Sol Meliá Increases Profits

Sol Meliá has achieved profits after taxes of 2,291 million pesetas for the first six months of the year, an increase of 22.3% over the same period in 1997.


During the first half of the year, the company has obtained a 13.3% increase in management fee revenues which have increased to 6,292 million pesetas.


In general terms, the increases have been largely due to the improved performance of hotels incorporated in previous periods and an overall increase in hotel occupancies of 2.1% with respect to the same period in 1997.


The company’s highly diversified hotel portfolio, range of locations and hotel categories, together with the important growth achieved in recent years, has minimised the effects of the current economic crisis in Asia which has had limited consequences for the profitable growth of Sol Meliá due to the stabilising effects of performance in other company divisions.


With regard to the results of other divisions, the best performances have been seen in the European Resort and European City Divisions. The European Resort Division is experiencing the benefits of important efforts in the Spanish tourism industry to reduce the seasonal nature of its tourism as well as the expertise of Sol Meliá in resort hotel sales.

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Hotel occupancy rates have increased by 2.64% over 1997. In the European City Division, occupancy rates have grown even more, increasing by 8.93%.


The recent incorporation of new hotels in the Cuban Division and Americas Division has allowed the company to increase management fee revenues by 14 and 19% respectively compared to 1997.


THIRD QUARTER FORECASTS:
According to the company CFO, Oscar Ruiz, “we are moderately optimistic with regard to the third quarter, which is the most important quarter for us with respect to revenues. This year, we believe that the general improvements seen in the summer season should be augmented by our improvements in occupancies and average room rates in our European resort hotels, especially in Spain.


The results will be seen when we announce third quarter performance once we have reached the end of September.


STRATEGIC GROWTH:
During the first six months of the year, Sol Meliá has added 34 hotels to its portfolio. By the 30th. June, the Spanish company operated 245 hotels in 25 countries with a total of 65,083 rooms.


By the same date, the company had also signed 17 agreements for hotel incorporations before the end of the year and a further 25 contracts to take over new hotels from 1999, along with any others that may be signed in the forthcoming months.


Amongst the most important agreements reached in the first six months of the year, the most significant has been the purchase of Croatian Hotels and Resorts, a management company running 21 hotels and tourist accommodation facilities in the north of Croatia near the border with Italy and Austria. The hotels are being gradually absorbed into the Company after undergoing major improvements.

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