Meliá Hotels International, S.A.

Good morning everyone and welcome to Meliath's first quarter and full year 2024 Ord earnings conference and presentation. I am Stefan Raus, Head of Investor Relations. For the time being, all participants will be in a listen-only mode. After the presentation, anybody who is interested will have a chance to ask questions so we can address any additional doubts. Please note this event is being recorded. Before we begin, we would like to remind you that all discussions this morning will include forward-looking statements. Actual results could differ from those indicated in the forward-looking statements, and forward-looking statements made today speak only to our expectations as of today. In the otherwise states, our response occupancy, average daily rate, and P&L comments present to year-over-year changes This morning, as usual, on the call with me today are Gabriel Escader, our President and Chief Executive Officer, Andres de Ondo, our Chief Operating Officer, Angel Luis Rodriguez, our Chief Financial Officer, and Sam Nacefardo, our Chief Real Estate and Sustainability Officer. Our president and CEO will provide an overall picture of the company's performance. André will then review our course quarter onwards. Following these words, we will be happy to take your questions. In any case, the investor relations team will be available following these conference calls to give you a chance to clarify anything else you might need. You can find our earnings release on our investor relations website at www.meliahotelsinternational.com And now, I am pleased to turn the call over to Gabriel.

Thank you, Stephan, and good morning, everyone, and thanks for joining us today. 2024 has been a year where the economic environment has evolved. Inflation has started to ease, but in some cases remains heavy. what would you like to share with the narrative in the market closely with you know what would be the recent changes after the different election processes that are taking place around the world both risk and opportunities while also increasing our certainty in this environment and to present these results and to confirm that our main financial and operational objectives Hotels Intl Ord Hotels Intl Ord Hotels Intl 10.7% confirming the robust guidance we set a year ago. This performance was mainly driven by price increases, which accounted for approximately 75% of the red flag growth, exceeding our initial expectations. In this context, turning to results for the full year and quarter, From a year-on-year perspective, consolidated revenues excluding capital gains stood at 2013 million euros, representing an increase of plus 0.4%. Notably, all and least available rooms are likewise minus 4.3% compared to last year, still in part derived from the equity to smugglers portfolio changing from least to management. Additionally, last year we had two one-off impacts. 11 million euros from the selling of estate in a subsidiary and 17 million from a positive conclusion of a trial in Brazil. Excluding all these aforementioned effects, the yearly increase of consolidated revenues, excluding capital gains, would be of plus 10%. On a like-for-like basis, for the fourth quarter, consolidated revenues, excluding capital gains, increased by plus I'd like to point out that management fees from third parties increased by plus 12.9%, showing the strength of a passive life expansion approach. Operating expenses increased by plus 3%, being the most relevant increase personal expenses by plus 4.7%. This is in part due to an overall extended season in our resort hotels, together with salaries increase. On the other hand, our efficiency in cost management, together with the deceleration of inflation, reduced the increase in hotel costs, enhancing EBDA flow through which stood at 56%. As anticipated last year, I am glad to announce that our objective to reach at least 525 million euros of TBDA excluded equity gains has been surpassed, as we reached a total of 533.6 million euros. For the fourth quarter, excluding the one-off in 2023, TBDA has increased in 30.6%. The yearly margins stood at 26.5% in tagging at 129 basis points improvement. Showing intimate financial results for the year, it worsened by 3.5 million for the year. However, I am pleased to report that we achieved a significant reduction in financial costs. decreasing by 10.3 million euros. Even though reference rates were higher during the year, the acceleration of our deliberating process, driven by strong cash flow generation and our proactive asset rotation strategy, have compensated for this increase. Additionally, you can see how our maturities have softened, or or or or or or or Profit and loss from Associates and JDs was of minus 13.4 million euros, mainly due to the accrual of an impairment by amount of 24.2 million euros. This impairment is related to a company that indirectly owns the operation rights of some hotels in Cuba. With all that, consolidated net profit increased by 24.5%, reaching a total of €162 million, while net profit of the current company reached a positive €146 million, that represents an increase of 19.4%. Lastly, Earning per share for the year stands at 0.64 euros. Turning to the balance sheet, I'm pleased to share the relevant progress we made on e-leverage, which has been one of the main priorities of the company for the last years. We reduced net financial debt by approximately 400 million euros. reaching and surpassing the leverage ratio objective set in the annual shareholder meeting. This relevant debt reduction was obtained using the following levers. Firstly, we have generated a strong operational free cash flow of approximately 100 million euros after paying 20.6 million euros in dividends. Secondly, Our well-known strategic asset rotation approach allowed us to generate approximately an additional 300 million euros from proceeds of selling minority stakes in subsidiaries. The main transaction, as you already may know, was carried out by Banco Santander and the last transaction which has been carried out in the fourth quarter with Banco Popular Dominicano. I'm confident our long-term relationship with our partners exploring additional projects together in the future. Turning into the value of our assets, together with the presentation of our annual accounts, we have published a new asset appraisal evaluation carried out by Richard Ellis. This new valuation shows an increase in the total value of our assets by plus 13.8%, reaching a total value of €5,285 million for all assets and JVs. This is a clear sign of the crystallization of our innovation and repositioning procedures. in our strategy to address the upper and luxury segments. After this valuation, we register a total amount of €39.9 million as capital gains. In accordance with the applicable accounting standards, only the revaluation of assets classified under investment property is required. I will now turn the call over to André to talk about our operational performance during the fourth quarter transfer wars in more detail. André, please.

Thanks, Gabriel, and good morning, everyone. Complimenting previous remarks, after a solid summer season fueled by the celebration of major events like the Olympics in Paris and the Euro Cup in Germany, the fourth quarter continued with the upward trends seen throughout the year. On a yearly basis, we have seen a positive performance in all regions, quarter by quarter, except for Cuba. Our period locations, together with the strong repositioning process we made in the upper-scale and luxury segments, allowed us to capitalize the strong market momentum. Achieving a yearly growth in system-wide rep part of 10.7%, with a 75% increase coming through pricing strategies. In the fourth quarter alone, system-wide rent part increase was of 7.3%. Going into more detail, our hotels located in Spain present once again a positive quarter, where our city hotels benefited from a positive leisure time during the festivities, combined with notable events such as sporting competitions and business fairs. Our resort hotels show likewise a positive performance, with price increasingly running 9% together with increase in occupancies. It is worth noting that the trend shown at the end of the year allowed us to once again extend the season in some of our hotels. Turning into a year, we see a positive end of the year overall. Mines together with uses transient and issue time have behaved well. We have nevertheless seen a double speed behavior within countries since France and Germany are facing some political uncertainty causing some instability thus showing a single digit increase in West Park. Other destinations like the UK and Italy perform better showing a double digit increase in West Park. The fourth quarter was particularly affected by uncertainty due to the US presidential election, causing some price adjustments in order to maintain market share. The positive note overall comes from the fact that the reservations and occupancy figures surged after the US election ended, showing a clear recovery. This can also be seen on the performance of our Black Friday campaign, which was very successful. This campaign as a whole generated an increase of around 26% in sales, with a 5% price increase compared to last year on a general basis. In Asia, China is still recovering from the weaker performance throughout the year. The market remains mainly domestic driven. the the the the the the the or a few you up or or or or or or or or or or or This year, we opened 19 hotels, adding 3,000 rooms to our system. Net unit growth for the year reached over 2%. Regarding new projects added to the pipeline, we signed 34 new hotels adding more than 5,000 rooms to our pipeline. For 2025, we will continue to reinforce our strategy, focus on three pillars. Consolidating our leadership in the luxury segment, We remain committed to signing at least 25 new hotels yearly and open 20 properties during next year. Our mid-term goal is to surpass the 100,000 rooms in our operative portfolio. Let us talk now about our 2025 expectations. While geopolitical risks and economic uncertainties present challenges in some countries, overall conditions for the global hospitality industry remain favorable for continued growth. This positive outlook is supported by stable labor markets, strong business activities, and economic growth, which have been benefited from easing inflationary pressures and the shift in the interest rate cycle over the past 12 months. Market research and consumer surveys indicate a continued periodization of spending on travel, while business surveys suggest increasing corporate travel budgets in 2025. With demand fully recovered, Oxford Economics estimates that global hotel room nights exceeded 2019 levels in 2023 and have continued to grow in 2024. I'll be home I'll great 3.0 3.6 percent 2034 I'll be home I'll be home I'll be home I'll be home City Hotels. By segments, all events will show a positive performance, and even though in years some one-off events like the Olympics or the Euro Cup will not take place, this should not cause a significant effect. Fitter markets overall remain to be unchanged with historical records, and we see no signs of a slowdown so far for top European clients. We also like to remember that in part thanks to our good decision and process, we are increasing market share contribution from nationalities like the U.S. and the United Arab Emirates, who have one of the highest ADR contributions to the company. We understand that the strong U.S. dollar evolution should be a tailwind in terms of our operations. and the future evolution of reservations, specifically in Europe. With all this, we are expecting that Redfar for 2025 should increase in the mid-single-digit range, with a balanced contribution from occupancy and price increases. I will now turn back the call over to Gabriel to summarize the main messages of the call.