The effects of the recession, downturn in business travel and slowdown in its key markets in Spain and the UK combined to cut revenues in Q109 by 9.6% to €266.7m. Earnings before interest, taxes and amortisation (EBITA) were down 37.4% at €39.4m.
For the second and third quarters of the year, Sol Melia predicted revPAR (revenue per available room) would remain under pressure because of corporate savings policies and difficulties in the Spanish island resorts as fewer Brits and Spaniards are travelling on holiday.
Currently, bookings for the summer season in Spain are below last year by double digit amounts, although they are ahead of the industry and the trend for late bookings mean the season could improve.
More than 50% of summer bookings are expected to be late bookings, and travellers are saving money by decreasing the length of their stay, visiting less expensive and closer destinations or opting for lower category accommodation. The demand for all-inclusive products has increased.
The impact of swine flu has been limited because the outbreak took place in the low season and clients have been transferred from Mexico to alternative destinations in the Caribbean.
Sol Meliá’s new contingency plan has boosted revenues in Q109 by €8m-10m while making savings of €12.1m.
On 30 April, Sol Melia took out a three-year €80m loan and agreed a mortgage loan of €20m.
Announcing the first quarter results, Gabriel Escarrer, chief executive and vice-chairman, said: ‘In the current environment it is virtually impossible to give a date for recovery, linked as it is to the global economic recovery.’
See also:
Sol Melia cuts more costs as profits plunge (02/03/2009)
Sol Melia seeks tax breaks (05/02/2009)
Spain costa too much, say Brits (19/01/2009)
UK visits to Spain fall 15% (23/12/2008)
Sol Melia hit by slump in demand from UK (11/11/2008)