2007 Year-End Results

Transcription

1 Profit & Loss Account (Million Euros) Dec 07 Dec 06 % REVENUES 1, , % EXPENSES (ex - Operating leases) (933.1) (867.5) 7.6% EBITDAR % Rental expenses (68.5) (63.4) 8.0% EBITDA % Depreciation and amortisation (109.0) (112.3) 2.9% Restructuring (3.5) 0 EBIT % Total financial profit/(loss) (65.8) (61.5) 7.0% Profit/(loss) from equity investments % Continuing EBT % Discontinuing Operations Profit before taxes and minorities % Net Profit % Net Profit attributable % Operational Ratios Dec 07 Dec 06 % RevPAR % EBITDAR MARGIN 31.0% 31.0% 0 bp EBITDA MARGIN 25.9% 25.9% -3 bp EBITDA MARGIN (ex-asset rotation) 24.1% 24.4% -28 bp EBT MARGIN 13.2% 12.3% 90 bp NET PROFIT MARGIN 12.0% 10.8% 117 bp Financial Ratios Dec 07 Dec 06 % EBITDA / NET INTEREST 5,3x 5,2x 3.5% EBIT / NET INTEREST 3,6x 3,4x 6.3% Stock Performance /01/ /02/ /03/ /04/ /05/ /06/ /07/ /08/ /09/ /10/ /11/ /12/ /01/ /02/2008 SOL VOLUME SOL LAST IBEX LAST Average Daily Volume 2007 ( ) 14,942, w High, April 17 th w Low, December 27 th Market cap Feb. 27 th 08 ( ) Bloomberg: SOL SM, Reuters: SOL.MC Year-End Results Highlights Revenues, EBITDA and Net Profit attributable increased by 7.5%, 7.1% and 18.9% respectively The performance of these items rises by 7.1%, 5.6% and 17.2% when excluding asset rotation profits in both periods. a) Overall resorts performance, especially in the Dominican Republic; b) sustained growth in the European cities and c) the positive evolution of the Sol Meliá Vacation Club, mainly explain the performance. Outlook 2008: In line with 2007 The slow down of the asset rotation activity along with the unfavourable evolution of the Euro/ dollar exchange rate is likely to offset the underlying hotel & Vacation Club Businesses. Nevertheless, in 2008, within the framework of the Strategic Plan and the New Organizational Model, Sol Meliá is starting an array of initiatives and investments to deliver a sensible overall performance and growth. Debt reduction & Maintenance of Investment Grade by Moody s Net debt has gone down to 65 million Euros, implying a decrease for the 4 th consecutive year (350 Mn). As a result of the conservative financial policy of the Company and the management of financial needs before liquidity uncertainty, the rating agency Moody s maintains Investment grade on Sol Meliá. The rating reflects Sol Meliá s strong market position and brand recognition, particularly in Spain, the diversification provided by the presence in both the city hotel and resort businesses, the anticipated debt reduction and improved operating performance which should continue to translate into improved credit metrics, the company s conservative financial policies and the good asset coverage provided by Sol Meliá s hotel portfolio. Asset Rotation In a year of Real Estate difficulties, the Company has achieved Mn of sales; 43.1 Mn profits and an 18.2x Ebitda multiple. In addition, the Company has increased its presence in central Europe with the acquisition of the hotel chain Innside as a platform for future growth in Europe. Strategic Plan The Company presents its Strategic Plan at an Investor s Day, including presentations by the Senior management team explaining the content of the Company s Strategic Plan 2010, accompanied by a New Organizational Model. The Plan responds to the following strategic priorities: 1) Brand equity, 2) Enhancement of Customer Knowledge,3) Leisure Real Estate Development, 4) People talent & empowerment and 5) Sustainability. investors.relations@solmelia.com SOL MELIÁ Gremio Toneleros, Palma de Mallorca Tel.:

2 Table of contents 1. Letter from the Co- C.E.O. & Co- Vice Chairman Information on Operations Hotel Performance Asset Management Performance Income Statement Balance Sheet Development...17

3 1. Letter from the Co- C.E.O. & Co- Vice Chairman Dear friend, Sol Meliá is pleased to release its year end results, reporting Revenues, Ebitda, Ebit and Net Profit increased by 7.5%, 7.1%, 10.7% and 19.3%. A RevPAR increase of 6% in 2007 reflects the positive evolution of the three hotel divisions of the Company. During the year, European Resorts have evolved positively, sustained by a +1.7% increase in international arrivals and the maintenance of Spain as a leading tourism destination, still the second most visited country in the world according to Exceltur. Going forward, our expectations are based on a) the results of negotiations with tour operators ;b) the increasing importance in terms of diversification of our clientele from eastern European markets, and c) the evolution of online TO compensating the decreases in traditional ones. Regarding our direct channel, in 2007 net sales through solmelia.com rose to 122 mn Euros, a 27% increase over the previous year. At the end of 2007, 2 million people were subscribed to the fortnightly solmelia.com special offers newsletter. The European City Division evolved positively with a RevPAR increase of 8.6%, mainly explained by a 6.7% ARR increase. At this stage we still do not perceive any sign of a slowdown in the Division, and we expect the evolution of 2008 figures will respond to a) result of negotiations with our major Key Accounts; b) the smaller growth of supply in the Spanish cities and c) the positive evolution of sales to the Corporate segment (business travel) and the evolution of Meeting Sol Melia (MSM), due to the efforts made to increase efficiency and synergies with the rest of the Company. In the Americas, Revenues increased by 12.3% and RevPAR in US Dollar by 14.9% for the year, mainly sustained by the evolution of the Dominican Republic and Caracas, and partially affected by the slow recovery of Puerto Rico and Cancun after the rebranding. Regarding the Sol Meliá Vacation Club, the business has reached 10.3% of the total consolidated Ebitda of the Company as we advanced 12 months ago, and also as we advanced when we launched this business in 2004, in the past compared it has proved a more resilient business compared to traditional Real Estate. The current weakness of the dollar has also affected the translation into Euros of the accounts in Latam, representing 14 million Euros at Ebitda level for the year. You should take into consideration that this impact is only at the accounting level since the cash generated is not brought to Europe. Despite difficulties in the traditional Real Estate market, during the year the Company has completed the disposal of million euros, generating 43.1 mn of profits (of which 32.3 million are at the Ebitda level, 5.7 Mn at the Financial Results level and 5.1 Mn included in Profit from Equity Investments. Transactions materialized in the fourth quarter of the year (53.5 Mn ) include hotels in Extremadura (Spain) at 30 Mn euros, generating 9.7 Mn of profit, at an Ebitda multiple of 18.9x, and two hotels in continental Europe (the Tryp Paris Boulogne in France, and the Melia Boutique Avenue Louise in Belgium) at 12.5 and 11 million respectively, generating 5 and 5.3 Mn of capital gains at an Ebitda multiple of 17.3x and 19.3x respectively. The total price of the disposals is in line with the valuation of CB Richard Ellis With these transactions, the company achieved its commitment to selling 100 Mn Euros of the asset base, despite the difficulties in the traditional Real Estate market. At the financial level, the company has finished the year with a comfortable financial situation as reflected in the maintenance of investment grade status by the Moody s rating agency. The latest financial operations signed by the company amount to 100 million euros at EURIBOR + 60 bp and 5 year maturity 3

4 (50 Mn on November 2007 and another 50 Mn in February 2008), together with a factoring of 76.3 million euros. Regarding the liquidity situation, the Company has sufficient leeway at the end of 2007 to a) afford the strategy for the next 3 years, b) attend the debt maturity related with the 150 millions of the convertible bond which matures in November 2008, and c) refinance debt. In the future, the company will maintain its conservative financial policy, with the maintenance of the credit rating being a strategic priority. Coinciding with the FITUR international tourism fair held in Madrid, Sol Melia announced the opening of two luxurious hotels in 2008: the Gran Meliá Palacio de Isora Resort in Tenerife (Spain) and Gran Melia Shanghai Hotel (China). Considered the culmination of the company s knowledge and values, the two new properties stand as twin flagships for a whole new level of hospitality that is the future of Sol Meliá s most coveted luxury brand. By 2009, the company will introduce two other Gran Melia sites in Italy (Gran Melia Roma) and Spain (Gran Melia Colon, Seville). Furthermore, Sol Meliá has signed an agreement with the WTO- World Tourism Organization, to promote the concept of social responsibility, stimulating projects in the field of international cooperation, environment and climate change, together with volunteer projects in those countries where Sol Melia is present. It has been an excellent year for the Company from different points, taking into consideration 1) the 7% debt reduction, the maintenance of the investment grade by Moody s and the evolution of the Asset Rotation activity together with hotels and Vacation Club evolution, as reflected in their historical results 2) It has also been a year for human capital progress, reaching our best results ever in the evaluation of the work environment, and receiving the award of Top Company to work in certificated by Accenture and CRF 3) In addition, 2007 has been special for us as we have announced important changes in the Company linked to the New Organizational and Business Model, a generational transfer based on balance, teamwork and delegation of authority, together with a year in which we have established the bases for the Strategic Plan. In this occasion I am delighted to present these results the same day that we celebrate Company s Investor s Day, an opportunity to reiterate our commitment to transparency in the markets, introduce our Senior Executive Team and explain the new Strategic Plan that will drive Sol Melia during the following period , together with the New Organizational Model as a pillar for the future growth of the company responding to our main strategic priorities. Best regards, Sebastian Escarrer Co- C.E.O. & Co- Vice Chairman 4

5 2. Information on Operations 2.1. Hotel Performance RevPAR for owned and leased hotels has increased by 6.0% during This evolution is mainly explained by the performance of European cities and the Americas, verifying the Company s expectations for the year. In the European Resort Division, RevPAR has increased by +4.4% (ARR +5.5%; Occupancy -1.0%). By region, the best performers of the year have been the Balearics, Alicante and the Costa del Sol, with a +6.8%, +6.3% and +5.0% RevPAR increase respectively, while the main challenge remained in the Canary Islands (-6% for the year) even though the region is evolving satisfactorily thanks to the progressive introduction of low cost airlines flying to the archipelago. Company RevPAR increased by 4.4% for the year, mainly offset by the lack of snow last year which damaged the Spanish Resort Division in Q1, and the slow evolution of the Canary Islands in the year, even if during Q4 we have verified a recovery thanks to the entry of low cost airlines encouraging more visitors to travel, which is expected to continue in the future. RevPAR in the European City Division grew by 8.6% (ARR +6.7%; Occupancy +1.8%) mainly due to the positive evolution of Spain (+7.9%), and the performance of the main European cities (London, Berlin, Paris and Milan). RevPAR from Spanish cities also grew, mainly explained by the good performance of Madrid and Barcelona (+9.5% and 6.8% respectively), together with the evolution of the Balearics (+13.7%), Valencia (+15.4%) and Seville (+2.6%). By brand, the best performer has been the Premium brands (+14.0%) followed by Tryp (+7.8%) and Melia (+4.4%). On a quarterly basis the Company has not noted a slowdown in Spanish cities, verifying a RevPAR increase of +8.9% in Q4 (Q1:+5.3%; Q2:+9.8%;Q3:+7.4%; Q4: 8.9%). Regarding operations outside Spain, the on-going evolution of European cities is reflected in RevPAR increases of 36.2%, 15.4% 3.2% and 9.4% in Berlin, London, Milan and Paris, exceeding market performance in all cases (3.1%, 9.8%, 2.6% and 9.9%) according to the statistics provided by HotelBenchmark Survey by Deloitte. Increase in Berlin is due to the recent opening, in October 2006, of the hotel Meliá Berlin (364). In the Americas Division, RevPAR growth of 14.9% in USD (3.5% in Euros) is mainly fuelled by the positive performance of our hotels in the Dominican Republic. The good results of the Gran Meliá Caracas (428) are also behind the 12.3% growth at the revenue level. Regarding hotels in Puerto Rico and Cancun are evolving progressively in order to achieve their market niche and consolidate their recent change of brand. 5

6 Table 1: Hotel statistics 07 / 06 (RevPAR & A.R.R. in Euros) OWNED & LEASED HOTELS Dec 07 / 06 Occupancy RevPAR A.R.R. EUROPEAN RESORT % % o/ % 4.4% 5.5% % EUROPEAN CITY ,6% % o/ % 8.6% 6.7% % AMERICAS % % o/ % 3.5% (1) 3.3% % TOTAL % % o/ % 6.0% (2) 5.5% % (1) RevPAR evolution in US Dollars is 14.9%. (2 ) Total RevPAR increases by 8.1% when stripping out the currency effect Table 2 shows the breakdown of the components of growth in room revenues at the hotel level for owned and leased hotels taking into account the company as a whole. Table 2: Breakdown of total room revenues owned/leased hotels 07 / 06 % Increase Dec 07 EUROPEAN EUROPEAN AMERICAS TOTAL RESORT CITY RevPAR 4.4% 8.6% 3.5% 6.0% Available Rooms -1.7% 2.1% 14.5% 2.7% Room Revenues 0.3% 10.6% 18.4% 8.8% In the European Resort Division, the decrease in available rooms (-1.7%) is due to the process of refurbishment of the hotel Magalluf Park (422) (Mallorca; Spain) and the disposal of the hotel Vista Sol (176) (Mallorca, Spain). The 2% increase in the European City Division is mainly explained by the incorporation of Innside hotels in Germany, in the last quarter of the year, the Melia Berlin (364) (Berlin, Germany) and the ME Madrid Reina Victoria (193) (Madrid, Spain), while offset by the disposal of the Meliá Rey Don Jaime (319) (Valencia, Spain) and the processes of refurbishment of the Melia Madrid Princesa (275), Melia Seville (364) and Gran Melia Colon (218). In the Americas, the 14.5% increase is due to our hotels in Cancun (Mexico), as a consequence of the increases in the hotels ME Cancun (433) and Gran Meliá Cancun (688) following the process of refurbishment after Hurricane Wilma. 6

7 Table 3: Hotel revenues split 07 / 06 for owned/leased hotels Dec 07 / 06 E.RESORT E.CITY AMERICAS TOTAL (Million Euro) 07 % o/ % o/ % o/ % o/ ROOMS % % % % F&B % % % % OTHER REVENUES % % % % 78.4 TOTAL REVENUES % % % %

8 2.2 Asset Management Performance Asset Rotation During the year, Sol Melia has completed million sales, exceeding the 100 million Euros expected for year end. Table 4: Asset Rotation SELL SIDE ASSET ROOMS PRICE EV/EBITDA (x) Profit Sol Vista Sol (Mallorca, Spain); 1Q La Jaquita plot of land (Tenerife, Spain); 1Q ,5 M. Rey Don Jaime (Valencia, Spain); 3Q % Meliá Colon (Seville, Spain); 4Q Tryp Hidalgo (Ciudad Real, Spain) 2Q Business Premise (Mallorca, Spain) 2Q Plot of land in the Dominican Republic 2Q % Paradisus Playa Conchal (Costa Rica) (*)2Q % Paramount NY (New York, USA) (*)2Q Other assets 3Q Melia Caceres, Merida & Trujillo (Extremadura, Spain) 4Q Tryp Paris Boulogne (Paris, France) 4Q Melia Avenue Louise Boutique Hotel (Brussels, Belgium) 4Q TOTAL 1, *) Profits generated by the stakes in Costa Rica and New York are included in the financial revenues and in Profit from Equity Investments items in the P&l account respectively. Therefore Ebitda at the Asset Rotation level includes 32.3 Mn. 8

9 Table 5: Asset Rotation BUY SIDE ASSET LOCATION ROOMS PRICE EV/EBITDA (x) Innside Hotel Chain Germany 1, TOTAL 1, On the buy side, the Company acquired in Q3 the German hotel operator Innside, under excellent financial conditions, while increasing its presence in the most important European cities thanks to Innside coverage: Berlin, Munich, Frankfurt, Bremen and Düsseldorf. At the moment this hotel chain operates 8 hotels that represent 1,072 rooms, plus 3 additional lease contracts in the pipeline that are expected to open between The quality of the Innside management team is also one of the benefits of this transaction on which Sol Melia will leverage its presence in the area Sol Meliá Vacation Club (SMVC) Total sales have gone up to Mn Euros (+26%) mainly fuelled by the Dominican Republic (40.7% of the total sales), Puerto Rico (17.4%), the Gran Meliá Cancun (12.3%) and the Gran Meliá Salinas (12%). During 2007, the number of weeks sold increased by 25.4%, while average priced decreased by 3.1%, affected by the strength of the Euro (average price in dollars increased by 5.6%). Total sales include not only the Vacation Club sales but also, amongst others, the revenues derived from the Interest Income (20%of total sales), Maintenance and Management fees (7% of total sales), as well as Network fees (2.5% of total sales). You should also consider that one of the achievements in the Club has been the focus on increasing the Silver & Gold Season Weeks, cleaning the stock of weeks that the Company had. Table 6: Sol Melia Vacation Club (SMVC) Data in Euro NUMBER OF WEEKS SOLD NUMBER OF EQUIVALENT CLUB UNITS AVERAGE PRICE VACATION CLUB SALES (IN 000 ) 2007 %o/ %o/ %o/ %o/ Europe % % % 19, , ,908.1 Americas 3, % 3, % % 15, , % 46,438.2 Total 4, % 3, % , % 15, , % 54,

10 3. Income Statement Revenues Total Revenues increased by 7.5% explained by the 8% increase in the hotel business, together with the 26% increase in the Sol Melia Vacation Club (SMVC). Up to December, Sol Melia has generated 46.5 million Euros from the disposals performed at the operating revenue level. Management fees from third party hotels represent 46.6 million Euros, a 1.8% decrease. This evolution is mainly explained by the disaffiliation of our hotel in New York and Cuba, partially offset by the good evolution of Spanish Cities and our resorts in Croatia. In Cuba, the Company has stepped-up in management contracts linked to GOP levels which explained the decrease in fees. Operating Expenses Underlying cost increases 7.6%, while Revenues and Ebitda 7.5% and 7.1% respectively. When excluding changes in the perimeter, hotels under a process of refurbishment, and the impact of SMVC (which increases its Ebitda by 52%) total cost increases by 5.9%. Rental expenses increased by 8% explained by the lease contract at the Meliá Berlin and Innside hotels in Bremen, Düsseldorf, Frankfurt and Munich. Excluding these hotels the item increase 0.4% and if we do not take into consideration the effect of hotels disaffiliated and the effect of Germany hotels, the item would increase by 1.4%. Ordinary Profit / Net Profit The average interest of Sol Meliá s debt is 5.29%, while the latest financial operations signed by the company amount for 100 million euros at EURIBOR + 60 bp and 5 year maturity (50 Mn on november 2007 and another 50 Mn in february 2008), together with a factoring of 76.3 million euros related with the SMVC. The increase in the account Profits from equity investments is explained by the 5.1 Mn Euros of capital gains generated from the disposal of the 17.4% stake in the Paramount New York and Total Financial Profit includes 5.7 million Euros of capital gains derived from the sale of the 15% minority stake in Costa Rica. The tax level rate at 8.1% reflects the ongoing tax management of the group. This level is mainly due to the goodwill generated in the Tryp acquisition, tax losses generated by companies of the Sol Melia Group in previous fiscal years, and fiscal credits that imply future reductions in the tax charge derived from investments both in Europe and in emerging countries in Latin America. 10

11 Table 6: Sol Meliá Consolidated Income Statement Million Euros Dec 07 Dec - 06 % Hotel Revenues 1, Real Estate Revenues Other revenues Total revenues 1, , % Raw Materials (168.2) (156.1) Personnel expenses (403.5) (376.4) Other operating expenses (361.4) (335.0) Total operating expenses (933.1) (867.5) 7.6% EBITDAR Rental expenses (68.5) (63.4) EBITDA % Depreciation and amortisation (109.0) (112.3) Restructuring (3.5) 0 EBIT % Net Interest Expense (54.0) (52.3) Exchange Rate Differences (0.6) 1.7 Other Interest Expense (11.2) (10.9) Total financial profit/(loss) (65.8) (61.5) 7.0% Profit/(loss) from equity investments Continuing Earnings Before Taxes % Discontinuing Operations Profit before taxes and minorities % Taxes (14.5) (16.4) Group net profit/(loss) % Minorities (P)/L (2.7) (1.7) Profit/(loss) of the parent company % 11

12

13 Table 8 : Business Segmentation of Sol Meliá s Consolidated Income Statement

14 4. Balance Sheet Assets The decrease in the Prepayments and assets in progress account is linked to the increase in the Land, account due to the reclassification of a plot of land in Brazil. The decrease in the Investments available-for-sale account is basically due to the sale of our stake in Playa Conchal for 17.7 million Euros. Liabilities & Shareholder s Equity Net debt amounts to million Euros as of 31 st December 2007, 65 million Euros less than last year. At the financial level, Sol Melia has signed on November 2007 a 5 year maturity loan which amount for 50 million Euros at EURIBOR + 60b.p. together with a factoring for 76.3 million Euros. With these operations, joined to another loan of 50 Mn euros signed in February 2008, the company s financial situation is strong enough to face the difficulties in capital markets. Total liquidity available as to 31 st December 2007 amounts to 515 million Euros together with the 6 million shares acquired as a hedge for the convertible bond which matures in November

15 Table 9: Consolidated Balance Sheet (million Euros) Thousands of Units '000 Dec 2006 Dec 2007 % ASSETS i INTANGIBLE FIXED ASSETS % Software Goodwill Other Intangibles ii PROPERTY. PLANT AND EQUIPMENT 1, ,986,8 0.9% Land Constructions 1, ,095.8 Technical plant and machinery Other assets Prepayments and assets in progress iii INVESTMENT PROPERTIES % iv OTHER NON-CURRENT ASSETS % Available-for-sale investments Investments in associates Loans to associates Deferred tax assets Other non-current financial assets TOTAL NON-CURRENT ASSETS 2, , % v NON-CURRENT ASSETS FOR SALE vi CURRENT ASSETS % Inventories Trade and other receivables Receivables for associates Other current assets Other current financial assets Cash and short-term deposits TOTAL CURRENT ASSETS % TOTAL ASSETS 2, , % 15

16 EQUITY AND LIABILITIES (Thousands of Units '000) Dec 2006 Dec 2007 % i EQUITY % Issued capital Share premium Revaluation reserves Distributable reserves Non-distributable reserves Results from prior years (380.9) (377.3) Reserves in co. full consolidation method Reserves in associates (3.9) 1.9 Exchange differences (43.1) (132.3) ii PROFIT AND LOSSES ATT. TO THE GROUP % Consolidated profit and loss Minority interests profit and loss (1.7) (2.7) Iii TREASURY SHARES (38.7) (42.0) 8.4% Iv TOTAL EQUITY % v MINORITY SHAREHOLDERS TOTAL NET EQUITY ,0 6.2% Vi NON-CURRENT LIABILITIES 1, , % Issue of debentures and other marketable securities Preference shares Payable to associates Bank debt Capital grants and other deferred income Provisions Deferred tax liabilities Other non-current liabilities TOTAL NON-CURRENT LIABILITIES 1, , % vii CURRENT LIABILITIES % Issue of debentures and other marketable securities Bank debt Payables to associates Trade payables Other current liabilities TOTAL CURRENT LIABILITIES % TOTAL EQUITY AND LIABILITIES 2, ,9 3.7% 16

17 5. Development The table below shows a description of the progress made in the Sol Meliá hotel portfolio up to December Table 7. Expansion plan. Owned & Leased 01/01/2007 ADDITIONS LOSSES CHANGES 31 / 12 / 2007 H R H R H R H R H R EUROPEAN CITY 89 14, ,541 Owned Hotels 32 6, ,958 Leased hotels 57 8, ,583 EUROPEAN RESORT 54 15, ,111 Owned Hotels 39 12, ,416 Leased hotels 15 2, ,695 AMERICA 17 6, ,921 Owned Hotels 15 5, ,691 Leased hotels OWNED HOTELS 86 24, ,065 LEASED HOTELS 74 11, ,508 TOTAL , ,573 Management & 01/01/2006 ADDITIONS LOSSES CHANGES 31 / 12 / 2007 Franchise H R H R H R H R H R EUR. CITY M 20 3, ,986 F 20 2, ,639 EUR. RESORT M 41 12, ,142 F 11 3, , ,215 AMERICA M 32 7, , ,031 F ASIA-PACIFIC M 7 2, ,198 F CUBA M 26 10, ,238 SUBTOTAL M , , ,595 F 32 5, , ,854 OTHER(*) 94 4, , ,972 TOTAL , , , ,421 TOTAL GROUP , , , ,994 M= Management; F= Franchise (*) This item includes the hotels franchised by Luxury Lifestyle Company. Luxury Lifestyle is a 50/50 Join Venture with the Stein group to franchise small luxury hotels and resorts. Excluding Luxury: 301 hotels and 75,022 rooms. 17

18 Additions Under management contract, Sol Meliá added to its portfolio the Melia Patagonia (97 rooms) in Chile, Tryp Zaragoza (162 rooms) in Spain and in 4Q07 incorporated the Meliá Gran Hotel Hermitage (728 rooms) in Bulgaria. The Company also added the Meliá Aldeia Dos Capuchos (198 rooms) in Portugal under franchise agreement to its portfolio. Loses During the 2007, the Company signed the disposal of the Tryp Hidalgo (54 rooms) in Spain. In 4Q07 Sol Meliá sold the Meliá Mérida (76 rooms) and the Meliá Caceres (86 rooms), both in Spain, and the Meliá Avenue Louise (80 rooms) in Belgium. Under management contract, Sol Meliá dropped from its portfolio 5 hotels in Brazil: the Sol Jangada Fortaleza (127), the Tryp Porto Alegre (79), the Meliá Maceio (180), the Gran Marquise (230) and the Tryp Brooklyn (201). The Company also disaffiliated the Sol Phebus (120) in Tunisia, the Meliá Cariari (222) and the Tryp Corobici (213), both in Costa Rica, the Meliá Pharaoh (357) in Egypt and the Paramount in New York. Under franchise contract, the Company disaffiliated the Sol Flor da Rocha (156) in Portugal. 18