Meliá Hotels International used its AGM to announce its revised strategy for 2020 to 2022, named “The Day After”.
The group has increased its focus on digital and said that it expected to see great consolidation in the industry as well as the “reconversion of obsolete hotels and destinations”.
Gabriel Escarrer Juliá, the group’s non-executive chairman, said: “Never, in more than six decades in the industry, have we had to face a crisis of such catastrophic dimensions”, adding that he expected to see more digitalisation, and major changes in distribution channels.
The group pointed to its direct sales channels such as melia.com and meliapro.com, which were now the company's main source of business.
The company reported a 0.6% increase in revpar for 2019, with revenues flat at €1.79bn and Ebitda down 2.3% on the year to €470.9m. The group cut net debt of €15m, keeping the net debt to Ebitda ratio slightly above two. The chairman described the 2019 results as “moderately positive", and said that the most important success of the year was the designation of Meliá as the most sustainable hotel company in the world.
Mélia’s liquidity stood at around €600m at the end of June.
The group said that it felt it was in a strong position due to its debt position and because of the renovation of almost the entire hotel portfolio, which saw more than €750m invested in assets since 2015.
It added: “The Meliá strategy in recent years and its commitment to a model focused on hotel management and based on strong and recognised brands, efficient management and direct sales systems, a loyal customer base, and also focused on enhancing its leadership in resort hotels, will allow the company to be even more resilient.”
Gabriel Escarrer Jaume closed his speech by commenting on the importance of urgent and decisive government action to back the tourism industry. In line with BBVA estimates of an expected loss of 20% of GDP in Spain, he said that the second quarter would be the worst ever in the history of global tourism, and appealed for an urgent and comprehensive plan to support and eventually rescue the industry financed by the Spanish government and with assistance from Brussels, to ensure the survival of the tourism industry itself and employment at the end of the year.
The Meliá VP appealed for public-private partnerships to promote a recovery based on a transformation of the tourism model, and recalled the scarce funding allocated by the Spanish government to the tourism industry (just over €4bn, almost all through loans guaranteed by the ICO) compared to the priority that other European governments have given to the industry and with the European Commission recommendation that 25% of funds be allocated to the tourism industry in the post-Covid-19 recovery.
Escarrer stated his appreciation for the good will shown by the Spanish government, but explained that “we need something more if we want our companies to survive and our country to continue to be a tourism leader, and Meliá and Exceltur once again offer our full support and collaboration to the Spanish government to achieve this.”
Insight: More colour is expected on this year’s trading at Mélia at the end of the month and, given the group’s resort holdings, it will be interesting to hear whether it has started to capitalise on that most popular of segments.
It is clearly also planning a scooping up of knackered assets - or rather, with its focus on management contracts, it would no doubt like someone else to scoop up knackered assets and then operate them. Since the last downturn things have changed and the large global operators, including Marriott International, also now fancy themselves as resort operators. This was first motivated by loyalty programmes, but now is more pressing.
The group will be hoping to make much of its experience in such matters, but, as it notes, all this only goes so far if you can’t get government assistance for what is likely to be a grisly couple of years. Consolidation is coming. Mélia’s role in it has not yet been clarified.