• Meliá’s urban renewal

Meliá Hotels International hailed “signs of slight recovery” in Spain’s urban market in its latest results.

The group was confident that it would continue to see growth as it made the shift towards a more management-based business model. It added that it was “optimistic” and revised its revpar forecast upwards for the full year, anticipating global growth in the low double digits.

Gabriel Escarrer, vice chairman & CEO, said that the company had: “Consolidated strengths such as our broad segmentation and strong international presence, and our powerful business strategy with an increasingly greater focus on the digital world.”

The group’s city hotels, which have suffered during the country’s prolonged downturn, reported revpar up 7.8% for the first nine months, 50% of which it attributed to price increases. Meliá said that trend was particularly noticeable in hotels with a strong component of both business and leisure travel. Hotels which took their trade from aircrews and airline passengers in transit were the one negative note, with the growth in airport traffic remaining limited to the budget airlines.

The company’s greatest strength was in its overseas and resort hotels, as it continued to lean on the leisure market. Escarrer commented that the results “once gain confirm the strength of leisure travel, in which our company is an international leader by number of rooms. In addition to the positive evolution during the third quarter, the company has achieved a dramatic improvement in its global revpar through its brand diversification and customer and revenue management strategies”.

The group attributed 70% of its 12.6% revpar rise to its ability to push rate. The third quarter was particularly strong for the group, being the period in which hotels in the Mediterranean Division (including Canary Islands) generated most of their operating profit.

Meliá said that it continued to make progress with its international growth strategy, with hotels added in Latin America, the Middle East, Asia Pacific and the US. The Americas led the group’s growth during the period, followed by its ME Europe hotels.

The total pipeline included 63 hotels, all of them under low capital intensive formulas, in line with the company’s more management-based business model. The group described this strategic focus as “an additional competitive advantage” in emerging markets such as the Middle East and Asia-Pacific.

The company has also been looking to drive sales through its direct channels, particularly melia.com, where it said it had seen increased sales in all regions, with “outstanding” results in the new ME hotels in Europe, where online channels generated nearly 90% of sales, thanks, it said to a “notable” contribution from melia.com.

Meliá is not the only entity to identify slight recovery in Spain. The country’s unemployment rate fell to its lowest level since 2011 in the year to September and its central bank said the economy grew by 0.5% in the third quarter, the fifth straight quarter of expansion, although the growth rate fell from 0.6% in the previous three months.

The growth is a flicker of light in a region overshadowed with concern caused by economies such as Germany. Meliá and others will hope that the nascent recovery will not be snuffed out by these wet blankets.

 

HA Perspective [by Chris Bown]: Having spread itself more internationally than Spanish peer NH, Melia is now enjoying the recovery in Spain rather than experiencing a sense of relief.

The company’s management has taken a strong decision to move elements of its portfolio upmarket, with great results. Two European resorts have been rebranded under the ME premium brand, and at ME Ibiza the renovation increased room rate by 198% and revpar by 203%. In Spain, the Gran Melia Don Pepe achieved an average rate of more than EUR400 in August, with occupancy over 90%.

One impressive area of improvement that is helping Melia across its portfolio is the uptick in direct sales. Direct channel sales were up 38% year on year in the Americas, while at ME in Europe, 90% of sales to individual were through online channels. In the UK, 25% of total hotel income is fed via Melia.com, again improving revpar.

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