U.S. Shareholders Control 10.04% Of Spain's Melia Hotels; Company Reports Libertad Act/Trump Administration Impact Upon Cuba Operations
/Palma de Mallorca, Spain-based Melia Hotels International (2018 revenues approximately US$2.4 billion) referenced the Republic of Cuba on nineteen (19) occasions in its twenty-eight (28) page 2019 Third Quarter Results published on 30 September 2019 and references the impact upon its operations due to lawsuits filed against third-party online travel service providers in the United States using Title III provisions of the Cuban Liberty and Democratic Solidarity Act of 1996 (known as “Libertad Act”). Melia Hotels International has been named as a defendant in one lawsuit [LINK].
Title III authorizes lawsuits in United States District Courts against companies and individuals who are using a certified claim or non-certified claim where the owner of the certified claim or non-certified claim has not received compensation from the Republic of Cuba or from a third-party who is using (“trafficking”) the asset.
U.S. Shareholders Control 10.04% Of Melia Hotels International; In 2000, 16%
Among the ten-largest shareholders in Melia Hotels International: Gabriel Escarrer Julié & Family (52%); New York, New York-based EII Capital Management, Inc. (5.53%); Austin, Texas-based Dimensional Fund Advisors LP (1.82%); Valley Forge, Pennsylvania-based The Vanguard Group, Inc. (1.36%); and Boston, Massachusetts-based Fidelity Management & Research Co. (1.33%). In 2000, individuals subject to United States jurisdiction reportedly held approximately 16% of the publicly traded shares of then-Grupo Sol Melia.
The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington D.C., authorizes companies subject to United States law to have non-controlling investments in third country companies that have commercial activities within the Republic of Cuba provided that the investments do not result in control in fact of the third country company and provided that a majority of the revenues of the third country company are not produced from commercial activities within the Republic of Cuba [OFAC 4 March 1994].
About Meliá Hotels International
“Founded in 1956 in Mallorca (Spain), Meliá Hotels International operates more than 390 hotels (portfolio and pipeline) throughout more than 40 countries, with brands including Gran Meliá Hotels & Resorts, Paradisus by Meliá, ME by Meliá, Meliá Hotels & Resorts, INNSiDE by Meliá, Sol by Meliá and TRYP by Wyndham.”
Third Quarter 2019 Report
CUBA
RevPAR in USD (managed) was impacted by already known circumstances and posted a drop of -10.7% in the quarter vs Q3 2018.
Total fee revenue in USD fell by -13.0% in the quarter vs the same period last year due to a number of aspects that will be discussed below.
Melia.com sales in room nights rose by +1% in Q3 2019 vs SPLY, due to a more dynamic management of rates, participation in all global, regional and private campaigns on melia.com, and particularly to the contribution from Melia Internacional Varadero, a hotel that has seen remarkable online sales since opening.
In line with the first half of the year, tourism in Cuba remained subject to tensions in the third quarter. The measures taken by the Trump administration continued to affect the group business known as "People to People". These measures also affected on shipping companies responsible for transporting fuel to Cuba, creating problems with fuel supplies that hindered hotel operations.
This context led to a deterioration in average rates in USD of -3.5% compared to the same period in the previous year. This downward pressure on rates was most prevalent in Havana, Cienfuegos, Jardines del Rey and Santiago de Cuba.
Occupancy fell by almost -3.6 percentage points compared to the same quarter in the previous year, with the most affected destinations being Cayo Largo, Camaguey, Santiago de Cuba, Varadero and Havana.
Results for the quarter also continued to be impacted by significant partial reforms in several hotels, including the renovation of Paradisus Varadero, part of the Sol Rio de Luna y Mares resort, and the Melia Las Américas, as well as the continued remodelling and extension of the Hotel Sirenas and Sol Santa Maria.
On the positive side, it is worth highlighting a certain market recovery as Canada, Argentina, Italy and Chile, as well as significant growth in the domestic market.
OUTLOOK
The bankruptcy of Thomas Cook is the most significant factor that will impact the region in 4Q2019, especially affecting markets in the United Kingdom and Germany, due to the lack of flights.
An impact is also expected from recent decisions by Trivago to withdraw a large number of Cuban hotels from their sales channels due to the application of Title III of the Helms Burton Act. All these circumstances point towards a medium single- digit decrease in RevPAR compared to the previous year, with Holguin, Cayo Largo and Havana being the destinations most affected.
PORTFOLIO AND PIPELINE
In this quarter we have not added any new hotels to our portfolio. The property owners remain focused on continuing to improve our hotel facilities through renovations and repositioning. At the end of the year, the reopening of the Sirenas Hotel is scheduled under the new name of Sol Varadero Beach, with 356 fully renovated rooms under a new concept for Cuba.
LINK To Third Quarter Report
Previous Posts:
Melia Hotels, Expedia, Trivago, Orbitz, Hotels.com, Travelocity, Booking.com Added To Title III Libertad Class Action Lawsuit
Plaintiffs Appeal Dismissal Of Lawsuit In Spain Against Melia Hotels; Plaintiffs Sue In U.S.; Why Did Melia Hotels Offer US$5 Million Then US$3,197.75?
Court In Spain Dismisses Lawsuit Against Melia Hotels International Relating To Operations In Cuba; Plaintiffs Now Expected To Sue In U.S. Using Libertad Act
