Gabriel Escarrer Jaume (Palma de Mallorca, 1971) grimaces when he is reminded that NH has surpassed Meliá Hotels International in terms of turnover in the last financial year. Of course, the president and CEO of the leading Spanish hotel company by number of rooms comes forward and quickly turns the situation around: “The most important thing is the bottom line,” the chain’s profits. …
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Gabriel Escarrer Jaume (Palma de Mallorca, 1971) grimaces when he is reminded that NH has surpassed Meliá Hotels International in terms of turnover in the last financial year. Of course, the president and CEO of the leading Spanish hotel company by number of rooms comes forward and quickly turns the situation around: “The most important thing is the bottom line,” the profits of the Balearic chain. They are larger than those of the one in the hands of the Thai firm Minor, he maintains.
Escarrer is satisfied with the results that the company achieved in 2023: 130 million euros of net profits (for 128 million NH) and income of 1,928.8 million, 14.8% more than the previous year (for 2,163 million NH). And also with the evolution of the business so far this year: “There is no indication that makes us think that 2024 is going to be worse than 2023. Despite the geopolitical uncertainty, the desire to travel has been accentuated after the covid in all markets,” says the executive, who speaks of a return to normality of the industry after the “clear recovery in recent months of the Asian market”, the only one left to resume its trips, and “that has changed “His priorities: he wants to travel at all costs and post it on social networks.”
However, the manager does not want to hear about the forecasts that are being considered in the sector that Spain will exceed 100 million foreign visitors in 2024: “We should stop talking about visitors and talk about the waste they cause, about raising their quality . Continuing to rely on the number of tourists can lead to a certain feeling of overwhelm in some places and bring about symptoms of tourismphobia,” as has been seen with the massive demonstrations last weekend in the Canary Islands.
The lucky islands are precisely the ones that are going to give the company the most joy in the first quarter of the year, which is also the best for the hotels in America-Caribbean, which are going to show very good results, advances Iván San Félix, analyst at Income 4. Just like those of Vietnam, Thailand and Indonesia, which have experienced their high season this winter with Asian tourists returning, explains Escarrer, who sees how this spring the Chinese and Japanese visitors, who had disappeared from Europe, They are coming back.
The fact that the only travelers left to return to normality after the pandemic have done so, together with events that act as major tourist hotspots: the Olympic Games in Paris or the Euro Cup in Germany, makes Meliá’s chief executive think that This is going to be a good year for your business. Something that stock market analysts who follow the hotel company listed on the Ibex 35 also think. Meliá “manages to defend the EBITDA margin in an environment of high inflationary pressure on costs (25% in 2023),” says a recent Bankinter report, which highlights the record levels of operating profit and net profit last year, and predicts that in 2024 profits will grow by 15% and EBITDA by 8%.
For the Renta 4 analyst, the point for improvement of this company, which he considers well managed and with growth plans, is its high debt (last year it closed with 2,613 million after a cut of almost 60). “It would be good to reduce it,” says San Félix. He’s not the only one who believes it. In fact, the latest asset rotation operation carried out by Meliá was very well received by the Stock Market, where the share was trading at around 6 euros until it announced the sale of 38.2% of three luxury hotels to a subsidiary of Banco Santander. for 300 million euros on February 20. Since then, the titles exceed 7.40 euros. They have less mileage, although Bankinter recommends buying them and sets the target price at 7.69 euros.
With this operation and the sale of another minority percentage of two hotels in Mexico and the Dominican Republic for a value of about 75 million dollars, as well as “with the good evolution of cash, we feel comfortable that in the very short term the debt net financial is below 2.5 times ebitda, at levels equivalent to or better than those of 2019, as we committed for this year,” explains Escarrer, for whom “the priority is to strengthen the balance sheet.”
Sovereign fund
Iván San Félix speaks of a negative impact on the hotel company’s accounts: the 17 hotels it sold last year to the sovereign fund Abu Dhabi Investment Authority, ADIA, which go from being rented to being managed, the model that Meliá is prioritizing, and therefore will contribute less income. But, for Escarrer, ADIA is an “exceptional and strategic partner.” So much so that both parties are “jointly analyzing third-party assets in Spain that need repositioning or are for sale.” These are both packages like the one they once bought from Meliá for 600 million and individual hotels, says the president, who is struck by the number of banks that are willing to lend money to the sovereign fund and their speed in closing agreements. . “There is a desire on both sides to strengthen our alliance.” And the family-owned hotel company wants to “continue getting the most out of” the partners it currently has (Azora, Atom, Darius Capital, Morfeo…) instead of looking for new ones.
The company intends to add at least 25 hotels to its portfolio of 400 this year (so far it has opened 5) and will experience significant growth in the short term in Saudi Arabia, Malta, Albania, Spain, Mexico and the Dominican Republic, the executive advances. 90% of the medium-term expansion will come from the United Arab Emirates and Saudi Arabia, Southeast Asia, North Africa, the Mediterranean basin and the Caribbean, he continues.
Last week the chain announced the signing of two new hotels in Thailand, where Escarrer traveled to continue through Saudi Arabia; With one of them he will introduce the luxury brand Paradisus in the country and in Asia with a newly built resort. This brand is one of those that drives its growth in the luxury segment, which will bring together half of the openings in 2024. And that is what, according to the executive, makes them differentiate themselves from the competition, which has grown a lot in four stars , but not so much in five. Something that he repeats with the Zel brand, launched last year together with Rafa Nadal: “It is bearing great fruit.”
Escarrer is happy with how the summer is looking. In the last two years, reservations were only made 45 or 50 days before the trip and now they are made 15 to 20 days more on average. “It’s a good sign,” he believes. The hotel company, which sells 46% of its beds directly, expects a good 2024: “We hope that occupancy, which in 2023 was four points below 2019, will recover this year or be above it thanks to the return of the Asian customer. And that prices, which have risen a lot, are in line with inflation or slightly above.”
Meanwhile, Escarrer hopes that on May 9 the shareholders’ meeting will approve his 18% salary increase, which he justifies because it has not been reviewed since 2018 and during the covid he did not receive variable remuneration and the fixed salary was lowered by 50% for the six first months and 25% the rest. Furthermore, the position of president has now been added to his card, he argues.
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