Meliá looks to ‘survival’ rather than ‘profit’


Shares in Meliá Hotels International, the Spanish operator, fell nearly 10 percent on July 31 as the company said that “long-term survival” had become its priority.

Gabriel Escarrer, the CEO, said: “This is not the time to be thinking about profits, but rather about long-term survival and strength.”

At the end of June net company debt stood at 2.3 billion euros, an increase of 294 million euros compared to the end of December.

At the end of June, Meliá had liquid assets and undrawn credit lines of 553 million euros. It added that the negative monthly cash outflow during the worst months of the crisis was less than 50 million euros.

Mr Escarrer said: “In an uncertain summer season which is expected to be shorter than usual and dominated by “staycations", the company is focusing on maximising the potential of the domestic market in each country and region, resort hotels - which are recovering faster than city hotels - and independent travellers.” He also referred to the lack in business travel and said that uncertainty about how long it will take to get back to normal meant the company would not make any financial estimates for 2020.

Net losses were 359 million euros because, the company said, of “the business environment caused by COVID-19 and the impairment in asset value of 148 million euros.” It said that it does not expect the writedown to increase in size because it was assumed that the ongoing pandemic would lead to a worsening macroeconomic climate. The net loss excluding the impairment charge was 203 million euros.

Only 12% of rooms were open in the second quarter compared to the same period in 2019 creating what it called a 96% gap in RevPAR – a “gap” of 63% between January and June.

The company said that its contingency planning “has safeguarded the liquidity and viability of the company in the short term.” It said that strategic planning for the next two years: “aims to maintain its leadership and leverage any opportunities in the medium and long term.”

It said costs had been reduced by 43% in the first half and by 67% in the second quarter. The cuts, it said, helped mitigate the effects of a 63% decrease in revenue.

Online channels and Meliá generated 48% of company sales in the first half of the year. Since June, it said, the channels have generated 60% of all business.


One does not need much in the way of ‘insight’ to see that Meliá is in deep trouble. The company itself has made the dismal truth crystal clear by telling the world its focus is on survival not profit.

If further insight is required, look no further than the share price. Stock market investors have given most rivals a metaphorical shrug on sight of second-quarter earnings. Meliá? Not.

Yet more troubling, perhaps, is the view given on examination of the year to date share price. Meliá stock is the worst performing of 14 peers including Accor, Hilton, Wyndham, InterContinental and NH Hotels over three, six and twelve months – according to data drawn from the Financial Times’ website. Over one year,  most are down between 20 and 40%. Meliá has lost more than half its value.

Markets are fallible. They are, underneath it all, only human. The insight offered here, however, is telling.