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Sol Melia Reports Net Profit of 49.1 million euros, 
an Increase of 260% Over 2002; RevPar in the
Sol Meliá Portfolio Decreased by 1.7%
Compared to 2002
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Palma de Majorca, 25th. February, 2004. 
  • 2003 EBITDA reached 222.3 million euros (- 4,7%), better than market expectations. Results were affected negatively by the appreciation of the euro, without which EBITDA would have increased by 4.5%
  • The year saw a significant recovery for the company, major alliances and a Euromoney award for the best equity-based bond issue for 2003
  • The positive performance in the fourth quarter of 2003 points towards healthy results in 2004 in Spanish resorts, European cities and the Caribbean.
The hotel company Sol Meliá has announced financial results for 2003 showing revenues reaching 987.8 million euros, a 2.2% decrease over 2002. Earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 4.7% to 222.3 million euros, above the expectations of market analysts and substantially better than the average for the industry, where analysts’ reports predict an average decrease of -13% in EBITDA for European hotel companies in 2003. The appreciation of the euro with respect to the US dollar has also had a negative effect on results, without which EBITDA would have grown by 4.5%.

Earnings before tax (EBT) grew by 10.1% to 51.1 million euros, while net profit reached 49.1 million euros, an increase of 260% over 2002. The net profit attributable to the group was over 9 times higher (+813%) than in 2002 at 38.1 million euros.

With respect to the fourth quarter 2003, EBITDA grew by 6.9% compared to -7,3% for the first nine months of the year, demonstrating the consolidation of a strong recovery in business which began with improved sales and EBITDA in each quarter from April. In the four quarters, EBITDA varied by – 26.1%, + 0.2%, + 0.5% and + 6.9% respectively. 

Positive performance in European resorts, recovery in European cities and strong growth in Latin America

RevPar (revenues per available room) for all of the hotels in the Sol Meliá portfolio decreased by 1,7% to 44.6 euros compared to 2002.

By business area, RevPar in resort hotels in Europe increased by 5% thanks in large part to a positive performance by hotels in Spain and, particularly, the sustained recovery of the Canary Islands and Balearic Islands after the end of the war in Iraq.

With regard to the European City Division, RevPar fell by 3.6% due to reduced business travel and the general slow-down in travel to major European cities. According to the Hotel Benchmark report by Deloitte & Touche, the RevPar decrease in European city hotels in 2003 hit 6.7%, meaning that the Sol Meliá results are well above those for the industry. A decrease in leisure trips to such destinations was offset to a degree by special offers and programmes made available through solmelia.com.

The Americas Division saw RevPar fall by 16.5% in euro terms after the strong appreciation of the currency against the US dollar. Without this currency effect, RevPar would have increased by 9.1% thanks to excellent results from hotels in the Dominican Republic and Mexico in 2003. In dollar terms, total revenues from the Americas Division grew by 8.5%.

Sol Meliá, chosen by Euromoney for best equity-based bond issue in 2003 in European markets 

Euromoney selected Sol Meliá as winner of its award for the exchangeable bond issue made in October, 2003. The market research carried out before the issue by the Sol Meliá finance department lead to bonds worth 150 million Euros being over subscribed two and a half times, generating total prior demand of 350 million Euros. The conversion premium of 80% was also the second highest in the European exchangeable bond market. Euromoney selected Sol Meliá thanks to the innovative structure of the issue in a market which moved 40 billion Euros in 70 different operations in a record-breaking 2003. Euromoney is one of the most prestigious publications in the financial media, producing monthly coverage of trends and events in international banking and capital markets.

2003: a year for major partnerships

2003 has seen the beginnings of recovery after two years of difficult trading conditions for the international travel industry. For Sol Meliá, this improvement in the outlook for the business has also been accompanied by a new impulse to company growth and innovation in which the company has turned its attention to opportunities for development through strong alliances with major travel partners and the creation of new hotel products and services. 

Cendant Corporation

The strategic alliance between Sol Meliá and Cendant Corporation, provides for close future co-operation in the areas of vacation ownership and travel marketing and distribution. Both companies will develop distribution and marketing programmes to offer consumers access to Sol Meliá hotel inventory through a variety of online and offline channels including CheapTickets.com, Lodging.com, Thor and Galileo. In a separate agreement, Cendant subsidiary RCI will provide consultancy, exchange and other networking services for the Sol Meliá Vacation Club, and will provide additional revenue and occupancy solutions to support Sol Meliá’s hotel business to drive growth in Europe and Latin America. The new Sol Meliá Vacation Club will become a "meeting point" for all of the owners of Sol Meliá timeshare properties, giving them a right to one week’s holiday every year for 30 years in any one of the hotels included in the Club.

Rank Group - Hard Rock Hotels

Improve, innovate and break the mould; three objectives achieved in one with the creation of a joint venture between Sol Meliá and the Rank Group, principally for the development of Hard Rock hotels in North America and Europe. The first hotel is already open for business in Chicago. The combination of the hospitality experience of Sol Meliá, the strength of the American brand and the financial support of Becker Ventures LLC will assist Sol Meliá in strengthening its presence and sales structure in 2004 in the US market, in addition to its well-established network in Latin America and the Caribbean, an area where the company is already market leader.

Lastminute.com

Sol Meliá and lastminute.com, the leading company in the European online travel market, reached an agreement which further strengthened the existing strategic alliance by which Sol Meliá became a Preferred Hotels Supplier to lastminute.com travel sites world-wide. The Sol Meliá website will also begin to offer package deals from lastminute.com that feature Sol Meliá hotels.

Warner Bros Consumer Products

In April, 2003, Sol Meliá signed an agreement with Warner Bros. Consumer Products to create theme hotels inspired by the famous Flintstone cartoon characters. The first of these Sol Flintstone hotels were the Sol Milanos Pingüinos in Menorca and the Sol Mirlos Tordos in Majorca. In 2004, the project will be extended to the Sol Antillas Barbados (Majorca), Sol Falcó (Menorca) and Sol Príncipe Principito (Malaga). 

Solmelia.com celebrates its fifth birthday increasing sales by 188%

2003 saw fifth anniversary celebrations at solmelia.com. The latest technology, a simple booking process, innovative marketing programmes and a lowest online rate guarantee have helped make solmelia.com the most successful hotel website in Spain. In 2003, more than 10 million visitors bore witness to the growth of a sales channel that increased online sales by 188% over the previous year. 

Financial results 2003: (million Euros)
 

Revenues 987.8 - 2.2 %
EBITDA 222.3 - 4.7 %
Earnings before extraordinary earnings and tax 51.1 + 10.1 %
Net profit 49.1 + 260 %
Profit attributable to group 38.1 + 813 %

Sol Meliá world-wide:
 

Location Positioning
Spain Market leader in both cities and resorts
Europe Third largest hotel chain 
Latin America and the Caribbean Largest hotel chain
World-wide Largest resort hotel chain
World-wide Twelfth largest hotel chain

New hotels

The Hard Rock Hotel Chicago (381 room), opened in January 2004, is Sol Meliá’s first hotel in the USA. Hard Rock hotels are a new concept in top quality 4 and 5 star hotels characterised by a very different atmosphere and by the design of the well known Hard Rock brand, inspired by music and movie culture. 

Puerto Rico, has been chosen by Sol Meliá as the location of its new Paradisus resort: the Paradisus Puerto Rico, scheduled to open in 2004. The hotel has already been accepted as one of the exclusive "Leading Hotels of the World" and will provide 500 rooms with all the services and facilities expected of a luxurious "All Inclusive" resort. Sol Meliá has invested a total of 140 million dollars in the project.

Sol Meliá will shortly add its first hotel in China: the Gran Meliá Shanghai. This luxurious hotel, designed by the architect Álvaro Sans in cooperation with the Architectural Design & Research Institute of Tongji University, will provide 700 rooms and is expected to be one of the finest hotels in the world.

Founded in 1956 in Palma de Majorca in Spain, Sol Meliá is the largest resort hotel company in the world and by far the largest hotel company in Spain, both in the city and resort hotel markets. The company currently provides 350 hotels in 30 countries on 4 continents and provides employment to more than 36,000 people in its Meliá, Tryp, Sol, Paradisus and Hard Rock Hotels.

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Contact:
Sol Meliá 
prensa@solmelia.com
www.solmelia.com

 
Also See: Sol Melia Invests $140 million in New Paradisus Resort, Puerto Rico / January 2004
Sol Meliá and the Rank Group Open the 381 room Hard Rock Hotel Chicago / January 2004
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