Paradisus La Perla YEAR END RESULTS

Transcription

1 0 Paradisus La Perla Mexico YEAR END RESULTS 2017

2 Dear fellow shareholders, The international tourism industry has experienced a remarkable growth over the entire 2017 in a number of countries of America, Europe and Asia, including certain regions where our presence is significant, such as Mexico and Spain, which became the second most visited country in the world, with over 82 million visitors. This, combined with the recovery of certain destinations, including Paris and London, and the bright prospects for the global hospitality industry, as reflected by the growth in the number of tourists worldwide forecasted by the UNWTO, allow us to be very optimistic for the upcoming years. Our 2017 YE results come to reinforce that the different strategies implemented and aimed at increasing the levels of efficiency and overall profitability of the company are bearing fruit. In this regard, and despite the different unforeseen and beyond our control one offs that we faced over the year, including the devastating effects of Hurricanes Irma and Maria in the Caribbean, the US depreciation against the EUR or the political tensions in Catalonia, among others, we posted strong results, with increases in revenues ex capital gains (+5.0), EBITDA (+11.0) and margins (+89bps), as well as in the value delivered to our shareholders, as shown by the increase in EPS over the last four years. Furthermore, we closed the year with a robust financial situation, with our Net Debt / EBITDA leverage ratio standing at 1.9x for a second consecutive year, well below our x range targeted, which will give us credibility and stability for the upcoming years. When looking at our distribution channels, sales through our direct channel melia.com posted a sharp increase and rose to around 520.0M as a result of the effective commercial digital strategy implemented after having partnered with top tech companies and advisors. This has allowed us to effectively focus on yield management, as well as to know and own our clients in a much better way, thus positively impacting not only in our Sales through our direct channel melia.com posted a sharp increase and rose to around 520.0M On the operational side, we continued to deploy our asset light strategy, with our management model now representing a third of the total EBITDA of the company, but also to allocate capital in an efficient manner to keep transforming our hotels in order to focus on upper segments, as this will allow us to become more resilient in cycle downturns. In this regard, we made a number of openings in new destinations with strong potential, such as Iguazú Falls in Argentina and Serengeti National Park in Tanzania, refurbishments and repositionings within our current portfolio, and signed 30 additional hotels that will reinforce our presence in mature destinations and let us to enter into new countries. Also, we expect that the contribution of both our hotels that are still in ramp up, such as Paradisus Los Cabos, Gran Meliá Palacio de los Duques or New York NoMad, plus the new ones that will be added to our portfolio, will become more relevant and allow us to significantly improve our future profitability. Moreover, given the recovery shown by the real estate market, particularly in Spain, we believe that the value of our owned assets will be higher than in previous years, and we expect this to be reflected in the new asset valuation that we will conduct and release to the market during Q Yours sincerely, System wide RevPAR rose at a healthy rate and reached 30 consecutive quarters growing at a higher rate than the industry average margins, but also in our global RevPAR, which rose at a healthy rate and reached 30 consecutive quarters growing at a higher rate than the industry average. Lastly but not least, we would like to highlight some of the awards received over the year and that motivate us to keep working tirelessly with our stakeholders in transforming the hospitality industry as we know it, including Best Worldwide Hotel Chain in the Leisure Segment by Global Traveller; Company with Best Corporate Reputation by Mercoempresas; or Leading Company in Sustainability by European Global ESG Awards. 1 Gabriel Escarrer Vice Chairman & CEO

3 YEAR END RESULTS 2017 P&L AND KEY INDICATORS SUMMARY (Million Euros) Dec Dec REVENUES 1, , Revenues ex asset rotation 1, , EBITDAR EBITDA EBITDA ex asset rotation EBIT TOTAL FINANCIAL PROFIT (LOSS) (33.1) (29.7) 11.5 EARNINGS BEFORE TAXES NET PROFIT NET PROFIT ATTRIBUTABLE EPS () REVPAR Owned & Leased () REVPAR Owned, Leased & Managed () EBITDAR MARGIN (ex - capital gains) bps EBITDA MARGIN (ex - capital gains) bps Business performance Total revenues excluding capital gains increased by +5.0 vs 12M 2016 as a result of the growth posted by O&L RevPAR (+5.6), fully explained by prices, and despite the devaluation of the USD against EUR during the last quarter of the year. On a constant currency basis, O&L RevPAR increased by +6.5 vs 12M EBITDA excluding capital gains rose by vs 12M 2016 and stood at M, despite the negative effects of a number of one-offs that were beyond control of the company, such as Hurricanes Irma and Maria, Catalonia instability or the USD depreciation, among others. Also, Q4 EBITDA rose by vs the same period last year. EBITDA margin (excluding capital gains) significantly improved and rose by +89bps vs 12M EPS for the year was 0.56 and grew by Over the last four years, EPS has increased by Total sales through our direct channel melia.com continued with the positive trend of the last years and increased by vs 12M 2016, reaching approximately 520M. Debt Management Net Debt increased by +9.6M in the last quarter of the year and reached M, which compares with the M at the end of At this level, our leverage ratio (Net Debt / EBITDA) stood at 1.9x for a second consecutive year, below the x expected, which shows the commitment of the company to maintain financially sound situation. Despite the negative ex differences, our financial result remained almost flat vs the same period last year thanks to the significant costs savings on the debt side as a result of the lower average interest rate paid (3.24 vs 3.46 in 12M 2016). Development strategy Our global pipeline stood at around 16k rooms (67 hotels), representing a 20.0 of our total portfolio and of which approximately 90.0 of them have been signed under management contracts. In addition, we opened hotels in appealing destinations with high growth potential, such as Iguazú Falls in Argentina and Serengeti National Park in Tanzania, that will allow us to further penetrate into the premium segments. In 2017, we signed 30 hotels, while in January we signed 3 hotels in Vietnam and opened 4 hotels in Cuba and 1 in Sitges (Spain) that will come to reinforce our footprint in the countries. Outlook 2018 For Q1 2018, we still foresee a negative impact caused by the depreciation of the USD against the EUR, so on a constant ex rate we expect RevPAR to increase by a mid single digit, mainly thanks to the good prospects for destinations such as the Caribbean, Spain, France and Italy, among others. In addition, we expect a significant improvement in margins for the entire 2018 as a result of the different strategies implemented aimed at increasing the levels of efficiency on a system wide basis. 2

4 Paradisus Cancún Mexico REPORT ON HOTELS OPERATION 1

5 FINANCIAL INDICATORS 12M M M M 2016 HOTELS OWNED & LEASED M M MANAGEMENT MODEL M M Total aggregated Revenues 1, , Total Management Model Revenues Owned Third Parties Fees Leased Owned & Leased Fees Of which Room Revenues Other Revenues Owned Total EBITDA Management Model Leased Total EBIT Management Model EBITDAR Split * Other Revenues in 12M 2017 include 70.1M of Corporate Revenues not directly attributable to any specific division. Idem in 12M 2016 data by 55.4M. Owned Leased EBITDA Split M M 2016 Owned OTHER HOTEL BUSINESS M M Leased Revenues EBIT Split EBITDAR Owned EBITDA Leased EBIT MAIN STATISTICS OWNED & LEASED OWNED, LEASED & MANAGED Occup. ARR RevPAR Occup. ARR RevPAR TOTAL HOTELS TOTAL HOTELS SAME STORE BASIS AMERICA EMEA SPAIN MEDITERRANEAN CUBA BRAZIL ASIA * Available Rooms 12M 2017: 11,611k (vs 11,586k in 12M 2016) in O&L // 23,315k (versus 22,649 in 12M 2016) in O,L&M. FUTURE DEVELOPMENT Current Portfolio Pipeline 12M YE Onwards TOTAL Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms GLOBAL HOTELS , , , , , , ,199 Management , , , , , , ,670 Franchised 49 9, , Owned 47 14, , Leased , , , ,974 4

6 HOTEL MARGINS Occup. ARR RevPAR RevPAR by Price EBITDAR EBITDAR MARGIN EBITDAR EBITDA EBITDA MARGIN EBITDA bps Flow Through bps Flow Through TOTAL HOTELS OWNED & LEASED bps bps 30.0 AMERICA (usd) bps bps 12.6 EMEA bps bps 16.3 SPAIN bps bps 68.2 MEDITERRANEAN bps bps -6.6 Occup. ARR RevPAR RevPAR by Price EBITDAR EBITDAR MARGIN EBITDAR EBITDA EBITDA MARGIN EBITDA bps Flow through bps Flow through TOTAL HOTELS OWNED & LEASED SAME STORE BASIS bps bps 36.6 AMERICA (usd) bps bps 22.0 EMEA bps bps SPAIN bps bps 40.4 MEDITERRANEAN bps bps Meliá Iguazú Argentina

7 FINANCIAL INDICATORS 12M M M M 2016 HOTELS OWNED & LEASED M M MANAGEMENT MODEL M M Total aggregated Revenues Total Management Model Revenues Owned Third Parties Fees Leased Owned & Leased Fees Of which Room Revenues Other Revenues Owned Leased EBITDAR Split Owned Leased EBITDA Split Owned Leased EBIT Split Owned Leased MAIN STATISTICS OWNED & LEASED OWNED, LEASED & MANAGED Occup. ARR RevPAR Occup. ARR RevPAR TOTAL AMERICA TOTAL AMERICA SAME STORE BASIS México Dominican Republic Venezuela U.S.A * Available Rooms 12M 2017: 2,455k (vs 2,348k in 12M 2016) in O&L // 3,154k (vs 3,045k in 12M 2016) in O,L&M. CHANGES IN PORTFOLIO Openings between 01/01/ /12/2017 Hotel Country / City Contract # Rooms Meliá Iguazú Argentina Management 169 Disaffiliations between 01/01/ /12/2017 Tryp Buenos Aires Argentina Management 62 ME Cancún Mexico / Cancún Management 434 FUTURE DEVELOPMENT Current Portfolio Pipeline 12M YE Onwards TOTAL Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms TOTAL AMERICA 27 8, , ,290 Management 8 1, , ,290 Franchised Owned 15 6, , Leased

8 AMERICA 2017 YEAR END RESULTS RevPAR in USD (owned, leased & managed) increased by +1,5 vs Q as a result of increases in both prices and occupancy rates. Total fee revenue decreased by vs Q given the significantly lower fees collected in the period mainly as a result of the disaffiliation of ME Cancún. EBITDA (owned & leased) flow through (in USD) improved by and EBITDA margin grew by 30bps vs 12M Melia.com sales rose in the quarter by vs Q4 2016, although on a yearly basis the increase was despite the negative effect of the hurricanes that hit the region a few months ago and the travel warning of the US government. The performance of our America division has been positive throughout the year in general terms, even though considering the unforeseen impact of certain natural disasters, mainly Hurricanes Maria and Irma, in our operations during September and October. When looking at specific countries, and despite the above mentioned challenging environment faced by the region as a result of having suffered two significant hurricanes in a row, Dominican Republic has delivered a better performance compared with Q4 2016, as reflected in higher EBITDA and margins. In the case of Mexico, we also managed to increase EBITDA and margins vs Q4 2016, even though the difficulties faced by the country as a result of the travel warning issued by the US Government preventing US citizens when travelling to certain destinations in Mexico given the deterioration in the perceived security levels. However, and despite the travel warning, the country has remained as one of the favorite holiday destinations and the number of visitors significantly increased during the year. Finally, in Puerto Rico our hotel will be closed until November 2018, as the destination is still suffering severe infrastructure problems caused by Hurricanes Irma and Maria, which devastated the island a few months ago. On the other hand, some of our hotels that are in their typical ramp-up periods are delivering a better performance compared with Q In this regard, particularly relevant has been the performance of Paradisus Los Cabos, an allinclusive resort located in Mexico that opened December 2016, which has positioned as one of the best choices in the luxury all-inclusive segment, including high-end medium-size groups and conferences or incentives. In addition, ME Miami improved its performance and delivered good results vs the same period last year. Having said that, when translating our America results into EUR, we have been affected by the USD depreciation (-8.0 in Q4 vs the same period last year), as the EUR/USD cross rate rose to its higher level since December Moreover, the performance of the division was negatively affected by the synthetic ex rate that we used for the Venezuelan Bolivar/USD. OUTLOOK Our America division will continue to improve its performance in the upcoming months, as it will benefit from the good market dynamics of the region and the positive impact that Hurricanes Irma and María are expected to have in certain countries, such as Dominican Republic and Mexico. However, when translating our America results into euros for consolidation purposes, we will be negatively impacted by the weakening of the dollar against the European currency, as the average USD/EUR ex rate that we used in Q was 1.07, which will compare to a significantly higher level. In this context, we expect to increase our RevPAR by a mid single digit (in USD), as a result of the improved performance of certain hotels that are still in ramp-up, such as Paradisus Los Cabos. Additionally, and as previously mentioned, our hotel in Puerto Rico will remain closed until late PORTFOLIO AND PIPELINE The number of hotels in our America portfolio remained the same during the quarter, as in October we opened our new flagship Meliá Iguazú (173 rooms), located in the hearth of the Iguazú National Park, while in November we disaffiliated ME Cancún (434 rooms). Moreover, we expect to open a new resort in Playa Mujeres (Mexico) by the end of Going forward, and given the importance of the division for our operations, we will continue to pursue further opportunities in regions with high-growth potential in order to increase our presence in both the resorts and MICE segments. 7 Paradisus Los Cabos Mexico

9 FINANCIAL INDICATORS 12M M M M 2016 HOTELS OWNED & LEASED M M MANAGEMENT MODEL M M Total aggregated Revenues Total Management Model Revenues Owned Third Parties Fees Leased Owned & Leased Fees Of which Room Revenues Other Revenues Owned Leased EBITDAR Split Owned Leased EBITDA Split Owned Leased EBIT Split Owned Leased MAIN STATISTICS FUTURE DEVELOPMENT OWNED & LEASED OWNED, LEASED & MANAGED Occup. ARR RevPAR Occup. ARR RevPAR TOTAL EMEA TOTAL EMEA SAME STORE BASIS Spain United Kingdom Italy Germany France * Available Rooms 12M 2017: 3,502k (vs 3,410k in 12M 2016) in O&L // 3,887k (versus 3,778k in 12M 2016) in O,L&M. CHANGES IN PORTFOLIO Openings between 01/01/ /12/2017 Hotel Country / City Contract # Rooms Tryp Lisboa Caparica Mar Lisbon, Portugal Franchise 354 Meliá Saida Garden All Incl. Golf Resort Morocco, Africa Management 150 Meliá Saida Beach All Incl. Resort Morocco, Africa Management 397 Innside Hamburg Hafen Hamburg, Germany Management 207 Serengeti Lodge Tanzania / Africa Management 50 Disaffiliations between 01/01/ /12/2017 Hotel Country / City Contract # Rooms Meliá Doha Doha, Qatar Management 317 Current Portfolio Pipeline 12M YE Onwards TOTAL Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms TOTAL EMEA 77 13, , , , ,588 Management 10 1, , ,331 Franchised 13 1, , Owned 13 3, , Leased 41 7, , , ,702 8

10 EMEA 2017 YEAR END RESULTS RevPAR (owned, leased & managed) rose by +1.9 in Q vs the same period last year given the higher prices. Total fee revenue dropped by in Q as a result of the deep decrease in third parties fees collected as a result of the disaffiliation of Meliá Doha. EBITDA (owned & leased) flow through improved by and EBITDA margins rose by +10bps vs 12M Melia.com sales jumped by in the quarter vs Q and by over the whole year thanks to the different initiatives implemented to optimize our platform and digital capabilities. The EMEA region has continued with the positive trend shown over the whole year in this last quarter, having been mainly boosted by the increasing demand for both MICE and bleisure segments and the recovery of certain destinations that were affected by a number one-offs that took place over the last couple of years. In general terms, all the areas within the region have improved vs Q4 2016, being the key highlights for each of them the following: GERMANY/AUSTRIA Even though 2017 has been a complex year in Germany as a result of the reduction in the number of trade fairs vs 2016, we managed to exceed expectations over the entire year, barely posting a slight drop vs In Q4, we increased our revenues by over +6.0 vs Q4 2016, being the key aspects to explain this significant growth the steady ramp up phases of our latest openings, such as Innside Leipzig, Innside Frankfurt Oostend and Innside Hamburg Hafen, as well as the robust performance posted by certain hotels, including Innside Frankfurt Niederrad, Frankfurt Eurotheum or Melia Berlin, among others, as a result of the deep increase shown by melia.com sales in the region (+23.0). UK In general terms, 2017 has been a solid year for the UK. When looking at Q4, the growth was slightly lower vs the same period last year given that transient demand was lower than initially expected in Melia White House. On an individual hotel basis, it is worth to mention the solid performance shown by ME London and Innside Manchester, with RevPAR of both hotels growing by +9.0 vs Q4 2016, while Melia White House fell behind and RevPAR slightly dropped by FRANCE Our hotels in France have posted one of the most significant growth rates of the entire EMEA region over the last quarter of the year. In this regard, the country posted a increase in RevPAR vs 2016, with both occupancy and ARR levels growing at a high pace. This performance has been led by Melia Paris La Defense, which experienced a growth in RevPAR motivated by the excellent performance of both transient and MICE segments. Furthermore, the rest of our Paris hotels posted a strong performance in general terms, with three of them increasing their RevPAR at double digit levels (Vendome: +12.0, Notre Dame: and Opera: +12.0), while in the other two RevPAR rose in the range. Finally, sales through melia.com increased by in the quarter. ITALY After a year that has had its ups and downs, mainly due to the situation in Rome, we are proud to highlight that the performance of our hotels in Italy has been out of the charts in Q4, showing a increase in RevPAR and with all of the hotels, particularly the ones located in Milano, positively contributing to the result. In this regard, ME Milan Il Duca and Melia Milano increased their RevPAR levels by and respectively, while Melia Genova improved its RevPAR by In addition, melia.com sales grew by in Q4. PREMIUM SPAIN 9 The performance of our premium hotels located in Spain has been, unfortunately, negatively affected by the complex situation that is taking place in Catalonia. In this regard, the trend shown by our hotels in Barcelona until Q3 was quite positive, but the uncertain political situation in the region motivated a significant decline in transient demand and a sharp decline in the MICE segment, in which we suffered last-minute cancellations of confirmed events and received instructions from organizers to seek for alternative destinations until the situation goes back to normal. Having said that, on the one hand and despite the challenging situation faced by the country, RevPAR of our urban hotels grew by +3.2 due to the good performance of our hotels located in Madrid, including Gran Melia Fenix, Gran Melia Palacio de los Duques and ME Madrid. On the other hand, and considering that mostly of our Spanish resorts have been affected by seasonal closure, it is worth to mention the performance of Gran Melia Palacio de Isora, that despite the uncertainties in the UK, its main feeder market, has been able to increase its RevPAR by +2.0, just like Gran Melia Don Pepe, which had a good off-season and managed to improve its RevPAR by in Q4. Also, the performance of ME Ibiza will be impacted and thus will not be comparable by the fact that in Q we had a massive car launch that will not take place again this year.

11 OUTLOOK The EMEA region is expected to deliver positive results in the upcoming months, as the market dynamics remain strong. In this regard, the European Commission expects GDP growth to continue in the European Union at 2.1 in 2018 and at 1.9 in 2019, according to the latest economic forecast released in autumn On a country basis, Q looks very promising in France, where we expect an increase in RevPAR of a high single digit vs the same period last year given the deep recovery anticipated in Paris. In Germany, we expect a positive year, as 2018 will be a trade fairs year, although for the first quarter we foresee a flat growth rate as a result of the excellent performance posted in Q The market in Italy looks also favorable, as the recovery and good performance of Milano, where we foresee an increase in RevPAR of a double digit, is expected to continue. In addition, the new addition to our Italian portfolio, the Innside Milano Torre Galfa, looks very promising and we expect it to become very relevant within the country. In the UK, we are also optimistic and forecast a RevPAR growth of a mid single digit in local currency, while in Spain we expect our urban hotels to grow by a high single digit, particularly due to the high expectations for Madrid, while in the resorts segment we expect also high growth rates and are very excited after having opened ME Sitges Terramar in late January, as it will become one of the landmarks of our Spanish premium portfolio. PORTFOLIO AND PIPELINE We have well founded positive expectations for EMEA and our teams have been working closely with different partners to secure valuable management contracts in locations with strong bleisure and MICE segments. In Q4 2017, we opened Serengeti Lodge (Tanzania, 50 rooms) in the heart of The Serengeti National Park and signed 3 new hotels in the region that will be incorporated to our EMEA portfolio in the upcoming years: Innside Newcastle (UK, 161 rooms), Innside Liverpool (UK, 207 rooms) and Meliá Maputo (Mozambique, 171 rooms). Furthermore, and given the importance of the region for our operations, we remain actively looking for new opportunities. 10 Meliá Berlin Berlin - Germany

12 FINANCIAL INDICATORS 12M M M M 2016 HOTELS OWNED & LEASED M M MANAGEMENT MODEL M M Total aggregated Revenues Total Management Model Revenues Owned Third Parties Fees Leased Owned & Leased Fees Of which Room Revenues Other Revenues Owned Leased EBITDAR Split Owned Leased EBITDA Split Owned Leased EBIT Split Owned Leased MAIN STATISTICS OWNED & LEASED OWNED, LEASED & MANAGED Occup. ARR RevPAR Occup. ARR RevPAR TOTAL MEDITERRANEAN TOTAL MEDITERRANEAN SAME STORE BASIS Spain Cape Verde * Available Rooms 12M 2017: 2,421k (vs 2,457k in 12M 2016) in O&L // 4,960k (versus 4,828k in 12M 2016) in O,L&M. CHANGES IN PORTFOLIO Openings between 01/01/ /12/2017 Hotel Country / City Contract # Rooms - Disaffiliations between 01/01/ /12/2017 Hotel Country / City Contract # Rooms - FUTURE DEVELOPMENT TOTAL MEDITERRANEAN Current Portfolio 12M YE Onwards TOTAL Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms 76 23, , , ,025 Management 24 8, , , ,753 Franchised 19 5, , Owned 10 2, , Leased 23 7, , Pipeline 11

13 MEDITERRANEAN 2017 YEAR END RESULTS RevPAR (owned, leased & managed) dropped by -3.2 in the quarter vs Q as a result of some hotels affected by refurbishments, ramp-ups and seasonal closures. Total fee revenue decreased by vs Q given the lower third parties and O&L fees collected in the period. EBITDA (owned & leased) flow through declined by -6.6 and EBITDA margins dropped by -90bps vs 12M Melia.com sales increased by in the last quarter of the year vs Q and by on a yearly basis, as the different digital campaigns launched to fully benefit from the increasing number of tourists in Spain are bearing fruit. Our Mediterranean division had a positive quarter despite the fact that a number of our hotels located in the Balearic Islands and Coasts were affected by seasonal closure, which started in October. In this regard, our hotels located in Spain benefitted from the high number of international visitors that came to the country over the past year, which rose to over 82 million, a level that made Spain to become the second most visited country in the world, above the US and only behind France. Due to this, our hotels in Spain posted a +3.4 RevPAR growth during the last quarter of the year vs Q When looking at specific areas, our hotels located in the Balearic Islands had a very positive performance and closed the quarter with a sharp increase in revenues explained by rises in both prices and occupancy levels. In the Canary Islands, revenues slightly fell compared with the same period last year, even though prices rose by a mid single digit, due to the negative impact on the main destinations of the bankruptcies of Air Berlin and Monarch, as well as because of certain refurbishments in some of our hotels that took place during the quarter, including Meliá Gorriones, Meliá Salinas and Sol La Palma, that reduced the number of rooms available. In Coasts, we managed to rise prices despite the slightly lower occupancy rates. Finally, our results in Cape Verde were affected by the ramp-ups of certain hotels, but despite this effect our hotels located in the country had a remarkable quarter after having significantly increased their revenues vs the same period last year. OUTLOOK For Q1 2018, and given that a number of hotels will remain closed until the summer season re-opens, the performance of the division will be linked to the prospects of our hotels located in the Canary Islands, where we expect to improve past year results despite the increasing demand in Egypt, particularly from German visitors, and the lower number of air seats available as a result of the above mentioned bankruptcies (airlines and TO). Also, some of our hotels still have ongoing refurbishments, and therefore the rooms available will be slightly lower compared with the same period last year. PORTFOLIO AND PIPELINE No new hotels were added to our Mediterranean portfolio during the last quarter of the year, as we have been focusing on refurbishing and repositioning a number of our properties in order to adapt them to the higher standards demanded by the upper segment, as well as to fully benefit from the increasing number of visitors coming to Spain. 12 Meliá Sancti Petri Cádiz - Spain

14 FINANCIAL INDICATORS 12M M M M 2016 HOTELS OWNED & LEASED M M MANAGEMENT MODEL M M Total aggregated Revenues Total Management Model Revenues Owned Third Parties Fees Leased Owned & Leased Fees Of which Room Revenues Other Revenues Owned Leased EBITDAR Split Owned Leased EBITDA Split Owned Leased EBIT Split Owned Leased MAIN STATISTICS OWNED & LEASED OWNED, LEASED & MANAGED Occup. ARR RevPAR Occup. ARR RevPAR TOTAL SPAIN TOTAL SPAIN SAME STORE BASIS Spain * Available Rooms 12M 2017: 3,088k (versus 3,366k in 12M 2016) in O&L // 4,210k (versus 4,543k in 12M 2016) in O,L&M. CHANGES IN PORTFOLIO Openings between 01/01/ /12/2017 Hotel Country / City Contract # Rooms Tryp Mallorca Santa Ponsa Santa Ponsa, Spain Franchise 60 Meliá Palma Bay Palma de Majorca, Spain Lease 268 Disaffiliations between 01/01/ /12/2017 Hotel Country / City Contract # Rooms Tryp Madrid Alcalá 611 Madrid, Spain Lease 93 Tryp Estepona Valle Romano Golf Madrid, Spain Lease 290 Tryp Sevilla Macarena Seville, Spain Lease 331 Innside Madrid Luchana 22 Madrid, Spain Management 44 Innside Madrid Genova Madrid, Spain Management 65 FUTURE DEVELOPMENT Current Portfolio Pipeline 12M YE Onwards TOTAL Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms TOTAL SPAIN 74 13, , Management 11 3, , Franchised 14 1, , Owned 9 2, , Leased 40 6, ,

15 SPAIN 2017 YEAR END RESULTS RevPAR (owned, leased & managed) jumped by vs Q as a result of the increasing demand of both national and international clients. Total fee revenue slightly declined by -0.4 vs Q given the relatively lower fees collected in the period. EBITDA (owned & leased) surged by over 68.0 and EBITDA margins grew by 300bps vs 12M Melia.com sales rose by in Q4 vs the same period last year and by over the whole year after having optimized our system to match the needs of the increasing number of visitors in Spain. The performance of our urban hotels located in Spain has been remarkable during the last quarter of the year. When looking at specific areas within the region, the main highlights have been the following: CENTRAL AREA MADRID Revenues jumped by around as a result of price hikes (+10.0) in mostly of the hotels. In this regard, particularly relevant has been the impact of certain events, including a number of conventions that took place during October and November, which allowed us to increase occupancy rates and prices in transient and MICE segments, which significantly improved vs the same period last year. In addition, the entire month of December was positive for the transient segment, while the leisure segment benefitted from the increasing demand in the December break and the week after. SOUTHERN SPAIN The area had a significant increase in room revenues, of almost +9.0, mainly thanks to the very positive performance of Meliá Lebreros and Melilla Puerto, and even though Meliá Marbella Banús was partially closed due to refurbishments. In terms of market segments, both individual and groups have shown significant improvements, as well as MICE, which increased its importance in Seville due to a number of events that were held in the city during the year. EASTERN SPAIN Our hotels located in Eastern Spain had a decent performance and closed the quarter with a +2.6 increase in revenues, despite that a number of hotels, including Meliá Palas Atenea and Tryp Apolo, were affected by partial closures. Certain hotels, such as Innside Palma Bosque, Meliá Sitges and Tryp Barcelona Aeropuerto, had a remarkable quarter and rose prices significantly, being this positive trend also shown by a number of our ski hotels, including Meliá Royal Tanau and Tryp Vielha, as the December ski season in Baqueira was excellent compared with the same period last year. On the negative side, the political instability of the region hit certain hotels located in Barcelona, where RevPAR fell by over in Q4. NORTHERN SPAIN & EAST (LEVANTE) Room revenues jumped by vs Q The increasing importance of melia.com and the improvement in the transient and MICE segments, which were boosted by the Volvo Ocean Race and the Valencian Community Moto GP, allowed our hotels to improve their results. Also, our hotels located in the north improved significantly, as international visitors rose in Bilbao, while La Coruña, Gijón and León benefitted from the increasing demand of Spanish tourists. OUTLOOK We have positive expectations for our Spanish non-premium urban hotels for the upcoming months and expect a high single digit growth in RevPAR. In Central Area, we foresee a good performance of both individual and business groups, which should benefit recently repositioned hotels like Meliá Madrid Princesa, Meliá Barajas and Meliá Madrid Serrano. For our hotels located in Southern Spain, we expect a rise in both prices and occupancy rates for Q1 2018, while in Eastern Spain we foresee a very good performance of our hotels located in Palma de Mallorca due to certain congresses (Jaguar and Panasonic events) that will be exclusively held in our hotels, and despite Meliá Palas Atenea and Tryp Apolo will remain partially closed for a number of weeks due to refurbishments. In addition, the prospects for the Mobile World Congress (late February 2018) are very positive. Finally, Northern Spain and East (Levante) look very promising thanks to the volumefocused strategy implemented in the area, the expected positive performance of the MICE segment and the different events and celebrations that will be held in Easter, which will commence in late March. PORTFOLIO AND PIPELINE We have not added any new hotels to our Spain non-premium urban portfolio during this quarter, as we have been actively repositioning and refurbishing our existing properties in order to adapt them to the upper segments and to the bleisure and MICE segments. 14

16 FINANCIAL INDICATORS 12M M M M 2016 HOTELS OWNED & LEASED M M MANAGEMENT MODEL M M Total aggregated Revenues N.A. N.A - Total Management Model Revenues Owned Third Parties Fees Leased Owned & Leased Fees Of which Room Revenues N.A. N.A. - Other Revenues Owned Leased MAIN STATISTICS OWNED & LEASED OWNED, LEASED & MANAGED Occup. ARR RevPAR Occup. ARR RevPAR TOTAL CUBA TOTAL CUBA SAME STORE BASIS * Available Rooms 12M 2017: 4,311k (versus 4,278k in 12M 2016) in O,L&M. CHANGES IN PORTFOLIO Openings between 01/01/ /12/2017 Hotel Country / City Contract # Rooms - Disaffiliations between 01/01/ /12/2017 Hotel Country / City Contract # Rooms - FUTURE DEVELOPMENT Current Portfolio Pipeline 12M YE Onwards TOTAL Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms TOTAL CUBA 28 12, , , ,067 Management 28 12, , , ,067 Franchised Owned Leased

17 CUBA 2017 YEAR END RESULTS RevPAR in USD (managed) dropped by vs Q as a result of the impact of Hurricane Irma in the island. Total fee revenue significantly dropped by in Q4 vs the same period last year. Melia.com sales fell by in the last quarter of the year vs Q4 2016, although they increased by +1.0 on a yearly basis, as a result of the severe impact of Hurricane Irma and the delay of TOs in the reopening of the destination. The unforeseen natural disasters that took place in Cuba over the third quarter of the year had a negative impact in our operations in Q4. Despite the quick and efficient response by the Cuban Government to repair the damages caused by Hurricane Irma, as well as to reestablish the main infrastructures of the affected areas, which were up and running again in just two months, the main TOs re-started flight connections to and from the country with a delay, thus affecting the bookings from the main feeder markets, which slightly deteriorated. Furthermore, and after having shown a significant increase over the first six months of the year, visitors coming from the US declined in the second half of the year as a result of the tightening in the relations between the Cuban and the US administrations. However, this exclusively affected our 3 hotels located in La Habana, which historically tend to be the preferred ones for US visitors. In this context, RevPAR on a country-wide basis declined sharply compared with the same period last year, motivated by a deep reduction in occupancy rates and a slight decline in ARR. Also, sales through our direct channel melia.com dropped given the complex situation of the island, while the MICE segment suffered as a result of certain event cancelations that were expected to took place in October and November. When looking at specific areas within the country, our hotels located in the eastern region of Los Cayos were severely affected by the hurricanes. In this regard, RevPAR levels in Cayo Santa María and Jardines del Rey fell by almost 60.0, while our hotels in Santiago de Cuba and La Habana posted RevPAR decreases of around 55.0 and 40.0 respectively, being some examples Meliá Habana and Meliá Cohiba, which were hit hard by both the negative implications of the hurricanes for international tourists and the decrease in the number of tourists coming from North America. OUTLOOK The damages that Hurricane Irma caused a few months ago in certain areas of the island will continue to have a negative impact in our operations in Cuba during Q Even tough the destination is safe at the moment and that all of our hotels are operating normally, we have been hit hard by the fact that Hurricane Irma took place during dates in which customers of the main European feeder markets were deciding where to spend their winter holidays. In this regard, we expect the situation to normalize in the following months once the interest in the product offered recovers, but this will not happen in Q1 2018, the high season period, for which we foresee a sharp decline in revenues compared with the same period last year. Furthermore, we would like to highlight that during January opened four new hotels, which are Meliá Colón and Meliá Gran Hotel, both located in Camaguey, as well as Meliá La Unión San Carlos and Innside Jagua, the latter being the first hotel of our Innside brand opened in the country. PORTFOLIO AND PIPELINE We have not added any new hotels to our portfolio in Cuba in the last quarter of the year, but we will continue analyzing potential opportunities to increase our footprint in the island in the upcoming months. 16 Meliá Buenavista Cuba

18 FINANCIAL INDICATORS 12M M M M 2016 HOTELS OWNED & LEASED M M MANAGEMENT MODEL M M Total aggregated Revenues ,563.8 Total Management Model Revenues Owned Third Parties Fees Leased Owned & Leased Fees ,789.8 Of which Room Revenues ,784.7 Other Revenues Owned Leased EBITDAR Split Owned Leased EBITDA Split Owned Leased EBIT Split Owned Leased MAIN STATISTICS OWNED & LEASED OWNED, LEASED & MANAGED Occup. ARR RevPAR Occup. ARR RevPAR TOTAL BRAZIL TOTAL BRAZIL SAME STORE BASIS * Available Rooms 12M 2017: 145,2k (vs 6,6k in 12M 2016) in O&L // 1,248k (versus 1,113k in 12M 2016) in O,L&M. CHANGES IN PORTFOLIO Openings between 01/01/ /12/2017 Hotel Country / City Contract # Rooms - Disaffiliations between 01/10/ /12/2017 Hotel Country / City Contract # Rooms - FUTURE DEVELOPMENT Current Portfolio Pipeline 12M YE Onwards TOTAL Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms TOTAL BRAZIL 15 3, , Management 13 3, , Franchised Owned Leased

19 BRAZIL 2017 YEAR END RESULTS RevPAR (owned, leased & managed) increased by +3.0 vs Q as a result of the improved performance of our hotels in the Sao Paulo area. Total fee revenue jumped by vs Q given the deep increase in third parties fees collected in the quarter. Melia.com sales jumped by in the quarter vs the same period last year and by over the entire year. The Brazilian economy has continued to perform decently in the last quarter of the year despite the complex economic and political situation faced by the country. In this environment, recent economic studies point to a slight increase of GDP vs 2016 and an acceleration for 2018 that will translate in an increase in ARR. In Q4, our Brazilian hotels posted an increase in revenues of a on a like-for-like basis and in local currency, mainly motivated for the continued positive performance of the market started in August thanks to the rise shown by both the transient and corporate segments, combined with the higher number of events and international trade fairs that were held in the country, particularly in the Sao Paulo area, and the positive impact of certain concerts of international artists that generated additional demand. When looking at individual segments, transient rose sharply in both public and corporate rates, while groups also improved compared with the same period last year due to the recovery in corporate accounts, which benefited from the above mentioned increase in the number of concerts and trade fairs. Furthermore, melia.com sales jumped in local currency as a result of the deep increase in direct sales of Meliá Jardim Europa (+56.0), Meliá Paulista (+54.0) and Meliá Brasil (+30.0). Finally, we would like to highlight that the situation of Gran Meliá Nacional de Rio over the last quarter of the year has been affected by the lower number of rooms available for sale, which resulted in severe difficulties to fully benefit from significant events that took place in the city, including APLA in November, as well as New Year s Eve. OUTLOOK The first quarter of 2018 looks very promising, since we are expecting an increase in demand, particularly during the second half of February and March, for mostly of our hotels. The most important drivers of this rise will be the increasing number of trade fairs in Sao Paulo and the recovery in the transient segment, for which we expect a robust growth. In January and the beginning of February, as usual, demand will be relatively weak in Sao Paulo and Brasilia due to corporate holidays and Carnival. Furthermore, we also foresee a solid demand in Gran Meliá Nacional de Rio for the entire quarter. PORTFOLIO AND PIPELINE No hotels were added over the last quarter of the year to our Brazilian portfolio and we do not expect to add additional ones in the upcoming months. In this regard, we will continue analyzing different strategic alternatives to improve the performance of our hotels and to increase the efficiency of the division. 18 Meliá Brasil 21 Brazil

20 FINANCIAL INDICATORS 12M M M M 2016 HOTELS OWNED & LEASED M M MANAGEMENT MODEL M M Total aggregated Revenues N.A. N.A. - Total Management Model Revenues Owned Third Parties Fees Leased Owned & Leased Fees Of which Room Revenues N.A. N.A. - Other Revenues Owned Leased MAIN STATISTICS OWNED & LEASED OWNED, LEASED & MANAGED Occup. ARR RevPAR Occup. ARR RevPAR TOTAL ASIA TOTAL ASIA SAME STORE BASIS Indonesia China Vietnam * Available Rooms 12M 2017: 1,545k (versus 1,064k in 12M 2016) in O,L&M. CHANGES IN PORTFOLIO Openings between 01/01/ /12/2017 Hotel Country / City Contract # Rooms Sol Bali Legian Bali, Indonesia Management 110 Sol House Shanghai Hongqiao Shanghai, China Management 187 Innside Yogyakarta Yogyakarta, Indonesia Management 242 Innside Zhengzhou Zhengzhou, China Management 323 Disaffiliations between 01/01/ /12/2017 Hotel Country / City Contract # Rooms - FUTURE DEVELOPMENT Current Portfolio Pipeline 12M YE Onwards TOTAL Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms TOTAL ASIA 18 4, , , , , ,229 Management 18 4, , , , , ,229 Franchised Owned Leased

21 ASIA 2017 YEAR END RESULTS RevPAR in USD (managed) fell by -8.6 vs Q as a result of the ramp up periods of certain of our hotels in the region. On a like for like basis (in USD), RevPAR increased by Total fee revenue dropped by vs Q given the lower third parties fees collected in the period mainly as a result of the negative impact of Agung Volcano eruption in our Indonesian hotels. Melia.com sales increased by in Q4 vs the same period last year and by on a yearly basis thanks to the great efforts made on the commercial side to promote attractive locations in the region among its main feeder markets. The last quarter of the year for our Asian division has been decent in general terms. In this regard, we have remained actively looking for high-value management contracts particularly in four main countries, China, Indonesia, Vietnam and Thailand, but also in some others, such as Myanmar, in order to continue increasing our footprint in the region and to further penetrate in the resorts segment. Moreover, it must be highlighted that the division is currently in a process of achieving a critical mass with new additions, which combines with certain hotels in ramp up that opened in 2016 and If we exclude both effects, RevPAR (in USD) grew by on a like for like basis. The asset-light model that we operate in Asia continued to improve its performance while we are reaching a critical scale of management contracts in order to increase the level of efficiency of our operations and the overall profitability of the division. In this context, EBITDA and margins improved vs the previous year thanks to the increase in fees collected plus the positive impact of the diverse actions taken to simplify a number of processes, and despite the negative impact that the eruption of Agung Volcano had in Indonesia. On an individual country basis, our hotels in China had a decent quarter as a result of the market dynamics of the country, being particularly significant the performances of Gran Meliá Xian, Meliá Jinan and Innside Zhenghzou, which opened in August to become the first hotel of the Innside brand in the country and that is benefitting from its prime location and the high level of service offered to its demanding guests. In Vietnam, Meliá Hanoi and Danang achieved unprecedented levels of ARR and occupancy, while in Thailand our Imperial Boat House Koh Samui hotel improved its performance vs last year. In addition, our hotels in Indonesia suffered during the quarter, as they were affected by the negative effects of the eruption of Agung Volcano. Finally, we expect that the four hotels that we opened over the year, Sol House Bali Legian, Sol Beach House Phu Quoc, Meliá Shanghai Honqiao and Innside Yogyakarta, will become more relevant in terms of contribution to the division once their typical ramp-up periods come to an end. OUTLOOK For the first quarter of the year, we foresee a relatively stable situation in terms of number of bookings given the negative effects of the Agung Volcano eruption in Indonesia, which is considered as a key destination for a number of feeder markets in Asia and EMEA. In this regard, and as all of the segments in the country will be affected to some extent due to this unforeseen natural event, we have been working tirelessly on the commercial side since the last quarter of 2017 in order to promote other attractive and appealing destinations, such as Thailand and Vietnam, with the aim of partially minimizing its negative effects in our operations. Furthermore, we have positive expectations for the new hotels that we expect to incorporate to our portfolio over the following months, such as Meliá Ba Vi Mountain Retreat, located in a natural paradise near Hanoi, and Meliá Shanghai Parkside in the heart of the Shanghai International Tourism and Resorts Zone. PORTFOLIO AND PIPELINE The Asian region will continue to be key for our future strategy. In Q4, we signed four new hotels that will be added to our portfolio over the following years, Meliá Bukit Tinggi (Malaysia, 219 rooms), Innside Bangkok (Thailand, 176 rooms), Meliá Resort Xueye Lake (China, 130 rooms) and Meliá Chiang Mai (Thailand, 261 rooms), that will allow us to further penetrate and to increase our brand recognition in the region. Moreover, and after having fully refurbished and repositioned mostly of our hotels, they are now prepared to offer distinctive experiences to our upper scale guests while our local teams will continue focusing on signing additional high-value added contracts in the resorts segment and in those cities benefitting from both strong bleisure and MICE segments. In this regard, in January we signed three new hotels in Vietnam that will allow us to penetrate in two of the most popular destinations of the country: the Ho Chi Minh financial district and the Halong Bay. 20 Sol Beach House Bali Benoa Indonesia

22 Meliá Ba Vi Mountain Retreat Vietnam OTHER NON HOTEL BUSINESSESS 2

23 CLUB MELIÁ & THE CIRCLE This year has been an exciting period of transformation and innovation for our timesharing business Club Meliá, as it shifted from a real-estate type model which has been in the market for decades to a brand new, innovative and fully customizable product adapted to the needs of a very demanding and long-term oriented type of client. In Q4, and despite the negative effect that Hurricanes Irma and Maria had in the region and thus in the performance of the division, sales rose at a healthy rate in both Punta Cana and Mexico during the second half of December due to Christmas season. When looking at our customer base, on the one hand, the number of members that migrated from Club Meliá to The Circle increased as a result of the flexibility offered by the new product to choose among several alternatives, its integration with Meliá Rewards and the high levels of exclusivity and thrilling experiences that the new resort in Punta Cana will provide to our clients once its construction is finished in late This rise in the number of customers that moved from the former product to the new one allowed us to increase sales significantly. On the other hand, our capabilities to attract new customers were severely affected by the lower base of potential clients available during the last quarter of the year as a result of the impact of the aforementioned natural disasters that hit the region in Q3. In addition, in Mexico we are still marketing the former Club Meliá product, which is based in different options that set the ground for The Circle and that provide a number of opportunities to capitalize on, particularly in Paradisus Playa del Carmen and thanks to our enhanced digital capabilities. Regarding our marketing abilities and salesforce performance, a high percentage of the clients that eventually bought the product were invited to know and feel it at first hand through our digital channels, which allowed us to reduce the number of negative reviews and complaints in both Punta Cana and Mexico, as well as to increase the overall profitability of the division. Additionally, the sales conversion ratio of these clients was significantly higher than that of clients that were invited through traditional channels. For the first quarter of 2018, and despite the minor fire that minimally affected our selling point in Meliá Caribe Tropical and the slight decrease of activity in business groups, we have positive expectations and foresee an increase in revenues of a mid-single digit vs Q in both Punta Cana and Mexico. In this regard, the main drivers of this expected improvement are the further degree of penetration of digital campaigns among Club Meliá clients, which are expected to double vs the same period last year; the positive impact that the new resort will have in the selling process once its construction comes to an end, since clients will have the chance to participate in an in-house fully immersive selling experience; as well as the higher degree of specialization of our salesforce, which will be complemented by new selling stories adapted to both North and Latin American customers that will help us to secure additional sales. REAL ESTATE We have not sold any fully owned real estate assets during the year and no capital gains have been generated, which compares with the 6.1M generated in Nevertheless, the disposal of four hotels that were held in the JV with Starwood Capital Group resulted in a profit of 20.6M million euros that were recorded in the P&L within the profit/(loss) from associates and JV line, which reflected the Group s share in the capital gain generated. Furthermore, we are still working in the potential sale of a number of non-core assets. In the meantime, we will appoint an independent appraisal to perform a new valuation of our owned real estate assets, which will be released during Q Also, we will continue working closely with our strategic partners in order to increase the value of our JVs, as well as to efficiently deploy capital in attractive repositionings, including the construction of the new resort in Punta Cana that will become the core for The Circle, so we can increase system-wide profitability and resilience to cycle downturns. 22 The Circle Dominican Republic

24 Meliá Bali Garden Villas & Spa Indonesia COMMITMENT AND CORPORATE RESPONSIBILITY 3

25 ESG ENVIRONMENTAL, SOCIAL & GOVERNANCE After two intense years, Meliá motivation to promote and to integrate ESG criteria in the hotel operations is becoming a reality. Meliá is incorporating tools that allow the improvement of management and to increase the levels of transparency in non-financial aspects. Besides, this performance enables the Company to transmit to its stakeholders a greater and better vision of the Company and its reality, encouraging the dialogue with them in order to integrate their needs and expectations regarding ESG. The result of this is the reinforcing of the trust placed in the Company. For Meliá, the ESG criteria are a real lever for the creation of management value for the hospitality business. In this line, the Company is strengthen its continuous commitment on measurement of its impact regarding ESG. Working from the perspective of the progressive incorporation of ESG assures Meliá the correct transmission, towards its Stakeholders, of the consistency and the relationship between the strategy, governance model, operation and financial and non-financial performance, as well as enhancing the positive impact across the entire Company. In terms of Corporate Responsibility, Meliá has clearly defined a four pillars strategy, focused on: REPUTATION ENVIRONMENT EMPLOYABILITY CHILDREN ENVIRONMENTAL 2017 has been the year in which, once again, the global initiative Carbon Disclosure Project (CDP), has recognized Meliá Hotels International as one of the leading companies in the fight against global warming. This international organization is a driving force behind the sustainable economy. Meliá has received the best rating in the hospitality sector in Spain (A-). The result places the Company in a leading position in terms of good practices in the tourism industry. The impact gains strength given the close relationship between the defense of Human Rights and the protection of the environment. Meliá has opened its first-ever 100 sustainable hotel through the use of the latest technologies and innovations. Meliá Serengeti Lodge is the first hotel designed to operate completely off the grid and became the perfect opportunity to create a state-of-the-art sustainable hotel. Meliá continues working on the integration of sustainable criteria in its portfolio. The Company is working on energy saving projects through contracts with Energy Service Companies (ESE's or ESCO). In this way, leading companies in the field of savings and energy efficiency have collaborated to reduce energy consumption and greenhouse gas emissions in the hotels. This kind of collaborations, during 2017, continue offering tangible results in reducing energy expenditure and the group's carbon footprint (364,814 Kg CO2). During 2017, Meliá obtained the certification of its Energy Management System in accordance with the ISO standard, endorsing the correct implementation carried out in the Gran Meliá Fénix hotel in Madrid. This management system is based on the Corporate Environmental Policy approved by our Board of Directors in February of this year and is closely related to the global environmental principles of Company as well as the commitments assumed in environmental matters. This year Meliá joined the Forética Climate Change Cluster. This working group is the benchmark business platform in Spain on climate. It is formed by a group of 50 large Spanish companies that work together to lead the strategic positioning in the face of climate CO2 EMISSIONS (Kg) CO2 EMISSIONS PER STAY (Kg) WATER CONSUMPTION PER STAY (m3) ENERGY CONSUMPTION PER STAY (kwh) 3.5M DIRECT INVESTMENT IN EFFICENCY PORTFOLIO CERTIFIED IN SUSTAINABILITY EMPLOYEES TRAINED IN SUSTAINABLE MANAGEMENT PORTFOLIO WITH RENEWABLE CERTIFIED ENERGY 24

26 SOCIAL Our global CR strategy has a specific focus on employability, internal and social, to provide future opportunities in the hospitality industry to people. This means the creation of new job opportunities accordingly to our growth. We pay special attention to groups at risk of exclusion. We work collaboratively and on a platform with reference entities to activate projects focused on promoting employability and the socio-occupational integration of at-risk youth by improving their skills and abilities beyond theoretical technical training. We share with them our knowledge, spaces, a real learning environment and, for many of them, a real work opportunity. In addition, being a hotel company drives us to enhance the cultural factor and knowledge of destinations. Therefore, transmitting the wealth of destinations is a key line of work for us in the social sphere EMPLOYABILITY. COLLECTIVES & WORKING AREAS COLLECTIVES Collectives at risk of social exclusion Employees Youth, children & families NGOs NEW EMPLOYEES INITIATIVES MAIN FIGURES EMPLOYABILITY CHILDREN CULTURE EMPLOYEES 46, TRAINING (Hrs/pax) 7 hours WORKING AREAS Training, learning & integration 79 Education & Development Sensitization ENTITIES BENEFICIARIES ECONOMIC SUPPORT +5, k +120k +321k +883k +315k GOVERNANCE FUNDS COLLECTED M - Meliá has assumed the commitment to report information that reflects its performance, as well as current challenges and future objectives. Likewise, this requires the Company to do it with greater cohesion and transparency. In 2017, and with the aim of placing itself at the forefront of reporting, has taken an important step forward by presenting its information under an Integrated Report model. During the 1 st Q of 2018 Meliá will publish it Annual Integrated Report. One of the most significant advances given by Meliá in 2017 in order to strengthen the cultural transformation and Governance Model has been the approval of new policies (Policy of Corporate Responsibility, Policy of Environment, Policy of Communications and Contacts with Shareholders, Institutional Investors and Voting Advisors, and the Policy of Selection of Directors). In addition, Meliá has initiated the elaboration of its 1 st Supplier Code of Ethics. The Company has started to give greater visibility to the Corporate Responsibility matters in the governance structure of the Company. The Company continues its active participation in the clusters and forums to which it has joined in 2017 like the Cluster of Transparency, Governance and Integrity driven by Forética, the International Chamber of Commerce (ICC) Corporate Responsibility Working Groups, World Travel & Tourism Council, Chamber of Commerce of Spain, among others. This participation responds to the commitment of the Company to share its experience in ESG matters with its main stakeholders with the aim of promoting responsible transformation in the institutions of which it forms a part. Melia has reviewed it Materiality Analysis. This review has allowed the Company to update those government, environmental and social issues that are relevant to its stakeholders. 24 of invited stakeholders participated in the review. In addition, after the launch of the Reputational NPS (Net Promoter Score) in September 2016, the Company analyzes on a monthly basis the evolution of an indicator that allows to measure the evolution, from the guest s perspective, of this important attribute. REPUTATION & ACKNOWLEDGMENTS 25 Leading Company in Sustainability (European Global ESG Leaders Awards Thomson Reuters). ESG Leader of the Year Gabriel Escarrer Jaume (European Global ESG Leaders Awards Thomson Reuters). Most Responsible Company in Latin America Social Ecumenical Forum Merco Businesses Best corporate reputation in Spanish tourism industry (5th cons. year). Global position 13/100 (+4) Merco Leaders Gabriel Escarrer Jaume. Executive with best reputation n Spain. Global position 31/100 (+14) Merco CR & Governance - Spanish tourist company with best corporate responsibility. Global position 17/100 (+8) Forbes Ranking Spain 50 best CEOs of the year Gabriel Escarrer Jaume. Universum th most attractive company to work for in Spain (university students). Randstad Award 2017 Most attractive Company to work for in Spain (hospitality). Digital Talent Accenture Award Talento & Workforce for talent management in social networks.

27 Innside Palma Bosque Mallorca - Spain FINANCIAL STATEMENTS 4

28 INCOME STATEMENT Important disclosure: As mentioned in June and September 2017, the financial statements presented in this report have been affected by the Venezuelan Bolivar/USD ex rate that we used to reflect the economic reality of the country. Revenues Total consolidated revenues rose by +4.6 vs past year s figures (+4.1 on a like-for-like basis) as a result of the different aspects described below: 1. Higher revenues (+4.6 vs 12M 2016) as a result of the improved results of the Hotels Division, which posted a RevPAR (O&L) growth of +5.6 vs the same period last year, fully explained by price (+4.3 on a same store basis, 93.0 explained by price). 2. Moreover, it is worth to mention the net impact that resulted from s in the perimeter, refurbishments and new openings, that contributed by +35.5M of additional revenues, being particularly relevant the performances of Paradisus Los Cabos and Gran Meliá Palacio de los Duques. 3. Additionally, revenues have been partially offset by lower capital gains generated in the period (0.0M vs 7.1M in 12M 2016) and the lower levels of activity of our TO Sol Caribe Tours. Operating Costs Total operating costs increased by +3.3 vs 12M 2016 (+2.6 on a like-for-like basis) as a result of the following: a) Net impact of +14.0M due to s in the perimeter such as new openings, disaffiliations, re-openings and s in the type of contract, including Paradisus Los Cabos, Gran Meliá Nacional de Rio and Meliá Palma Bay. b) Reduction in Raw Materials by -3.4 vs 12M 2016 (-4.9 on a like-for-like basis) due to the lower levels of activity of Sol Caribe Tours, which was partially offset by the lower revenues (zero effect at EBITDA level). c) Increase in Personnel Expenses by +2.7 (+3.3 on a like-for-like basis) and in Other Operating Expenses by +6.0 (+4.7 on a like-for-like basis) vs the same period last year. d) Higher Rental Expenses (+14.5M, +8.9 vs 12M 2016) as a result of the combination of new rental contracts (+10.0M), such as Gran Meliá Nacional de Rio, Innside New York NoMad and Meliá Palma Bay, and the increase of certain variable rentals due to the improved performance of the hotels. Nevertheless, these two effects were partially offset by a number of disaffiliations and s in the type of contracts from rentals to management (-4.4M). In addition, it is worth to mention the reversal of certain rental provisions by -3.4M and -2.8M in 2017 and 2016 respectively. EBITDA EBITDA increased by +8.6 vs 12M 2016 (+11.0 excluding capital gains), while EBITDA excluding capital gains margin stood at +16.5, showing an increase of +89bps. Depreciation and Amortization grew by vs the same period last year, being this increase explained mainly by the extraordinary amortizations of software applications (i.e. SAP licenses) and the 6.2M impairment of our hotel located in Puerto Rico as a result of the devastating effects of Hurricane Irma. Operating Profit (EBIT) Operating Profit rose by +5.8 (+10.2M) vs the same period last year. Result from entities valued by the equity method increased by +21.6M vs 12M 2016 mainly due to the +20.6M capital gain generated by Starmel Hotels as a result of the sale of 4 hotels in June. Excluding this effect, the result from entities valued by the equity method improved by +1.0M vs 12M Net Profit Net Profit significantly improved vs 12M 2016 and rose by (+28.0M). EPS stood at 0.56, which compares with the 0.44 posted in 12M

29 INCOME STATEMENT (cont d) Q4 17 vs Q4 16 Q Q (Million Euros) 12M M M 17 vs 12M 16 Revenues split Total HOTELS 1, , Management Model Hotel Business Owned & Leased 1, , Other Hotel Business Real Estate Revenues Club Meliá Revenues Overheads Total Revenues Aggregated 2, ,115.9 (101.2) (93.7) Eliminations on consolidation (347.3) (314.0) Total Consolidated Revenues 1, , (46.7) (50.7) Raw Materials (215.2) (222.8) (116.8) (120.7) Personnel Expenses (502.7) (489.7) (168.8) (159.8) Other Operating Expenses (678.7) (640.2) 0.3 (332.2) (331.1) Total Operating Expenses (1,396.6) (1,352.7) EBITDAR (39.1) (35.1) Rental Expenses (178.3) (163.7) EBITDA (36.2) (25.1) Depreciation and Amortisation (124.3) (109.8) EBIT (OPERATING PROFIT) (6.9) (7.7) Financial Expense (30.0) (42.1) Other Financial Results Ex Rate Differences (11.5) (2.2) Total financial profit/(loss) (33.1) (29.7) 11.5 (3.3) (3.0) Profit / (loss) from Associates and JV Profit before taxes and minorities (2.6) (11.9) Taxes (42.6) (44.6) Group net profit/(loss) (1.5) (3.4) Minorities Profit/(loss) of the parent company Meliá Saidia Beach Morocco

30 BALANCE SHEET Assets Total assets declined by -3.1 over the entire year as a result of the following aspects: a) Reduction in Tangible Assets by -43.8M, being this drop mainly explained by: I. Increase in amortizations for the period (-103.0M). II. III. Translation differences (-96.5M) as a result of the devaluations of the Dominican Peso and Venezuelan Bolivar against EUR and that were partially offset by the adjustment made in Venezuela in order the consider the hyperinflation suffered by the country during the period. Increase in investments as a result of the different refurbishments and repositionings made in our portfolio for a total amount of 141.7M. b) Increase in Investments in Associates by +39.5M mainly motivated by the addition of Renasala, as well as a result of the equity rollover in the new JV with London & Regional after the sale of 4 hotels by the JV with Starwood Capital. c) Decrease in Other Non-Current Financial Assets by -36.3M given the reduction in credits with associated companies and long-term credits. d) Increase in Tax Assets on Current Gains by +25.4M, which corresponds mainly to the taxes paid in advance for the 2017 tax period, as required by the new tax rules, and that implied a higher corporate tax refund for the year. (Million Euros) Dec 2017 Dec 2016 Dec 17 vs Dec 16 ASSETS NON-CURRENT ASSETS Goodwill Other Intangibles Tangible Assets 1, ,693.4 Investment Properties Investments in Associates Other Non-Current Financial Assets Deferred Tax Assets TOTAL NON-CURRENT ASSETS 2, , CURRENT ASSETS Inventories Trade and Other receivables Tax Assets on Current Gains Other Current Financial Assets Cash and Cash Equivalents TOTAL CURRENT ASSETS TOTAL ASSETS 3, ,

31 BALANCE SHEET (cont d) Liabilities Total liabilities decreased by -3.5 and total equity declined by -2.6 in 2017 vs the same period last year, being the main aspects that explain this movement discussed below: a) Reduction in Trade and Other Payables by -16.4M as a result of the decline in debts with associates. b) Decline in Other Current Liabilities by -30.3M given the debt repaid as a result of the second payment related to the Paradisus Los Cabos purchase. (Million Euros) Dec 2017 Dec 2016 Dec 17 vs Dec 16 EQUITY Issued Capital Share Premium 1, ,121.1 Reserves Treasury Shares (15.0) (14.3) Results From Prior Years Other Equity Instruments (0.0) (0.0) Translation Differences (541.1) (400.7) Other Adjustments for Changes in Value (1.7) (2.5) Profit Attributable to Parent Company EQUITY ATTRIBUTABLE TO THE PARENT CO. 1, , Minority Interests 26,6 43,3 TOTAL NET EQUITY 1, , LIABILITIES NON CURRENT LIABILITIES Issue of Debentures and Other Marketable Securities Bank Debt Other Non-Current Liabilities Capital Grants and Other Deferred Income Provisions Deferred Tax Liabilities TOTAL NON-CURRENT LIABILITIES CURRENT LIABILITIES Issue of Debentures and Other Marketable Securities Bank Debt Trade and Other Payables Liabilities for Current Income Tax Other Current Liabilities TOTAL CURRENT LIABILITIES TOTAL LIABILITIES AND EQUITY 3, ,

32 CASH FLOW STATEMENT Cash flow from operating activities Cash flow from operating activities for the entire 2017 was M as a result of the substantial increase in taxes paid (+25.4M vs 12M 2016) given the new requirements of current tax legislation. Cash flow from investing activities Cash flow from investing activities for the period was M given the lower payments received due to assets disposals (-10.9M vs 12M 2016). Cash flow from financing activities Cash flow from financing activities for the year was -29.2M as a result of the decline in interest paid, mainly as a result of the drop in the cost of debt, plus the higher amount of dividends paid (+19.4M vs 12M 2016) as a result of having increased the dividend payout to 30.0 and the higher net profit for the year. Other items Other items worsened vs the same period last year mainly as a result of the negative evolution of ex rates differences given the depreciation suffered by the USD against EUR in the year. As a result of the above mentioned movements, cash and cash equivalents decreased by -34.9M vs December In addition, the following graph shows the evolution of net debt over the year: Net debt evolution: Dec 2016 Dec 2017 ( millions) +51.2M (214.7) Net Debt Dec16 Operations Flow Investing Activities Flow Dividends Other Financing Activities Flow Other (FX, etc.) Net Debt Dec17 31 Meliá Las Dunas Cuba

33 FINANCIAL RESULTS & DEBT Financial results Net financial expenses rose by 11.5 in 2017 vs last year, being the main aspects that explain this increase discussed below: a) Substantial reduction in Financial Expense (-12.1M vs 12M 2016) as a result of the significantly lower average interest rate paid (3.24 vs 3.46 in 12M 2016). b) Higher income in Other Financial Results (+0.7M vs 12M 2016). c) Negative evolution of Ex Rate Differences (-16.2M vs 12M 2016) given the significant depreciation suffered by the USD against the EUR (-12.0 in 2017 vs +4.5 in 2016). Q Q Item 12M M Ex Rates Differences (11.5) 4.7 (6.9) (7.7) Financial Expense (30.0) (42.1) (0.8) (3.2) Interest Capital Markets (3.3) (13.2) (6.1) (4.5) Interest bank loans and others (26.7) (28.9) Other Financial Results (0.4) (2.4) Net Financial Income/(Loss) (33.1) (29.7) Debt In 2017, gross debt increased by +16.4M and reached 925.6M, while net debt rose by +51.3M and closed the year in 593.7M. Over the year, we have been involved in an number of investments ranging from refurbishments to full repositionings aimed at enhancing the service offered to our guests, as well as to position our hotels in the upper segments of the market to become more resilient against economic cycle downturns. In addition, gross debt has increased due to the higher dividend payout ratio, as well as due to a higher amount of taxes paid because of new tax rules requirements plus negative ex rate differences. Nonetheless, our leverage ratio has remained below 2.0x and closed the year at 1.9x, which shows our continued commitment to maintain financial stability going forward. The maturity profile of current debt is shown in the following graph: Debt maturity profile 1 ( millions) > 2022 Bank loans & others Capital markets 1) Excluding credit facilities 32

34 Gran Meliá Palacio de Isora Resort & Spa Tenerife - Spain MELIÁ IN THE STOCK MARKET 5

35 STOCK MARKET Our stock price decreased by -6.0 in Q4 2017, underperforming the Ibex 35 Index (-3.3). On a yearly basis, our stock price rose by +3.8 in 2017, while the Ibex 35 Index increased by Max: /06/2017 Min: /11/ /12/ /02/ /04/ /06/ /08/ /10/ /12/2017 Volume Price Q Q Q Q Average daily volume (thousand shares) Meliá performance Ibex 35 performance Number of shares (millions) Average daily volume (thousands shares) Maximum share price (euros) Minimum share price (euros) Last Price (euros) Market capitalization (million euros) 2, , Dividend (euros) Source: Bloomberg Note: Meliá s shares are listed on the Ibex 35 and FTSE4Good Ibex Index Main Highlights of 2017: On January 13th 2017, we signed a stock liquidity agreement aimed at providing Meliá shares with higher liquidity in the market and attractiveness for investors. On July 11th 2017, a dividend was paid to shareholders. 34

36 Gran Meliá Rome Villa Agrippina Italy APPENDIX 6

37 BUSINESS SEGMENTATION OF MELIÁ HOTELS INTERNATIONAL 12M 2017 Total Real Club Total Eliminations Total Overheads Hotels Estate Meliá Aggregated On Consolidation Consolidated Revenues 1, , ,885.2 Expenses 1, , ,396.6 EBITDAR Rentals EBITDA D&A EBIT M 2016 Total Real Club Total Eliminations Total Overheads Hotels Estate Meliá Aggregated On Consolidation Consolidated Revenues 1, , ,802.0 Expenses 1, , ,352.7 EBITDAR Rentals EBITDA D&A EBIT Meliá Las Antillas Cuba

38 CONSOLIDATED FLOW THROUGH AND MARGINS EVOLUTION CONSOLIDATED P&L ACCOUNT 12M 2017 M 12M 2016 M Flow through Revenues 1, ,802.0 Operating expenses (1,396.6) (1,352.7) EBITDAR EBITDAR Margin Rentals (178.3) (163.7) EBITDA EBITDA Margin CONSOLIDATED P&L ACCOUNT EXCLUDING CAPITAL GAINS AND THE REVERSAL OF ONEROUS CONTRACTS 12M 2017 M 12M 2016 M Revenues 1, ,794.9 Operating expenses (1,396.6) (1,351.7) Flow through EBITDAR EBITDAR Margin Rentals (181.7) (166.5) EBITDA EBITDA Margin P&L adjusted by: a) Ex-capital gains on asset rotation (0.0 M in 12M 2017; 6.1 M in 12M 2016). b) Excluding the reversal of onerous lease contracts (3.4 M in 12M 2017; 2.8 M in 12M 2016). ADJUSTED CONSOLIDATED P&L 12M 2017 M 12M 2016 M Revenues 1, ,548.1 Operating expenses (1,199.9) (1,169.0) Flow through EBITDAR EBITDAR Margin Rentals (143.4) (136.9) EBITDA EBITDA Margin P&L adjusted by: a) Ex-capital gains on asset rotation. b) Excluding the reversal of onerous lease contracts. c) Based in Same Store Sales (excluding openings, disaffiliations and majors refurbishments). 37 Meliá Zanzibar Tanzania