Annual Report | 2016
Melia Hotels International Presentation
Letter from the President
In 2016 we celebrated a special landmark anniversary which I would like to share with all those who are part of the Meliá Hotels International family, “60 years of hospitality in an exciting industry”. Six decades have already passed since the foundation by Gabriel Escarrer Julià of what is today, we can proudly say, one of the largest hotel companies in the world. There are many people who over these 60 years have contributed their effort, motivation and affection to making Meliá Hotels International the great company it is today. So I would like to share this anniversary with you, along with our gratitude, affection and appreciation for the many years of commitment and professionalism.
In addition, 2016 was the year in which Meliá Hotels International was again listed on the IBEX 35. This long-awaited return has been made possible by the positive performance of the Company in recent years. Today, our team is made up of more than 44,000 people of over 140 nationalities, operating in 43 countries and with a rich mix of generations who bring enthusiasm and motivation. Meliá Hotels International also added a total of 8,284 people to its worldwide team this year, 21% of them in Spain.
The Company's environment and internationalisation, as well as its cultural and generational assets, require Meliá Hotels International to be in a constant process of transformation, not only in its management but in the hotel business model itself. In fact, we are evolving towards a model in which our management capacity becomes more important each year and facilitates growth with greater agility. Undoubtedly, a strong portfolio of internationally recognised hotel brands plays an important role in our future. The significant presence of Meliá Hotels International, which is comprised of 375 hotels, in close contact with different markets, proximity to our customers and knowledge of the social realities that we can capitalise on and integrate into this consistent and sustainable process of transformation in which we are engaged.
The cultural diversity that we have displayed in recent times will be enhanced now that Meliá Hotels International has increased its presence with the opening of 17 new hotels in four new countries. Today 15% of our portfolio is operated under group ownership, strengthening our strategy of positioning ourselves as a benchmark company with a low capital intensity management model.
Throughout our history we have faced up to the typical difficulties facing a dynamic industry that is constantly evolving, challenging and, of course, full of opportunities. Today, the complex geopolitical situation is marked by international terrorism, widespread market instability, Brexit and the various elections in Europe, the emergence of collaborative economies and consolidation within the sector. Without a doubt, this situation is defining a new business environment that we need to manage as an international company.
Since its inception Meliá Hotels International has grown not only in size and scope, but also in experience, self-discipline and responsibility. So, among the attributes that characterise the company I would like to emphasise our adaptability, desire to excel and, above all, our firm commitment to continuous improvement. This process was intensified six years ago when we overhauled our corporate brand and evolved from being Sol Meliá to Meliá Hotels International. It was the right time to update our corporate values, which have now taken on an important role as the guidelines for ensuring our process of transformation and growth.
We have accelerated a transformation that goes well beyond a change of corporate brand by encompassing the design of new products and services, strong hotel brands tailored to different customer profiles and segments, and entering new markets that have yet to be explored. With our strategic commitment to digitalization, we have optimised our processes to further improve our business management. The resulting operating efficiencies and synergies are undoubtedly allowing us to reach more customers, including the most demanding, so that we are strengthening the emotional ties that bind us together, while making them participants in the change process too.
The digital transformation that we are undergoing and the new management model that focuses on providing global experiences to our customers have been recognised by the markets. This successful combination has enabled us to strengthen our relationships and knowledge and to customise our management, basing it on proximity. Today we can celebrate the fact that the revamped melia.com has become the Company's main sales channel, generating €427.9 million in sales, and that MeliáRewards, our loyalty programme, will soon have over 7 million members. The positive evolution of MeliáPro, with growth of 71%, has also strengthened the link with our business partners (B2B), making it an excellent platform for contacting the more than 30,000 agencies registered on it. In general, Meliá Hotels International closed 2016 with very positive results, following a series of adverse trends in international tourism and several years of transformation. We have been able to improve the Company's main economic and financial indicators and to report an increase in RevPAR (revenue per available room) over 27 consecutive quarters.
The leadership and experience accumulated during these 60 years in the leisure segment - characterised by greater resilience and projected global growth - is today a distinguishing feature that gives us a clear advantage and competitive strength. The positive performance of the hotel business in terms of RevPAR, the indicator that best reflects the evolution of this business, which managed to surpass the levels recorded in 2007 (+14%), also translated into a year that closed with a net profit of €100.7 million, an improvement of 180% over the previous year. These results, together with positive financial management, which has reduced our debt by €226 million (placing it at the lowest level in our history), have exceeded market expectations.
I would like to highlight one important milestone in particular. Our Chairman and Founder has announced his resignation and transferred his executive powers to me in a special year for all of us. This fact guarantees our stakeholders continuity and renewal, keeping intact the family values that have characterised Meliá Hotels International since its inception.
We have owed a lot to our stakeholders since our beginnings as a company. They are part of our history, of our growth as a company and, it goes without saying, are an important part of the transformation in which we are engaged. Over time, we have built strong relationships and shared commitments with all of them. We also evaluate their priorities through a materiality analysis that, year after year, serves as a catalyst for a model of dialogue that is based on trust, closeness and transparency. It is precisely our commitments to our stakeholders that form a major part of the strategic priorities of Meliá Hotels International.
Ensuring the cultural change and transformation that Meliá Hotels International has undertaken requires us to foster and consolidate our corporate reputation and the management of our teams' talent, the essential foundations for bringing about transformation. In this connection, for the third consecutive year, the Company has been named by Merco as the Spanish tourism company with the best corporate reputation and the best employer brand. In parallel, Meliá Hotels International, as a hotelier, has a special commitment to environmental protection and the protection of its destinations. This commitment and our environmental strategy have placed us, once again, at the head of the Carbon Disclosure Project for our industry, making it clear that our reputation as responsible managers is recognised at an international level.
I think we are setting out to face our future from an excellent position and we need to take full advantage of it. As a family business, we have a long-term vision, a solid foundation and strong values, 60 years of experience and a team that is motivated and committed to generating shared value.
Gabriel Escarrer Jaume
Vice Chairman and Chief Executive Officer
Vision 2020 & milestones
DEDICATION TO SERVICE
- Entry into Miami and New York
- Opening of our first hotel in Jamaica
- Morocco opens its doors to our first hotel there
- Signing a deal for a 100% organic hotel in Tanzania
- Commitment to Iran, with the Gran Meliá brand
- Launch of the renovated Gran Meliá Palacio de los Duques
- Myanmar, a new destination in the Asia Pacific region
- Gabriel Escarrer Juliá receives the “Hall of Fame Award”
- The founder of Meliá Hotels International named Honorary Ambassador of Marca España (Brand Spain)
- Industry leaders in Merco Companies & Merco Talent
- The CDP Iberia 2016 index recognises our environmental commitment
- Entry into the TOP 100 of Merco LATAM Corporate Reputation
- Meliá Hotels International renews its alliance with UNICEF for the third time
- Meliá Zanzibar, “Best initiative in sustainable development and corporate responsibility”
- Meliá Hotels International celebrates 60 years of Hospitality
- The Company returns to the IBEX 35
- Work begins on the new hotel and commercial complex in Calviá Beach
- Internationally recognised digital transformation
- Telefónica enters as a technological partner worldwide
- Meliá Hotels International is chosen to run the new Palacio de Congresos in Palma
- Artificial intelligence & big data revolutionise customer awareness
Map of positioning
Meliá Hotels International has defined its position in various fields to reinforce its leadership and to drive change by generating value.
In order to strengthen this position, the Company collaborates directly with associates, partners and collaborators that are renowned in their fields, including civil society, multilateral organisations, public administrations and key institutions in the academic world with which it shares common objectives
Reputation and recognition
Leading company with the best corporate reputation in the tourism sector
One of the companies with the best corporate reputation
Entry into the TOP 100. Evaluation carried out by Merco Companies in Spain and Latin America
Best Hotel Companies Worldwide
Leader in Spain by presence, turnover and overall number of establishments and rooms
One of the best companies at attracting and retaining talent
Meliá Hotels International has generated wealth of €2,878 million, distributed among numerous stakeholders. This authenticates the solid values on which the Company is founded, as its activity works to directly benefit society in general and, in particular, its stakeholders. This contribution has been distributed around the globe, due to the international presence of the Company in 43 countries and on 4 continents, as well as in the country where the Company was founded, Spain
Meliá Hotels International’s business model focuses on generating value for its stakeholders. This model is the result of the Company's evolution over six decades in areas such as internationalisation, innovation and a range of global services under criteria of excellence and proximity to the needs and expectations of its stakeholders
DIGITALIZATION OF THE SALES AND DISTRIBUTION MODEL
The greater customer-based personalisation has improved satisfaction ratios and other operating and business ratios, such as an increase of the conversion ratio, an increase in revenues and their contribution to the profitability of the business
DIGITALIZATION OF PROCESSES
PARTNERS & OWNERS
SHAREHOLDERS & INVESTORS
PRESS AND MEDIA
INDUSTRY & COMPETITION
€1,802.0 million Revenues (+4%)
€279.5 million EBITDA without capital gains (+14%)
27 Consecutive quarters of RevPAR growth (CAGR 10%)
50.7% Centralised sales ratio (+21%)
39.9% Revenues from loyal customers +31%)
16.4% Mobile sales growth
44,405 Employees (+5%)
71.4% Management positions filled internally
30% Employees < 30 years
16th position Merco Talent (+4 Pos.)
Top Employer China
17th position Merco Talent (+1 Pos.)
TOP 100 Merco LATAM
6.9 million Members MeliáRewards (+44%)
6,304 Global suppliers (+45%)
19,699 Impact stakeholder newsletter
€5.1 million Investment (+15%)
Best social media strategy The E-Show Madrid
Best business idea Katmandu Park & Resort
€163 million Investment (+52%)
World’s Best Resort Brand World Travel Awards
ME London Best Wow Effect by a luxury hotel World Travel Awards
Debt reduction (-29%)
Evolution of shares (-9%)
€100.7 million Net profit (+180%)
TOP 3 Best European investor relations team
Presence in 43 countries
42.6% Net Promoter Score - NPS (+1 pp)
395 Hotel awards and recognitions
Launch of new melia.com
23 language versions available on melia.com
Member of FTSE4GOOD IBEX since 2008
Llotja Prize for best information and transparency Chamber of Commerce of Barcelona
25th position Merco Responsibility and Corporate Governance (-4 Pos.)
45% Independent Directors
234 Internal audits carried out (+14%)
7.1% Women promoted
+€700,000 Earmarked for children
€360.1 million Volume billed by local suppliers (+60%)
Best CSR project Worldwide Hospitality Awards Improving life in Kairo
Carbon Disclosure Project CDP Top Iberia-A-
Carbon footprint: tonnes of CO2 per stay (-3%)
48% Portfolio of certified hotels (+8 pp)
Electricity consumption per stay (-12% kWh)
Water consumption per stay (-8% m3)
Consumption of kgCO2 per stay (-12%)
Fuel consumption per stay (-17% kWh)
€24.2 million Investment in technology (+37%)
Best company in digital transformation
Digital European Mindset Awards
Digital Talent Award Accenture Strategy & El Economista
Presence in main sector forums
28.7 million Stays (-4%)
83% Non-Spanish customers (-1%)
Overview of the environment
Meliá Hotels International monitors the macroeconomic and geopolitical environment and the evolution of trends so as to consider them and their impact on a dynamic environment that is constantly changing.
The growth of the tourism industry has remained solidly in line with expectations, despite challenges during the year, such as lack of security in some regions and geopolitical conflicts in specific destinations.
All this reflects the key importance of the tourism industry in the world economy, as it generates 10% of world GDP, 1 in 11 jobs worldwide and creates wealth for the local communities in which it operates.
Meliá Hotels International highlights the following factors as those that can mark the future of the global landscape in the coming months
Personalisation & experiences
Growth of urban areas
New competitors (M&A)
Lack of legal guarantees
Impact of OTAs
Opening of Cuba
Big data & analytics
Connectivity of devices
Volatility of financial markets
Trust in emerging markets
Price of raw materials
Meliá Hotels International promotes its strategy in line with Vision 2020, organising the transformation processes along three fundamental dimensions that are key to its business model in the current environment: innovacion, people and digitalisation
These three dimensions act as ambitious, cross-cutting forces for change and are present in the different levers that make up the strategic drive of Meliá Hotels International in 2016