• EBITDA grew by 5% to 233.4 million euros (+ 5%) and the ordinary benefit by 34% to 68.4% million euros.
• Growth is in line with market expectations for the tenth consecutive quarter.

Ordinary earnings before tax (EBT) reached 68.4 million euros, a 34% increase over 2003. Net profits increased by 43.4% to 70.4 million euros.

Sol Meliá has reduced its net debt in 2004 by 11% to 116.4 million euros.

4% increase in RevPar in Spanish resort hotels

The summer season was positive for Sol Meliá�s Spanish resort hotels. The Balearic Islands and Alicante saw RevPar (revenues per available room) increases of 4.8% and 10% respectively. The Canary Islands had a good fourth quarter, with a RevPar increase of 8.5%.

The disintermediation of sales, one of the fruits of the growth in sales through centralized distribution channels, especially solmelia.com, and the high brand awareness Sol Meliá has in its domestic market also contributed to 4% growth in RevPar.

The outlook for 2005 is moderately positive, with a good performance in bookings from Germany, Great Britain and Spain and further progress in online bookings.

North Americans and Europeans choose the Caribbean

Sol Meliá saw an increase in US dollar revenues of 29% in 2004 in the Caribbean thanks to the quality of its All Inclusive products and the consolidation of the company as the market leader in the region and an increase in the number of American tourists.

The outlook for 2005 is good thanks in part to the luxury Paradisus Puerto Rico resort for both business and leisure travelers in traditional feeder markets (North America, Canada, etc.) and also in the European market thanks to favorable exchange rates.

The results from cities in other European countries offset those from cities in Spain

The performance of Sol Meliá hotels in cities in other countries in Europe has partially offset decreases in Spain. The London and Paris properties saw RevPar increases of 27.0% and 9,2% respectively, while the RevPar of company hotels in Germany grew by 12%.

Overall, the Spanish city hotels ended the year with a 4.7% decrease in RevPar (Melia: -1.3%, Tryp: -7.6%) principally due to the terrorist attacks of March 11th and the ensuing general elections that resulted in a change of government.  It is interesting to highlight how the Meliá branded hotels with their meeting, congress and convention services and facilities and with good restaurant options have been affected less than the limited service Tryp hotels.

The outlook in cities outside of Spain is positive thanks to the general recovery in the hotel sector and the increasing maturity of those properties. The outlook in Spain is more moderate and also subject to a decrease in the rate of growth of new hotels in the second half of the year. The growth in the number of hotel rooms in the last two years is the product of decisions made four years ago when Spain's hotel market was prospering, real estate was priced significantly lower and there was far greater liquidity in the market. The current state of the real estate market (high land prices) and hotel market (excess supply leading to lower profitability) may dissuade new hotel projects or stimulate conversions to residential use.

Consolidation of Food and Beverage standards

The Sol Meliá Food and Beverage management team focused objectives in 2004 on brand standardization: haute cuisine for Gran Meliá; fun meals and theme nights for Sol and a balanced menu and cooperation with Telepizza for room service in Tryp hotels were just some of the achievements of the team.

Solmelia.com now takes 25% of all of the centralized bookings

A general increase in online bookings has contributed to positive results for solmelia.com. In 2004, the revenues of website sales as a percentage of all centralized bookings grew to 25% from only 15% in 2003, with the sales through solmelia.com representing 88% of all Internet sales.

Positive results from Sol Meliá strategic alliances

The 50/50 joint venture with the Rank Group has seen Sol Meliá add two new Hard Rock hotels in 2004: the Paramount in New York and the Reina Victoria in Madrid. Both hotels will be renovated in 2005 to adapt them to the standards of the Hard Rock brand.

The Flintstones were the stars of the show in five Sol hotels that have added �Flintstones Land� themed areas with clubs and activities for children of all age groups and a range of options for parents too. Sol Meliá aims to add a further ten resort hotels.

The strategic alliance with lastminute.com has also led to an increase of 56% in sales of Sol Meliá hotels through the leading online travel site in Europe.

Asset management, added value for Sol Meliá

The Sol Meliá Asset Management Department has focused on two key business areas: hotel management and real estate and other asset management. The new department is responsible for optimizing the use and assignment of the surface area of hotels owned by the company and by third parties and structuring the rotation of company assets valued at 4,000 million euros.

Within a framework of a more active management of real estate assets, in 2004 Sol Meliá disposed of the Sol Aloha Playa and Tryp Caballo Blanco hotels as well as 50% of the tour operator Meliatour for 20 million euros, generating capital gains of 15 million euros at an EBITDA multiple of 16.

The Sol Meliá timeshare business is another example of a new approach to real estate. The division saw revenues grow in 2004 by 260% thanks to the units available in Cancun, Puerto Vallarta (Mexico) and Punta Cana (Dominican Republic).

The company also created the new Sol Meliá Vacation Club to provide additional benefits for members including greater flexibility in choosing the period for their vacations and an increase in the number of destinations to include all of the company�s hotels. Other benefits of the Sol Meliá Vacation Club include the receipt of the MaS Gold card and discounts with partner companies (airlines, cruise liners, car rental, etc.).

Within the asset rotation policy in 2005, the company has announced the sale of the Tryp Macarena (Seville, Spain) and the Meliá Torremolinos (Malaga, Spain).

The sale of the hotel in Seville has been made at 42 million euros, a multiple of 19 times EBITDA, creating capital gains of 24 million euros. The transaction has been made at a premium of 56% over the evaluation made by American Appraisal in 2001. The agreement also allows Sol Meliá to lease the hotel on a long-term contract at an interest rate of 5.25%, far below the current lease conditions in the Spanish hotel market.

The sale of the Meliá Torremolinos hotel has generated 23 million euros in revenues and capital gains of 17.4 million euros. The EBITDA multiple of the sales price is 61.6 times, while the transaction was made at a premium of 30% over the 2001 evaluation made by American Appraisal en 2001.

Founded in 1956 in Palma de Mallorca (Spain), Sol Meliá is the largest resort hotel chain in the world, and the leading hotel chain in Spain in both the city and resort hotel markets. The company currently provides 350 hotels in 30 countries on 4 continents, and employs 36,000 people in its Meliá, Tryp, Sol, Paradisus and Hard Rock hotels.