Meliá Hotels International: Strong Profit Growth in FY 2024 Driven by Post-Covid Strategy

Meliá Hotels International, S.A. (SMIZF) reported strong profit growth in its fiscal year 2024, driven by a successful post-Covid strategy that focused on capitalizing on dynamic travel demand, strengthening the balance sheet, and enhancing the value and category of its hotel portfolio. The company's earnings increased by 24.5% to €162 million, with an EBITDA (excluding capital gains) of €533.6 million.



The company's post-Covid strategy has been instrumental in its financial success. Key components of this strategy include:

1. Asset-light formulas: Meliá signed 34 new hotels in 2024, all under asset-light formulas, adding over 5,000 rooms. This approach helps the company grow without significant capital investments, reducing financial risk and improving return on invested capital.
2. Management agreements: The company opened another 19 hotels under management agreements, adding approximately 3,000 rooms. This strategy allows Meliá to expand its portfolio and generate revenue without the need to own the properties, further reducing financial risk.
3. Optimizing management and creating value: Meliá has focused on optimizing its management and creating value, as evidenced by the increase in RevPAR (Revenue Per Available Room) by 10.7% compared to 2023, with 75% of the growth attributable to price improvements. This demonstrates the company's ability to effectively manage its properties and maximize revenue.
4. Financial consolidation: Meliá has successfully reduced its net financial debt by more than one-third (- €391 million) to €772.7 million, thanks to operating cash generation and asset rotation transactions. This financial consolidation has helped the company achieve a Net Financial Debt/EBITDA ratio of 2.2x, returning to pre-pandemic levels.
5. Sustainability and ESG focus: Meliá has made significant progress in sustainability governance, including a new indicator control system and advances in compliance with the European CSRD Directive. The company was recognized as the most sustainable hotel company in Europe by Standard & Poor's Global and third in the entire global tourism sector. This focus on sustainability not only contributes to the company's reputation but also helps attract environmentally conscious customers and talent.



The primary drivers behind the 10.7% increase in RevPAR for Meliá Hotels International in FY 2024 were price improvements and increased demand. Price improvements can be sustained in the long term through strategic pricing, revenue management, and cost optimization. By leveraging data analytics and market intelligence, Meliá Hotels International can continue to optimize its pricing strategy to maximize revenue and maintain a competitive edge. Additionally, cost optimization initiatives can help the company maintain profitability and support sustainable growth.

Increased demand can also be sustained in the long term through effective marketing and branding strategies, as well as a focus on customer experience and satisfaction. By investing in marketing campaigns, digital presence, and customer loyalty programs, Meliá Hotels International can continue to attract and retain customers, driving demand and RevPAR growth. Furthermore, a focus on customer experience and satisfaction can lead to positive word-of-mouth marketing and repeat business, further supporting long-term demand growth.

Meliá Hotels International's focus on ESG initiatives has positively impacted its financial performance and market reputation. The company's progress in sustainability governance, net-zero emissions, and recognition as a leader in sustainability have enhanced its reputation and attracted environmentally conscious customers and investors. To further grow in this area, Meliá can expand its net-zero emissions initiative, strengthen supply chain sustainability, enhance employee engagement, and innovate in sustainable technologies.

In conclusion, Meliá Hotels International's strong profit growth in FY 2024 is a testament to the success of its post-Covid strategy, which has enabled the company to capitalize on dynamic travel demand, strengthen its balance sheet, and enhance the value and category of its hotel portfolio. By focusing on asset-light formulas, management agreements, optimizing management, financial consolidation, and sustainability initiatives, Meliá Hotels International has positioned itself for long-term success in the hospitality industry.