Sol Melia has reported growth in all its divisions for the first time in five years. And it remains optimistic for its full-year results.
The improved performance helped the Spanish company to show an increase in EBITDA for the second quarter of the year of 13%.
The key has been turning the negative tide in Spain. Both the European city division and the European resort division showed increases, of 8.9% and 2.2% respectively in the first half.
The main Spanish cities were at or close to double digit revpar increases (Seville 15.5%, Madrid 11.5% and Barcelona 7.1%, again for the first half). Sol said that there had been a progressive absorption of the room supply, the growth of which had severely hit Spanish hotel performance in recent years.
Sol is also continuing its slow but steady asset rotation strategy. Last month, it sold the Rey Don Jaime Hotel in Valencia for Eu38.5m, a price multiple of 17.5 times EBITDA. It has created the post of real estate development within its management team to speed the process of shedding underperforming hotels for use as residential or other redevelopment.
Sol said it is expecting a good summer season thanks to the increase in visitors from its key source markets, particularly Germany, Spain and the UK; the lack of discounts on prices; and the increase in reservations via its website, up 46%.
The axe has been taken to Sol’s joint venture with Rank Group involving hotels under the Hard Rock brand. Sol is now to bring extra focus to developing its Melia lifestyle brand. The next property of this new generation will be the Reina Victoria in Madrid which is due to open in September.
Sales during the second quarter were Eu581m, up 9%, EBITDA was Eu139m and net profit was Eu39.3m, up 85%.