Meliá & Starwood Sell 4 Hotels To London & Regional For €230M

10 July 2017 – Expansión

The Meliá Hotel Group is rotating its asset portfolio. Starmel, the joint venture that the Mallorca-based hotel chain controlled by the Escarrer family constituted with Starwood Capital in 2015, has sold four hotels to London & Regional in an operation worth €230 million, according to market sources.

The hotels in question are the Sol Príncipe de Málaga, Sol Lanzarote, Sol House Ibiza and Sol Palmanova in Mallorca. These establishments, which have been renovated recently, contain more than 2,000 rooms between them and will continue to be managed by Meliá following the operation.

This is not the first time that London & Regional and Meliá have crossed paths. In fact, the company owned by Ian Livingstone, one of the greatest real estate entrepreneurs in the United Kingdom, and the Mallorca-based hotel chain have been partners since 2013, when London & Regional purchased 50% of a hotel that Meliá was preparing in Ibiza. That operation opened the doors to the Spanish market for Livingstone.

Meanwhile, the alliance between Meliá and Starwood Capital dates back to 2015, when the hotel group sold seven establishments in the Balearic Islands, the Canary Islands and Andalucía, worth €176 million, to Starmel. The fund controls an 80% stake in the joint venture, whilst Meliá, which recorded profits of €35 million from that operation, owns the remaining 20%. The partners planned to allocate €30 million to the renovation and repositioning of those hotels, which Meliá will continue to manage for the next 15 years.

In parallel, Starmel is continuing to look for opportunities to acquire new assets, with the focus on holiday resorts in the Mediterranean area. Hotels have become one of the preferred assets for investors.

According to data from the consultancy firm CBRE, investment in hotels exceeded €2,000 million during the first half of this year, which represents an increase of 170% compared to the same period in 2016. During this period, operations involving one hundred establishments have been closed, affecting 14,000 rooms in the Spanish market. In this case, CBRE has advised Starmel in the operation. “The assets are located in key tourist areas. Together with those destinations, Madrid and Barcelona are continuing to attract international investors, which reinforces the strength of the Spanish hotel market as an investment destination for the international investment community”, said Miguel Casas, Director of CBRE Hotels España.

Forecasts

The share price of Meliá Hotels International fell by 0.62% on the stock market on Thursday (following the announcement) to €12.88. The hotel chain, which has a market capitalisation of €2,959 million, has seen its share price rise by 16.25% so far this year.

For the year as a whole, Bloomberg’s analysts forecast that Meliá’s revenues will rise by 6.75% to €1,927 million and the net profit will increase by 12.45% to €116.5 million, according to the experts.

Original story: Expansión

Translation: Carmel Drake

Optimism Abounds Amongst Spain’s Hotel Chains

10 April 2017 – Expansión

Meliá, Barceló, RIU and other groups are hanging the “No vacancy” sign up in top destinations and are increasing their prices, thanks to the pull of the overseas market and the recovery in domestic tourism.

The tourism sector is on a roll and the main Spanish chains – Meliá, Barceló, Iberostar, RIU, Grupo Piñero and Palladium – are getting ready to break records once again. The positive trend in demand, the pull of international tourism in both archipelagos, and the recovery in the domestic market in regions such as Andalucía are allowing the hotel groups to hang the “No vacancy” sign up in some of their destinations, such as in the Canary Islands, and achieve occupancy rates of between 80% and 90% in the Balearic Islands and Andalucía.

Despite the uncertainty generated by Brexit, the British market remains a mainstay for the hotel chains, alongside Germany and Central Europe, in addition to the recovery in domestic demand.

For example, Meliá forecasts growth of more than 6% in its average occupancy rate in vacation hotels in Spain, as well as an improvement in prices with respect to 2016. The markets with the greatest pull for the chain owned by the Escarrer family are the British and Central European, whilst demand from domestic tourists continues its upwards trend.

Meanwhile, Barceló forecasts growth of 6% in its occupancy rate at hotels in the Balearic Islands, with an average occupancy rate of 81% and an average room rate of €110, which represents an increase of 13% with respect to the previous year. In terms of Andalucía, the volume of reservations corresponds to forecast occupancy rates of more than 90% and an improvement of 26% in prices, according to the company.

In the case of Iberostar, the hotel chain owned by the Fluxá family forecasts an occupancy rate of almost 100% over the Easter holidays. Iberostar highlights the good performance of the United Kingdom, Benelux and Germany, compared with countries in Eastern Europe, where demand is “more stagnant”.

In terms of room rates, Iberostar states that prices have improved moderately, by between 2% and 3% on average.

For RIU, the economic situation in the Canary Islands, with very high occupancy rates, means it has little margin for growth, however, there is still scope for increases at the hotels on the Costa del Sol, which have been completely refurbished this season. (…). In terms of the best markets, RIU highlights German tourists, as well as a considerable improvement in the number of reservations from Scandinavian and British clients, plus a 5% increase in domestic tourism.

Meanwhile, Palladium highlights the sweet moment that Ibiza is enjoying. “The season has opened early on the island, with a large volume of tourists visiting in April. This has been made possible by hotels opening early and new flight connections”. Overall, hotel occupancy rates have risen by 4%, whilst prices have increased by 2.5% YoY, for the time being, in line with the annual forecast increase of 7%.

Finally, Grupo Piñero says that its three hotels in Tenerife area already full, with an improvement in prices of between 4% and 8%.

Optimism

And the euphoria of the hotel chains extends beyond Easter. The large hotel groups expect to set new records in 2017. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Three Minority Shareholders Acquire Petit Palace Hotel Chain

19 September 2016 – Cinco Días

The Choice Hotels chain has had the doors to the Spanish hotel market closed in its face. The US group signed a pre-agreement with N+1 in July whereby the investment bank committed to sell its 52% stake in High Tech. Several minority shareholders then also joined the agreement, which is due to expire on 30 September.

However, three of the chain’s minority investors have opted to exercise their right of first refusal and acquire shares from other investors. In this way, on Friday, N+1 announced the sale of 26% of the company that it held through N+1 Dinamia Portfolio II, an operation that, excluding expenses, amounted to €9 million, given that it had valued its stake at €0.

Besides that stake, the investment bank also held another 26% stake in High Tech through several private equity funds, which it has also divested, according to sources familiar with the operation.

The three minority shareholders that now control High Tech are: Inversiones el Piles, an Asturian company that also owns 24.5% of Duro Felguera. It used to own 10% of the hotel chain, but now controls 54%. Alongside it is the company Edificio Miño, a private investment fund linked to one of the shareholders of Seguros Santa Lucía, which previously held 6.5% and now holds 11%; and General Oilex Company, the real estate group originally from Sweden, which has increased its stake from 5% to 35%.

These three investors, which have paid around €40 million for the 78.5% of the company that they did not control, have taken on all of its debt. They had been given the option to exercise their right to accompany the other investors in Choice’s offer or to exercise their right of first refusal; they opted for the latter.

The operation represents N+1’s exit from the hotel chain’s share capital, after it first became a shareholder in 2003. It also sees the departure of the founding executives of the company, which together held a 26.2% stake. On several occasions, some of the founders, such as Antonio Fernández and Javier Candela, expressed their interest in regaining control of High Tech, due to differences in terms of management and they tried to look for financial support from other investment funds. As such, over the last year, they have sounded out buyers including Hotusa.

High Tech operates 31 hotels in Spain, through the Petit Palace brand; it rents the majority and manages the rest. The chain has a strong presence in Madrid, where it manages 20 properties, as well as in Barcelona, Valencia, Sevilla, Bilbao and Málaga. In total, it has 1,966 rooms.

High Tech was launched 15 years ago by the team from Tryp, following the sale of that brand to the Escarrer family (Meliá). The founding team, which the other shareholders subsequently joined, created an urban brand, which suffered during the years of the crisis due to the high price of rentals and high financing costs. Sources in the market suggest that the new owners may be interested in valuing the company for its subsequent sale.

Original story: Cinco Días (by Laura Salces)

Translation: Carmel Drake

Meliá Generates Profits Of €45M In H1 2016

2 August 2016 – Expansión

The hotel chain earned €45 million during the six months to June and reduced its net debt by €213 million.

The hotel chain Meliá, which will join the Ibex next week, replacing FCC, doubled its profits during the first half of the year, to €45 million. The company has highlighted that the 123% improvement in net profit has been generated even without the sale of any assets.

The company owned by the Escarrer family increased its average revenue per room (RevPAR) by 9.4% – or by 14.2% if we include the assets under management in its portfolio – and whereby recorded six years of consecutive quarterly increases.

The company closed the first half of the year with operating income of €856 million, 0.4% lower than in the same period in 2015. If we strip out the effect of gains from the sale of assets last year, operating income increased by 5.7%.

By geographic region, RevPAR in America was lower in H1 2016 than in H1 2015, which the company explains was due to the impact of the depreciation in the Canadian dollar, the economic deceleration in Brazil and Argentina, changes in reservations due to the Zika virus and the good temperature in the USA and Canada, the main issuing markets. By contrast, the company highlighted the strong performance of hotels in the Mediterranean and Caribbean, with a RevPAR increae of 30.9%.

In terms of the financial situation, Meliá decreased its net debt by €213 million during the first six months of the year, bringing it down to €556 million at the end of June, thanks primarily to the early conversion of a convertible bond issued in 2013.

The Vice-President and CEO of Meliá, Gabriel Escarrer Jaume, stated that the repositioning of its hotels, investment in assets and strategic markets, as well as financial strengthening have allowed the group to return to the Ibex thirteen years later.

The company is “optimistic” about the performance of its hotel complexes during the third quarter and its urban hotels during the second half of the year. In the same way, it forecasts a favourable “albeit unequal” performance across its “European hotels”, influenced by the world environment, especially France, in the face of the heightened terrorist threat. In terms of America, the firm expects a boost with the opening of several new hotels: Innside New York Nomad, ME Miami and Meliá Braco Village (Jamaica).

At a conference with analysts, the company made reference to Brexit explaining that it does not expect any impact in the short term, given that Britons have already booked their holidays for 2016, and some have even booked for next year.

Original story: Expansión

Translation: Carmel Drake

‘Melia Hotels’ Doubles Net Profit In Q1 2015 To €16M

13 May 2015 – Expansión

Melia Hotels International’s results are improving, driven (primarily) by the strength (of the recovery in the) Spanish tourism sector. The chain controlled by the Escarrer family increased revenues by 13.64%, to €358.9 million during the first quarter (of 2015). Its gross operating profit (EBITDA) improved by 13.52%, to €60.2 million, whilst net profit doubled, from €8.15 million to €16.17 million.

Melia attributed this progress to the good performance of the hotel business, in which RevPar (revenues per available room) increased by 12%. And the increase was not driven by the holiday segment alone, the RevPar of the urban business segment also rose, by 14.8%.

For the full year, the company expects the increase in RevPar to be in the high single digits. Melia experienced a 5% increase in demand in Spain during Semana Santa (Easter), which it expects will be maintained this summer. In the Mediterranean, reservations for the summer season are almost 15% higher than in 2014. During the year to March, the group had signed 14 new contracts. Melia’s share price increased by 0.04% on the stock exchange yesterday to €11.24 per share.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake