9M09 Results. Highlights Rev, Ebitda and Net Profit down by 9.3%, 16.0% and 40.7% Profit & Loss Account. Operational Ratios. Interest Cover Ratios

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1 9M09 Results Profit & Loss Account (million Euros) RevPAR % EBITDAR MARGIN 27.2% 28.2% -104 bp EBITDA MARGIN 20.6% 22.3% -165 bp EBITDA MARGIN (ex-asset rotation) 15.2% 22.3% -707 bp EBT MARGIN 7.0% 9.0% -200 bp NET PROFIT MARGIN 5.3% 8.1% -279 bp Interest Cover Ratios EBITDA / Net Interest Expense 5.9x 5.0x 19.2% EBIT / Net Interest Expense 3.6x 3.3x 7.1% EBITDA / Net Int. (ex - asset rotation) 4.4x 5.0x -12.1% EBIT / Net Int.( ex - asset rotation) 1.4x 3.3x -57.4% Stock Performance /01/ /02/ /03/ /04/ /05/ /06/ /07/ /08/ /09/2009 SOL VOLUME SOL LAST IBEX LAST 01/10/ /11/2009 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Average Daily Volume 2009 ( ) 1,679, Week High, Oct 19th Week Low, March 6th Market cap Nov 9th 09 ( 6.070) 1,121.6mn / $1,681.5 mn Bloomberg: SOL SM ; Reuters: SOL.MC Sep 09 Sep 08 % REVENUES % EXPENSES ( ex - Operating leases) % EBITDAR % Rental expenses % EBITDA % Depreciation and amortisation % EBIT % Total financial profit / (loss) (39.8) (55.5) 28.2% Profit/(loss) from equity investments (8.7) (3.0) % Continuing EBT % Discontinuing Operations Profit before taxes and minorities % Net Profit % Net Profit attributable % Operational Ratios 0 Highlights Rev, Ebitda and Net Profit down by 9.3%, 16.0% and 40.7% Figures are explained by the -15.9% decrease in Total Hotel Revenues, especially in the Tryp brand which went down by -22.8%. This is explained by the sluggish performance of overall Spanish cities (Total Revenues 9M: %). Such effect could not be offset by the better evolution of Premium brand hotels (Total Revenues 9M: -10.4%), on the back of the overall performance of LatAm hotels (Total Revenues: - 7.5%) as of 9M. The Company has witnessed an improvement in Q3 vs. Q2 of Hotel Revenues (-16.2 % vs %) and Occupancy rates (-6.6 % vs %) in all brands Additionally, 1) the sale of the Meliá Madrid Princesa for 87.8 Mn Euros, generating 48.6 Mn Euros of capital gains, 2) the improvement of the Financial Results by 28.2% resulting from the management of debt and the reduction of 3-month Euribor and 3) the 59.8 mn Euros in savings derived from the implementation of the Contingency Plan. Outlook: Slow pace of recovery expected Throughout Q4, a better evolution of Occupancy Rates is expected for Spanish Cities according to current booking positions, although no recovery in prices is foreseen in the coming months. Requests & leads for Business Groups are starting to pick up slowly, but still high degree of lack of visibility. Spanish Presidency of the EU in 2010 is likely to support large cities. Spanish Resorts are expected to outperform City Hotels across the board, as occurred in 9M. For summer 2010 contracting with major British and German Tour Operators indicates stable prices. The European Cities will outperform Spanish cities, especially in London, Berlin, Paris and Rome. Positive trend is seen for Business Groups in Germany, Italy and France, while Congress and Incentive market continues to struggle in the UK. The recovery in LatAm hotels is linked to the evolution of the US economy, although Cancun is likely to still suffer in the short term derived from the Influenza A (H1N1). Further financing of 30 million US Dollars On November 6th, Sol Meliá signed a $30 million non-recourse factoring agreement associated to promissory notes of the Sol Melia Vacation Club. Considering this agreement, liquidity levels rise to million Euros. Sol Meliá continues to explore different financing opportunities to face million Euros debt maturities for 2010 / 2011 (190 mn mn) while maintaining its high levels of liquidity. Future Development Although the Company has put on halt all expansionary Capex, in order to improve its financial situation, Sol Meliá keeps on growing through non-capital intensive contracts. Currently, the pipeline represent 7,725 rooms (24 hotels) (broadly 1 hotel every 6 weeks), 83% under management & franchise and 17% under lease contracts. The pipeline implies the incorporation of establishments in 4 new countries: Austria, Denmark, China and Cape Green Islands

2 Table of contents 1. Letter from the C.E.O. and Vice-Chairman Information on Operations Hotels Sol Meliá Vacation Club Leisure Real Estate Energy consumption Emission savings Income Statement

3 1. Letter from the C.E.O. and Vice-Chairman Dear friend, Sol Meliá is releasing its 9 month results in a slightly more favourable global economic environment than three months ago. In this period, the IMF has reviewed upwards its 2010 GDP estimates, particularly in some of our major feeder markets such as the United Kingdom, US or Germany (Spain, although at a lower pace, still sees slowdown), providing a message that the recovery process in the global economy may have started. Apart from the battery of progressively better macro indicators, we are currently in a period for the release of company results which indicate overall a recovery at the top line and better-thanexpected results. Despite this message of optimism, we understand we must be cautious since the pace of recovery is expected to be slow, and await the evolution of the economy after the withdrawal of the supports by Central Banks and fiscal stimuli. Uncertainty and, especially, unemployment are likely to remain high next year, having a negative effect on available household income. It will be important to closely monitor the net effect of both unemployment and expected low interest rates on spending decisions. RevPAR 9M: Spanish cities: %; Spanish resorts: -14.6% 2010 Outlook: cautious although some signs of improvement Relationship with key players behind success of USP s As far as our Company is concerned, we have started to see a year-on-year gap reduction in occupancy rates in Spanish city hotels for the coming months according to our booking position. In the resorts, contracting for 2010 with British and German tour operators indicates stable prices. Next year, we also expect resorts to have a high level of resilience as occurred in 2009 when, as of September, RevPAR of the Spanish resorts changed by %, versus the -22.7% RevPAR decrease of the Spanish cities. In LatAm, looking ahead, recovery will be linked with the evolution of the US economy that represents some 60% of the clientele in the region. Nevertheless, Cancun, still likely to be affected in 1H10 derived from the impact of Influenza A (H1N1). In the current environment, where even medium-term visibility remains with a high degree of uncertainty, we continue to believe that Sol Meliá has responded with appropriate measures included in the Contingency Plan: 1) Revenues, 2) Cost Optimization, 3) Risk Management and 4) Cash Flow management and Financial Equilibrium. As far as 1) Revenues are concerned, since last May, as we announced in previous reports, one of the measures implemented in order to optimize Revenues was the introduction of Brand Unique Selling Proposals (USP s) in each brand, responding to customer needs with a clear value for money proposition in addition to the regular offers. These USP s have been very well received by customers, having had a direct impact on revenues up to September of almost 4.5 million Euros, and reaching over 77% of the target set for The positive evolution with key industry players and the solid and balanced relationship with OTA s (On line Travel Agencies), Tour Operators, Travel Agents and Business travel managers, together with solmelia.com are behind the success of the brand USP s. All in all, total measures implemented apart from the USP s (a. sales actions with Online Travel Agencies (OTAs) b. the implementation of CRM tools, c. launching of the Cash Incentive campaign to Spanish travel agents, d. aggressive campaigns through solmelia.com and e. the empowerment of family and friends domestic programmes), have had a total impact on revenues of 41.1 million Euros in the first 9 months of 2009, meeting the target set. According to STR Global benchmarking survey, Sol Melia s hotels has shown a better RevPAR performance than its competitive set in large European cities in Madrid, Berlin, Milan and Paris as of September. We understand that the measures taken within our Contingency Plan is behind such evolution. Contingency Plan paying-off Regarding the 2) Cost Optimization Programme, the array of different actions has been widely detailed in previous quarterly reports. As of September, the direct effect of the measures implemented at both Headquarters (14.0 mn Euros) and Business Unit levels (45.8 mn Euros) has led Sol Meliá to save 59.8 million Euros therefore in line with our 64.0 million Euros objective in savings at the end of the year. We want to stress that these measures have been implemented without affecting our brand quality standards in any way. 3

4 In relation to the 3) Risk Management, we keep on working closely with PriceWaterhouseCoopers in order to maintain the Company s risk map up to date, adapting it to current market practices and conditions. As occurred during the first half of 2009, in hotels the Company still maintains similar average collection period to last June figure (64.0 days), a fairly good value in the current market environment. No main changes have been registered in either delinquency rate or the impact of insolvencies or bankruptcies of any company. The evolution of the Influenza A (H1N1) virus so far has been more positive than expected, not causing any increases in employee absenteeism to date (in fact, there was a slight decrease between January and October compared to the previous year) and thus avoiding any impact on costs or affecting the continuity of the business. At the 4) Cash Management and Financial Equilibrium level, Sol Meliá continues to work to maintain high levels of liquidity. Over the past three months, the Company has renewed 96 % of the credit facilities maturing in that period. facing coming debt maturities maintaining high liquid situation. Covenants met by Year-End In the Sol Melia Vacation Club, on November 6, we signed a 30 million US Dollar non-recourse factoring agreement associated to the sale of promissory notes of the Sol Meliá Vacation Club. Considering this transaction, current liquidity levels rise up to million Euros (cash and short-term deposits, available credit facilities and factoring agreement), that compare with million debt maturities of the period. Given the level of uncertainty that still exists, Sol Meliá is exploring the different opportunities that the market offers in order to guarantee short and medium term maturities while keep on maintaining high levels of liquidity. During the third quarter of 2009, Net Debt level has decreased by 87.6 million Euros down to million Euros. For 2009 Year-End, the Company remains confident in accomplishing the bank covenants (Net Debt to Ebitda and Ebitda to Net Interest, based on Spanish GAAPs) that involves 600 million Euros. Although Sol Meliá is currently responding in the short term with measures aimed at managing the current market difficulties we have not altered the vision of our main strategic priorities. In this regards, on October 15th Sol Meliá joined the Corporate Reputation Forum (Foro de Reputación Corporativa), a group founded in 2002 by leading companies in their respective sectors with the aim of sharing and creating knowledge that will help to generate reputation, as a key driver of value creation. To end this letter, we would like to point out that we do not expect any further deterioration of our businesses witnessing some signs that the Company is reaching the bottom, but we are cautious about the pace of recovery. In any case, we are well prepared since we believe we have reacted correctly by implementing timely and appropriate measures within a framework of significant competitive advantages: 1) assets in unbeatable locations and extraordinary physical condition - Historically, Sol Meliá has had a focus on its product renewal, as shows the 600 million Euros invested in the Major Refurbishment Program. More recently, the Company has invested million Euros in the 2006 Sep 09 period in order to maintain its 78 hotels under property (23,897 rooms) in prime condition, approximately 4,200 Euros per room per annum- 2) business diversification, providing us stability in this environment 3) a flexible cost structure 4) Brand loyalty and Distribution capability along with 5) human capital, professional and talented people continue taking the right decisions. Best regards, Gabriel Escarrer Vice Chairman & CEO 4

5 2. Information on Operations 2.1. Hotels RevPAR for owned and leased hotels has decreased by -17.7% during the first 9 months of the year, due to decreases in Occupancy and ARR by -8.9% and -9.7% respectively. All brands have improved at the Occupancy and Total Revenues levels when comparing Q3 vs. Q2. RevPAR for Sol brand (100% resort, 100% Spain) decreased by -15.9% during the first 9 months of the year, mainly due to a decrease in Occupancy of -11.2%. The performance of the Balearic and Canary Islands, where RevPAR decreased by -20.8% and -17.6% respectively, are behind these figures. During the third quarter of the year, RevPAR decreased by -17.2%, due both to decreases in Occupancy and ARR by -8.8% and -9.2% respectively. The Balearic Islands, where RevPAR decreased by -23.5%, have been severely affected by the decrease of the UK (50% of total roomnights in Q3) by 15.9% as well as other important feeder such as Italy, Russia and Portugal (15% of total roomnights) which combined roomnights have gone down by -26.4%. These slowdowns could not be offset by the positive performance of the Spanish feeder market (second in importance in Q3 with 23.6% of total roomnights), with an 8.6% increase of its roomnights in the Balearic Islands. The performance of the Balearics were not compensated by the results in mainland Spain hotels, specially those located on the Costa del Sol, where RevPAR decreased by only -1.8%, aided by the preference of the Spanish market for short haul destinations. By segment, revenues from Tour Operation during the third quarter have fallen by the same percentage as the figure accumulated to June (-22%). On the other hand, revenues from the Individual Leisure segment increased by 5% during the third quarter of As previously announced, corrective measures have been implemented including the Sol brand Unique Selling Message and Strategy through the Family Fun Programme, including the implementation of allinclusive services in all Spanish resort areas. These measures have had a positive impact at the revenues level, resulting at September 09 in an increase of 2.8 Mn, exceeding the budget for The decrease in Available Rooms is related to the late opening of 3 seasonal hotels: Sol Costa Blanca (Alicante), Sol Antillas-Barbados and Sol Falco, both in the Balearic Islands. RevPAR for the Tryp brand (100% City; 78% Spain) has decreased by -19.8% during the first 9 months, as result of decreases in ARR by -12.3% and to a lesser extent in Occupancy by -8.6% During Q3, RevPAR decreased by -16.7%, showing a lesser deterioration when comparing with the first half of 2009 (RevPAR: -21.4%). This is partly explained by the performance of the hotels in Germany (RevPAR: -6.9%) and to a lesser extent some Spanish cities such as Barcelona (RevPAR: -4.6%). In the third quarter of 2009, when compared with H1, there has been a global improvement in all segments, primarily in 1) Business Groups, helped by the hosting of some Congresses and Trade Fairs in Barcelona, 2) Air Crews, and, to a lesser extent 3) Individual Leisure, especially in Madrid, due to promotional efforts through solmelia.com. In the coming months, segments with more limited visibility are Tour Operation and Business Groups, due the later to the nature of the segment. The corrective measures implemented within the Tryp brand, which include Tryp s Brand Unique Selling Message and Strategy trough the launch of City Business Plan and City Weekend Plan are being well received since they were implemented last June, and up to September 30 th have a compliance level of over 40% versus budget for

6 Decrease in the Available Rooms item is explained by the sale of the hotel Tryp Los Bracos (Spain) during 4Q08 and the termination of 2 hotel lease contracts, the Tryp Langenselbold and the Tryp Potsdam Michendorf, both in Germany. In 9M, RevPAR for the Meliá brand (45% Spain, 21% LatAm, 34% EMEA) decreased by -17.7%, due to decreases in the ARR by -12.2% and to a lesser extent in Occupancy by -6.2%. In 3Q09, RevPAR decreased by -15.8%, affected by the performance of both City hotels and Resorts. City hotels have shown a better performance during 3Q (RevPAR -16.4%), when compared with the first half of the year (RevPAR: -22.7%), on the back of a better performance of German City hotels (RevPAR 3Q: -10.3% vs. RevPAR 1H09: -20.5%), and to a lesser extent Spanish City hotels (RevPAR 3Q: -14.7% vs. RevPAR 1H09: -26.9%). During the third quarter, the Spanish business group segment has shown the same trend as during the first half of the year, due to the decrease in business activity. On the other hand, Spanish Individual Leisure segment has had a better performance when compared with the first half of the year, decreasing by -4% vs. - 10% in 1H09 thanks to the programmes launched through solmelia.com. Regarding Meliá Resorts, Q3 RevPAR has gone down by -15.7%, explained by the poor performance of the Mexican Resorts (RevPAR: -23.2%) negatively affected by the Influenza A (H1N1) virus, but partially offset by the Dominican Republic Resorts (RevPAR: -7.3%) and to a lesser extent Spanish Resorts (- 14.4%). The Meliás s Brand Unique Selling Message and Strategy through the All in One programmes has been successfully implemented, leading to a level of compliance up to September at the income level above 90% of budget for In terms of Available Rooms, the increase is explained by 1) the incorporation of the Meliá Athens (Greece June 08), Meliá Luxembourg (May 09) and Innside Düsseldorf Derendorf, 2) the reopening of some floors at the Meliá Madrid Princesa (Madrid Spain) and 3) the disaffiliation of the Meliá Trujillo (Cáceres Spain) in July 08. Premium hotels have seen RevPAR go down by -18.0%. This decrease is primarily explained by the performance of Gran Meliá hotels, where RevPAR decreased by -18.6%. The evolution of Spanish city hotels is behind this figure. During the third quarter of 2009, RevPAR decreased by -22.9%. In this quarter, ME by Meliá and Gran Meliá hotels located in Mexico which RevPAR has gone down by -25.3% in Q3 have been affected by the Influenza A (H1N1) virus. F&B and Other revenues have decreased by -1.6% during the first 9 months of 2009, mainly explained by the performance of the Gran Meliá Caracas, where Revenues from Food and Beverage activity increased by 28.9%, on the back of the price increases in banqueting programs, without compromising the existing levels of demand. The corrective measures implemented under the Premium brands Luxe-clusive offers, have been well received, even considering they were launched last September. During that month, a compliance level of over 42% has been achieved versus budget for 2009, representing revenues of more than 0.4 million Euros In terms of Available Rooms, the decrease is explained by by the ME Cancun, closed during 1 month affected by the Influenza A (H1N1) virus and the disaffiliation of the hotel Gran Meliá Mofarreij (Brazil). 6

7 Table 1: Hotel statistics Owned and Leased hotels 09 / 08 (RevPAR & A.R.R. in Euros) % Occupancy RevPAR A.R.R. Available rooms ( 000 units) SOL 2, % ,565.5 % o/ % -15.9% -5.3% -2.3% 2, % ,624.9 TRYP 2, % ,179.0 % o/ % -19.8% -12.3% -4.5% 2, % ,282.6 MELIÁ 2, % ,816.7 % o/ % -17.7% -12.2% -1.9% 2, % ,871.5 PREMIUM 2, % ,268.8 % o/ % -18.0% -7.8% -1.3% 2, % ,285.3 TOTAL 2, % ,830.0 % o/ % -17.7% -9.7% -2.6% 2, % ,064.3 Table 2: Hotel revenues split 09 / 08 for owned/leased hotels Room Revenues F&B and Other Total Revenues SOL 2, % o/ % -13.9% -16.4% 2, TRYP 2, % o/ % -20.9% -22.8% 2, MELIÁ 2, % o/ % -9.5% -15.4% 2, PREMIUM 2, % o/ % -1.6% -10.4% 2, TOTAL 2, % o/ % -9.6% -15.9% 2,

8 Table 3: Third parties management fees (included in Other Businesses and Overheads ) Management fees have decreased by -11.8%. The Sol brand has seen its management fees decrease by -3.5% due to the performance of Cuban and Spanish resorts, where management fees went down by % and -29.4% respectively. These figures where partially offset by Croatian resorts (+20.1%) Meliá brand decreased its management fees by -14.1%, explained by the evolution of the Spanish City hotels, where management fees have gone down by -33.4%. This fact could not be compensated by the good performance of hotels in Brazil, where management fees increased by 18.2% and the incorporation of two hotels, the Meliá Sharm in Egypt and the Meliá la Reconquista in Oviedo Spain. Management fees for Tryp brand have gone down by -29.5% due to the performance of the Spanish city hotels, where management fees decreased by -41.9%, and to a lesser extent the results of the Cuban hotels (-32.7%). Management fees for Premium brand decreased by -1.6 during the first 9 months of the year due to two opposite effects: 1) the incorporation of the Gran Meliá Palacio de Isora and the ME Barcelona in 2008, and the re-opening of the Gran Meliá Colón due to refurbishment, and 2) the results achieved by Cuban hotels, where management fees decreased by -29.4%. Excluding changes in the perimeter, management fees for Premium brand hotels decreased by -5.6%. Table 4: Management Fees MANAGEMENT FEES REVENUES (million Euros) Sep 09 Var. 09 / 08 Sep 08 SOL Basic % 4.6 Incentive % % 8.6 MELIÁ Basic % 12.6 Incentive % % 17.0 TRYP Basic % 3.5 Incentive % % 6.1 PREMIUM Basic % 4.1 Incentive % % 6.2 TOTAL BASIC % 24.8 TOTAL INCENTIVE % 13.0 TOTAL %

9 2.2. Sol Meliá Vacation Club During the first 9 months of 2009, total Vacation Club Revenues decreased in Euros by -33.2%. This item includes Vacation Club unit sales (74% of the total) as well as revenues derived from Interest Income, Maintenance and Management fees, and Network fees. Total number of weeks sold has gone down by -24.0% in 9M09. The overall performance is explained by the decrease in occupancy levels and the reduction in the average number of days per stay of hotel guests, therefore reducing the time allowed to approach new prospects, in addition to a significant change in the mix of business between groups and transients which has a direct correlation to the number of qualified prospects. In Mexico, the decrease in the number of weeks sold have been affected by both the decrease in the occupancy levels, specially affected by the Influenza A (H1N1) virus, and the depreciation of the Mexican peso. To soften the impact of business slowdown, cost containment measures have been implemented such as the closure of unprofitable operations or those with marginal production. Additionally, in-house marketing programmes have been implemented in LatAm and the Canary Islands, primarily at the Gran Melia Palacio de Isora. In this latter destination, the company is aiming to generate new prospects from mainland Spain through programmes in airports, mini-holidays and corporate alliances. From a risk management perspective, Sol Meliá Vacation Club has launched an array of actions to reduce delinquency that involves the increase of minimum qualifications for prospective buyers, focus and incentives to the sales force for higher average down-payments as well as payments in cash Leisure Real Estate 48.6 million Euros of capital gains were generated by asset rotation activity during the fist 9 months of 2009 from the sale of the hotel Meliá Madrid Princesa. No capital gains were generated in Regarding the other real estate businesses: 1) in the Desarrollos Sol complex in the Dominican Republic, sales of plots of land are above last year while the management and administration of villas has shown an increase on the back of the villas incorporated last year to the complex that also explains the increase in Revenues at the golf course. The shopping centre (Sierra Parima) in the complex has increased revenues derived from the rental of further shopping premises and offices. All in all, revenues have risen to 6.9 million Euros (-2.9%). 2) In Venezuela, the rental of shopping areas in the basement of the hotel Gran Meliá Caracas represent revenues of 2.1 million Euros (+78.0%). 9

10 3. Energy consumption Emission savings Table 5: Environment and Energy Up to September Average % / Average Environmental Metrics CO2 Emissions ( Kg) 79,537, % 83,940,676 per stay % Water Consomption ( m3 ) 2,381, % 2,620,794 per stay % Energy metrics Diesel (litres) 3,013, % 3,559,238 per stay % 0.72 Gas ( m3 ) 2,373, % 2,378,079 per stay % 0.93 Electricity (Kwh) 127,049, % 130,762,691 per stay % Note: To compare the efficiency at the same levels of Occupancy, the metrics per stay corrected per Occupancy are: CO2 Emissions: Kg (-3.9%), Water Consumption: m3 (-7.8%), Diesel: 0.62 l (-13.0%), Gas: 0.91 m3 (- 1.7%), Electricity: Kwh (-1.5%) The consumption and emission data come from a comparison between the average values (in total and per customer) up to the end of the third quarter for and the same average values up to the end of the third quarter for the period The objective of this comparison over a number of years is to ensure that it is as rigorous as possible, avoiding any distortion caused by climate factors and any other bias that may occur in any comparison of energy values from one year to the next. This methodology for measuring consumption and emission is supported and certified by the company Bureau Veritas, and has allowed Sol Meliá to be recognised by the Ministry of the Environment, Rural and Maritime Affairs given that the Sol Meliá SAVE project has been included in the voluntary emission reduction system ( The methodology was created in 2007 for the company Strategic Plan and is based on the principles and recommendations contained in Annex 1 of European Directive 2006/32 on energy efficiency and services. The sample includes 94 hotels running the SAVE project, an energy saving and efficiency programme which formed part of the mentioned Strategic Plan There are currently 154 hotels included in the project and which will serve as the comparable basis for future measurements. The data shows a reduction in both energy and water consumption and in the emission of CO2. To avoid the bias caused by occupancy increases or decreases on per customer ratios, the per customer values for are adjusted to allow comparison with the occupancy levels over the period The percentage reductions in consumption per stay allow a more accurate appreciation at comparable occupancy levels and eliminate climatic factors, thus showing the true improvements in energy and water consumption and efficiency. 10

11 The savings have been based on the implementation of four action areas in the SAVE programme (Sol Meliá energy saving and efficiency programme) a. Awareness and training b. Standardisation of products and systems c. Investments to create savings and energy efficiency d. Measurement and monitoring of energy ratios The greatest reduction have been achieved in the consumption of water and diesel oil. Water consumption has been reduced by the use of flow regulation systems which do not affect guest comfort but which save important amounts of water and the fuels used to heat water (diesel oil and gas). The reductions in diesel oil consumption derives from the renovation of certain facilities and performance improvements thanks to the use of additives in boilers. Part of this improvement comes from the switch from diesel oil to gas in some facilities which has generated a reduction in emissions. The numbers relating to gas consumption have been affected by this change, but still achieve reductions in overall consumption. In the area of electricity use, hotels have sought to optimise the times and conditions under which energy is used while also improving energy efficiency and the performance of obsolete facilities, in addition to the standardisation of the use of efficient lighting in hotels, switching from conventional and incandescent lighting to low-energy lighting. Other actions which have improved on previous consumption figures are: - Creation of a website on the company Intranet describing operational and technical measures and best practises - publication of weekly banners to announce and reinforce measures - Adjustment of reports to base-level staff transformation of emissions into "tree equivalents" to give a more practical idea of the impact of the measures implemented. - Definition of objectives for reductions in energy consumption per hotel and monthly monitoring. - Training and agreements with leading companies in the field of energy efficiency. - Investments in energy efficiency in new and renovated hotels with measures such as temperature control via geothermal systems, room and facility controls activated by human presence detectors, use of LED technology in new hotels, desalination and the recycling of waste water. 11

12 4. Income Statement Revenues Total Operating Revenues decreased by 9.3% (-91.8 million Euros). Revenues from Hotels and Sol Meliá Vacation Club decreased by -15.9% ( million Euros) and -33.2% (-25.9 million Euros) respectively, while Leisure Real Estate increased by 591.0% (49.3 million Euros), derived from the sale of the hotel Meliá Madrid Princesa. The increase in Other Revenues by 15.8% (14.3 million Euros) is partly derived from the increase in revenues of Sol Caribe Tours (tour Operator in Cuba). Operating Expenses Total Operating Expenses decreased by 7.9% (-56.5 million Euros). Positive evolution of Expenses vs. Revenues throughout the quarters (H1: Revenues: -11.9% and Costs: -7.4% vs. Q3: Revenues: -4.9% and Costs: -8.9%). Raw material expenses have decreased by -13.8%. This decline is due to the decrease of the hotel business, but also largely as a consequence of the renegotiations with raw material suppliers and commissions, as reflects the decrease of Food & Beverage cost per stay in all brands (Sol: -3%, Tryp: - 13%, Meliá: -9% and Premium: -2%). Personnel Expenses have decreased by -5.5% (-17.3 million Euros) as a consequence of the implementation of the Operational Contingency Plan launched during At the Hotel Level, personnel expenses decreased by -6.7% (-16.5 million Euros), while at Central Headquarters this figure decreased by -1.0% (-0.8 million Euros). Other Operating Expenses have decreased by -8.2% (22.5 million Euros), as a consequence of measures implemented in all brands through the Cost Optimization Programme, involving renegotiation of third-party services (including energy), centralization of processes, creation of a Global Marketing Fund for a better management of marketing expenses, renegotiation of commissions and overall reduction of other operating expenses. Rental expenses have increased by 0.1% (0.1 million Euros). This figure is affected by some changes in the perimeter: 1) the disaffiliation of the hotel Gran Meliá Mofarrej (Brazil), 2) the incorporation of 3 hotels: an Innside hotel in Düsseldorf (Germany) within the Meliá brand in March 08, the Meliá Athens (Greece) and the Meliá Luxembourg in June 08 and May 09 respectively, and 3) the incorporation of the Meliá Madrid Princesa (Spain) under a lease contract last July 09. Excluding changes in the perimeter, rental expenses have decreased by -5.0% (-2.9 million Euros), derived from negotiations being carried out with hotel owners and the decline in hotel performance, since some of the lease contracts have a variable part linked to the result obtained by the hotel. Ordinary Profit / Net Profit Depreciations and amortizations increased by 0.5% (0.3 million Euros), as a result of investments made during 2008 in 1) Paradisus Palma Real (Dominican Republic), adding 190 Vacation club units (11.6 million Euros invested), and 2) in Paradisus Punta Cana (Dominican Republic), adding 192 Vacation club units (15.0 million Euros invested). In 9M, Financial results increased by 28.2% (15.7 million Euros). This is explained by the decrease of the Net Interest Expense by million Euros due to 1) the management of the overall Company debt, 2) the decrease of 3 month Euribor average by 339 basis points and 3) the decrease of the Exchange Rate Differences by 2.7 million Euros, on the back of a more favourable forex. Losses from equity investments are explained by Altavista Hotelera S.L., Colon Verona S.A. and Comunidad de Propietarios Meliá Castilla S.A., owners of the hotels ME Barcelona, Gran Meliá Colón and Meliá Castilla respectively, all of them in Spain. 12

13 Table 6: Sol Meliá Consolidated Income Statement Million Euros Sep 09 Sep 08 % Hotels Leisure Real Estate Vacation Club Other Revenues Total revenues % Raw Materials (104.5) (121.2) Personnel expenses (298.0) (315.2) Other operating expenses (252.8) (275.3) Total operating expenses (655.3) (711.8) -7.9% EBITDAR % Rental expenses (59.2) (59.1) EBITDA % Depreciation and amortisation (73.6) (73.3) EBIT % Net Interest Expense (31.3) (44.4) Exchange Rate Differences 0.4 (2.3) Other Interest Expense (8.9) (8.8) Total financial profit/(loss) (39.8) (55.5) 28.2% Profit/(loss) from equity investments (8.7) (3.0) Continuing Earnings Before Taxes % Discontinuing Operations Profit before taxes and minorities % Taxes (10.8) (7.3) Group net profit/(loss) % Minorities (P)/L (5.2) (1.8) Profit/(loss) of the parent company % 13