May 7, 2020 / 6:12 PM / 20 days ago

UPDATE 1-Spain's Melia Hotels sees 80 mln euro loss in Q1, gloomy Q2 outlook

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MADRID, May 7 (Reuters) - Spain’s Melia Hotels on Thursday reported a first-quarter net loss of 79.7 million euros ($86.15 million) after the coronavirus outbreak forced the closure of most of its hotels, clouding its outlook for the second quarter.

In the first quarter of 2019 the company reported a net profit of 11.5 million euros, while core profit for the quarter fell 85% to 14.2 million euros, Melia said.

Chief Executive Officer Gabriel Escarrer said the COVID-19 pandemic had caused a progressive and drastic drop in business, culminating in the “closure of practically all of our hotels except for a few hotels in Asia Pacific countries that have not been hit so hard.”

Of Melia’s 326 hotels worldwide, only 40 remain open, mainly in Portugal, Southeast Asia and Brazil.

After Spain declared a state of emergency on March 14 in response to the outbreak, hotels and other tourist accommodation were shut and borders closed as the government banned non-essential travel. Airlines also cancelled flights.

Spain accounts for 43% of Melia’s portfolio of rooms, while the rest of the EMEA region represents 19%.

Tourism is one of Spain’s most important economic pillars, generating around 12% of economic output and creating millions of jobs. In March, the number of international visitors to Spain plunged 64.3% from the same month a year ago.

Melia said the COVID-19 pandemic would have a “significant impact” on its activity, though it lacked sufficient information to make detailed estimates.

“April and May may be considered the most difficult months of the year in terms of revenue, with almost all of our hotels closed, the company said.

“Today we still have very high uncertainty about the scope and pace of any measures that different governments may take to reactivate their respective economies.”

Group revenue declined 25.5% to 293 million euros, while revenue per available room (RevPAR) - a closely watched metric in the hotel industry - fell 17.5%.

Escarrer said that after the gradual reopening of hotels, the company would focus on domestic markets for as long as travel bans continued and borders remained closed, though there were areas of optimism.

“Some markets are showing positive signs, particularly China, where the first signs of recovery are beginning to be seen and where the pick-up for bookings and general consumer trends are good for the second quarter,” the company said.

$1 = 0.9252 euros Reporting by Jesús Aguado; additional reporting by Inti Landauro; editing by Nathan Allen and David Evans

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