the changes in exchange rates of the Venezuelan bolivar against the euro in 2014 and 2015.
AMERICA
RevPAR for owned and leased hotels in the Americas division grew by 15.3%, with ARR increasing by 16.2% and
occupancy decreasing by 0.8%.
RevPAR for the first quarter of 2014 has been adjusted to take into account the rebranding of the Meliá Cozumel and
Meliá Puerto Vallarta as part of the Vacation Club, as was reported in June 2014.
During the first quarter of 2015 the evolution of RevPAR has been negatively affected by the devaluation of the
Venezuelan bolivar. If we exclude this effect, RevPAR would have increased by 25.54%, 99% of which explained by ARR
increases. If we also exclude the positive effect of the appreciation of the US dollar compared to the euro, RevPAR in
US dollars increased by 1.7%, which is an improvement of EBITDA of 10.99% in US dollars (excluding Venezuela) and
37% in euros.
By areas:
The evolution of RevPAR in US dollars in the Dominican Republic is unchanged, but it is important to highlight the
improvement in ARR of +2.8% offset by a reduction in occupancy of 2.7%.This has allowed an improvement in EBITDA
in US dollars of 4.28%. This improvement is due to the company’s commitment to yield management, highlighting the
positive evolution of the introduction of The Level and The Level Adults Only at the Meliá Caribe Tropical.
There has been a positive performance from the hotels in Playa del Carmen and Cancun, where EBITDA in US dollars
has improved by 29.4% due to the positive performance of sales through direct sales channels (the Paradisus Playa del
Carmen resorts doubled sales through direct channels in the first quarter compared to last year) as well as constant
improvement in the groups segment (MICE), with growth of 15% compared to 2014.
Available rooms have increased by 0.8% due to an increase in the number of rooms at the Paradisus Palma Real.
At a management level, there has been a positive performance by the Meliá Nassau which, after renovations in 2014
and a change to an All Inclusive programme, has tripled its results.
EMEA (+PREMIUM)
RevPAR for the owned and leased hotels in the EMEA division has increased by 6.5%, explained 100% by ARR growth.
From this year onwards, the EMEA division also includes ME EUROPE.
By region, the most important news includes:
GERMANY: Despite the first quarter being negatively affected by the absence of the Euroshop event in the Dusseldorf
area, the region has successfully managed to increase revenue by 7.7% mainly due to the successful opening of the
Innside Wolfsburg which in its first year of operations is meeting all expectations. Meanwhile, recent additions such as
the Innside Haffen and refurbished hotels such as the Tryp Munich, show double-digit growth, confirming the success
of the company’s product improvement strategy in the region. Lastly, there has been a positive evolution of outbound
sales from Germany to other company hotels, where there has been a growth of over 100% especially in groups and
conventions.
PARIS: During the first quarter of the year the company opened the new Meliá Paris La Defense with very positive
results in terms of revenue, achieving targets from the first month and making it a benchmark hotel in the La Defense
district of Paris. Meanwhile, the hotels in the center of Paris continue to show positive evolution. Mention should be
made of the work to update products in the first quarter with the refurbishment of the Tryp Francois.
4
ITALY: The evolution of our hotels in Italy has been positive in the first quarter of the year with growth of 4%, mainly
due to the excellent performance of the Gran Meliá Rome which has increased RevPAR by double-digits and is now
one of the most renowned hotels in the city, reflected by the fact that it has just been named the Best City Hotel in the
World by the prestigious magazine Conde Nast Traveler.
UK: The positive performance in the UK has been supported mainly by growth in RevPAR of nearly 19% (6% in GB
pounds) at the ME London which continues its positive price trend based on its online strategy, the renovation of key
corporate accounts, and greater penetration of the high-end leisure market. Both hotels show a better evolution of
RevPAR than the market average according to STR Global data.
PREMIUM SPAIN: The company’s luxury strategy continues to progress, with growth in RevPAR by 13.5% in the first
quarter, 80% of which is explained by price increases. Of note is the performance of two of the company’s flagship
hotels: the Gran Meliá Palacio de Isora and Gran Meliá Colón, which have generated double-digit growth in RevPAR,
especially the latter which maintains an upward trend with RevPAR growth of over 30% in the first quarter of the
year, confirming the recovery of the market in Seville. Also of note is the positive performance of such iconic hotels as
the Gran Meliá Don Pepe, with growth in RevPAR of over 20%. Madrid and Barcelona continue to perform well and
have very positive prospects for the second quarter, especially in Madrid. The results confirm the success of a strategy
focused on direct sales to end consumers and also major luxury sales networks which are increasingly welcoming the
company’s premium products.
The hotels in Luxembourg,Vienna opened last year and Athens all reported double-digit growth in RevPAR.
Available rooms increased by 8.8% due to the additions of the Innside Wolfsburg, the Meliá La Defense and the Meliá
Barcelona Sky, partially offset by the transfer of the Meliá Madrid Princesa to the SPAIN division.
MEDITERRANEAN
Growth of RevPAR in the first quarter was 10.2%, explained 100% by price increases.
The Company its collecting the benefits from the rebranding of the hotels under the new Sol brand.
85% of revenue in the first quarter in this division is generated in the Canary Islands, with Tenerife reporting the best
increase in RevPAR (+20.31%), explained mainly by the addition of the Meliá Jardines del Teide, a hotel which was under
a management agreement in 2014. Excluding this incorporation, RevPAR in Tenerife would have remained unchanged
(+0.35%): occupancy would have decreased by 5.92% while prices would have improved by 6.67%.
The Canary Islands continue to benefit from the problems in North Africa, and although countries such as Egypt have
recovered part of their demand in the first quarter, reservations in these destinations have slowed again since the
terrorist attack in Tunis and Paris.
Available rooms in the region grew by 1.7% due to the aforementioned incorporation of the Meliá Jardines del Teide.
SPAIN
RevPAR for the first quarter of the year improved by 14.6%, confirming the trend seen in the previous year. Growth
was due to improvements in occupancy (+7.6%) as well as in ARR (+6.5%).
This good performance its partially since to the successful implementation of the lesisures segments in .to the city
hotels
The first quarter also saw the incorporation of the Meliá Madrid Princesa, which was part of the EMEA division in 2014.
If this were not taken into account, RevPAR for the division would have increased by 11.58%.
March was the best month of the quarter thanks to events such as the European Urology Congress in Madrid, the
Mobile World Congress in Barcelona, which was held in February last year, as well the improved performance of the
5
groups segment in Seville.
Madrid and Seville (RevPAR increase of 35%) are the best performing destinations. Meanwhile,Valencia experienced an
unchanged RevPAR performance as many conferences held there last year were not repeated this year.
The hotels near Madrid airport continue to struggle due to the highly competitive environment, although it has been
possible to stop the decreases.
In secondary cities there were signs of some improvements.
Barcelona is experiencing a situation different to other major cities in Spain, with negative RevPAR changes during the
first quarter (-1.42%) after an occupancy decrease of -5.94% and price increases of 4.80%.
In the first quarter of 2015 sales through melia.com have improved by 9.8% compared to last year.
The number of rooms has increased by 1.6% due to the incorporation of the Meliá Madrid Princesa from the EMEA
division offset by the loss of the Tryp Arenal and Tryp Oviedo, both considered underperforming hotels.
ME Milano Il Duca | Italy
6
HOTEL STATISTICS OWNED & LEASED 15 / 14 (in Euros)
% Available
Occupancy RevPAR
A.R.R.
rooms
AMERICA
2.01578,6%119,2151,6492,4
% o/ 2014
-0,8%
15,3%
16,2%
0,8%
2.01479,2%103,3130,5488,5
EMEA
2.01565,1% 81,7125,5779,2
% o/ 20140,0%6,5%6,5%8,8%
2.01465,1% 76,7117,8716,2
MEDITERRANEAN 2.015
64,7%35,454,8
458,2
% o/ 2014
0,0%
10,2%
10,2%
1,7%
2.014
64,7%32,149,7
450,6
SPAIN
2.015
54,0%39,573,0
832,7
% o/ 2014
7,6%
14,6%
6,5%1,6%
2.014
50,2%34,468,6
819,6
TOTAL
2.015 64,0%
66,9 104,52.562,5
% o/ 20141,8%
11,8%9,8%3,5%
2.014
62,9%59,995,2
2.474,9
HOTEL REVENUES SPLIT OWNED & LEASED 15 / 14 (Million Euros)*
Room
F&B
Total
Revenuesand OtherRevenues
AMERICA
2.01553,065,9
119,0
% o/ 201415,7%15,1%15,4%
2.01445,857,3
103,1
EMEA
2.01563,731,094,7
% o/ 2014
15,9%
5,9%
12,4%
2.01455,029,284,2
MEDITERRANEAN 2.01516,210,827,1
% o/ 2014
12,0%
8,0%
10,4%
2.01414,510,024,5
SPAIN
2.01532,914,747,5
% o/ 2014
16,4%
6,7%
13,3%
2.01428,213,842,0
TOTAL
2.015165,8122,4288,2
% o/ 201415,6%11,0%13,6%
2.014143,5110,3253,8
* This figures (2015/2014) do not include the Gran Meliá Puerto Rico.
7
Hotel Business Outlook
Easter sales were very positive, especially with regard to stays by Spanish guests which grew by 5% over the previous
year. This indicator often anticipates the trends for Spanish demand for the summer months.
In Spanish cities over the coming months it is worth noting that the Spanish Meetings and Events segment is having a
satisfactory year although currently has lower sales on the books up to the end of the year compared to the previous
year. This is due to the fact that a number of events held in 2014 will not be repeated this year, including as the World
Basketball Championship, the European Cardiology Congress and ESMO (European Society for Medical Oncology)
event.
This lack of events is being offset by other events with their origin in EMEA (up 97% compared to last year) and America
( up 79% compared to last year).
EMEA is expected to maintain its positive first quarter trend throughout the year, with the ramping up of the Meliá la
Defense joined by recent additions such as the Innside Manchester and ME Milan which, together with the Meliá Milano,
will benefit from the Expo 2015.
For the summer, and particularly in the Mediterranean region, reservations to date are up by 14.8%, which allows us to
predict a healthy summer season. There are, however, different trends amongst the different outbound markets, with
the UK market presenting an improvement of 15.5% thanks in part to the appreciation of the pound. We must also
mention the positive impact expected from the rebranding of a number of hotels under the new Sol brand.
Sales through direct channels for the summer have improved by 23%.
The only markets showing signs of a poorer performance compared to last year are the Russian and Scandinavian
markets due to the devaluation of their currencies. This is expected to be offset by guests from Italy, the UK, Spain and
Portugal.
In the Americas region, a positive trend is expected for the second and third quarters, with improvements over the
previous year especially in Playa del Carmen and Cancun, where the outlook is excellent thanks to a very strong performance in the groups segment.
For the whole portfolio, after a strong first quarter, the company maintains its guidance of healthy, high single-digit
growth in RevPAR for 2015, explained more than 60% by prices increases.
Innside Palma | Majorca - Spain
8
MANAGEMENT MODEL IN MELIÁ HOTELS INTERNATIONAL
Given the focus of the company on an asset-light model and the growing importance of management agreements, at
the close of 2013 the company changed its reporting method to include more detail on the profitability of the overall
management model.
The table below reflects the income generated by Meliá as a hotel manager, including:
• The management fees from third parties but also from Meliá’s owned and leased hotels.
• Other revenues, mainly commissions and other services.
It is worth mentioning that the Total Fees Revenues, including both owned and leased and third party hotels, increased
by almost 5 million euros compared to Q1 2014.
Management fees from third parties totalled 13.9 million euros, 1 million euros higher than in 2014. The difference is
mainly due to the positive evolution of last years’ openings, mainly the Meliá Nassau Beach, Meliá Jardines del Rey and
Meliá Dunas, as well as the increase in fees from Cuba, helped by the effect of changes in the dollar exchange rate.
Management fees from owned and leased hotels totaled 18.2 million euros, 3.6 million higher than the previous year.
This increase is mainly due to two effects: the strong performance of new hotels (Innside Wolfsburg, Meliá La Defense)
and the increase of management fees from America, partially due to the dollar effect offsetting the decrease of fees from
Venezuela once the new SIMADI change rate is applied.
Million Euros
Total Rev.
Fees Owned & Leased hotels
Management Fees Third Parties
Other Revenues
1Q2015
53.0
18.2
13.9
20.9
1Q2014
48.8
15.8
12.8
20.2
Innside Manchester | United Kingdom
9
OTHER HOTEL BUSINESS
The Other Hotel Business item basically includes the contribution of casinos, golf facilities and Sol Caribe Tours, a tour
operator based in Latin America.
Total Revenues increased by 20% to 19.1 million euros mainly due to the higher contribution from Sol Caribe Tours
thanks to the appreciation of the USD and the Casino business performance.
REAL ESTATE
In the first quarter of 2015, as in the same period in 2014, the company did not generate any capital gains on asset sales,
although, as reported with regard to the agreement with Starwood Capital Group, the effective transfer of hotels was
subject to the closure of financial packages with several banks as well as authorisation of the operation by European
competition authorities. Approval was received at the end of April.
The financing is expected to be formalised before the end of May 2015, and then duly reported to the market.
The company maintains the guidance for asset sales of a minimum of 200 million euros in 2015 to be used to decrease
net debt.
CLUB MELIÁ
Sales at Club Meliá in the first quarter grew by 9.2 million euros, mainly explained by improved performance of 2 million
euros from the two hotels included in the Club together with the appreciation of the USD compared to the EUR, given
that almost all of the Club Meliá revenues are in USD.
The integration of the hotels Meliá Cozumel and Meliá Puerto Vallarta in the Club Meliá business has allowed an improvement of the commercial strategy, focused 100% on sale of Club Meliá units, this has allowed a significant performance in the profitability of these hotels.
The Club Meliá strategy is more focused on price improvement than the number of weeks sold, as it is done in the
hotel division.
The number of weeks sold were slightly below the first quarter of the previous year, in part due to the slowdown of
sales in Puerto Rico linked to the asset disposal process which penalizes Club Meliá sales, and also due to sales reductions to customers from some emerging markets in order to avoid country risk.
On the positive side the new higher-margin “Destinations” product and upgrade activity has helped to compensate the
slowdown in the number of weeks sold.
OVERHEADS
This item only includes the overheads in Meliá Hotels International.
The revenue increase is mainly due to rebilling between group companies which will be adjusted after elimination in
consolidated accounts.
Kuta Beach Club | Bali - Indonesia
10
INCOME STATEMENTS
Revenues
Total revenues increased by 13.6%. Hotel revenues increased by 12.4%, thanks to an 11.8% improvement in RevPAR,
84.4% of which is explained by an increase in the Average Room Rate. Club Meliá also reported good figures with 39%
growth. The contribution of the Real Estate division in the first quarter was inexistent due to a lack of capital gains
from asset disposals.
Excluding changes in the scope, the impact of the appreciation of the USD against the EUR, and the impact of the devaluation of the Venezuelan Bolivar, total revenues would have increased by 5.7%
Operating Expenses
Raw materials, Personnel expenses and Other operating expenses increased by 11.7%, 4.4% and 23.5% respectively,
affected by the changes in the perimeter, the appreciation of the USD, and the devaluation of the Bolivar. On a like-forlike basis, the evolution of expenses would be as follows: Raw materials +0.6%, Personnel expenses +1.7% and Other
operating expenses +6.4%.
Rental expenses grew by 11.7% due the incorporation of the Meliá Vienna, Innside Wolfsburg, Meliá Jardines del Teide
and Meliá La Defense compared with the first quarter 2014.
EBITDA
All the above mentioned factors allowed Meliá to register an improvement in EBITDA of 13.6%
At the “Profit/(Loss) from Associates and JV” level, the better results of Altavista Hotelera (Meliá Barcelona Sky) and
the Meliá Castilla allowed an improvement in this item of 0.9 million euros.
Meliá Campioni | Como - Italy
11
(Million Euros)
March 2015
March 2014
Revenues Split:
Total HOTELS
Management Model
Hotel Business Owned & Leased
Other Hotel Business
360.3
318.5
53.0
48.8
288.2
253.8
19.1
15.9
Real Estate Revenues
1.8
2.0
Club Meliá Revenues
32.6
23.4
Overheads
22.518.7
Total Revenues Aggregated
Eliminations on consolidation
417.3
362.5
-58.7-46.7
Total Consolidate Revenues
359.0
315.9
Raw Materials
-49.5
-44.3
Personnel expenses
-99.4
-95.2
Other operating expenses
-126.0
-102.1
Total Operating Expenses
-274.9
-241.5
EBITDAR
Rental expenses
EBITDA
13,6%
13.8%
84.074.4
-23.83
-21.3
60.3 53.113.5%
Reestructuring
Depreciation and amortisation
-23.1
-21.5
Negative differences in consolidation
EBIT (OPERATING PROFIT)
37.1
31.6
Financial Expense
-18.5
-25.6
Other Financial Results
1.9
4.1
Exchange Rate Differences
2.1
1.7
17.4%
Other Interest Expense
Total financial profit/(loss)
Profit / (loss) from Associates and JV
Profit/(loss) from ordinary activities
Extraordinary profit/(loss)
Profit before taxes and minorities
Taxes
12
-14.5
-19.9
-2.0
-3.0
20.6
8.7
0.0
0.0
20.6
8.7
27.0%
136.4%
136.4%
-8.3-1.6
Continuing operations
12.3
7.1
Discontinued Operations
2.9
0.0
Group net profit/(loss)
15.2
7.2
72.1%
112.5%
Minorities
-0.9-1.0
Profit/(loss) of the parent company
16.2
8.2
98.4%
FINANCIAL RESULTS AND DEBT
FINANCIAL RESULT
Financial results have improved by 27% compared to the previous year (€5.3 million) due to the net effects of:
a) Reduction of “Financial expenses” by €7.1 million due to lower gross debt and the improvement in average
interest rates compared to the first quarter of 2014.
b) €2.2 million less revenue in “Other financial results” mainly due to lower revenues from associated
companies due to the reduction /capitalisation of loans, as well as the reduction in interest generated by
cash deposits due to lesser cash amounts compared to the first quarter of 2014. This was positively offset
by lower financial costs related to the redefinition of balance sheets in Venezuela to adjust for hyperinflation.
c) Improvement in exchange rate differences of €0.4 million mainly due to the appreciation of the US dollar.
(thousands euros)
Exchange differences
Borrowings
Interest Capital Markets
Interest bank loans and others
Other financial expenses
Other financial incomes
Net Financial Income
1Q 2015
1Q 2014
2.123
(18.481)
(7.454)
(11.027)
0
1.851
1.676
(25.600)
(11.008)
(14.592)
0
4.057
(14.508)
(19.867)
FINANCIAL DEBT
Company net debt increased compared to December 2014 by €15.5 million, reaching €1,002 million. This increase in
debt can largely be explained by the evolution of net cash flow which during the first quarter is usually the weakest of
the year.
The increase in net debt in the first quarter of 2014 was €84 million, excluding the extraordinary effects of the devaluation of the bolivar and the consolidation of the company Colon Verona, the change in net debt was €35.6 million.
The company maintains its debt reduction guidance for 2015, partially supported by the sale of assets to generate a
minimum €200 million euros as well as improvements in the company’s Free Cash Flow.
Regarding the agreement to the Starwood Capital Group, it is worth mentioning the authorization received form the
European Competition Authorities.
Million €uros
13
MELIÁ ON THE STOCK MARKET
The stock price rose by +29,5% during the first quarter of 2015. The Ibex Medium Cap and the Ibex 35 increased by
+20,8% and +12.1% respectively.
1Q2015
2015
1.303,61
1.303,61
Meliá performance
30%
30%
Ibex Med Cap performance
21%
21%
Ibex 35 performance
12%
12%
Average daily volume (thousands shares)
Source: Blomberg
NOTE: Meliá’s shares are listed on the IBEX Medium Cap and FTSE4Good Ibex index.
On January 2015, 14,3Mn newly-issued ordinary shares to attend partially the conversion of the convertible bond were admitted to trading to the
Spanish Stock Exchanges.
ME Miami | USA
14