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MELIÁ HOTELS: COO FORECASTS GOOD DEMAND FOR HOTELS ON THE IBERIAN PENINSULA (ANÁLISIS BANCO SABADELL)

In an interview to the CNBC, Meliá’s COO outlined that most of the company’s hotels on the Iberian Peninsula are currently open and are seeing good demand levels.
On another note, the COO considers that the summer season could be “favourable in some regions”, although operating costs (that could rise by +10% due to Covid-19) and restrictions to provide their services could result in a complicated 2020.
Positive news, as one of the key factors for the share price would currently lie in the confirmation of some rise in demand following the lifting of the lockdown measures. The share price is now climbing (+8.2% in absolute terms, +5.6% IBEX), although it has plummeted more than -28% from the highs seen at the beginning of June.
Even though this is positive news, note that the Spanish resort segment account s for ~20% of MEL’s EBITDA, with the resumption of the activity in LatAm being key (where no newsflow has been announced for the time being), which accounts for ~40% of the Group’s EBITDA (and where ~50% of demand come from the US). In our estimates we already assume a significant recovery scenario, where in 2022 MEL will be able to generate an EBITDA level only -10% below that seen in 2019, however, at current levels we do not see upside.