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2010, a transition year

Saturday 27, February 2010

 

2010, a transition year

 

The forecasts for 2010 for Sol Meliá are moderately better than for 2009. By region, Spanish cities, one of the areas most affected by the decrease in corporate travel, will continue to see the stabilisation already started in occupancy (which will also be positively affected by the Spanish presidency of the EU), although the continuing pressure on prices means that improvements in RevPAR are not expected for the area.

 

 

For Spanish resort hotels, the company expects a slightly better high season than last year due to stronger ties with strategic partners, particularly on the Spanish mainland coast, in Menorca and Mallorca. In Ibiza the season is expected to be much like 2009, while the performance in the Canary Islands remains a question mark subject to the effect that may be created by the so-called “Canary Islands Plan” approved by the Government.

 

In Europe, capital cities such as London, Rome, Paros or, to a lesser degree, the German cities, have already seen positive trends which are expected to continue in 2010. Latin America is expected to see a positive underlying trend boosted by the recovery in consumption in its ma¡n feeder market, the United States. Sol Meliá continues to monitor the effect of the Haiti earthquakes on the hotels in the Dominican Republic, where normality is being resumed and further growth is expected from April. The hotels were not affected by the earthquakes, but have been touched by the magnitude of the tragedy, particularly due to the proximity to the Dominican Republic. The hotels are contributing to aid with a 4 dollar donation for every night booked going to the Clinton-Bush fund for Haiti.

 

According to Sol Meliá, the Revenue Per Available Room (RevPAR), so severely affected in recent years by alterations in the hotel supply and demand equation, will begin to find a more stable balance –although still incipient- in 2010. After several years of oversupply, the crisis will bring a progressive adjustment in the supply of rooms, accompanied by a gradual recovery in demand as we come out of the crisis. In Spain the total hotel supply is expected to grow by only 1% over the next four years, and of those new hotels only 36% are actually under construction. In Europe supply is expected to grow by 3%, but 40% of those hotels will be in the budget segment – with no food and beverage service – and not in markets in which Sol Meliá operates.

 

Given the signs of improvement in the business environment, Sol Meliá does not expect any further deterioration in 2010, but remains prudent when it comes to forecasting the speed of the recovery. The company is also very aware of the fact that:

 

a) its relatively more positive situation

b) its continued commitment to its long-term vision – even while reacting with the most appropriate measures at the lowest point in the cycle, and

c) its continued commitment to discipline during this current phase

 

are factors which, as soon as the market recovers, will allow Sol Meliá to make the most of these benefits to gain strategic strength and improve its hotel portfolio at all levels.

 

 

 

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