Luxury Hospitality Daily News

< Previous news Next news >

MELIÁ RESULTS REFLECT THE STRONG IMPACT OF COVID-19, ENDING THE FIRST QUARTER WITH DECREASES IN REVENUE (-25.5%) IN AN ENTIRELY DISRUPTIVE CONTEXT THAT DISTORTS ANY COMPARISON WITH THE PREVIOUS YEAR (Spain)

The results reflect the impact of the almost complete closure of the business in mid-March

MELIÁ RESULTS REFLECT THE STRONG IMPACT OF COVID-19, ENDING THE FIRST QUARTER WITH DECREASES IN REVENUE (-25.5%) IN AN ENTIRELY DISRUPTIVE CONTEXT THAT DISTORTS ANY COMPARISON WITH THE PREVIOUS YEAR (Spain)

The results reflect the impact of the almost complete closure of the business in mid-March

Category: Europe - Spain - Industry economy - Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2020-05-13


The company is working simultaneously on its Contingency Plan and the adaptation of its post-COVID Strategic Plan

The “Stay safe with Meliá” program certified by Bureau Veritas defines the protocols and standards that Meliá hotels will comply with to guarantee the health and safety of employees and customers worldwide

Business performance

  • Consolidated revenues reached €293M (-25.5%) and EBITDA stood at €14,2M (-85%)
  • The Revenue Per Available Room (RevPAR) in owned and leased hotels decreased by 14,7%
  • Net Attributable Profit was negative at -€79,7M
  • The closure of hotels in mid-March cut short the mostly positive performance of company hotels in January and February, whilst challenges remained in the Dominican Republic
  • China and Barcelona, on the other hand, suffered an earlier impact from the pandemic, the latter due to the cancellation of the Mobile World Congress in late February.
  • 15 company hotels in Spain, Europe and America remain open and operating as hospitals or residences for emergency service workers.

Financial results

  • Net Debt stands at €2,183.9M (+€155.1M compared to December 2019)
  • The Company has taken several measures to maintain liquidity to allow it to face the coming months with a certain calm, guaranteeing employment and the continuity of the business.

Strategy for "the day after"

  • Meliá has adapted its Strategy to the needs of the recovery period and the competitive environment which will exist after COVID, prioritizing security, the people, liquidity, the business continuity and competitiveness for the new scenario
  • It is focused on reviewing all of its processes and operating model in terms of efficiency and digitalisation, accelerating its BeDigital360 programme
  • The Group works closely with its partners, hotel owners and strategic suppliers to build a joint and collaborative way out to the crisis

Outlook 2020

  • Low visibility on how the crisis and the recovery will evolve do not currently allow any estimates of the financial impact for financial year 2020.
  • The most difficult months in terms of revenue are expected to be April and May, given government travel restrictions and difficulties in recovering demand and flights from destinations for an uncertain amount of time.
  • A positive impact is expected over the coming months from the cost-saving measures already introduced.
  • The recovery is expected to be gradual and mainly based on domestic markets, already shown by an incipient yet dynamic recovery in consumption in hotels in China.
Gabriel Escarrer Jaume, Executive Vice President and CEO of Meliá Hotels International: "The disruption caused by the COVID-19 pandemic in the world economy and its brutal impact on the travel industry have generated an extreme turning point in the results of Meliá Hotels International, ruling out any basis for comparison with previous years. The moderately positive performance that the company expected for the year, and which was the case up to the end of February, ended in mid-March when the global emergency was declared, causing the almost immediate closure of hotels worldwide. This forced us to implement a rigorous contingency plan to guarantee the continuity of the business and the preservation of employment, as well as adapting our Strategic Plan to ensure we are stronger and more competitive when the industry returns to business after COVID.

Without any doubt, our financial strength, our strategic commitment to digital transformation over recent years, and our geographic diversification, are strengths that will help us maintain our leadership and competitiveness in the new travel industry which emerges after COVID and for which the company is preparing itself intensively." ​

Meliá Hotels International has announced a loss of - -79,7M for the first quarter of 2020, with revenues down 25.5% to €293M and EBITDA down 84,7%. to 14,2m€, un Comparisons with the previous year are, however, distorted by the sudden and unexpected closure of the business due to force majeure caused by the pandemic. Along the same lines, the gradual closure of hotels in the second half of March also caused the company's global RevPAR to fall by -17.5%.

After the quick and efficient shutdown of most of its hotels worldwide, the company has focused all its efforts on combining the implementation of a contingency plan for the short and medium term with the development of its post-COVID recovery strategy. The Contingency Plan has involved the company making all necessary efforts to guarantee sufficient liquidity in the face of a crisis of a prolonged but uncertain duration, ensure the health and safety of employees and customers, and preserve as far as possible maximum employment and talent retention. At the same time, the company is working on adapting its Strategic Plan based on further reinforcing its BeDigital360 programme, optimising its operating model, and strengthening its value proposition for customers and investors in the new competitive environment which will come after COVID.

On a financial level, the company has strengthened its financial position and has more than €220M in liquidity available at the end of March and undrawn credit lines up to €230. Along with the evolution of financing, the impact of containment measures and cost-savings on company cash flow is being constantly monitored to measure the effectiveness of the Contingency Plan in guaranteeing the continuity of the business and preparing for the recovery phase.

With almost all of its hotels closed except those converted into hospitals or used by emergency service workers, the company has used the opportunity to “reset" its operations, reviewing and optimising its operating model and processes and further boosting its digital transformation, as well as adapting its Strategic Plan to the COVID-19 challenge throughout 2020 and developing a subsequent recovery strategy.

A collaborative and responsible way out of the crisis

The health and safety of employees and customers is one of Meliá's management priorities. As the leading company in the industry most affected by COVID-19, the company is aware that the idea of "safe travel" and "trust in health" will undoubtedly define the brands that will come out on top in the future travel industry. The Group has also been able to rely at all times on the experience of its team in Asia, which has lived through the COVID crisis from its epicentre and helped pass on essential know-how. With regard to the gradual reopening of hotels and offices, the company has already presented its “Stay Safe With Meliá" programme which includes protocols and operating guidelines for facilities and maintenance, and the adaptation of brand standards, all in line with the highest international health and safety standards and certified by Bureau Veritas, an independent external organisation of acknowledged prestige.

Equally important for Meliá at times like these is a commitment to the travel value chain and the mutual commitment that the different players in the industry now have to show. The company is very much aware that in order to come out of this crisis on top, more than ever before it has to support its stakeholders and also rely on their support. The company has therefore designed a series of protocols and a prevention model that guarantee safe supplies to hotels, aligning the entire value chain with the highest standards of health and safety. The Group reports that it is also working hard with distribution partners, its strategic suppliers, and the owners of leased hotels, among others, to define the best possible way that it can mitigate the economic recession that will follow the pandemic, and developing a collaborative and responsible way out of the crisis.

People also occupy an essential and preferential position in the Meliá contingency strategy, with safeguarding employment and retaining talent the top priority, along with ensuring the continuity of the business. With a large part of the Group's employees in total or partial temporary redundancy programmes, the company remains committed to their development and digital training through the eMelia platform, which has carried out 6.657 training actions since mid-March. Meliá believes that the digitalisation of the travel industry and the economy as a whole will be one of the most obvious consequences of the COVID-19 crisis, and, as Gabriel Escarrer explains, "We are making huge strides in the digital transformation of our company and our team, a process which began a few years ago, and we are proud of the commitment and results achieved by our team members, both in working with innovative teleworking systems and also in training and education to prepare for the new and even more digital ecosystem of post-COVID-19 travel. "

Impact of COVID-19 by markets

The evolution of the business by region reflects the different timing and severity with which the pandemic has affected different areas, with all of them having two very different stages. The performance in the first two months of the year was generally in line with expectations, followed by results which reflected the sudden closure of the business in the second or third week of March.

RevPAR performance was therefore negative in all regions: -21.1% in America, -22.1% in EMEA, -23.3% in Cuba (where the airports closed on March 23) and -23% in Asia Pacific, where the situation is different in China, where demand for travel within the country is beginning to recover, and the countries in Southeast Asia (Indonesia, Vietnam, Thailand, Malaysia and Myanmar). Overall, the Company has 11 hotels open, and 13 closed, in the Asia-Pacific region.

In Spain, RevPAR showed positive growth up to February (3.2% in city hotels, with the exception of Barcelona due to the cancellation of the Mobile World Congress, and 9.6% in resort hotels) with a notable recovery in the Canary Islands (+9.1%). At the end of the quarter the result become negative (-11%) after the total closure of hotels during the second and third week of March.

Hospitality solidarity

Since the crisis worsened towards the end of March, Meliá Hotels International responded to the needs raised by many regional governments for hospital beds and residences for emergency service workers by offering the authorities hotels that were closed or about to close due to the State of Emergency. 8 hotels were eventually converted into hospitals: Meliá Palma Bay and Palma Convention Centre, Meliá Sitges, Meliá Barcelona Sarriá, Meliá Valencia, and the Group's hotels in Melilla, Vielha, and Madrid Alameda Aeropuerto. Two other hotels were made available but eventually discarded. Two other hotels in Spain (León and Madrid Airport Suites) and four more outside of Spain (Innside Lima, Innside Manchester, Meliá Luxembourg and Meliá Kuala Lumpur) were also kept open to be used as quarantine accommodation or for hospital or emergency service workers. All in all, some 2,500 rooms were made available.

The company also echoed the wave of gratitude in society for the work done by healthcare workers on the front line of the battle against the pandemic, and in mid-April announced a solidarity campaign for healthcare workers through melia.com, giving away 20,000 free hotel nights through 10,000 two-night stay vouchers for two people. The campaign was extraordinarily well-received, reaching 63 million people on social media and delivering 5,011 vouchers to nurses, 3,573 to doctors, 1,020 to nursing assistants, 205 to orderlies and 198 to ambulance staff in just 10 days.


More about...




You will also like to read...







< Previous news Next news >




Join us on Facebook Follow us on LinkedIn Follow us on Instragram Follow us on Youtube Rss news feed



Questions

Hello and welcome to Journal des Palaces

You are a communication or the PR manager?
Click here

You are an applicant?
Check out our questions and answers here!

You are a recruiter?
Check out our questions and answers here!