MELIÁ HOTELS INTERNATIONAL

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Meliá Hotels International

Annual Report 2015

Presidential Letters

Letter from the Chairman

For 60 years we have relied on solid values and a long-term vision to create value for the communities in which we operate, becoming a key player in creating shared value

Gabriel Escarrer Juliá
Chairman

Letter from the Vice-Chairman & CEO

Staying ahead after so many years is only possible through constant innovation and reinvention, transforming our brands, evolving our urban and resort hotels, and anticipating the needs of our customers

Gabriel Escarrer Jaume
Vice-Chairman and CEO

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Letter from the Chairman

Dear readers,

60 years ago, when I founded what is now called Meliá Hotels International, I was unaware of the magnitude of the path I was setting out on, but I was absolutely certain that I wanted to make a major contribution to developing the incipient tourist industry and thus generating a positive social and economic impact in the community. Today this impact would be called the “creation of shared value”.

Our Group has progressed from having a small leased hotel in the city of Palma to a portfolio comprising 376 hotels and a presence in 41 countries so we have gone from being a modest “start-up” – a term that was not used in the 1950s – to a multinational with more than 42.000 employees, turnover of around 1.738 billion Euros and which generates profit of 40.5 million Euros for its shareholders.

Moreover, we have evolved from a single holiday brand under the name of Sol Hoteles to a broad offering of 7 hotel brands that are leaders in their respective segments, and which are gaining presence in the main cities worldwide and at the leading tourist destinations: Gran Meliá Hotels & Resorts, Paradisus by Meliá, ME by Meliá, Meliá Hotels & Resorts, INNSIDE by Meliá, TRYP by Wyndham and, of course, the renewed Sol Hotels & Resorts, with 4 very differentiated new concepts.

Since the Group was founded, all of us who have pooled our efforts and played an active part in the growth of Meliá, have managed to turn our company into a sector benchmark, and not only from a business standpoint, but also with regard to reputation and leadership. Meliá’s evolution through to current times has always been guided by a set of deeply embedded family values, which we have been able to integrate into the daily tasks of this major business project which is Meliá Hotels International. From our solid principles, coupled with clear long-term view of the business, we have been able to create value for the communities where we currently operate.

2011 was an important year for Meliá as we began to renew our corporate brand, evolving from Sol Meliá to Meliá Hotels International. We believed it appropriate to update and adapt our values to the 21st-century because for us it was essential that these continue to be the backbone that guides the transformation process of Meliá: service vocation, excellence, innovation, proximity and consistency.

Today I feel proud to see that these values still guide all of our actions, allowing Meliá to be considered as a responsible company, and one that creates wealth for its surrounding areas and which, just as I dreamt in 1956, has become a key player in the creation of value for our society.

This Annual Report attempts to reflect, in accordance with the Integrated Reporting principles, our strategic vision, how this is reflected in the performance, the Company’s global figures as well as the impact that Meliá generates in the community and our relationship with stakeholders, without overlooking the “social cash flow” of Meliá, which reflects how our Company’s revenue is redistributed in society as a whole.

In summary, dear friends, this Annual Report arrives at a time when, as a consequence of business acumen, efforts and commitment of all those that form part of Meliá, the Group’s financial figures reveal significant progress and our responsible and sustainable model is being acknowledged. However, this is only the beginning. We hope to continue getting closer to the ideal leading and socially relevant company that we have always wanted to be, with the valuable support of all of you, for the next 60 years.

Gabriel Escarrer Juliá
Chairman and Founder of Meliá Hotels International

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Letter from the Vice-Chairman & CEO

In 2015, Meliá Hotels International has successfully concluded a strategic cycle that began in 2012 in the midst of a crisis in the Eurozone, and has also marked the new strategic challenges through to 2018. Thus the Group is facing a new period with greater strength and a watchful attitude in a setting in which certain uncertainties persist.

We have taken advantage of these years to continue growing – above all on the international stage – and to consolidate the intense process of organizational, strategic and cultural transformation that we started in 2011, when we bid farewell to our beloved “Sol Meliá” and launched our new corporate brand, Meliá Hotels International.

Thanks to this strategic vision and stringent management, coupled with solid family-based values, we have successfully concluded a complex stage in which we have managed to achieve most of the targets proposed, and can face the future with solvency and optimism.

This fact is clearly shown and substantiated in our performance figures. We closed 2015 with a healthy balance sheet, a borrowing reduction of more than 200 million Euros and a plethora of major acknowledgements awarded this year worldwide.

Staying ahead after so many years is only possible thanks to an ongoing process of innovation and reinvention, in which our brands continue revolutionizing the urban hotel business with lifestyle concepts and transforming the holiday hotel segment with contemporary products that are adapted to the different profiles of our clients. In this regard, I should like to highlight the new concepts of the Sol Hotels & Resorts brand and our commitment to being at the cutting edge, which now also involves an in-depth digital transformation in our commercial model, which will generate competitive advantages.

The holiday hotel business is enjoying an upturn on the international stage, and Meliá boasts the leading mix of holiday hotels in the industry; our brands currently compete for management of the leading hotels of the world, under equal conditions as the major international chains. In Spain, a country that maintains its buoyant position as the third largest recipient of tourists worldwide, Meliá continues to be the leading hotel chain in terms of size and rooms, and I am enormously satisfied to report that, for the third consecutive year, we also continue to spearhead the sector in the issue of Corporate Reputation, according to the prestigious MERCO Empresas Index.

Our major strategic commitments are bearing fruit in abundance. Firstly, our strength and credibility as managers gives us the flexibility and competitive advantage that are essential in tackling our growth and expansion. Secondly, our growing global presence in 41 countries, backed by an international pool of talent and professionalism with more than 32,000 employees located outside Spain, as well as the excellence of our management systems, will enable us to respond to the more than 25 international inaugurations scheduled for 2016.

However, this satisfactory balance would not be complete if I failed to highlight the major headway achieved in issues of corporate responsibility, an aspect that has taken deep root in our strategy, enabling Meliá to maintain and strengthen an excellent reputation that has consolidated itself throughout our history. So, in 2015 we have continued to delve further into the commitment to the employability of young persons, recognized at the 12th UNWTO Awards Forum, celebrated as part of the Tourism Fair that takes place every year in Madrid, Spain. Meliá also collaborates with universities to ensure closer relations between the world of education and the world of business, to ensure the future employability of our young adults.

In harmony with its social positioning in favor of childhood, Meliá has consolidated its international partnership with UNICEF, signed in 2011, to guarantee the rights of children in those countries where we have a presence, with major projects in the Dominican Republic and Mexico, among others. Our commitment to childhood is now more valid and necessary than ever.

I am also proud to point out that our environmental commitment has been reflected in the prestigious CDP 2015 Index, in which Meliá has been included on the “A List” among the Top International Companies, with the highest level of commitment and performance in the fight against climate change.

In 2016 we are addressing new and major challenges, let there be no doubt about that, but we are also aware that we are tackling these challenges from a position that is more solid than ever.

Today, Meliá Hotels International is a young 60-year old company with a long track record which, in the same way as the founding family, has a long-term vocation and the ambition to continue contributing with our activity to breaking down barriers and fostering socio-economic development of the destinations where we operate.

Gabriel Escarrer Jaume
Vice-Chairman and CEO

Meliá in the World

Net profit

40,5 €M

(+27%)

Revenues

1.738,2 €M

(+16%)

Ebitda

293,1 €M

(+29%)

Revpar

74,4 €

(+15%)

376

Hotels

99.337

Rooms

41

Countries

30

Million Stays

42.275

Employees

8

Brands

Brand Portfolio

The Meliá Hotels International hotel brands have their own, well-defined positioning strategy, targeting different customer psychographics to support the expansion strategy of the Company

Premium
Upscale
Midscale
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GRAN MELIÁ HOTELS & RESORTS

Combining traditional luxury with avant-garde style, Gran Meliá has designed a first-class series of hotels and resorts in the most desirable destinations in the world to satisfy even the most discerning travellers

Hotels

11 Operative

4 Pipeline

Rooms

3.383 Operative

1.258 Pipeline

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ME BY MELIÁ

ME hotels are meticulously designed to satisfy the needs of the most modern guests who see travel not just as a journey but as an extension of their life experience. ME by Meliá. It Becomes You

Hotels

7 Operative

5 Pipeline

Rooms

1.523 Operative

878 Pipeline

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PARADISUS BY MELIÁ

An extraordinary experience, all included, in luxury resorts right on the beach

Hotels

9 Operative

2 Pipeline

Rooms

4.431 Operative

1.079 Pipeline

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MELIÁ HOTELS & RESORTS

Hotels and Resorts in the best international business and leisure enclaves worldwide. Meliá Hotels & Resorts represents the passion of Meliá Hotels International and stands out for its ideal combination of design and service

Hotels

103 Operative

24 Pipeline

Rooms

31.909 Operative

7.631 Pipeline

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INNSIDE BY MELIÁ

Each INNSIDE hotel has its own unique architectural personality, elegant rooms and modern bars and restaurants. INNSIDE hotels by Meliá represent a fresh and sophisticated choice for business travelers seeking a lifestyle touch

Hotels

16 Operative

21 Pipeline

Rooms

2.173 Operative

4.189 Pipeline

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TRYP BY WYNDHAM

At TRYP by Wyndham, the city belongs to you. TRYP by Wyndham, welcomes the life-loving globetrotter in some of the world’s most attractive and cultural hotspots, including Barcelona, Berlin, New York, Buenos Aires, Lisbon, Madrid, Paris, São Paulo and many more... Own the city

Hotels

90 Operative

Rooms

14.480 Operative

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SOL HOTELS & RESORTS

Hotels and resorts besides the beach in the main tourist destinations of the Mediterranean, the Canary Islands, South East Asia and the Caribbean. Fresh holidays: from family hotels to adult only experiences

Hotels

78 Operative

6 Pipeline

Rooms

25.353 Operative

1.050 Pipeline

2015 Strategic Impulse

MELIÁ DIGITAL
Promoting the sales channel as a key driver of improved performance and RevPAR growth, supported by an investment plan involving more than 100 million and applying the most advanced technology
REAL ESTATE STRATEGY
Developing the real estate function as owner, creating and realising value for the Group
BRANDS AND INNOVATION
Build a portfolio of attractive and competitive brands that generate value for customers, owners and partners, driven by innovation and the differentiation of experiences and attributes
COMPETITIVE AND EFFICIENT ORGANIZATION
Adapting and evolving the organizational and cultural transformation model aimed at making a more agile, efficient and innovative company, with the support of technology and the talent of our team
INTERNATIONALISATION OF THE COMPANY
Strengthening the positioning of Meliá Hotels International, growing in emerging markets such as Latin America, as well as in major European cities, with the ambition to be leaders in the leisure segment
REPUTATION AND RESPONSIBILITY
Further integration of responsible and sustainable management criteria in the Meliá business model, based on the corporate values of consistency and accountability, with the firm intention of generating value for stakeholders
CONSOLIDATED DATA
Revenues: 1.738,2 €M (+16%)
Ebitda: 293,1 €M (+29%)
OPERATING DATA
Revpar*: 61,8 € (+10%)
OCCUPATION*: 66,7% (+1%)

* Aggregated Data (Property, Leased and Management)

Business Performance

An excellent performance of the hotel business generates an improvement in EBITDA (+29%) and a reduction in debt of 216 million Euros

Governance Model

GOVERNANCE BODIES

Meliá has a strong and coherent governance model based on principles of diligence, transparency and separation of functions

RISK MANAGEMENT

The Meliá Integrated Risk Management Model identifies and assesses the main risk factors and ensures the implementation of the control measures and action plans required

CODE OF ETHICS

The Meliá Code of Ethics includes the ethical principles that provide order and meaning to the values of the Company

Meliá for the World

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Relationship with Stakeholders


Customers

We offer our guests the best personalized accommodation experiences, exceeding their expectations with the excellence of our finest services


Owners and Partners

We offer comprehensive services to generate return on investment, managing with professionalism and seriousness, and the confidence of a major brand with international prestige


Human Team

We offer the best opportunities for professional development based on the stability of a family business and the strength of a major international leader that recognizes commitment, talent and achievements


Environment

We help to preserve the environment and landscape, monitoring the impact of our activities and promoting awareness of sustainability among all our stakeholders


Shareholders and investors

We manage the Company under criteria of transparency, rigour and good governance, to achieve profitability and increase value in the medium and long term


Suppliers

We bring professionalism and scale to build lasting relationships based on trust, respect and mutual benefit


Society

We actively search for ways to generate prosperity and sustainable development in the communities where we operate, respecting and promoting their culture, traditions and values, with a particular focus on children and the most vulnerable groups
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Corporate Social Responsibility

Initiatives

665

Employees Involved

30.754

Customers Involved

302.871

Economic Impact

802.613 €

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Calviá, a sustainable model

Revenues

+66%

Revpar

+48%

Open days

+18%

Employment generation

+36%

Data 2015 vs 2011