SOL MELIA ANNUAL REPORT 00 COMP
SOL MELIA ANNUAL REPORT 00 COMP
SOL MELIA ANNUAL REPORT 00 COMP
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
<strong>ANNUAL</strong> <strong>REPORT</strong> 2<strong>00</strong>0<br />
www.solmelia.com
CONTENTS<br />
<strong>COMP</strong>ANY PROFILE 2-7<br />
LETTER FROM THE CHAIRMAN 8-11<br />
<strong>COMP</strong>ANY HISTORY 12-17<br />
ORGANISATIONAL STRUCTURE 18-19<br />
MILESTONES 2<strong>00</strong>0 20-45<br />
FINANCIAL RESULTS 22-26<br />
HOTEL GROWTH 27-33<br />
RESEARCH & DEVELOPMENT 34-36<br />
HUMAN RESOURCES:<br />
EVERYTHING IS POSSIBLE CAMPAIGN 37-38<br />
QUALITY & ENVIRONMENT 39-42<br />
<strong>COMP</strong>ANY AND SOCIETY 43-45<br />
<strong>SOL</strong> MELIÁ IN THE 21ST. CENTURY 46-54<br />
BRAND STRUCTURE CHANGE 48-49<br />
NEW PROJECTS 50-51<br />
<strong>COMP</strong>LETING THE E-TRANSFORMATION 53-54<br />
GOOD GOVERNANCE CODE 55-67<br />
OFFICIAL COMMUNIQUÉS 68-70<br />
FINANCIAL <strong>REPORT</strong> 72-160<br />
CORPORATE INFORMATION 161
<strong>ANNUAL</strong> <strong>REPORT</strong> 2<strong>00</strong>0
<strong>COMP</strong>ANY PROFILE<br />
ASIA: (10)<br />
Indonesia (7), Malaysia (1), Thailand (1)<br />
and Vietnam (1).<br />
MEDITERRANEAN: (26+3)<br />
Egypt (1+2), Morocco (7),<br />
Tunisia (18+1).<br />
+ (Includes projects signed by Sol Meliá)<br />
EUROPE: (241+34)<br />
Andorra (1), Belgium (1), Croatia (27),<br />
France (8), Germany (12), Italy (1 + 4),<br />
Malta (+1), Portugal (13+1), Spain (172 + 28),<br />
Turkey (5) and United Kingdom (1).<br />
MIDDLE EAST: (1)<br />
Lebanon (1).<br />
LATIN AMERICA & CARIBBEAN: (58+33)<br />
Argentina (1), Brazil (15 + 25), Colombia (7),<br />
Costa Rica (4), Cuba (20 + 5),<br />
Dominican Republic (5), Guatemala (1),<br />
Mexico (10 + 1), Panama (1), Peru (1+1),<br />
Puerto Rico (+1), Uruguay (1)<br />
and Venezuela (2).<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
3
<strong>COMP</strong>ANY PROFILE<br />
CURRENT <strong>SOL</strong> MELIÁ POSITIONING<br />
DIVERSIFICATION: A <strong>COMP</strong>ANY SUCCESS STORY<br />
• The largest resort hotel company in the world.<br />
• Leader in the Spanish market in both<br />
business and leisure hotels.<br />
• Leading hotel company in Latin America<br />
and the Caribbean.<br />
• Second largest hotel company in Europe.<br />
• Seventh largest hotel company in the world<br />
by market capitalisation.<br />
• Tenth largest hotel company in the world by<br />
number of rooms.<br />
• Hotels in 30 countries.<br />
- More than 33,<strong>00</strong>0 employees.<br />
DIVERSIFICATION OF CITY & RESORT HOTELS<br />
(NUMBER OF HOTELS)<br />
49% 51%<br />
City Hotels<br />
Resorts Hotels<br />
GROWTH IN NUMBER OF HOTELS, ROOMS<br />
AND BEDNIGHTS<br />
DIVERSIFICATION BY MANAGEMENT TYPE<br />
(Percentage of rooms)<br />
4<strong>00</strong><br />
350<br />
3<strong>00</strong><br />
250<br />
2<strong>00</strong><br />
52.359<br />
47.938<br />
205<br />
227<br />
65.597 68.766 81.942<br />
246<br />
262<br />
335<br />
80.<strong>00</strong>0<br />
70.<strong>00</strong>0<br />
60.<strong>00</strong>0<br />
50.<strong>00</strong>0<br />
40.<strong>00</strong>0<br />
Franchise<br />
12%<br />
44%<br />
31%<br />
13%<br />
Owned<br />
150<br />
1<strong>00</strong><br />
50<br />
C.A.G.R. 14,3%<br />
30.<strong>00</strong>0<br />
20.<strong>00</strong>0<br />
10.<strong>00</strong>0<br />
Management Leased<br />
DIVERSIFICATION BY HOTEL CATEGORY<br />
0<br />
1996 1997 1998 1999 2.<strong>00</strong>0<br />
0<br />
(Percentage of rooms)<br />
Nº of Hotels Nº of Rooms<br />
C.A.G.R. for Nº of Rooms<br />
37% 24%<br />
BEDNIGHTS<br />
39%<br />
YEARS<br />
BEDNIGHTS<br />
1998 19 Million<br />
1999 21 Million<br />
2<strong>00</strong>0 23 Million<br />
3 Stars<br />
4 Stars<br />
5 Stars & Deluxe<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
4
<strong>COMP</strong>ANY PROFILE<br />
DIVERSIFICATION OF NUMBER OF ROOMS<br />
BY GEOGRAPHY<br />
8% 4%<br />
(3+1%)<br />
22%<br />
(7+15%)<br />
22%<br />
(5+17%)<br />
44%<br />
(19+25%)<br />
DIVERSIFICATION BY GUEST<br />
NATIONALITY<br />
3% 1%<br />
5% 7%<br />
7%<br />
8%<br />
10%<br />
12%<br />
31%<br />
16%<br />
Spain<br />
Africa-Mediterran.<br />
Rest of Europe Asia<br />
Latin America & Caribbean<br />
In brackets, City%+Resort%<br />
Spain<br />
United Kingdom<br />
Germany<br />
USA & Canada<br />
Latin America<br />
France<br />
Italy<br />
Benelux<br />
Asia<br />
Others<br />
BRANDS - CATEGORY - SECTOR<br />
BRAND CITY RESORT<br />
5 STAR ALL INCLUSIVE<br />
5 STAR · SUPERIOR 4 STAR 5 STAR · SUPERIOR 4 STAR<br />
4 STAR · SUPERIOR 3 STAR<br />
4 STAR · SUPERIOR 3 STAR<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
5
<strong>COMP</strong>ANY PROFILE<br />
FINANCIAL PROFILE<br />
• Company foundation: 1956<br />
• Date of IPO: 2nd. July, 1996<br />
• IPO share price (before split): 9<strong>00</strong> pesetas (5.41 euros)<br />
• Ticker Symbol: Sol<br />
• Markets: Continuous Market (Spain)<br />
• Forms part of IBEX 35 and EuroSTOXX<br />
• Shares issued: 184,776,777<br />
• Share price at 31/12/<strong>00</strong>: 11.01 Euros<br />
• Rating BBB Stable from Standard & Poor’s<br />
• Increase in value from IPO to 31/12/<strong>00</strong>: 103.5%<br />
BASIC RATIOS<br />
PER 17.4<br />
EV / EBITDA 11.25<br />
NET DEBT /<br />
SHAREHOLDER EQUITY 77.6%<br />
FIXED CHARGE COVERAGE 5.1 X<br />
MARKET CAPITALISATION € 2,034,392.32<br />
IBEX WEIGHTING 0.6<br />
<strong>SOL</strong> <strong>MELIA</strong>’S SHARES<br />
15<br />
14<br />
13<br />
12<br />
11<br />
10<br />
9<br />
8<br />
7<br />
4<strong>00</strong><strong>00</strong><strong>00</strong><br />
35<strong>00</strong><strong>00</strong>0<br />
3<strong>00</strong><strong>00</strong><strong>00</strong><br />
25<strong>00</strong><strong>00</strong>0<br />
2<strong>00</strong><strong>00</strong><strong>00</strong><br />
15<strong>00</strong><strong>00</strong>0<br />
1<strong>00</strong><strong>00</strong><strong>00</strong><br />
5<strong>00</strong><strong>00</strong>0<br />
6<br />
0<br />
30/12/99 15/2/<strong>00</strong> 29/3/<strong>00</strong> 16/5/<strong>00</strong> 28/6/<strong>00</strong> 10/8/<strong>00</strong> 22/9/<strong>00</strong> 8/11/<strong>00</strong> 27/12/<strong>00</strong><br />
Stock Market Quotation € <strong>SOL</strong> MELIÁ<br />
Stock Market Quotation € IBEX<br />
Volume of shares<br />
1999<br />
Price % Increase IBEX-35 Max. Min Average Daily Volume Dividend EPS CFPS<br />
(31/12/99) Shares Euros (M) € € €<br />
11.25 +13.41% +18.35% 13.53 8.42 388,<strong>00</strong>0 4.6 0.120 0.55 0.92<br />
2<strong>00</strong>0<br />
Price % Increase IBEX-35 Max. Min Average Daily Volume Dividend EPS CFPS<br />
(31/12/<strong>00</strong>) Shares Euros (M) € € €<br />
11.01 -2.13% -21.75% 14.28 8.8 416,<strong>00</strong>0 4.9 0.144 0.63 1.14<br />
(+20%) (+24%)<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
6
<strong>COMP</strong>ANY PROFILE<br />
ANALYSIS OF ACTIVITIES<br />
Data in thousand pesetas<br />
31-DEC-99 INCREASE 31-DEC-<strong>00</strong><br />
HOTEL REVENUES 94,845 (€570 Mill.) 36.8% 129,735 (€780 Mill.)<br />
European Resort 42,859 (€258 Mill.) 14.5% 49,087 (€295 Mill.)<br />
European City 30,382 (€183 Mill.) 61.6% 49,102 (€295 Mill.)<br />
Americas Division 21,604 (€130 Mill.) 46.0% 31,546 (€190 Mill.)<br />
MANAGEMENT FEES 5,734 (€34 Mill.) 17.4% 6,729 (€40 Mill.)<br />
CASINOS 2,056 (€12 Mill.) 0.4% 2,064 (€12 Mill.)<br />
TIMESHARE 1,931 (€12 Mill.) 25.6% 2,426 (€15 Mill.)<br />
OTHERS 5,018 (€30 Mill.) 48.4% 7,446 (€45 Mill.)<br />
TOTAL REVENUES 109,584 (€659 Mill.) 35.4% 148,399 (€892 Mill.)<br />
ECONOMIC PROGRESS<br />
Data in thousand euros<br />
1996 1997 1998 1999 2<strong>00</strong>0 C.A.G.R.<br />
REVENUE 51 80 95 659 892 105%<br />
- 57% 19% 596% 35%<br />
EBITDA 27 43 52 199 261 76%<br />
- 59% 21% 283% 31%<br />
NET PROFIT 21 34 42 88 113 52%<br />
- 62% 24% 110% 28%<br />
1<strong>00</strong>0<br />
8<strong>00</strong><br />
6<strong>00</strong><br />
4<strong>00</strong><br />
2<strong>00</strong><br />
0<br />
C.A.G.R. 105%<br />
892<br />
659<br />
51<br />
80 95<br />
1996 1997 1998 1999 2<strong>00</strong>0<br />
3<strong>00</strong><br />
250<br />
2<strong>00</strong><br />
150<br />
1<strong>00</strong><br />
50<br />
0<br />
C.A.G.R. 76%<br />
261<br />
199<br />
43 50<br />
27<br />
1996 1997 1998 1999 2<strong>00</strong>0<br />
120<br />
1<strong>00</strong><br />
80<br />
60<br />
40<br />
50<br />
0<br />
34<br />
21<br />
C.A.G.R. 52%<br />
42<br />
113<br />
88<br />
1996 1997 1998 1999 2<strong>00</strong>0<br />
Revenues<br />
EBITDA<br />
Net Profit<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
7
LETTER FROM THE CHAIRMAN<br />
dDear shareholders,<br />
The year 2<strong>00</strong>0 has been, without a shadow of a doubt, a key year for<br />
Sol Meliá. The acquisition and integration of Tryp Hotels and the consequences<br />
of the deal represent great milestones in company development and<br />
a major step towards our consolidation as a major player on the world stage.<br />
More than 330 hotels with more than 82,<strong>00</strong>0 rooms in 30 countries makes<br />
us not only the biggest resort hotel company in the world, but also undisputed<br />
leaders in Spain and in Latin America and the Caribbean, as well as<br />
the second largest hotel chain in Europe. And after almost half a century,<br />
all of this has made the year 2<strong>00</strong>0 a year in which Sol Meliá has entered<br />
the prestigious “Top Ten” hotel companies in the world. A team of more<br />
than 33,<strong>00</strong>0 people and a portfolio of 80 new hotel projects already signed<br />
for development will take Sol Meliá to 410 hotels with 102,<strong>00</strong>0 rooms in<br />
less than 2 more years.<br />
As one would expect, the company that now emerges from this deal is much<br />
more structurally sound, blessed with greater operational capacity and with<br />
great expectations for improvements in results. The acquisition has also reaffirmed<br />
our philosophy of diversification of our hotel portfolio and our ability<br />
to provide solutions to the needs of all different types of business and leisure<br />
travellers. Our consolidation in the city hotel arena and our clear leadership<br />
of the Spanish market have also made it more difficult for foreign companies<br />
to gain a significant foothold in our domestic market, while also improving<br />
our position in terms of variable and structural costs.<br />
This significant deal has not only served to increase the number of hotels<br />
in our portfolio, but it has also provided, as expected, an increase in company<br />
profitability. Our earnings before interest, taxes, depreciation and<br />
amortisation (EBITDA) have reached 43,377 million pesetas – 260.7<br />
million euros-, an increase of 31% over the previous year and, once again,<br />
far in excess of the 20% annual growth we have always set as our objective.<br />
The new and strategic incorporations, the benefits generated by the extensive<br />
refurbishment programme in a large number of hotels and the repositioning<br />
of company hotels and brands after such an important deal have<br />
had an exceptional result: the achievement of record financial results for the<br />
year 2<strong>00</strong>0. Consolidated turnover increased by 35%, while consolidated<br />
revenues grew to 149,399 million pesetas – 891.9 million euros -, and net<br />
profits rose to 19,750 million pesetas – 118.7 million euros.<br />
These results, the financial solvency of the company and the excellent perspectives<br />
for the future have given us the second best credit rating in the<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
9
LETTER FROM THE CHAIRMAN<br />
hotel industry, a BBB (stable) from Standard & Poor’s. The achievement of<br />
the rating was also a starting point for the launch of a Eurobond issue<br />
aimed at diversifying our sources of finance and which ended its first phase<br />
in 2<strong>00</strong>0 with spectacular results.<br />
And if the purchase of Tryp was the most important deal of the year, our<br />
firm commitment to the use of new technology (the so-called e-transformation<br />
of the company) is another of the key elements of the evolution of<br />
the business in 2<strong>00</strong>0. In general terms, the e-transformation involves the<br />
modernisation and automation of a wide range of internal processes and<br />
external transactions, affecting all departments in the company and the<br />
three areas termed the Inside, Sell Side and Buy side.<br />
Activities on the Inside include the integration of the SAP (System<br />
Application Program) platform, an immense database designed to facilitate<br />
and improve processes using the benefits of the internet and assisting in<br />
placing the customer at the very heart of our organisation. Sales force automation,<br />
a new Property Management System at the hotel Front Desk (RA<br />
2<strong>00</strong>0), new instruments for financial control (FICO), human resources (PA<br />
& PD) or procurement (MM) will provide significant savings in time and<br />
money. Thanks to a global communications network, this revolutionary<br />
system will also provide extensive detailed information on all of the activities<br />
carried out in hotels and corporate departments and on each of the<br />
guests that stay in any of the company’s hotels.<br />
The Sell Side includes the businesses fronted by the websites of AOL Avant<br />
and Meliá Viajes and the solmelia.com site. Sol Meliá was a co-founder of<br />
the family leisure portal, Prodigios, the embryo for what has now become<br />
AOL Spain, the launch pad for America On Line in Spain, based in Palma<br />
de Majorca, and for which Meliá Viajes is the exclusive supplier of travel<br />
reservation services. Besides this major new venture, we are also working<br />
hard on a new generation website and the growth of our multi-channel travel<br />
agency Meliá Viajes.<br />
Finally, Buy Side ventures include our participation in the HotelnetB2B<br />
market place for the hotel industry. This initiative, founded by Sol Meliá,<br />
Telefónica and BBVA, has now attracted 19 partners from amongst the leading<br />
hotel companies in Spain and aims to provide the finest possible service<br />
to hotel managers and suppliers through the optimisation of purchasing<br />
processes using Internet technology.<br />
Within the framework of the modernisation policy, the company has also<br />
modified its Statutes so as to better adapt its management to the growing<br />
demands of the market as well as facilitating the decision-making process.<br />
The Shareholders’ Meeting held on the 23rd. October approved the initiative<br />
with a quorum of 99.48 % of the representation of 82.41%.<br />
Sol Meliá has also completed the final stages of its three-year Hotel<br />
Refurbishment Programme, an ambitious project involving the modernisation<br />
of a large part of the company’s hotels so as to adapt them to the needs<br />
and standards of their respective hotel brands and equip them with the latest<br />
modern technologies while maintaining the style and appeal of their different<br />
local architectural styles and their respect for the natural environment.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
10
LETTER FROM THE CHAIRMAN<br />
And it is precisely this policy of expansion and adaptation to new technologies<br />
and the increasing demands of a highly competitive market that<br />
forms the basis of our future strategy, aiming to consolidate the more than<br />
80 hotel projects that we have already signed and successfully completing<br />
the e-transformation of the company. As well as these future additions to<br />
the portfolio, over the year 2<strong>00</strong>0 we have added a total of 81 hotels in 11<br />
countries with over 14,<strong>00</strong>0 rooms, creating more than 3,<strong>00</strong>0 jobs.<br />
Our ambitious development programme, which will see more than 20,<strong>00</strong>0<br />
new rooms added, equivalent to the total size of some of our most direct<br />
competitors in Spain, will be the cornerstone of the Sol Meliá of the future,<br />
a grand company with a presence in the business and leisure destinations<br />
most popular amongst our European and American clients.<br />
Furthermore, and in line with the trends in the international hotel industry,<br />
the company has reorganised its brand portfolio, reducing it to 4 key<br />
brands, so as to simplify and better segment our hotel products. Tryp<br />
Hotels will include all of our 3 and 4 star city hotels, while Sol Resorts will<br />
include all of our resort properties in the same categories. Meliá Hotels &<br />
Resorts will continue to be associated with superior 4 star and 5 star properties<br />
in both major cities and first class leisure destinations. Paradisus<br />
Resorts, meanwhile, will remain as deluxe “all inclusive” properties in privileged<br />
exotic locations.<br />
Slowly but surely, and not without the occasional difficulty, Sol Meliá is<br />
managing to firmly establish its quality standards and its position as a company<br />
of reference in the hotel business. How is it done Quite simple really:<br />
through the implementation of challenging service, quality, technology and<br />
environmental policies, the launch of an innovative “Everything is Possible”<br />
campaign, the implementation of a Guest Satisfaction Assurance programme,<br />
the constant refurbishment and enlargement of our hotel portfolio, our link<br />
with social organisations and events and, above all, our insistence on placing<br />
the customer at the very heart of our organisation and our belief in our<br />
lemma “your satisfaction, our commitment”.<br />
Guests, shareholders, suppliers, employees and hotel owners are the creators<br />
of the success of a company that is now almost fifty years old. Their<br />
confidence, their efforts and their co-operation will make tomorrow’s<br />
Sol Meliá a truly great company on which the sun never sets and in<br />
which, more than ever, Everything is Possible.<br />
Gabriel Escarrer Juliá<br />
Chairman<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
11
<strong>COMP</strong>ANY HISTORY<br />
A dream is born ...<br />
a<br />
1956.- At only 21 years of age, an entrepreneurial Gabriel Escarrer<br />
began to rent and operate his first hotel, the Altair in the residential area<br />
of Son Armadans (Palma de Majorca). 60 rooms that would later become<br />
Sol Meliá.<br />
60’s.- The tourism boom of the 1960’s were fundamental to the consolidation<br />
of the structure of a growing business. Through reinvestment<br />
of profits, increased co-operation with Tour Operators and bank loans,<br />
the company began to take shape. The tenacity of Gabriel Escarrer and<br />
his team, led by Juan Vives, his charisma and innate flair for sales and<br />
marketing would do the rest.<br />
70’s.- This was a time for growth in the Balearic Islands, the most popular<br />
destinations on the Spanish mainland and the Canary Islands with the<br />
acquisition of the company’s first resort hotels. The entrepreneurial vision<br />
and spirit of its founder and, once again, a risky but firm commitment for<br />
making his name in the hotel business were key in this growth.<br />
Sol Cala Blanca<br />
Over a 20 year period, coinciding with the growth of Spain as a tourism<br />
destination, Escarrer built up a small hotel chain with a strong presence<br />
in the Balearic Islands operating as Hoteles Mallorquines until 1976,<br />
and also laid the foundations for what is still company philosophy: reinvestment<br />
of profits in new hotels, growth through the purchase of other<br />
hotel chains and constant renovation of hotel facilities.<br />
The embryo of a great company<br />
At the end of the 70’s, Sol Meliá began to consolidate its expansion in<br />
Spain with a presence in most popular tourism destinations on the<br />
mainland and in the Canary Islands, changing its name along the way to<br />
Hoteles Sol.<br />
1984.- Time for real growth. In a joint deal with Aresbank (financial<br />
representative of the KIO group in Spain), the 32 hotels of the HOTASA<br />
chain in Spain were acquired. The purchase meant the beginning of a presence<br />
in the city hotel market and the company moved up to number 37 in<br />
the world ranking of hotel chains. At the same time, the company also<br />
became the largest hotel chain in Spain, a position it has held ever since.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
13
<strong>COMP</strong>ANY HISTORY<br />
Meliá De Mar<br />
Meliá De Mar<br />
1985.- The company began its international expansion with its first<br />
hotel outside Spain: the Bali Sol. The business instincts of Gabriel<br />
Escarrer once again led to commercial success as the company became<br />
the first international chain to build a hotel in the then-unknown destination<br />
of Bali. It seemed like a very risky bet. Nowadays all of the<br />
major world hotel companies are there, but only one can proudly claim<br />
to be a pioneer.<br />
1986.- Continuing with a policy of growth through acquisition,<br />
Hoteles Sol took over Compañía Hotelera del Mediterráneo, including<br />
11 hotels partly owned by the airline British Caledonian.<br />
...and then there was Meliá<br />
1987.- 27th. June, 1987 was the date for another milestone in company<br />
history. Owned by the Luxembourg-based company Interport,with<br />
Giancarlo Parretti at its head, the 22 Meliá hotels were the object of<br />
desire of major international hotel groups including Sheraton, Wagon-<br />
Lits or Hilton. Arduous negotiations finally led to Gabriel Escarrer<br />
becoming the new Chairman of Hoteles Meliá.<br />
Growth continued in mainland Europe, the Americas, the Caribbean,<br />
South-east Asia and the Mediterranean. Globalisation and diversification<br />
became the watchwords of the times.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
14
<strong>COMP</strong>ANY HISTORY<br />
New management<br />
1993.- The incorporation of Sebastián Escarrer brought new ways to<br />
the company as he began a revolution in Sol Meliá business strategy and<br />
implemented the organisational structure that is in place today.<br />
Meliá Bali<br />
To favour continued growth, the management team was reinforced and<br />
changes were made in management procedures and systems (information<br />
technology, accounts, quality control, bonus systems, financial<br />
management, added values for the 5 types of clients, etc...). Faithful to<br />
its origins, the company also adopted a management style aimed at<br />
encouraging an entrepreneurial and team spirit, with fluid lines of communication<br />
and a greater focus on the market and the customer.<br />
That same year the company was named as the recipient of the Príncipe<br />
(Prince) Felipe Award for excellence in tourism for its management,<br />
growth and contribution to the industry.<br />
Meliá Castilla<br />
Going public<br />
1996.- Once the new organisation and management systems were<br />
consolidated, on 2nd. June, 1996, Sol Meliá became the first hotel<br />
management company in Europe to be floated on the stock exchange.<br />
Prior to the flotation the company had been split into two new entities:<br />
Inmotel. SA., the owner of hotels and the new Sol Meliá S.A., a hotel<br />
management company and target of the flotation.<br />
On 30th. December 1996, the value of the company’s shares had increased<br />
by 72.2% and had been incorporated into the IBEX 35 index along<br />
with all other major Spanish public companies.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
15
<strong>COMP</strong>ANY HISTORY<br />
Just six months later, the US agency Standard & Poor’s granted a credit rating<br />
of BBB+, rating Sol Meliá as the most solvent hotel company in Europe and<br />
allowing much greater capacity to obtain financing on capital markets.<br />
Time for integration: the new Sol Meliá<br />
1998-1999.- A strategic decision is made to reintegrate the hotel management<br />
and property businesses, to further strengthen company growth and<br />
initiate the company’s technological transformation. The integration ended<br />
in 1999 with the take-over of Meliá Inversiones Americanas (MIA) and the<br />
merger with Inmotel Inversiones. The new Sol Meliá became the 12th. largest<br />
hotel group in the world with more than 260 hotels in 27 countries and a<br />
market capitalisation of 382,646 million pesetas (2.3<strong>00</strong> million euros).<br />
After the creation of the new Sol Meliá, another of the Chairman’s sons,<br />
Gabriel Escarrer Jaume, joined the company as Chief Executive Officer.<br />
He had held the same position with Inmotel Inversiones, a period during<br />
which he brought about an important modernisation and adaptation of the<br />
company to prepare for merger with Sol Meliá, while also initiating an<br />
ambitious and highly successful plan for renovation of the hotel portfolio.<br />
1999.- In 1999, the company added 27 hotels and purchased 34, further<br />
reinforcing and developing its presence in its three key natural markets:<br />
Latin America, the Mediterranean and major European cities. The<br />
investment made in purchases reached 1<strong>00</strong>,623 million pesetas (605<br />
million euros).<br />
Thanks to these investments, the company established a presence in<br />
Europe’s foremost capital cities and business and leisure tourism destinations:<br />
Rome, Paris and London.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
16
<strong>COMP</strong>ANY HISTORY<br />
Adapting to a new age:<br />
E-Transformation<br />
The natural evolution of the market led to Sol Meliá creating a new<br />
E-Business Division, headed by Luis del Olmo, Executive Vice<br />
President of Sales & Marketing. The Division is charged with adapting<br />
all of the company’s purchasing and sales activities, as well as its internal<br />
management, to the new technological environment, creating a true<br />
“solmelia.com” on the Inside, the Sell Side and the Buy Side.<br />
Tryp Hotels, the latest major deal<br />
On 21st August, 2<strong>00</strong>0, Sol Meliá sealed its purchase of Tryp Hoteles.<br />
With the incorporation of the 60 hotels of the company led by Antonio<br />
Briones, Sol Meliá has consolidated its leadership position in both the<br />
business and leisure hotel markets in Spain, Latin America and the<br />
Caribbean, and its ranking as number 2 in Europe. At the same time, Sol<br />
Meliá has achieved a place in the Top Ten hotel companies in the world<br />
by number of rooms and has become the undisputed leader of the<br />
Spanish city hotel market.<br />
Sol Meliá currently operates more than 330 hotels in 30 countries on<br />
4 continents with a team of over 33,<strong>00</strong>0 employees.<br />
Meliá Colón<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
17
ORGANISATIONAL STRUCTURE<br />
CHAIRMAN<br />
Gabriel Escarrer Juliá<br />
gabriel.escarrer@solmelia.com<br />
VICE CHAIRMAN<br />
Sebastián Escarrer Jaume<br />
sebastian.escarrer@solmelia.com<br />
CHIEF EXECUTIVE OFFICER<br />
Gabriel Escarrer Jaume<br />
gabriel.escarrer.jr@solmelia.com<br />
ADMINISTRATION<br />
Mark Hoddinot<br />
mark.hoddinot@solmelia.com<br />
FINANCE<br />
Onofre Servera<br />
onofre.servera@solmelia.com<br />
HOTEL DEVELOPMENT<br />
Ángel Palomino<br />
angel.palomino@solmelia.com<br />
HUMAN RESOURCES<br />
Pending announcement<br />
INFORMATION SYSTEMS<br />
Hervé Imbert<br />
herve.imbert@solmelia.com<br />
LEGAL<br />
Juan Rotger<br />
juan.rotger@solmelia.com<br />
MARKETING, SALES & E-BUSINESS<br />
Luis del Olmo<br />
luis.del.olmo@solmelia.com<br />
QUALITY & TECHNOLOGY<br />
Agustín Serrano<br />
agustin.serrano@solmelia.com<br />
WORKS & MAINTENANCE<br />
Antonio de La Calle<br />
antonio.delacalle@solmelia.com<br />
HOTEL<br />
CLIENT<br />
AMERICAS<br />
Evagrio Sánchez<br />
evagrio.sanchez@solmelia.com<br />
ASIA<br />
Miguel Payeras<br />
miguel.payeras@solmelia.com<br />
CUBA<br />
Gabriel Cánaves<br />
gabriel.canaves@solmelia.com<br />
EUROPEAN CITY<br />
Andrés Encinas<br />
andres.encinas@solmelia.com<br />
EUROPEAN RESORT<br />
Marcello Pigozzo<br />
marcello.pigozzo@solmelia.com<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
19
MILESTONES 2<strong>00</strong>0<br />
s<br />
New entry in<br />
the Top Ten<br />
Sol Meliá ended the 20th. century with a truly remarkable achievement. At<br />
the end of the year 2<strong>00</strong>0, the company had achieved record profits thanks<br />
to the positive performance of its European City and Resort Divisions and<br />
recovery in the Asian and Latin American markets. Above all other factors,<br />
however, the achievement of such extraordinary results was in large part due<br />
to what, without a shadow of a doubt, was the most important deal of the<br />
year: the integration of the 75 hotels of the Tryp Hotels chain, with 60<br />
hotels already in operations and 15 under development.<br />
Above and beyond the contribution to the leadership of Sol Meliá in<br />
Spain, Latin America and the Caribbean and our second position in the<br />
European ranking, the deal also meant that Sol Meliá entered the “top<br />
ten” ranking of world-wide hotel companies. This was a spectacular<br />
achievement and represents another positive step towards the achievement<br />
of the company’s growth and diversification objectives. During the<br />
year 2<strong>00</strong>0 another 81 hotels in 11 countries were added to the Sol Meliá<br />
portfolio and agreements were signed to add another 70 new projects in<br />
the next two years.<br />
The “E-transformation” of Sol Meliá, its firm commitment to the use of<br />
new technologies to allow the company to advance and adapt to the new<br />
needs and preferences of the market, was another key feature of the year.<br />
The application of a wide range of new technologies will facilitate processes<br />
and reduce costs to the benefit of both hotel operations and guest services.<br />
The 33,<strong>00</strong>0 Sol Meliá employees that make up this immense global<br />
team will thus be available, more than ever, to ensure that in Sol Meliá,<br />
Everything is possible.<br />
Finally, and in parallel with the company “e-volution”, Sol Meliá has continued<br />
to make great advances with its Quality Assurance and<br />
Environmental Protection programmes, efforts that have been rewarded<br />
for yet another year by a large number of awards and certifications to a<br />
growing number of hotels world-wide. Sol Meliá has also kept up its<br />
support of social, cultural and sporting events through different types of<br />
sponsorship aiming to provide a service to society and contribute to<br />
improvements in the quality of life.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
21
MILESTONES 2<strong>00</strong>0· FINANCIAL RESULTS<br />
Excellent results for the year 2<strong>00</strong>0<br />
w2<strong>00</strong>0 was another record year for Sol Meliá.At<br />
the end of the year the company had far exceeded<br />
its objectives for the year and had obtained<br />
RevPar growth of 19%, a figure way above<br />
the average for the rest of the Spanish and<br />
international hotel industry. These results are<br />
reflected in the INCOME STATEMENT:<br />
ITEM 2<strong>00</strong>0 INCR.<br />
Figures<br />
Consolidated Sales: 148,399 mill. ptas. + 35%<br />
(891.9 mill. euros)<br />
EBITDA: 43,377 mill. ptas. + 31%<br />
(260.7 mill. euros)<br />
Net Profits: 19,750 mill. ptas. + 26%<br />
(118.7 mill. euros)<br />
Profits to Mother Company: 18,761 mill. ptas. + 28%<br />
(112.6 mill. euros)<br />
As expected in our projections, the Americas<br />
Division saw a recovery over the year. The profitability<br />
of hotels added in more recent times<br />
such as the Meliá Mexico Reforma and the<br />
recovery of the Latin American market, led to<br />
RevPars up to 30% above the previous year.<br />
Finally, management fee revenues also grew by<br />
18%, thanks to the contribution of the Cuba<br />
Division (+ 10%) and, above all, Asia Pacific (+<br />
25%) and the Americas (+ 23%).<br />
Performance may be summarised as follows:<br />
Income statement<br />
Data in thousand Pesetas.<br />
INCOME STATEMENT Dec-<strong>00</strong> Dec-99 Dec-98<br />
The performance of the different Divisions is<br />
as follows:<br />
With a RevPar increase of 15%, the European<br />
City Division, which includes the major part<br />
of the hotels added after the purchase of Tryp<br />
Hotels, became the best performer for the year.<br />
The excellent conditions for business travel in<br />
Europe and especially in Spain were decisive<br />
factors behind the spectacular performance of<br />
the Division. At the same time, the positive<br />
evolution of the summer 2<strong>00</strong>0 season, once<br />
again, especially in Spain, also took the<br />
European Resort Division to a RevPar increase<br />
of 11%.<br />
TOTAL REVENUES 148,399,154 109,584,292 15,749,996<br />
OPERATING EXPENSES (105,018,980) (76,485,646) (7,488,615)<br />
EBITDA 43,380,174 33,098,646 8,261,381<br />
DEPRECIATION / AMORTISATION (13,984,526) (10,379,849) (804,121)<br />
EBIT 29,395,648 22,718,797 7,457,260<br />
PROFIT FROM EQUITY INVEST. 158,539 161,248 579,889<br />
FINANCIAL EXPENSES (16,387,435) (10,367,021) (350,165)<br />
FINANCIAL REVENUES 7,878,646 6,186,070 457,081<br />
FINANCIAL RESULTS (8,508,789) (4,180,951) 106,916<br />
CON<strong>SOL</strong>IDATION GOODWILL AMORT. (443,670) (304,151) (231,119)<br />
PROFIT / (LOSS ) FROM ORD. ACTIV. 20,601,728 18,394,943 7,912,946<br />
EXTRAORDINARY PROFIT/ (LOSS) 3,458,069 884,574 (174,482)<br />
PROFIT BEFORE TAXES & MINOR. 24,059,797 19,279,517 7,738,464<br />
TAX EXPENSE (4,321,366) (3,611,561) (752,314)<br />
MINORITIES (992,641) (1,024,201) (70,375)<br />
NET PROFIT/(LOSS) AFTER MINOR. 18,745,790 14,643,755 6,915,775<br />
FUNDS FROM OPERATIONS 33,729,836 26,528,584 7,615,983<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
23
MILESTONES 2<strong>00</strong>0· FINANCIAL RESULTS<br />
As regards the Balance Sheet, the most important<br />
changes that have been seen are due to the<br />
purchase of Tryp Hotels, thanks to which Sol<br />
Meliá assets have grown to almost half a<br />
billion pesetas.<br />
Net debt has increased by 57% due to the large<br />
number of investments that have been made,<br />
particularly, as we have already mentioned, the<br />
purchase of Tryp. The ratio of net debt to own<br />
funds has increased from 67% to 77.6%, a fact<br />
which has meant that the average weighted<br />
cost of debt has risen from 5.1% to 5.7%.<br />
Finally, the ratio of interest coverage was at 5.1<br />
times EBITDA at the end of the year, while all<br />
short term liquidity ratios have improved with<br />
respect to the previous year.<br />
This excellent situation, together with well<br />
structured financial planning for the coming<br />
years have led Standard & Poor’s to classify the<br />
health of the company balance sheet with a<br />
BBB (stable) rating.<br />
“From a financial<br />
point of view, the<br />
year 2<strong>00</strong>0 has been<br />
another record year<br />
for Sol Meliá. The<br />
purchase of Tryp<br />
Hotels has made an<br />
enormous contribution<br />
to our firm<br />
policy of providing<br />
greater value for<br />
shareholders,<br />
allowing us to<br />
increase the size<br />
and profitability of<br />
the company and<br />
increasing earnings<br />
per share”.<br />
Onofre Servera,<br />
Executive Vice President<br />
Finance”<br />
During the year Sol Meliá sold the Meliá Bávaro<br />
(Dominican Republic), Sol Inn Bardinos (Gran<br />
Canaria), Sol Las Olas (Fuerteventura), Sol Punta<br />
Elena Apartamentos (Fuerteventura) and the<br />
Guadalajara Industrial Laundry. These sales occurred<br />
as part of an asset sales plan for the year 2<strong>00</strong>0<br />
that has generated additional revenues of 15,<strong>00</strong>0<br />
million pesetas –90 million euros- and capital<br />
gains of 4,250 million pesetas (€ 25.54 million).<br />
The main objective of the plan has been to benefit<br />
from good divestment opportunities for nonstrategic<br />
assets or in areas where the company<br />
has already consolidated its presence, freeing up<br />
resources for increasing the category of the company<br />
portfolio in new destinations.<br />
During the year there was also a gross dividend<br />
payment of 20,057 pesetas to shareholders related<br />
to 1999 results, and there was also an attendance<br />
premium at the latest General<br />
Shareholders’ Meeting of € 0.02 (3,33 pesetas)<br />
gross per share.<br />
Balance sheet 2<strong>00</strong>0<br />
Cash Flow<br />
Another of the key features of Sol Meliá<br />
financial policy for the year 2<strong>00</strong>0 is 131,947<br />
million pesetas (€ 792 million) made in<br />
investments, of which 60,<strong>00</strong>0 million pesetas<br />
(€ 360 million) was used for the acquisition<br />
of Tryp. The financing of that deal was achieved<br />
through a capital increase of 33,<strong>00</strong>0<br />
million pesetas (€ 198 million) and debt of<br />
27,<strong>00</strong>0 million pesetas (€ 162 million). The<br />
total increase in debt for the year 2<strong>00</strong>0 rose to<br />
68,<strong>00</strong>0 million pesetas (€ 409 million).<br />
Amongst other ends, other investments made<br />
during the year 2<strong>00</strong>0 included the hotel projects<br />
Meliá Avenue Louise Boutique Hotel<br />
(Brussels), Meliá Milano (Italy) and Paradisus<br />
Puerto Rico (Puerto Rico), as web as the E-<br />
transformation process and the renovation and<br />
refurbishment of the company hotel portfolio.<br />
Data in thousand Ptas.<br />
CASH FLOW 2<strong>00</strong>0<br />
FUNDS FROM OPERATIONS 33,729,836<br />
(INCREASE) / DECREASE OF WORKING CAPITAL (11,802,286)<br />
CAPITAL EXPENDITURE (131,309,219)<br />
PROCEEDS FROM ASSET SALES 14,170,521<br />
CAPITAL INCREASE 32,999,602<br />
INTEREST BEARING FINANCING 68,065,186<br />
DIVIDENDS PAID AND ATTENDANCE PRIME (3,902,625)<br />
INCREASE / (DECREASE) OF CASH 1,951,016<br />
BEGINNING CASH 10,425,394<br />
ENDING CASH 12,376,410<br />
INCREASE IN DEBT NET 66,114,170<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
24
MILESTONES 2<strong>00</strong>0· FINANCIAL RESULTS<br />
Balance Sheet 2<strong>00</strong>0<br />
Data in thousand Ptas.<br />
ASSETS Dec-<strong>00</strong> Dec-99 Dec-98 LIABILITIES Dec-<strong>00</strong> Dec-99 Dec-98<br />
CASH 12,376,399 10,425,394 4,<strong>00</strong>8,228 TRADE ACCOUNTS PAYABLE 19,473,781 11,797,816 867,735<br />
SHORT TERM INVESTMENTS 7,281,309 12,999,339 127,677 SHORT TERM LOANS 24,903,879 25,660,065 2,423,780<br />
SHORT TERM DEBTORS 31,173,393 17,<strong>00</strong>0,251 5,792,587 OTHER SHORT TERM LIABIL. 10,796,<strong>00</strong>5 8,519,657 2,124,210<br />
INVENTORY 5,992,508 4,232,986 21,262 CURRENT LIABILITIES 55,173,665 45,977,538 5,415,725<br />
OTHER CURRENT ASSETS 3,124,854 1,730,880 879,908<br />
CURRENT ASSETS 59,948,463 46,388,850 10,829,662 LONG TERM LOANS 169,731,234 1<strong>00</strong>,909,862 45,261<br />
OTHER LONG TERM LIABIL. 30,373,651 27,466,078 1,<strong>00</strong>3,620<br />
GROSS FIXED ASSETS 362,508,419 296,114,440 2,328,041 TOTAL LIABILITIES 255,278,550 174,353,478 6,464,606<br />
ACCUMULATED DEPRECIATION -87,373,658 (68,541,373) (631,087)<br />
NET FIXED ASSETS 275,134,761 227,573,067 1,696,954 MINORITY INTERES 9,799,570 7,250,035 123,935<br />
LONG TERM DEBTORS 7,438,278 7,248,697 1,768,320 TOTAL COMMON EQUITY 224,949,555 166,217,239 48,<strong>00</strong>4,568<br />
OTHER FIXED ASSETS 147,506,173 66,610,138 40,298,173 SHAREHOLDER EQUITY 234,749,125 173,467,274 48,128,503<br />
TOTAL ASSETS 490,027,675 347,820,752 54,593,109<br />
TOTAL LIABILITIES<br />
& EQUITY<br />
490,027,675 347,820,752 54,593,109<br />
Investments<br />
Ratios<br />
Data in Million pesetas<br />
MOST IMPORTANT INVESTMENTS<br />
TRYP HOTELS 60,<strong>00</strong>0<br />
FÉNIX AND COLÓN HOTELS (SPAIN) 12,501<br />
MELIÁ AVENUE LOUISE (BRUSSELS) 1,538<br />
HOTEL AZAFATA (VALENCIA) 842<br />
PUERTO RICO RESORT DEVELOPMENT 6,440<br />
MELIÁ MILAN CONSTRUCTION 5,315<br />
GOLF COURSE AND OTHER FACILITIES<br />
(DOMINICAN REPUBLIC) 3,247<br />
PARTICIPATION IN AOL-AVANT 3,506<br />
E-TRANSFORMATION (SAP) 2,808<br />
HOTELNETB2B.COM 519<br />
<strong>MELIA</strong>VIAJES.COM 264<br />
REFURBISHMENT HOTELS IN SPAIN 18,335<br />
REFURBISHMENT HOTELS<br />
IN LATIN AMERICA 1,931<br />
FIRST STAGE REFURBISHMENT<br />
MELIÁ WHITE HOUSE (LONDON) 1,587<br />
REFURBISHMENT HOTELS IN PARIS 1,225<br />
OTHERS 11,252<br />
Data in thousand Ptas.<br />
FIXED CHARGE COVERAGE Dec-<strong>00</strong> Dec-99 Dec-98<br />
F.F.O. / NET DEBT 18.5% 22.8% -494.8%<br />
EBITDA / NET INTEREST 5.1 x 7.9x -77.3 x<br />
NET DEBT / EBITDA 4,2x 3,5x -0.2 x<br />
LIQUIDITY Dec-<strong>00</strong> Dec-99 Dec-98<br />
CURRENT ASSETS / CURRENT LIABILITIES 109% 101% 2<strong>00</strong>%<br />
F.F.O. / CURRENT LIABILITIES 61% 58% 141%<br />
F.F.O. / TOTAL DEBT 17% 21% 308%<br />
LEVERAGE Dec-<strong>00</strong> Dec-99 Dec-98<br />
NET DEBT 182,258,713 116,144,533 -1,539,187<br />
WEIGHTED AVERAGE COST OF DEBT 5.7% 5.1% 4.9%<br />
NET DEBT / TOTAL ASSETS 37.2% 33.4% -2.8%<br />
NET DEBT / SHAREHOLDER EQUITY 77.6% 67.0% -3.2%<br />
NET DEBT / MARKET CAP (*) 53.84% 36.17% -1.<strong>00</strong>%<br />
(*)<br />
Price at closing (31/12/<strong>00</strong>): 1,832 ptas. (Eur 11.01)<br />
TOTAL 131,309<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
25
MILESTONES 2<strong>00</strong>0· FINANCIAL RESULTS<br />
Standard & Poor’s BBB rating<br />
In November 2<strong>00</strong>0, Standard & Poor’s granted<br />
a BBB (stable) rating to Sol Meliá, the second<br />
highest credit rating in the world for a hotel<br />
company and the only such rating for a<br />
Spanish hotel group.<br />
These circumstances assist in increasing the<br />
capacity of Sol Meliá to obtain resources from<br />
capital markets, a policy which the company is<br />
promoting as it looks to diversify its sources of<br />
finance.<br />
Euronote issue programme<br />
The application of this financial diversification<br />
policy has been seen in the programme to issue<br />
Medium Term Euro Notes for a total value of<br />
249,9<strong>00</strong> million pesetas (€1,5<strong>00</strong> million). Within<br />
the mentioned plan, an initial issue of 56,644<br />
million pesetas (€340 million) has been made,<br />
with a duration of 5 years and with the Deutsche<br />
Bank as Global Co-ordinator.<br />
The funds obtained from the issue have been<br />
used for the acquisition of Tryp (26,990 million<br />
pesetas (€162 million) and refinancing existing<br />
debt (22,990 million pesetas (€138 million).<br />
receive regular updates on financial performance,<br />
Annual General Meetings and<br />
Dividends, amongst other things, while they<br />
may also use the direct line set up with the<br />
company to request any additional information<br />
they may require.<br />
Club members receive a membership card<br />
giving them the following benefits in Sol<br />
Meliá hotels: preferential rates, free newspapers,<br />
priority reservations, express check in and<br />
late check out (until 16:<strong>00</strong> hours), amongst<br />
others. In addition, for every stay in a Sol<br />
Meliá hotel, Club members also earn points<br />
that they can later exchange for free stays in<br />
company hotels world-wide.<br />
Those members of the Club that remain as<br />
shareholders for a certain amount of time will<br />
also receive additional benefits such as greater<br />
discounts for hotel stays, welcome gifts on<br />
arrival at hotels and discounts in hotel restaurants.<br />
Sol Meliá also intends to introduce a new section<br />
on its website specially for shareholders<br />
providing such tools as a share price calculator<br />
and calendar of events, presentations, information<br />
on dividends, analysts recommendations,<br />
annual reports, video clips, quarterly<br />
reports, etc.<br />
Creation of Shareholders’ Club<br />
The Sol Meliá Shareholders’ Club is an innovative<br />
initiative which aims to improve the services<br />
the company provides to some of its most<br />
important clients: its minority shareholders.<br />
The Club offers a wide range of benefits for<br />
clients staying in any Sol Meliá hotel while<br />
also providing regular detailed information on<br />
company development.<br />
A special telephone hotline specifically for<br />
shareholders has been set up along with an e-<br />
mail service at club.accionista@solmelia.com.<br />
Members of this exclusive Club will thus<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
26
MILESTONES 2<strong>00</strong>0· HOTEL GROWTH<br />
Year 2<strong>00</strong>0 data<br />
dDuring the year 2<strong>00</strong>0 the company added a<br />
total of 81 hotels with 14,264 rooms as<br />
follows:<br />
HOTELS BY TYPE<br />
SEGMENT<br />
CITY HOTELS<br />
RESORT HOTELS<br />
HOTELS BY DIVISION<br />
DIVISION<br />
AMERICAS<br />
CUBA<br />
EUROPEAN CITY<br />
EUROPEAN RESORT<br />
HOTELS / ROOMS<br />
53 hotels (7,171 rooms)<br />
28 hotels (7,093 rooms)<br />
HOTELS / ROOMS<br />
7 (1,430 rooms)<br />
6 (2,593 rooms)<br />
46 (5,741 rooms)<br />
22 (4,5<strong>00</strong> rooms)<br />
“The agreement<br />
between Sol Meliá<br />
and Tryp creates a<br />
giant hotel company<br />
with Spanish<br />
majority capital<br />
and also unites two<br />
complementary<br />
strategies to take on<br />
new projects that<br />
will allow us to<br />
continue our ascent<br />
in the world<br />
ranking”<br />
”<br />
Sebastián Escarrer,<br />
Vice Chairman<br />
Entering the “Top Ten”:<br />
The integration of Tryp Hotels<br />
Sol Meliá growth policy in 2<strong>00</strong>0 was somewhat<br />
marked by an event of tremendous importance<br />
for the future: the purchase of the Tryp<br />
Hotels chain. The deal was sealed on the 21st.<br />
August 2<strong>00</strong>0 and brought with it the extension<br />
of the company’s leadership position in the<br />
Spanish city and resort hotel markets, the consolidation<br />
of its second position in the<br />
European ranking and a position as the leading<br />
hotel company in such important leisure tourism<br />
destinations as Cuba and Tunisia. Above<br />
all, however, this giant leap forward brought<br />
about the entry of Sol Meliá in the world top<br />
ten, the ranking of the 10 largest hotel companies<br />
in the world.<br />
HOTELS BY COUNTRY<br />
COUNTRY<br />
HOTELS / ROOMS<br />
BELGIUM<br />
1 (80 rooms)<br />
BRAZIL<br />
5 (960 rooms)<br />
CUBA<br />
6 (2,593 rooms)<br />
GERMANY<br />
2 (251 rooms)<br />
ITALY<br />
1 (270 rooms)<br />
MOROCCO<br />
1 (147 rooms)<br />
PANAMA<br />
1 (287 rooms)<br />
PERU<br />
1 (183 rooms)<br />
PORTUGAL<br />
2 (260 rooms)<br />
SPAIN<br />
51 (6,783 rooms)<br />
TUNISIA<br />
10 (2,450 rooms)<br />
Commercial and strategic reasons abound for<br />
the purchase of Tryp: the size of the company,<br />
relatively easy to digest but, at the same time,<br />
Tryp Fénix (future Gran Meliá Fénix)<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
28
MILESTONES 2<strong>00</strong>0· HOTEL GROWTH<br />
with a presence all over Spain, the absence of<br />
any net debt so as not to compromise the future<br />
growth of Sol Meliá, the possibility of generating<br />
cost savings of around 1,1<strong>00</strong> million<br />
pesetas - 7 million euros- through synergies in<br />
operations, the barrier to entry created for<br />
international hotel groups to get a significant<br />
foothold in Spain and, above all, the impact on<br />
financial results.<br />
The deal in figures<br />
With a very strong position in Spain with a<br />
portfolio of 50 hotels, the Tryp chain also had<br />
an international presence with 3 hotels in<br />
Cuba, 1 in Andorra and 7 in Tunisia. Its solid<br />
position in the city hotel market and, particularly,<br />
its outstanding presence in Madrid make<br />
the new company a reference point if the<br />
Spanish city hotel market. 51% of Sol Meliá’s<br />
hotel portfolio is now in city locations with<br />
49% of hotels in resorts.<br />
The purchase of Tryp Hotels means the addition<br />
of 60 hotels and more than 9,7<strong>00</strong> rooms,<br />
figures which take us to more than 330 hotels<br />
in 30 countries on 4 continents. The company<br />
portfolio also includes 81 signed new projects<br />
(15 from Tryp) which will take the total number<br />
of Sol Meliá hotels in 2<strong>00</strong>3 to at least 410<br />
with more than 102,<strong>00</strong>0 rooms.<br />
RANKINGS OF SPANISH <strong>COMP</strong>ANIES*<br />
<strong>COMP</strong>ANY HOTELS ROOMS<br />
<strong>SOL</strong> <strong>MELIA</strong> 203 42,281<br />
RIU HOTELS 59 14,377<br />
NH HOTELS 86 10,101<br />
FIESTA HOTELS 34 8,369<br />
IBEROSTAR 25 8,173<br />
BARCELO HOTELS 28 7,743<br />
H10 HOTELS 21 6,647<br />
HOTELES GLOBALES 31 6,376<br />
PRINCESS HOTELS 15 5,910<br />
GRUPOTEL 38 5,470<br />
Source: Hostelmarket.<br />
(*) Including signed projects for Sol Meliá.<br />
TOTAL COST<br />
60,891 Million pesetas<br />
PAYMENT STRUCTURE 27,<strong>00</strong>0 Million pesetas in cash payment +<br />
13,222,266 Sol Meliá shares (at 15€)<br />
% OF <strong>SOL</strong> MELIÁ CAPITAL IN OWNED<br />
BY TRYP SHAREHOLDERS<br />
(Antonio Briones, Rufino Calero y Max Mazin) 7.2%<br />
MEMBERS OF TRYP IN<br />
<strong>SOL</strong> MELIÁ BOARD 1<br />
Nº OF HOTELS INCORPORATED 60 + 15 signed projects<br />
<strong>COMP</strong>LEMENTARY ADQUISITION Hotels Tryp Fenix (Madrid)<br />
(Included in total nº of hotels)<br />
and Tryp Colón (Sevilla)<br />
PRICE OF <strong>COMP</strong>LEMENTARY<br />
ADQUISITION<br />
12,5<strong>00</strong> Million pesetas<br />
RANKING INTERNATIONAL LEVEL*<br />
RANKING <strong>COMP</strong>ANY HOTELS ROOMS<br />
1 CENDANT CORP. 6,315 542,630<br />
2 BASS HOTELS & RESORTS 2,886 471,680<br />
3 MARRIOTT INTERNATIONAL 1,888 355,9<strong>00</strong><br />
4 ACCOR 3,234 354,652<br />
5 CHOICE HOTELS INTERNATIONAL 4,248 338,254<br />
6 BEST WESTERN INTERNATIONAL 4,037 313,247<br />
7 HILTON HOTELS CORP, 1,7<strong>00</strong> 290,<strong>00</strong>0<br />
8 STARWOOD HOTELS & RESORSTS 716 217,651<br />
9 CARLSON HOSPITALITY 616 114,161<br />
10 <strong>SOL</strong> MELIÁ + TRYP 420 103,274<br />
11 HYATT 195 85,743<br />
12 SOCIÉTÉ DU LOUVRE 990 65,970<br />
13 HILTON INTERNATIONAL 217 61,889<br />
14 FORTE HOTEL GROUP 449 58,636<br />
15 FELCOR LODGING TRUST 188 50,<strong>00</strong>0<br />
Source: Hotels Magazine, july 2<strong>00</strong>0.<br />
(*) Including signed projects for Sol Meliá & Tryp.<br />
EBITDA MULTIPLE ANALYSIS<br />
Acquisition of lease / management company 2<strong>00</strong>0 2<strong>00</strong>1(*)<br />
Purchase of tryp before synergies (1) 9.36x 6.87x<br />
Purchase of tryp after synergies (2) - 5.89x<br />
Purchase of Tryp after synergies and fiscal<br />
deduction of Goodwill (3) 5.25x 3.30x<br />
(1) At Friday 1st December closing price of € 9.11<br />
(2) Sol Meliá estimates 6,87 million euro synergies.<br />
(3) Goodwill’s fiscal deduction 124,2 million euro<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
29
MILESTONES 2<strong>00</strong>0· HOTEL GROWTH<br />
Meliá Balneario Mondariz<br />
Consolidating our position<br />
in Spain<br />
which (4,978 rooms) in city destinations and<br />
10 (1,887 rooms) in resorts.<br />
As we have seen, the integration of Tryp has<br />
strengthened Sol Meliá’s leadership position in<br />
its domestic market where, after the addition<br />
of the projects currently under development,<br />
the company will provide more than 2<strong>00</strong> city<br />
and resort hotels.<br />
Meliá María Pita<br />
Amongst the most significant hotels that have<br />
joined the portfolio in Spain, special mention<br />
must be made of the Tryp Fénix (future Gran<br />
Meliá Fénix) in Madrid, the Meliá Colón<br />
(Seville) or the Meliá Balneario Mondariz<br />
(Pontevedra).<br />
Within this framework, Madrid has become one<br />
of the destinations most favoured by the deal,<br />
with the addition of the 20 Tryp hotels in city<br />
making the new Sol Meliá the undisputed leader<br />
in the hotel industry in the Spanish capital with<br />
27 hotels with 5,069 rooms.<br />
Throughout the year 2<strong>00</strong>0, Sol Meliá added a<br />
total of 50 hotels (6,865 rooms) in Spain, 40 of<br />
The evolution of Sol Meliá in the Spanish<br />
market is a result of a dual objective: to diversify<br />
the hotel portfolio to respond to the needs<br />
of different customer segments and to consolidate<br />
the company’s position as the leading<br />
hotel chain in Spain through a high profile<br />
presence in the company’s major cities and<br />
provincial capitals.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
30
MILESTONES 2<strong>00</strong>0· HOTEL GROWTH<br />
Meliá Avenue Louise Boutique Hotel<br />
Growth in European Cities<br />
For Sol Meliá 2<strong>00</strong>0 was a year for the consolidation<br />
of its European expansion programme<br />
and its firm commitment to the city hotel<br />
market, 50% of its total supply in Europe.<br />
Over the course of the year a total of 46 hotels<br />
were added with almost 6,<strong>00</strong>0 rooms in<br />
important cities in Belgium, Germany, Italy,<br />
Portugal and Spain.<br />
The company has opened its first hotel in the<br />
Italian capital, the Meliá Roma Aurelia Antica<br />
and has also added the Meliá Avenue Louise<br />
Boutique Hotel (Brussels-Belgium), the Sol Inn<br />
Wolfsburg and Sol Inn München in Germany<br />
and the Meliá Confort Doña María or Tryp<br />
Atlántico in Portugal. The number of city<br />
hotels in Spain also grew by 40 properties.<br />
Our arrival in Rome and Brussels is also another<br />
step towards achieving our objective of<br />
being in all of the major European cities and<br />
establishing our position as an important player<br />
in the European business travel market.<br />
“The incorporation<br />
of the Meliá Roma<br />
Aurelia Antica is<br />
another step<br />
towards the<br />
development of our<br />
expansion policy in<br />
the capitals and<br />
major cities of<br />
Europe and another<br />
sign of our firm<br />
commitment to Sol<br />
Meliá growth in<br />
Italy, a country that<br />
is host to an average<br />
of 35 million<br />
visitors per year”.<br />
”<br />
Andrés Encinas,<br />
Executive Vice President<br />
European City Division<br />
Diversification in European<br />
Resorts<br />
Sol Meliá ended the year 2<strong>00</strong>0 having added<br />
23 hotels with 4,790 rooms. Amongst the<br />
additions, the company confirmed its firm<br />
intention to remain the market leader in<br />
resort hotels in the Mediterranean with 11<br />
Meliá Royal Tanau Boutique Hotel<br />
In European cities Sol Meliá currently has a<br />
portfolio of 153 hotels with 22,649 rooms, 132<br />
of them (19,581 rooms) in operations and 21<br />
under development in Spain, Italy and<br />
Portugal with a total of 3,068 rooms.<br />
new hotels in Tunisia (8 of which came with<br />
the purchase of Tr yp) and another in<br />
Morocco. The addition of the Tryp Roc de<br />
Caldes made Andorra the 30th. country in the<br />
Sol Meliá portfolio.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
31
MILESTONES 2<strong>00</strong>0· HOTEL GROWTH<br />
In Spain the number of hotels grew by 10: 6 on<br />
the Costa del Sol, 2 in the Canary Islands, 1 in<br />
Lérida and 1 in Pontevedra (Galicia). Amongst<br />
the new hotels, special mention must be made of<br />
the Meliá Royal Tanau Boutique Hotel (Valle de<br />
Arán - Lérida), which together with projects<br />
under development for new hotels in Formigal<br />
and Vielha, will further strengthen Sol Meliá’s<br />
leadership of the Spanish ski resort market.<br />
Many of the hotels in the Division have also<br />
seen considerable improvements to their facilities:<br />
enlargement of sports and leisure installations,<br />
perfection of entertainment programmes,<br />
new food and beverage concepts, environmental<br />
protection or changes in the organisation<br />
of services to better adapt them to the real<br />
needs of guests.<br />
A large number of resort hotels have also added<br />
options for congresses, conventions and incentives.<br />
These new and comfortable facilities for business<br />
travellers are equipped with the latest modern<br />
technologies and provide an interesting and complementary<br />
addition to hotel facilities that is<br />
expected to reduce seasonality in the business.<br />
The intense activity carried out by the Division<br />
in making improvements to product and service<br />
quality has been rewarded by many major<br />
tour operators. Over the year 2<strong>00</strong>0, many<br />
hotels have received awards, including:<br />
“Sol Meliá is firmly<br />
committed to<br />
development in the<br />
Mediterranean<br />
region, an area<br />
which is still one of<br />
the world’s most<br />
popular, competitive<br />
and profitable<br />
holiday destinations.<br />
We are also firmly<br />
committed to aiding<br />
socio-economic and<br />
cultural development<br />
in those countries in<br />
which we operate”.<br />
”<br />
Marcello Pigozzo,<br />
Executive Vice President<br />
European Resort Division<br />
AWARD TOUR HOTEL<br />
OPERATOR<br />
ACCOMODATION AWARD Airtours -Sol Magalluf Park (Majorca)<br />
-Sol Alcúdia Center (Majorca)<br />
-Sol Élite Gavilanes (Menorca)<br />
-Sol Élite Menorca (Menorca)<br />
BEST 3 STAR ON THE Airtours -Sol Príncipe-Principito<br />
COSTA DEL <strong>SOL</strong><br />
(Torremolinos-Malaga)<br />
OVERALL AWARD BEST 4T HOTEL Thomson -Sol Príncipe-Principito<br />
SKYTOURS PROGRAMME<br />
(Torremolinos-Malaga)<br />
GOLD AWARD Thomson -Sol Guadalupe (Majorca)<br />
-Sol Mirlos Tordos (Majorca)<br />
-Sol Cala Blanca (Majorca)<br />
GOLD AWARD FOR BEST SUMMER Thomson -Sol Élite Gavilanes (Menorca)<br />
RESORT DESTINATION<br />
The European Resort Division includes 154<br />
hotels with 46,819 rooms, of which 137 hotels<br />
with 41,954 rooms are currently in operation.<br />
The additional 17 hotels with 4,865 rooms<br />
currently under development will be located in<br />
Egypt, Italy, Malta, Spain and Tunisia. The<br />
figures illustrate the objective of Sol Meliá to<br />
maintain its position as the world’s largest<br />
resort hotel company.<br />
The power of Latin America<br />
and the Caribbean<br />
At the end of 2<strong>00</strong>0, Sol Meliá closed another<br />
year as the leading hotel company in Latin<br />
America and the Caribbean, the opening of 13<br />
more hotels in the two regions having extended<br />
this lead even further. During the year 7<br />
new hotels with 1,430 rooms were added in 3<br />
countries in the Americas Division: Brazil (5),<br />
Panama (1) and Peru (1), and another 6 with<br />
2,593 rooms joined the Cuba Division.<br />
The company thus was able to consolidate its<br />
position in Brazil, now with 13 Sol Meliá<br />
hotels, and extend its presence to new countries<br />
such as Peru and Panama. With easy access to<br />
the nearby airport, historical city centre and<br />
Congress Centre, the Meliá Lima provides<br />
excellent business and leisure options. The<br />
Meliá Panama Canal, located in a spectacular<br />
natural environment, provides great sports and<br />
business facilities adapted to satisfy the needs<br />
of the widest range of different types of guests.<br />
The 20 hotels operated by Sol Meliá in Cuba<br />
make the company the leading hotel company<br />
in this Caribbean island. The 6 hotels added<br />
during the year 2<strong>00</strong>0 are a further indication of<br />
the company’s firm commitment to this first<br />
class tourism destination and, especially, to the<br />
booming region of “Los Cayos”. Sol Meliá<br />
currently operates 3 hotels in Cayo Coco, 2 in<br />
Cayo Guillermo and one in Cayo Largo and is<br />
soon scheduled to open another hotel in Cayo<br />
Santa María.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
32
MILESTONES 2<strong>00</strong>0· HOTEL GROWTH<br />
Paradisus Punta Cana<br />
Latin America and the Caribbean are considered<br />
to be natural markets for Sol Meliá and the<br />
company has thus extended and improved its<br />
portfolio in the region, both in the city, with a<br />
presence in most of the region’s capital cities,<br />
and in resorts, with the inauguration of<br />
modern Convention Centres in three of its<br />
finest properties: the Meliá Cancun, the Meliá<br />
Cabo Real (Mexico) and the Meliá Caribe<br />
(Punta Cana-Dominican Republic).<br />
The quality of the products and services provided<br />
by Sol Meliá in the region has also been<br />
recognised by many important Tour Operators.<br />
The Meliá Azul Ixtapa and Meliá Cabo Real in<br />
Mexico have received the Golden Apple Award<br />
from the US Tour Operator Apple Vacations,<br />
while Jet Tours has named the Paradisus Punta<br />
Cana (Dominican Republic) as winner of its<br />
Quality Facilities Trophy.<br />
With a portfolio of 1<strong>00</strong> hotels and 26,057<br />
rooms, the future of the leadership of Sol Meliá<br />
in the region is guaranteed. Furthermore, the<br />
34 hotel projects under development will add a<br />
further 8,102 rooms in Brazil, Cuba, Mexico,<br />
Peru and Puerto Rico.<br />
“We aim to maintain<br />
our leadership<br />
position in Latin<br />
America and the<br />
Caribbean with<br />
hotels in paradise<br />
locations, able to offer<br />
the finest<br />
accommodation, food<br />
and beverage and<br />
entertainment<br />
services with the<br />
support of the latest<br />
modern technologies<br />
and extensive<br />
meeting and<br />
convention facilities.<br />
We will thus attract<br />
both business and<br />
leisure travellers and<br />
achieve one of our<br />
eternal objectives: the<br />
reduction of<br />
seasonality”.<br />
”<br />
Evagrio Sánchez,<br />
Executive Vice President<br />
Americas Division<br />
Meliá Panamá Canal<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
33
MILESTONES 2<strong>00</strong>0 · RESEARCH & DEVELOPMENT<br />
E-Transformation: Creating a Company<br />
for the 21st. Century<br />
d<br />
During the year 2<strong>00</strong>0, Sol Meliá embarked on a<br />
process of “E-Transformation”, a complex but<br />
wholly necessary process to adapt the company<br />
to the needs of a 21st. century business. With a<br />
budget of around 12,<strong>00</strong>0 million pesetas for creating<br />
new technological infrastructures and participating<br />
in joint ventures, the company aims to<br />
remain highly competitive in a world in which<br />
new technologies will play an increasingly<br />
important role. The investment is distributed as<br />
follows: E-Transformation (5,<strong>00</strong>0 million pesetas<br />
- 30 million Euros), E-Procurement (5<strong>00</strong><br />
million pesetas - 3 million Euros), Prodigios<br />
(3,5<strong>00</strong> million pesetas - 21 million Euros) and<br />
Meliaviajes.com (3,<strong>00</strong>0 million pesetas - 18<br />
million Euros).<br />
To assist in the implementation the company<br />
has created a new E-Business Division led by<br />
Luis del Olmo, also the Executive Vice<br />
President of Sales & Marketing. Company<br />
strategy is divided into three areas which are<br />
enormously different but in which there are<br />
three common objectives: to place the customer<br />
at the heart of the organisation, to make<br />
processes more efficient and save costs. The<br />
three areas are:<br />
1. Business to Consumer<br />
(B2C) or Sell Side.-<br />
Based on changes in our relations with our<br />
customers, improving the distribution of our<br />
products, improving the ability to attract new<br />
customers and retain them through efficient<br />
loyalty programmes and also improving the<br />
services and information provided to real and<br />
potential hotel guests. This is expected to<br />
“We aim to<br />
generalise the use of<br />
the Internet and<br />
new technologies to<br />
find new ways of<br />
distributing our<br />
products and<br />
improving the<br />
services we provide<br />
to our guests,<br />
centralising all of<br />
our procurement<br />
procedures and<br />
carrying them out<br />
online, improving<br />
the efficiency of our<br />
operations and<br />
optimising the<br />
functionality of the<br />
Sol Meliá Intranet<br />
to improve internal<br />
management at all<br />
levels”.<br />
”<br />
Luis del Olmo Piñeiro,<br />
Executive Vice President<br />
E-Business<br />
generate a greater number of reservations with<br />
a consequent increase in revenues and decrease<br />
in distribution costs.<br />
Solmelia.com.- the company is currently<br />
working on the development of a new generation<br />
website (www.solmelia.com) to adapt the<br />
site to the developing needs of users. A faster<br />
and easier search engine, a more modern<br />
design and the incorporation of innovative<br />
new services are just some of the features that<br />
the new site will have.<br />
Meliaviajes.com.- This new multichannel<br />
travel company is destined to become<br />
a major player in the travel industry. Initially<br />
the company will operate in Spain and<br />
Portugal, before moving on to Latin America.<br />
The investment earmarked for development is<br />
set at almost 3,<strong>00</strong>0 million pesetas.<br />
AOL Avant.- Sol Meliá was a co-founder<br />
of the generalist portal “Prodigios” which<br />
was later also supported by Planeta and BSCH.<br />
The initiative has ended up being integrated<br />
with AOL Avant, the Spanish arm of America<br />
Online which has been set up at the ParcBit in<br />
Palma de Majorca. With a shareholding of<br />
6.2%, Sol Meliá is also taking part in family<br />
and leisure portal through Meliaviajes.com,<br />
the exclusive provider of travel reservation services<br />
through the site. The Banco Santander<br />
Central Hispano (BSCH) and American Online<br />
(AOL) hold 40% stakes in the business and<br />
Planeta holds 6.17% with the remainder in the<br />
hands of minor shareholders.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
35
MILESTONES 2<strong>00</strong>0 · RESEARCH & DEVELOPMENT<br />
2. Inside.<br />
The company is working on optimising the<br />
functionality of its Intranet to improve internal<br />
company management at all levels. The<br />
incorporation of the SAP platform (System<br />
Application Programmes) will allow the storage<br />
of an immense amount of data, required<br />
to accelerate and improve processes using<br />
Internet channels. The new applications cover<br />
5 main areas: Sales Force Automation (SFA),<br />
hotel receptions (RA 2<strong>00</strong>0), financial control<br />
tools (FICO), Human Resources (PA and<br />
PP) and purchasing (MM). The integration<br />
and use of these valuable applications are<br />
expected to generate significant savings in<br />
time and money.<br />
3. Business to Business (B2B).<br />
Buyside.<br />
The incorporation of new technologies will<br />
also bring the centralisation of purchasing processes<br />
and allow them to be carried out online,<br />
leading to improved efficiency, more competitive<br />
pricing and reductions in operating costs.<br />
Sol Meliá is a co-founder together with<br />
Telefónica, Barceló, Iberostar and the BBVA of the<br />
Hotelnetb2B.com portal. A further 18 hotel<br />
companies have taken a stake in the venture<br />
which aims to provide the finest possible service<br />
to all hotel managers and their suppliers to allow<br />
them to optimise the purchasing process for<br />
goods and services using new technologies.<br />
The portal aims to operate throughout Spain,<br />
the Mediterranean and Latin America and already<br />
has a portfolio of more than 9<strong>00</strong> hotels in 21<br />
countries. The expected investment for its first<br />
two years of operations is 5,<strong>00</strong>0 million pesetas<br />
(€30 Mn.).<br />
This firm commitment to e-transformation has<br />
already begun to bear fruit, with awards received<br />
during the year 2<strong>00</strong>0 including the following:<br />
AWARD FROM TO<br />
Estrategas.com Dinero Magazine Sebastián Escarrer<br />
(Vice Chairman Sol Meliá)<br />
Best Website CETT (Hospitality & Sol Meliá<br />
Tourism Research Centre)<br />
Hermes Award HTR Magazine (France) Sol Meliá<br />
for Best Website<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
36
MILESTONES 2<strong>00</strong>0 · EVERYTHING IS POSSIBLE CAMPAIGN<br />
With Sol Meliá, everything is possible<br />
mMore than 33,<strong>00</strong>0 people in 30 countries on 4<br />
continents are at work every day to ensure that<br />
when we say that in Sol Meliá “everything is<br />
possible” we really mean it. It is the excellent<br />
work and enthusiasm of this immense team<br />
that is the principle ingredient in the company’s<br />
recipe for success.<br />
During the year 2<strong>00</strong>0 Sol Meliá has very successfully<br />
incorporated the more than 2,<strong>00</strong>0<br />
employees of the Tryp hotel chain to the team.<br />
Together with the incorporation of a stream of<br />
new hotels due to the rapid growth of the company,<br />
the deal has led to the creation of many<br />
new opportunities for professional development<br />
and an enriching exchange of experience<br />
and know-how.<br />
Training and promotion are the foundations<br />
on which Sol Meliá human resources policy is<br />
built, a philosophy that has remained intact<br />
since the day the company began. An example<br />
may be seen in the collection of training courses<br />
out together by the Human Resources<br />
Department aimed at achieving company<br />
objectives on product and service quality.<br />
The company also continues to develop its<br />
extensive internal Management Development<br />
Programme for Hotel General Managers, inaugurated<br />
in 1988, based around an 18-month<br />
period of theoretical and practical training<br />
followed by a period as Assistant General<br />
Manager in a hotel before moving up to a<br />
General Manager position. The Human<br />
Resources Department also coordinates<br />
Corporate Career Plans for key positions in<br />
the company structure, and internal development<br />
programmes for Sales Managers and<br />
Administration Managers.<br />
“The success of any<br />
good business person<br />
depends on them<br />
surrounding<br />
themselves with a<br />
truly great team<br />
and in a situation<br />
where positions are<br />
earned rather than<br />
granted”.<br />
”<br />
D. Gabriel Escarrer Juliá,<br />
Chairman<br />
On an institutional level, Sol Meliá enjoys<br />
active and fruitful relations with prestigious<br />
universities and other centres of learning<br />
world-wide co-operating on the placement of<br />
students and training courses.<br />
In June 2<strong>00</strong>0 Sol Meliá signed an agreement<br />
with the Autonomous University of Barcelona to<br />
jointly develop projects aimed at improving the<br />
training and education of future professionals<br />
in the tourism and hospitality industries.<br />
The agreement includes cooperation in developing<br />
an integrated tourism training model to<br />
cover the entire educational cycle and combine<br />
both practical and theoretical learning. More<br />
than 1,<strong>00</strong>0 students from the Catalonian<br />
Tourism and Hospitality faculties will be given<br />
in-house training at the Tryp Campus, a hotel<br />
which is managed by Sol Meliá and located in<br />
the same building as the two faculties.<br />
The company has also been involved in a<br />
large number of similar projects including<br />
sponsorship of wine education courses ate the<br />
Balearic Islands University or the course on<br />
Tourism Development Management organised<br />
by the University of Wisconsin-Stout, the<br />
Balearic Islands Hotel School and the Balearic<br />
Islands University Tourism School. The company<br />
also reached an agreement with the<br />
Galicia Hospitality School to train senior<br />
managers.<br />
Finally, the Sol Meliá website (www.solmelia.com)<br />
also has a special section for employment<br />
opportunities with the company and a<br />
dedicated e-mail service for candidates at<br />
(rrhh@solmelia.com).<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
38
MILESTONES 2<strong>00</strong>0 · QUALITY & ENVIRONMENT<br />
Towards Total Quality<br />
sSol Meliá continues with the implementation<br />
of its ambitious corporate standards programme,<br />
working towards “Total Quality”. Under<br />
the slogan “Your satisfaction, our commitment”,<br />
the philosophy of the company is based<br />
around placing its 5 different types of clients<br />
(hotel owners, shareholders, suppliers, guests<br />
and employees) at the very heart of the organisation<br />
and adapting its products and services to<br />
their needs and preferences.<br />
During the year 2<strong>00</strong>0 the Guest Satisfaction<br />
Programme has been given a further impulse<br />
aiming to provide an immediate response to<br />
the needs of increasingly discerning guests.<br />
The company is in the process of gradually<br />
introducing a new Guest Satisfaction<br />
Assurance programme which aims to improve<br />
service quality and levels of personalisation,<br />
while also increasing the motivation of hotel<br />
teams through a flexible system which focuses<br />
on Creating Memories for guests and anticipating<br />
their needs.<br />
Thanks to the fine-tuning of processes, the use<br />
of new quality control tools and the active and<br />
enthusiastic involvement of personnel, problems<br />
may be detected and resolved more<br />
quickly, while fluid communication channels<br />
and a will to learn from the experiences of<br />
others mean that in Sol Meliá its really true<br />
that “everything is possible”.<br />
Recognition for a job<br />
well done<br />
Since the company created its firs Guest<br />
Satisfaction Programme in 1994, the constant<br />
“At Sol Meliá we<br />
encourage a<br />
philosophy of<br />
Continuos<br />
Improvement and<br />
competitiveness,<br />
which means not<br />
only complying<br />
with standards, but<br />
also going one step<br />
further, keeping up<br />
with our clients as<br />
their needs develop<br />
and trying to stay<br />
one step ahead of<br />
those needs”.<br />
”<br />
Sierra<br />
Gabriel Escarrer Jaume,<br />
Chief Executive Officer<br />
Gran Meliá Don Pepe<br />
Nevada<br />
efforts by the company to grow and adapt to<br />
the changing needs of guests have been rewarded<br />
with a large number of official certifications.<br />
In 1996 Sol Meliá became the first<br />
European hotel company to achieve ISO 9<strong>00</strong>2<br />
Quality Certification, a distinction that would<br />
later be shared by the Meliá Lebreros hotel<br />
(Seville) or Meliá Kuala Lumpur (Malaysia),<br />
amongst others.<br />
Another 12 company hotels in Spain have also<br />
merited the “Q” for Quality granted by the<br />
Spanish Hotel Quality Institute to those hotels<br />
that tirelessly strive to create “continuous<br />
improvements” in their products and services.<br />
The hotels are the Meliá Zaragoza, Meliá<br />
Sierra Nevada and Meliá Granada (Granada),<br />
Meliá Balneario Mondariz (Pontevedra), Gran<br />
Meliá Don Pepe, Meliá Costa del Sol, Sol Élite<br />
Aloha Puerto, Tryp Alameda and Sol Príncipe-<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
40
MILESTONES 2<strong>00</strong>0 · QUALITY & ENVIRONMENT<br />
Principito (Malaga), Gran Meliá Bahía del<br />
Duque (Tenerife), Sol Magalluf Park (Majorca)<br />
and Meliá Altea Hills Resort (Alicante). The<br />
Meliá Varadero in Cuba has also received the<br />
“Quality 2<strong>00</strong>0” award from the Tour Operator<br />
Cubanacan.<br />
Respecting the Environment:<br />
a commitment to Sustainable<br />
Tourism<br />
Always conscious of the importance of environmental<br />
respect and conservation, Sol Meliá<br />
was the first Spanish company to create its<br />
own Corporate Environmental Protection<br />
Manual back in 1995. The insistence of the<br />
company’s senior management has been a decisive<br />
factor in making the environment a priority<br />
concern in all company activities and in<br />
introducing the concept of sustainable development<br />
in the company’s strategic planning<br />
processes.<br />
“Increasing environmental<br />
sensitivity<br />
bring a need to define<br />
and document in a<br />
written Manual our<br />
company policies. Sol<br />
Meliá believes in an<br />
equation that says<br />
Better environment<br />
+ Better product +<br />
Better Service =<br />
Better quality.<br />
Training our staff<br />
and improving the<br />
information we<br />
provide to our guests<br />
is the road we have<br />
to follow to ensure we<br />
achieve our environmental<br />
plans and<br />
that our achievements<br />
are rewarded.”<br />
”<br />
Agustín Serrano,<br />
Executive Vice President<br />
Quality and Technology<br />
Apart from creating its own internal<br />
Environmental Management Systems, Sol<br />
Meliá has also taken part in a large number of<br />
initiatives organised by private and public<br />
bodies aiming to continue to make progress in<br />
the application of its environmental protection<br />
policies. Company representatives have taken<br />
part in the AENOR Work Group designing<br />
regulations to adapt ISO 14<strong>00</strong>1 to the hotel<br />
sector, which a large number of hotels have<br />
also signed up with the Environmental<br />
Foundation.<br />
The Environmental Department organises and<br />
manages hotel staff attendance on courses and<br />
seminars on environmental policy and offers<br />
consultancy services for hotels. Sol Meliá also<br />
provides internal assessment services on environmental<br />
legislation for certified hotels and<br />
works together with hotels to constantly update<br />
procedures manuals to ensure continued<br />
compliance with environmental protection<br />
guidelines.<br />
Meliá Varadero<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
41
MILESTONES 2<strong>00</strong>0 · QUALITY & ENVIRONMENT<br />
Sol Gavilanes<br />
Rewarding Environmental<br />
Concern<br />
The great challenges Sol Meliá has overcome<br />
to implement its environmental protection<br />
policies have been amply rewarded both in<br />
Spain and abroad with numerous awards from<br />
prestigious environmental protection organisations.<br />
These are the hotels that have received environmental<br />
management certification:<br />
Sol Magalluf Park<br />
CERTIFICATION<br />
ISO 14<strong>00</strong>1<br />
HOTEL<br />
Sol Élite Falcó (Menorca)<br />
Sol Pelícanos Ocas (Benidorm-Alicante)<br />
Sol Élite Milanos/Pingüínos (Menorca)<br />
Meliá Confort Montevideo (Uruguay)<br />
Sol Magalluf Park (Majorca)<br />
CERTIFICATION<br />
EMAS (European Community “Eco-Management and<br />
Audit Scheme”)<br />
HOTEL<br />
Sol Élite Falcó (Menorca)<br />
Sol Cala d’Or ( Majorca)<br />
Sol Élite Gavilanes (Menorca)<br />
Sol Pinet Playa (Ibiza)<br />
Meliá Barcelona (Barcelona)<br />
Meliá Confort Apolo (Barcelona)<br />
Meliá Confort Girona (Gerona)<br />
Meliá Sitges (Barcelona)<br />
Sol Falcó<br />
CERTIFICATION<br />
GREEN GLOBE COMMENDATION AWARD<br />
1999 and 2<strong>00</strong>0<br />
HOTEL<br />
Meliá Bali (Indonesia)<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
42
MILESTONES 2<strong>00</strong>0 · <strong>COMP</strong>ANY AND SOCIETY<br />
A Useful Member of Society:<br />
Sponsoring with Sensitivity<br />
a<br />
A high level of commitment to society has<br />
always been one of the distinctive characteristics<br />
of Sol Meliá. In this sense, our sponsorship<br />
of cultural and sports events or other occasions<br />
to benefit society has always been the most<br />
common means of demonstrating our commitment<br />
and contributing to the development of<br />
less privileged communities while encouraging<br />
excellent relations between our hotels and their<br />
neighbours.<br />
During the year 2<strong>00</strong>0 Sol Meliá worked together<br />
with a very wide range of organisation on<br />
many different projects, all aimed at encouraging<br />
the integration into society of people with<br />
some type of problem, fighting injustice, relieving<br />
illness or epidemics or improving the quality<br />
of life in areas in need:<br />
“Sol Meliá has<br />
always professed a<br />
firm desire to offer a<br />
service to society<br />
and to contribute to<br />
improvements in<br />
the quality of life”.<br />
”<br />
Jaime Puig de la Bellacasa,<br />
Director of<br />
Communication and<br />
Institutional Relations<br />
BENEFICIARY<br />
NIDO Foundation for<br />
assistance and support<br />
for the disabled<br />
ACTION AGAINST<br />
HUNGER<br />
EVENT<br />
SPONSORED<br />
Christmas market to<br />
gather funds<br />
to assist with<br />
attending to the<br />
needs of members.<br />
Inclusion in Solidarity<br />
Campaign of<br />
Clara Magazine to finance<br />
a Nutrition Therapy Centre<br />
in Gao (Mali).<br />
4 <strong>SOL</strong>IDARITY PROJECTS Participation in the<br />
· Untouchables in India “Solidarity Telephone”<br />
· Angolan war victims initiative organised by the<br />
· Straits of Gibraltar immigrants Sunday supplement<br />
· Street children Brazil of the Spanish daily<br />
newspaper “La Vanguardia”.<br />
SPANISH ASSOCIATION<br />
AGAINST CANCER<br />
Sponsorship of Grand<br />
Charity Gala Dinner for the<br />
Balearic Delegation of the<br />
Spanish Association Against<br />
Cancer.<br />
WORLD HEART<br />
FEDERATION<br />
MESSENGERS<br />
OF PEACE<br />
Sponsorship of<br />
“World Heart Day”<br />
September 2<strong>00</strong>0.<br />
Participation in the<br />
“Telemarathon” organised<br />
by Antena 3 TV.<br />
Co-operation in the<br />
Christmas Charity Concert<br />
Organised by<br />
Globomedia and shown<br />
on Tele 5 TV.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
44
MILESTONES 2<strong>00</strong>0 · <strong>COMP</strong>ANY AND SOCIETY<br />
Support for education, the arts and culture,<br />
whatever the genre or origin, is another of the<br />
constant pillars of the company sponsorship<br />
programme. Over the year we took part in:<br />
On the sporting field, Sol Meliá was an active<br />
participant in a number of events through different<br />
sorts of sponsorship. Our support and<br />
promotion of the benefits of sport were seen in:<br />
BENEFICIARY<br />
Red Cross<br />
EVENT<br />
SPONSORED<br />
Concert by<br />
JOSÉ CARRERAS<br />
in Palma de Majorca<br />
Co-operation agreement<br />
With the Spanish<br />
Red Cross to train<br />
employees<br />
The firm commitment of Sol Meliá to sponsorships<br />
that bring some benefit to society will<br />
continue in the 21st. century, maintaining our<br />
solidarity with local communities as we prepare<br />
to face the challenges of increasingly complex<br />
markets.<br />
SPORT<br />
Tennis<br />
EVENT SPONSORED<br />
III Edition of the Majorca<br />
Open ATP Tennis Tournament<br />
Hotel School<br />
of the Balearic Islands<br />
UIB Tourism School<br />
& University of<br />
Wisconsin-Stout<br />
European Wine<br />
Management<br />
course organised by the<br />
Hotel School<br />
of the Balearic Islands<br />
the UIB Tourism<br />
School and the<br />
University of<br />
Wisconsin-Stout<br />
Sailing<br />
Diving<br />
Golf<br />
Regatta<br />
Cadiz - Havana<br />
World Record Attempt<br />
La Palma-Isla Bonita<br />
Corporate Challenge<br />
Golf Spain<br />
Europa Universitas<br />
Foundation<br />
XIII Edition of the<br />
Europa Universitas<br />
Awards<br />
October Productions<br />
Filming of the<br />
“El Mar de l’Home”<br />
series<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
45
<strong>SOL</strong> MELIÁ IN THE 21 ST.<br />
CENTURY<br />
Looking to the Future<br />
sSol Meliá faces the 21st. century with the solidity and confidence that<br />
has been gained from almost half a century of operations and having set<br />
in motion the internal reorganisation that will allow the company to meet<br />
the growing challenges of the new millennium. One of the major features<br />
of this preparation has already been seen when after detailed research<br />
and analysis Sol Meliá has slimmed down and reorganised its hotel brand<br />
portfolio to better focus and segment its products and services.<br />
The finalisation of the three-year hotel refurbishment programme, with<br />
investments of over 60,<strong>00</strong>0 million pesetas, and the current pipeline of<br />
over 80 signed hotel development projects, means that by 2<strong>00</strong>3 the company<br />
will have grown to at least 420 hotels in 32 countries with more<br />
than 102,<strong>00</strong>0 rooms.<br />
The coming years will also see the consolidation of the company’s<br />
investments in new technology. Greater flexibility in processes and<br />
important cost savings will be the first noticeable consequences of new<br />
systems. At the same time we will also see the release of the fourth generation<br />
www.solmelia.com, continued growth in quality joint ventures<br />
aimed at increasing our distribution, the growth and consolidation of<br />
our multi-channel travel agency, meliaviajes.com and the automation of<br />
internal systems to allow us to move towards far greater personalisation<br />
and superior quality service.<br />
The 21st. century Sol Meliá will continue to be a company that is firmly<br />
committed to preserving the natural environment, passionate about quality<br />
and placing the customer at the very heart of our organisation. A<br />
company in constant growth, perfectly integrated in its social and natural<br />
environments. A company that will continue to strive to maintain its<br />
position as one of the world’s finest hotel chains and with the finest<br />
team of people working to achieve that aim.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
47
<strong>SOL</strong> MELIÁ IN THE 21 ST.<br />
CENTURY · BRAND STRUCTURE CHANGE<br />
t<br />
Simplifying things:<br />
New Sol Meliá Brand Structure<br />
The rapid growth enjoyed by Sol Meliá in recent<br />
years together with the development of the<br />
international hotel industry in general brought<br />
the company around to analysing its hotel portfolio<br />
and considering the possibility of introducing<br />
certain modifications aimed at simplifying<br />
and better segmenting its hotel products.<br />
After the purchase of Tryp Hotels, the incorporation<br />
of a new group of hotels provided an ideal<br />
opportunity for revisiting the subject of brand<br />
structure with the assistance of Infratest Burke,a<br />
world leader in ad-hoc market research and strategic<br />
brand positioning, and analysing the market<br />
perception of company brands and the characteristics<br />
they are felt to have.<br />
The results of the analysis made it very clear that<br />
the Meliá brand is extremely well known and<br />
respected and that the Meliá Confort brand is<br />
associated with Meliá but transmits no clear<br />
notion of the services its hotels might provide<br />
nor its category. The Tryp brand is very clearly<br />
associated with city locations and functional<br />
hotels. Sol and Sol Élite hotels are not seen to be<br />
any different from each other, while Sol Inn is a<br />
brand with limited recognition and confusion<br />
over its nature.<br />
The research also showed how the international<br />
hotel market concentrates a large number of<br />
properties in a limited number of brands and<br />
uses the concept of sub-brands for specialist<br />
market segments such as health, golf and congresses,<br />
amongst others.<br />
“Sol Meliá has<br />
decided to simplify<br />
and clarify its<br />
brand structure,<br />
eliminating those<br />
brands that may<br />
have created<br />
confusion or lacked<br />
high brand<br />
awareness, and<br />
repositioning the<br />
remaining brands<br />
in the market niches<br />
to which they are<br />
best suited”<br />
”<br />
Sebastián Escarrer,<br />
Vice Chairman<br />
1<strong>00</strong> (90)<br />
157 (111)<br />
8 (3)<br />
BRANDS - CATEGORY - SECTOR<br />
BRAND CITY RESORT<br />
Paradisus Resorts: exceptional “all inclusive”<br />
hotels located in exotic and very special<br />
destinations.<br />
Meliá Hotels & Resorts: prestigious,<br />
luxury hotels in the five star and superior four<br />
star categories, especially suitable for meetings<br />
and conventions.<br />
Tryp Hotels: located in major city destinations,<br />
providing excellent value for money for<br />
business travellers.<br />
Sol Resorts: great value for money and the<br />
widest range of sports and entertainment activities<br />
for the whole family.<br />
155 (137)<br />
5 STAR<br />
ALL INCLUSIVE<br />
5 STAR 5 STAR<br />
SUPERIOR 4 STAR SUPERIOR 4 STAR<br />
4 STAR<br />
SUPERIOR 3 STAR<br />
4 STAR<br />
SUPERIOR 3 STAR<br />
The company will be investing a<br />
total amount of 2,<strong>00</strong>0 million<br />
pesetas in carrying out the<br />
changes required to adapt to<br />
the new brand structure, 4<strong>00</strong><br />
million of which will be<br />
spent on an advertising campaign.<br />
As a result of the conclusions of the research, Sol<br />
Meliá has reorganised its hotel portfolio into a<br />
new brand structure:<br />
Sol Hotels & Resorts<br />
Tryp Hotels<br />
( ) Operating Hotels<br />
Meliá Hotels & Resorts<br />
Paradisus Resorts<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
49
<strong>SOL</strong> MELIÁ IN THE 21 ST. CENTURY · NEW PROJECTS<br />
Sol Meliá: consolidating<br />
constant growth<br />
Sol Meliá is the biggest resort hotel company<br />
in the world, leader in the Spanish, Latin<br />
American and Caribbean markets, the second<br />
largest hotel company in Europe and the<br />
tenth largest in the world. These market seg-<br />
sments will also form the backbone of the<br />
company’s expansion policy, aiming to<br />
strengthen its leadership position in its key<br />
destinations. Thus Latin America and the<br />
Caribbean, the Mediterranean region and<br />
major cities in Spain and Europe are the<br />
areas in which hotels are under development<br />
and in which future focus will continue to<br />
reside, with particular attention to the city<br />
hotel market and consolidating leadership<br />
positions in all markets.<br />
“Our main objective<br />
is to continuing<br />
growing in our natural<br />
markets: major<br />
cities in Spain and<br />
Europe, the Mediterranean<br />
region and<br />
Latin America and<br />
the Caribbean. In<br />
parallel we will be<br />
absorbing the 22,<strong>00</strong>0<br />
rooms already<br />
scheduled to be added<br />
and to reaffirm our<br />
commitment to<br />
geographical and<br />
business<br />
diversification”.<br />
”<br />
Ángel Palomino,<br />
Executive Vice President<br />
Hotel Development<br />
After the purchase of the Tr yp hotel chain,<br />
on 31/12/<strong>00</strong> Sol Meliá had a portfolio of 347<br />
hotels in 30 countries and 83 signed agreements<br />
for new hotels*, which, when incorporated,<br />
will bring the portfolio up to 420<br />
hotels 102,<strong>00</strong>0 rooms in less than 3 years.<br />
Next year will also see continuity in the process<br />
of renovations of the portfolio to adapt<br />
them to company product and service quality<br />
standards.<br />
The regions of Latin America and the<br />
Caribbean, Europe and Spain’s major cities,<br />
and the Mediterranean region in general are<br />
not only the company’s natural markets, but<br />
also the destinations in which all new projects<br />
are located. Sol Meliá will continue to<br />
focus on the city hotel market and the consolidation<br />
of its market leadership.<br />
• As of 31/12/<strong>00</strong> but susceptible to modification in the coming months as<br />
the Company incorporates new development projects.<br />
Gran Meliá Jakarta<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
51
<strong>SOL</strong> MELIÁ IN THE 21 ST. CENTURY · NEW PROJECTS<br />
The 83 projects under development with<br />
21,<strong>00</strong>0 rooms are distributed as follows:<br />
NEW HOTEL PROJECTS BY DIVISION<br />
EUROPE · MEDITERRANEAN<br />
Resort City TOTAL<br />
Hotels 23 25 48<br />
Rooms 6.946 3.375 10.321<br />
AMERICAS · CUBA<br />
Resort City TOTAL<br />
Hotels 7 28 35<br />
Rooms 4.595 6.081 10.676<br />
NEW HOTELS (ROOMS) BY OWNERSHIP TYPE<br />
Owned Leased Managed Franchised Total<br />
2<strong>00</strong>0* 5 (1,027) 48 (6,978) 23 (5,224) 6 (1,252) 82 (14,481)<br />
2<strong>00</strong>1 3 (915) 9 (1,515) 29 (7,632) 2 (162) 43 (10,224)<br />
2<strong>00</strong>2 5 (1,443) 7 (1,245) 17 (5,881) ——— 29 (8,569)<br />
2<strong>00</strong>3 ——— 3 (424) 8 (1,780) ——— 11 (2,204)<br />
TOTAL 8 (2358) 19 (3184) 54 (15,293) 2 (162) 83 (20,997)<br />
* Hotels already incorporated (including Tryp)<br />
After gaining a position in the world hotel<br />
company top ten, Sol Meliá continues to seek<br />
future growth based on sustainable expansion<br />
in its main markets but with a view to becoming<br />
an increasingly global company. This<br />
growth is expected to reinforce the company’s<br />
leadership positions and its brand awareness<br />
world-wide.<br />
Meliá México Reforma<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
52
<strong>SOL</strong> MELIÁ IN THE 21ST. CENTURY · <strong>COMP</strong>LETING THE E-TRANSFORMATION<br />
A Company for the New Millennium:<br />
completing the E-transformation<br />
t<br />
The first few years of the 21st. century will see the<br />
consolidation of the Internet as a channel for an<br />
important volume of sales transactions. In this new<br />
economy, the only companies that will remain competitive<br />
are those that have been able to adapt their<br />
organisation to the requirements of the emerging<br />
market and whose structure is sufficiently flexible<br />
and open to grow along with it. Fully aware of the<br />
need for change to face the new future, in the year<br />
2<strong>00</strong>0 Sol Meliá began an ambitious “e-transformation”<br />
process which is now nearing completion.<br />
Given that an optimum performance would never<br />
be possible without solid internal infrastructure,<br />
the company is also finalising the renovation of all<br />
of its computer systems to create a single, unified<br />
and integrated platform which will provide cost<br />
reductions, accelerate processes and store and<br />
process enormous amounts of information. This<br />
new nucleus will avoid loss of information, external<br />
filtration and pirate programmes. The final<br />
stage of the integration of SAP (System<br />
Application Programme) will take place over the<br />
next couple of months, allowing the automation<br />
of most of the company’s principal functions.<br />
“Sol Meliá is<br />
modernising its<br />
entire technological<br />
platform in order to<br />
prepare the company<br />
for a new era and<br />
face the challenges of<br />
the 21st. century in<br />
optimum conditions.<br />
This commitment<br />
will allow us to fully<br />
adapt our internal<br />
and external<br />
management to new<br />
technologies and<br />
really become a<br />
“solmelia.com”.<br />
”<br />
Hervé Imbert,<br />
Executive Vice President<br />
Information Systems<br />
In parallel with these internal changes, the company<br />
is also working on several important initiatives<br />
on both the Sell Side (clients) and Buy Side<br />
(suppliers) to change the way that we do business.<br />
On the Sell Side, the use of new technologies in<br />
different aspects of the company’s business is<br />
expected to generate significant increases in<br />
revenues and reductions in distribution costs:<br />
SolRes.- The central reservations system<br />
rebuilt using latest generation technology and with<br />
a centralised structure operating 24 hours a day.<br />
www.solmelia.com.- The fourth generation<br />
of the website will personalise interactions<br />
with users as they make real time reservations<br />
and greatly extend the information available on<br />
the company and its hotels.<br />
meliaviajes.com.- A new multi-channel<br />
travel agency aiming to become market leader<br />
providing a wide range of destinations and holiday<br />
experiences tailor-made for customers on an<br />
individual basis.<br />
Sol Meliá and Telefónica Data have reached an<br />
agreement to implement the “SolNet” network<br />
allowing an “on line” connection of all of the<br />
company’s hotels in 30 countries on 4 continents<br />
as well as its different corporate offices. The creation<br />
of a modern global network will increase<br />
the efficiency of internal communications while<br />
also generating important savings in time and<br />
money. It will also ensure the receipt of more<br />
reliable information both on guests and on internal<br />
operations, and, in the short-term, allow<br />
direct Internet access for all guests from their<br />
hotel rooms.<br />
Loyalty programmes.- The consolidation<br />
of company Loyalty Programmes is another<br />
of the objectives of the e-transformation.<br />
Members are already able to access all of the<br />
information on programmes through the website<br />
(www.solmelia.com) as well as checking their<br />
account.<br />
The company is also actively supporting joint<br />
ventures or alliances in new technology ventures<br />
with market leaders in different sectors of the<br />
economy that are expected to add value to the<br />
products and services provided by Sol Meliá.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
54
GOOD GOVERNANCE CODE<br />
tThe following section describes how the company Statutes, regulations<br />
for the Board of Directors and company activities comply with the<br />
recommendations that appear in the Good Governance Code for public<br />
companies published in February 1998 by the Special Commission for<br />
the study of an Ethical Code for Company Board of Directors.<br />
1 Function of the Board of Directors<br />
“That the Board of Directors should explicitly assume as the nucleus of<br />
their mission the general function of supervision; exercise without delegation<br />
the responsibilities this implies; and establish a formal record of<br />
the items reserved for their knowledge”.<br />
Article 34 of the Statutes states that the Board of Directors is responsible<br />
for the representation, direction and administration of the company<br />
with respect to all of the activities undertaken within the objectives of<br />
the company as limited by the Statutes, as well as those activities required<br />
by Law and the Statutes, and without prejudice to those activities<br />
specifically reserved for them at the General Shareholders’ Meeting. The<br />
mentioned Article details the legal acts or business which are within the<br />
competence of the Board of Directors.<br />
2 Independent Directors.<br />
“That the Board of Directors includes a reasonable number of independent<br />
Directors that are persons of professional prestige unrelated to the<br />
company management team nor significant shareholders”.<br />
Article 31 of the Statutes specifies the requirements for Independent<br />
Directors. The same Article states that, without prejudice to the stipulations<br />
of Company Law, and to guarantee the independent criteria of<br />
the Board and the defence of the best interests of the company and its<br />
shareholders, at least one third (1/3) of the members of the Board of<br />
Directors must be Independent Directors.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
56
GOOD GOVERNANCE CODE<br />
The Board of Directors of the company on 31st. December, 2<strong>00</strong>0 consisted<br />
of six non-Independent Directors and five Independent Directorsocho.<br />
3 Composition of the Board of Directors.<br />
“That external Directors (representatives of majority shareholders and<br />
independents) should represent a large majority of the members of the<br />
Board of Directors with respect to company executives and that the<br />
proportion between representatives of majority shareholders and independents<br />
should be established bearing in mind the relation that exists<br />
between majority and minority shareholders”.<br />
The Sol Meliá, S.A. Board of Directors at 31st. December, 2<strong>00</strong>0 comprised:<br />
Executive Chairman<br />
Gabriel Escarrer Juliá<br />
Non-Independent Director<br />
Non-Executive Vice Chairman<br />
Juan Vives Cerdá<br />
Non-Independent Director (Representative)<br />
Executive Vice Chairman<br />
Sebastián Escarrer Jaume<br />
Non-Independent Director<br />
Chief Executive Officer<br />
Gabriel Escarrer Jaume<br />
Oscar Ruiz del Río<br />
AILEMLOS S.L.*<br />
Hoteles Mallorquines Consolidados S.A.<br />
P.P. by: Mª Antonia Escarrer Jaume<br />
Eduardo Punset Casal<br />
Alfredo Pastor Bodmer<br />
José Joaquín Puig de la Bellacasa Urdampilleta<br />
Emilio Cuatrecasas Figueras<br />
José María Lafuente López<br />
Non-Independent Director<br />
Non-Independent Director (Representative)<br />
Non-Independent Director (Representative)<br />
Non-Independent Director (Representative)<br />
Independent Director<br />
Independent Director<br />
Independent Director<br />
Independent Director<br />
Secretary Independent Director<br />
* The company AILEMLOS S.L was designated as Director in January 2<strong>00</strong>1, making the total<br />
number of current Directors 12.<br />
4 Number of Directors<br />
“That the Board of Directors adjusts its size in order to achieve more<br />
efficient and participative operations. In principal, the appropriate size<br />
may oscillate between five and fifteen members”.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
57
GOOD GOVERNANCE CODE<br />
According to the Statutes, articuloArticle 31.2, “The Board of Directors<br />
should consist of a minimum of five and a maximum of twenty members<br />
chosen by the General Shareholders’ Meeting”.<br />
On 31st. December, 2<strong>00</strong>0, the Board of Directors comprised 11 members.<br />
5 The Chairman of the Board of Directors<br />
“That, should the Board opt to combine the roles of Chairman and<br />
chief Executive in one person, the Board should adopt all necessary<br />
cautionary measures to reduce the risks of concentration of power in<br />
one person”.<br />
This recommendation has been carried out given that the Chairman of<br />
the Board of Directors does not have and faculties delegated by the Board<br />
of Directors. At the same time a number of additional measures are in<br />
place to ensure compliance: appointment of two Vice Chairmen and a<br />
Chief Executive Officer, creation of two delegate commissions, etc.<br />
6 The Secretary of the Board of Directors<br />
“That the figure of Secretary of the Board be given far greater relevance,<br />
reinforcing their independence and stability and highlighting their<br />
function to ensure the formal and material legality of the actions of the<br />
Board”.<br />
Article 33 of the Statutes, as well as the Regulations of the Board of<br />
Directors, in its Article 12, highlight the figure of the Secretary of the<br />
of the Board of Directors placing amongst his functions to support the<br />
Chairman in his labours and to provide directors with the advice and<br />
information they require as well as conserving all documentation and<br />
maintaining minutes on the development of the sessions and agreements<br />
reached. Directors are also formally committed to appointing a person<br />
that is capable of performing the role appropriately as Secretary.<br />
The current Secretary of the Board of Directors is an Independent Director.<br />
7 The Executive Commission<br />
“That the Executive Commission, wherever such exists, should reflect<br />
the same balance as the Board between different types of Directors and<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
58
GOOD GOVERNANCE CODE<br />
that the relations between both bodies is based on principals of transparency,<br />
in such a way that the Board is fully aware of the matters dealt<br />
with and decisions made by the Commission”.<br />
Article 39 of the Statutes foresees the possibility of the constitution of<br />
such a commission, although it has not been deemed necessary to date<br />
given that a full meeting of the Board has always been required.<br />
8 Delegate Control Commissions<br />
“That the Board of Directors creates within its ranks delegate control<br />
commissions, made up exclusively of external Directors, to monitor<br />
accounts information and control (Audits); selection of Directors and<br />
senior management; remuneration policies and reviews; and the evaluation<br />
of governance”.<br />
On 23rd. February, 1999, the Board of Directors agreed to create, in line<br />
with Article 14 of the Regulations of the Board, the following delegate<br />
commissions:<br />
1. Auditing and Compliance Commission, which includes amongst<br />
its functions the proposal of Auditors, the review of annual<br />
accounts and of compliance with legal requirements, correct application<br />
of accountancy principles and the provision of financial<br />
information adapted to those principles, as well as examining compliance<br />
with the internal regulations governing compliance with<br />
Stock Markets, the Regulations of the Board of Directors and the<br />
governance rules of the company.<br />
2. Appointments and Remuneration Commission, which includes<br />
amongst its basic functions the formulation and revision of the criteria<br />
that must be followed to form the Board of Directors and the<br />
selection of candidates, the proposal to the Board of appointments<br />
of Directors and of members that should form part of<br />
Commissions, the periodic review of remuneration policies, the<br />
supervision of the transparency of remuneration and information<br />
on transactions that may imply conflicts of interests and, in general,<br />
for the items included in Chapter VIBII of the Regulations of<br />
the Board of Directors regarding the Duties of Directors.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
59
GOOD GOVERNANCE CODE<br />
The Commissions are made up of three Directors, including at least one<br />
Independent Director.<br />
9 Information to the Directors<br />
“That all necessary measures are taken to ensure that Directors are provided<br />
sufficiently in advance with the information they require, specifically<br />
prepared to assist in the duties of the Board without prejudice,<br />
except in exceptional circumstances, to the importance or reserved<br />
nature of the information”.<br />
The Regulations of the Board of Directors in its Article 19 foresees that<br />
Board meetings are convened by letter, fax, telegram or e-mail authorised<br />
by the signature of the Chairman or the Secretary on behalf of the<br />
Chairman. They also foresee the possibility that extraordinary sessions<br />
of the Board are convened by telephone whenever the Chairman may<br />
feel that circumstances make this appropriate.<br />
In compliance with Article 35.2. of the Statutes, this communication<br />
must include the agenda for the session along with a summary of the<br />
information required.<br />
Under normal circumstances the information will be provided to<br />
Directors fifteen days in advance.<br />
10 Functions of the Board of Directors.<br />
“That, to ensure the appropriate performance of the duties of the<br />
Board, meetings should be held with the frequency required to allow<br />
achievement of objectives; that the Chairman should encourage the<br />
intervention and independence of mind of all Directors; that special<br />
care should be taken with the taking of minutes and that an assessment<br />
of the quality and efficiency of the work of the Board should be carried<br />
out at least once per year”.<br />
The Board of Directors, as stated in articuloArticle 35.1 of the Statutes<br />
must meet at least five times per year and whenever the interests of the<br />
company require, whenever decided by the Chairman or by his substitute,<br />
or on request of at least one third of the members of the Board, in<br />
which case the Chairman should convene a Meeting of the Board within<br />
a period of ten days from such a request.<br />
During the year 2<strong>00</strong>0, a total of eight Meetings of the Board were held.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
60
GOOD GOVERNANCE CODE<br />
11 Selection and re-election of Directors.<br />
“That the intervention of the Board of Directors in the selection and<br />
re-election of its members is carried out using formal and transparent<br />
procedures after presentation of a reasoned proposal by the<br />
Appointments Commission”.<br />
Article 16 of the Regulations states that the Appointments and<br />
Remuneration Commission should formulate and revise the criteria to<br />
be applied to the composition of the Board of Directors and the selection<br />
of candidates.<br />
The Commission must thus propose the appointment of Directors so<br />
that the Board may directly approve them or submit such a decision to<br />
the General Shareholders’ Meeting.<br />
According to Article 31.3 of the Statutes, at least one third of the members<br />
of the Board must be Independent Directors. These should be persons of<br />
acknowledged prestige with no relation to the executive team or Major<br />
Shareholders (as defined in Royal Decree 377/1991, of 15th. March).<br />
12 Resignation of Directors<br />
“That companies include in their regulations an obligation that<br />
Directors resign in circumstances which might have a negative effect of<br />
the functioning of the Board or the credit or reputation of the company”.<br />
The Statutes state that the absence of any Director at three consecutive<br />
meeting of the Board or at any four meetings within the same financial<br />
year, without appropriate justification, will give ground to the Board to<br />
declare that Directors automatic release from his position and to then<br />
designate a provisional successor until such may be submitted to the next<br />
General Shareholders’ Meeting for ratification.<br />
Chapter VIII of the Regulations of the Board of Directors also deals<br />
with this matter.<br />
13 Age of the Directors<br />
“That a maximum age is set for the position of Director, that may be<br />
between sixty five and seventy for Executive Directors and the<br />
Chairman, and more flexible for other members of the Board”.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
61
GOOD GOVERNANCE CODE<br />
Neither the Regulations of the Board nor the Statutes include maximum<br />
limits on the age of Directors.<br />
14 Information for Directors<br />
“That there is formal recognition of the right of all Directors to gather<br />
and obtain the information and advice required to perform their supervisory<br />
duties, and that appropriate means are established to allow this<br />
right to be exercised, including the use of external experts in special circumstances”.<br />
As stated in Article 35.8 of the Statutes, in the performance of their<br />
duties Directors have the right to request the professional assistance of<br />
company executives and internal advisors. They must also have free and<br />
direct access either personally or through others delegated by them to all<br />
of the company’s books and files, unless the Chairman refuses such right<br />
in defence of the interests of the company. Such a refusal will not be permitted<br />
whenever the Director in question has requested and obtained a<br />
favourable vote of at least twenty five per cent (25%) of the inscribed<br />
shareholders with a right to vote, as expressed in the General<br />
Shareholders’ Meeting.<br />
This right is also detailed in Chapter VI of the Regulations of the Board<br />
of Directors.<br />
15 Remuneration of Directors<br />
“That the remuneration policy applied to Directors, the proposal, evaluation<br />
and revision of which should be carried out by the<br />
Remuneration Committee, should reflect moderation and company<br />
performance with detailed and personalised information”.<br />
As stated in Article 35 of the Statutes, Independent Directors receive an<br />
amount of one million five hundred thousand pesetas for their attendance<br />
at each session. This amount may be increased on agreement by<br />
the Board in proportion with any increase in the consolidated profits of<br />
the company, without prejudice to its posterior ratification by the<br />
General Shareholders’ Meeting, either explicitly or through approval of<br />
the Annual Accounts.<br />
The remuneration of Non-independent Directors will consist of a fixed<br />
annual amount, the same for all of them, to be defined or ratified by the<br />
General Shareholders’ Meeting, without prejudice to the payment of<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
62
GOOD GOVERNANCE CODE<br />
fees or other amounts that may be due from the company for the provision<br />
of professional services or derived from their private work as may be<br />
the case.<br />
Remuneration will be paid out after the end of the month in which it<br />
may have been earned to ensure that it is proportional to the time that<br />
the Director may have served on the Board during the year.<br />
16 General duties of Directors and conflicts<br />
of interest.<br />
“That the internal regulations of the company detail the obligations<br />
derived from the general duties of diligence and loyalty expected of<br />
Directors, including, specifically, matters relating to conflicts of interest,<br />
confidentiality requirements, the exploitation of business opportunities<br />
and the use of company assets”.<br />
Article 26 of the Regulations of the Board of Directors and others indicate<br />
the obligations of Directors.<br />
The most relevant obligations are:<br />
1. The Director must maintain confidentiality regarding the deliberations<br />
of the Board and the delegate Commissions of which they<br />
may form part and, in general, must abstain from revealing information<br />
to which they have had access due to their position.<br />
2. The aforementioned confidentiality must be maintained even after<br />
such person ceases to be a Director.<br />
3. The Director may not occupy management positions in companies<br />
whose mission or nature that is partially analogous with that<br />
of the company, with the exception of other companies controlled<br />
by the group.<br />
4. Before accepting any management position with another company,<br />
the Director must consult the Appointments and Remuneration<br />
Commission.<br />
5. The Director may abstain from attending or intervening in deliberations<br />
that may affect matters in which they may be personally<br />
involved.<br />
6. The Director may not carry out, neither directly nor indirectly,<br />
commercial transactions with the company.<br />
7. In the performance of their duties, the Independent Directors<br />
must declare any developments in their relations with the company,<br />
controlling shareholders or companies associated with controlling<br />
shareholders.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
63
GOOD GOVERNANCE CODE<br />
17 Transactions with major shareholders<br />
“That the Board of Directors should promote the adoption of appropriate<br />
measures to extend the duties of loyalty to major shareholders,<br />
establishing, specifically, cautionary procedures relating to any transactions<br />
carried out between such shareholders and the company”.<br />
This recommendation is in place and regulated in Article 35 of the<br />
Regulations of the Board concerning hypothetical relevant transactions<br />
that may occur between major shareholders, after a report by the<br />
Appointments and Remuneration Commission.<br />
18 Communication with shareholders<br />
“That measures are taken to make mechanisms for delegating votes<br />
more transparent and to reinforce communications between the company<br />
and its shareholders, particularly with institutional investors”.<br />
As established in Article 25.1. of the Statutes, the Board of Directors<br />
may demand that in the convening of the General Shareholders’<br />
Meeting the company is in possession of the delegation of representation<br />
by shareholders at least two days before the day on which the<br />
General Shareholders’ Meeting is to be held, specifically indicating the<br />
name of the corresponding representative.<br />
This representation must be assigned in writing for each General<br />
Shareholders’ Meeting within the terms established by Company Law.<br />
Since the company IPO there have been many contacts with institutional<br />
investors and shareholders. Sol Meliá, S.A. is very active regarding<br />
providing information for investors and carries out a minimum of one or<br />
two roadshows per quarter to provide information on company activities<br />
and performance. In parallel, further roadshows are held whenever any<br />
important event requires the supply of information.<br />
The company has also held meetings and maintained other forms of<br />
contact with shareholders in Spain and other countries.<br />
The principal executives of Grupo Sol Meliá, S.A. have attended roadshows<br />
in cities such as London, Paris, Frankfurt, Edinburgh, Milan, Geneva,<br />
Cologne, Dublin, Brussels, Amsterdam, Eindhoven, Madrid, Barcelona<br />
and Zaragoza, amongst others, visiting existing and potential investors.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
64
GOOD GOVERNANCE CODE<br />
Amongst the numerous visits to investors, shareholders and analysts, the<br />
following are highlighted:<br />
• Information roadshows on company results<br />
• Information roadshows on the Tryp acquisition<br />
• Information roadshows on the bond issue by one of the subsidiaries<br />
All of the activities described in this section are carried out in observance<br />
of the regulations of the stock market and after providing, if required,<br />
the corresponding reports to the Spanish Stock Exchange Commission<br />
(CNMV) for publishing.<br />
In addition, during the Extraordinary General Shareholders’ Meeting of<br />
23rd. October, 2<strong>00</strong>0 the company made a series of changes to the<br />
Statutes, introducing the possibility, on request by the Chairman, of<br />
requesting from intermediary bodies the identities of the shareholders of<br />
Sol Meliá.<br />
This measure aimed to reaffirm the mechanisms in place for transparency<br />
within the company and put in place controls that would clarify<br />
the evolution of the shareholder structure.<br />
Sol Meliá has also recently launched an “Investors Club” to provide<br />
regular financial information to those shareholders that request such<br />
information, as well as other benefits including an investors “Hotline”.<br />
19 General information<br />
“That the Board of Directors, over and above the requirements of<br />
existing legislation, should assume responsibility for providing the<br />
markets with rapid, precise and reliable information, particularly<br />
regarding the shareholder structure, substantial modifications to the<br />
rules of governance, particularly relevant deals or operations and<br />
company shareholdings”.<br />
As indicated in Article 38 of the Regulations of the Board , the company<br />
has provided information considered to be of sufficient detail and<br />
through the appropriate channels (Statements to CMNV, regular<br />
published information, communications regarding majority shareholders,<br />
other communications, etc.), on matters regarding the share price<br />
and any other matter considered relevant, as well as regular information<br />
on the company rules of governance.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
65
GOOD GOVERNANCE CODE<br />
20 Financial information<br />
“That all of the regular financial information as web as the annual<br />
information offered to the markets is generated using the same professional<br />
principles and practises as the annual accounts and that, before<br />
being published, are verified by the Audit Commission”.<br />
Amongst their duties, the Board of Directors, along with the Audit and<br />
Compliance Commission are entrusted with the duty of providing<br />
financial information to the markets following the same professional<br />
principles, criteria and practises as those employed in the production of<br />
the annual accounts.<br />
Financial analysts have also been kept informed through conference calls on<br />
quarterly results after their presentation and registration with the CNMV.<br />
21 External Auditors<br />
“That the Board of Directors and the Audit Commission supervise<br />
situations that may present a risk to the independence of the company’s<br />
external auditors and, specifically, that they verify the amounts paid to<br />
external auditors as a percentage of the total revenues of the auditing<br />
firm, and that they make public information on fees paid for services<br />
other than audits”.<br />
The Board of Directors and Audit and Compliance Commission have<br />
made an analysis of the possible risks regarding the independence of<br />
external auditors.<br />
That total amount paid to the external auditor Ernst & Young reached<br />
105,761,085 pesetas for auditing and consulting services. This amount is<br />
equivalent to 0.7 % of the total revenues of the firm in Spain.<br />
In addition, the company has paid out a total of 11,8<strong>00</strong>,<strong>00</strong>0 Pesetas to<br />
Arthur Andersen and 370,019 Pesetas to KPMG in consultancy fees.<br />
22 Production of the Annual Accounts.<br />
“That the Board of Directors should avoid presenting accounts to the<br />
General Shareholders’ Meeting that contain exceptions and reservations<br />
in the auditors’ report, and that, whenever this is not possible,<br />
both the Board of directors and the auditors must clearly explain to shareholders<br />
and to the market the content and scope of the discrepancies”.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
66
GOOD GOVERNANCE CODE<br />
This recommendation is included in article 39 of the Regulations of the<br />
Board, and it is being accomplished by the Company.<br />
23 Information on Governance rules.<br />
“That the Board of Directors include in their Annual Report information<br />
on their Governance rules, providing explanations for any that do<br />
not comply with the recommendations contained within this Code”.<br />
This report aims to clearly and precisely reflect the degree to which the<br />
recommendations of the Code of Good Governance has been implemented<br />
in the company, and particularly in regard to the obligations,<br />
duties and procedures followed by the Sol Meliá, S.A. Board of<br />
Directors so as to comply with said recommendations.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
67
OFFICIAL COMMUNIQUÉS<br />
tThe following is a summary of the different communiqués sent by Sol<br />
Meliá to the Comisión Nacional del Mercado de Valores (Spanish Stock<br />
Exchange Commission) during the year 2<strong>00</strong>0:<br />
28th. February<br />
With reference number 20990, Sol Meliá announced results for the second<br />
half of 1999.<br />
16th. May<br />
With reference number 22214, the company sent an advance of results for<br />
the first quarter of 2<strong>00</strong>0.<br />
22nd. May<br />
With reference number 22319, the Board announced the celebration of the<br />
Ordinary and Extraordinary General Shareholders’ Meeting for 29th. May.<br />
29th. May<br />
With reference number 22542, the company sent information on the<br />
matters agreed at the Ordinary General Shareholders’ Meeting held the<br />
same day.<br />
1st. June<br />
With reference number 22639, Sol Meliá announced the acquisition of<br />
90% of the capital of the company Azafata S.A.<br />
21st. June<br />
With reference number 22939, Sol Meliá announced the entry of the Banco<br />
Santander Central Hispano (BSCH) in Prodigios, a project to create a generalist<br />
portal site aimed at Spanish and Portuguese speaking families.<br />
4th. July<br />
With reference number 23493, the company provided information on<br />
the liquidation of warrants by Hoteles Mallorquines Agrupados S.A.,<br />
Hoteles Mallorquines Asociados S.A. and Hoteles Mallorquines<br />
Consolidados S.A.<br />
21st. July<br />
With reference number 2319, Sol Meliá announced results for the first half<br />
of the year 2<strong>00</strong>0.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
69
OFFICIAL COMMUNIQUÉS<br />
25th. July<br />
With reference number 23940, Sol Meliá responded to news that had<br />
appeared in the press concerning a possible alliance with the UK-based<br />
hotel group Hilton International.<br />
31st. July<br />
With reference number 24064, Sol Meliá announced the signature of a<br />
Letter of Intent regarding the negotiation of the acquisition of the hotel<br />
chain owned by Tryp S.A.<br />
21st. August<br />
With reference number 24279, Sol Meliá and Tryp S.A. announced the<br />
signature of the final agreement by which Sol Meliá integrated all of the<br />
shares in Tryp S.A. for 60,<strong>00</strong>0 million pesetas and the creation of one<br />
position on the Board for ex-shareholders.<br />
22nd. August<br />
With reference number 24355, Sol Meliá provided information on the<br />
financial repercussion of the acquisition of Tryp S.A. on company<br />
accounts.<br />
26th. September<br />
With reference number 24912, Sol Meliá announced the celebration of<br />
the Extraordinary General Shareholders’ Meeting for the 23rd. and<br />
24th. October.<br />
4th. October<br />
With reference number 25072, the company provided information on<br />
the attendance conditions for the mentioned Meeting.<br />
17th. October<br />
With reference number 25235, Sol Meliá announced approval of a new<br />
variable bonus system for management, not including Board members,<br />
to be applied for 2<strong>00</strong>0.<br />
23rd. October<br />
With reference number 25331, the company informed that the<br />
Extraordinary General Shareholders’ Meeting had approved a capital<br />
increase to allow the shareholding agreed with Tryp S.A.<br />
17th. November<br />
With reference number 25637, Sol Meliá provided information on<br />
results for the third quarter of 2<strong>00</strong>0.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
70
CON<strong>SOL</strong>IDATED ASSETS<br />
In thousands of Pesetas.<br />
A. UNCALLED SHARE CAPITAL<br />
31/12/1998 31/12/1999 31/12/2<strong>00</strong>0<br />
B. FIXED ASSETS<br />
I. START-UP EXPENSES 1,524,980 3,486,086 3,473,216<br />
II. INTANGIBLE FIXED ASSETS<br />
1. Intangible assets and rights 1,156,783 37,219,295 54,739,424<br />
2. Provisions and amortization (170,480) (2,358,929) (4,283,168)<br />
III. TANGIBLE FIXED ASSETS<br />
1. Land and buildings 1,250,909 225,809,503 277,877,304<br />
2.Technical installations and machinery 286,847 22,325,498 30,227,956<br />
3.Other fixed assets 786,718 43,354,676 50,447,938<br />
4.Prepayments and tangible fixed assets in progress 3,567 4,624,763 3,905,221<br />
5.Provisions and depreciation (631,087) (68,541,373) (87,373,658)<br />
IV. INVESTMENTS<br />
1.Participations by equity method 13,190,153 2,943,132 3,586,697<br />
2.Loans to subsidiaries 4,999,817 2,428,594<br />
3.Long-term securities portfolio 22,353,409 16,343,6<strong>00</strong> 18,320,265<br />
4.Other long-term receivables 1,768,320 7,248,697 7,438,278<br />
5. Provisions (1,364,325) (293,925)<br />
V. OWN SHARES<br />
TOTAL FIXED ASSETS 41,520,118 296,090,439 360,494,142<br />
C. GOODWILL ON CON<strong>SOL</strong>IDATION<br />
1. From companies consolidated under full consolidation 1,881,494 2,557,898 65,624,776<br />
2. From companies consolidated by equity method 361,835 233,211 329,030<br />
TOTAL GOODWILL ON CON<strong>SOL</strong>IDATION 2,243,329 2,791,108 65,953,806<br />
D. DEFERRED EXPENSES 2,550,355 3,631,264<br />
E. CURRENT ASSETS<br />
II. INVENTORIES 21,262 4,232,986 5,992,508<br />
III. DEBTORS<br />
1.Trade debtors 5,129,569 13,084,251 17,889,520<br />
2. Subsidiaries 80,114 110,716 1,542,070<br />
3. Other debtors 962,401 5,637,280 15,360,579<br />
4. Provisions (379,497) (1,831,996) (3,618,776)<br />
IV. SHORT-TERM INVESTMENTS<br />
1. Short-term securities portfolio 8,408 3,550,310<br />
2. Loans to subsidiaries 10,278,821 30,196<br />
3. Other loans 127,677 2,743,622 3,7<strong>00</strong>,803<br />
4. Provisions (31,512)<br />
V. OWN SHARES 704,550 1,123,106 1,802,468<br />
VI. CASH AND BANKS 4,<strong>00</strong>8,228 10,425,394 12,376,399<br />
VII. PREPAYMENTS AND ACCRUALS 175,358 607,774 1,322,386<br />
TOTAL CURRENT ASSETS 10,829,662 46,388,849 59,948,463<br />
TOTAL ASSETS 54,593,109 347,820,752 490,027,675<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
76
CON<strong>SOL</strong>IDATED LIABILITIES<br />
In thousands of Pesetas<br />
31/12/1998 31/12/1999 31/12/2<strong>00</strong>0<br />
A. EQUITY<br />
I. SHARE CAPITAL 3,1<strong>00</strong>,<strong>00</strong>0 5,708,859 6,148,854<br />
II. SHARE PREMIUM 33,095,450 1<strong>00</strong>,418,656 132,298,9<strong>00</strong><br />
III. REVALUATION RESERVE R.D.L. 7/96 8,032,947 8,032,947<br />
IV. RESERVES<br />
1. Distributable reserves 1,693 709,<strong>00</strong>3 5,092,764<br />
2. Reserve investments Canary Islands Law 19/94 951,121 2,033,319 3,265,127<br />
3. Reserves in Cies. consolidated under full consolidation 4,623,663 26,064,671 38,184,435<br />
4. Reserves in Cies. consolidated by equity method 339,506 392,171 364,978<br />
5.Non-distributable reserves 1,101,089 1,837,935 2,953,870<br />
6.Results from prior years 16,577 16,577<br />
VII. FOREIGN CURRENCY GAINS/(LOSSES)<br />
1. From Cies. consolidated under full consolidation (290,189) 6,378,310 9,865,367<br />
2. From Cies. consolidated by equity method (610,117) (18,963) (3,475)<br />
VIII. PROFIT AND LOSSES FROM PARENT <strong>COMP</strong>ANY 6,915,775 14,643,755 18,745,790<br />
1.Consolidated profit and losses 6,986,150 15,667,956 19,738,432<br />
2.Profit and losses attributed to minority interests (70,375) (1,024,201) (992,642)<br />
IX. INTERIM DIVIDEND PAID IN PREVIOUS YEAR (1,240,<strong>00</strong>0)<br />
TOTAL EQUITY 48,<strong>00</strong>4,568 166,217,239 224,949,555<br />
B. MINORITY SHAREHOLDERS 123,935 7,250,035 9,799,570<br />
C. NEGATIVE CON<strong>SOL</strong>IDATION DIFFERENCE<br />
1. From companies consolidated under full consolidation 238,091 2,520,938 3,716,226<br />
2. From companies consolidated by equity method 32,633<br />
TOTAL NEGATIVE CON<strong>SOL</strong>IDATION DIFFERENCE 238,091 2,520,938 3,748,859<br />
D. DEFERRED INCOME<br />
1.Capital grants 3,<strong>00</strong>0 580,767 605,237<br />
2. Other deferred income 252,775 2,653,662 3,083,803<br />
TOTAL DEFERRED INCOME 255,775 3,234,429 3,689,040<br />
E. PROVISIONS FOR LIABILITIES AND CHARGES 58,506 8,845,618 9,437,013<br />
F. LONG-TERM LIABILITIES<br />
I. Issue of debentures and other marketable securities 33,511,454 68,588,250<br />
II. Debts with credit institutions 45,261 67,398,408 101,142,984<br />
III. Debts with subsidiaries 115,996 66,284<br />
IV. Other liabilities 335,251 12,798,810 13,498,739<br />
TOTAL LONG-TERM LIABILITIES 496,508 113,774,956 183,229,973<br />
G. SHORT-TERM LIABILITIES<br />
I. Issue of debentures and other marketable securities 97,552 98,464<br />
II. Debts with credit institutions 2,423,780 25,562,513 24,805,414<br />
III. Debts with subsidiaries 571,969 7,432 779,993<br />
IV.Trade creditors 867,735 11,797,816 19,473,781<br />
V. Other non-trade debts 1,532,685 7,746,211 8,242,457<br />
VI.Trade provisions 19,556 4,074 695,596<br />
VII. Accrued expenses 761,938 1,077,958<br />
TOTAL SHORT-TERM LIABILITIES 5,415,725 45,977,538 55,173,664<br />
TOTAL LIABILITIES 54,593,109 347,820,752 490,027,675<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
77
CON<strong>SOL</strong>IDATED PROFIT AND LOSS ACCOUNT<br />
In thousands of Pesetas<br />
A. EXPENSES<br />
31/12/1998 31/12/1999 31/12/2<strong>00</strong>0<br />
1. Supplies and other external expenses 29,526 14,282,829 19,299,455<br />
2. Personnel expenses<br />
a) Salaries, wages and related expenses 2,198,493 25,844,228 34,321,572<br />
b) Social Security 634,377 8,837,938 11,<strong>00</strong>1,<strong>00</strong>2<br />
3. Fixed assets depreciation charges 804,121 10,379,850 13,984,526<br />
4. Changes in trade provisions 284,350 239,348 614,507<br />
5. Other operating expenses 4,341,869 27,281,303 39,782,444<br />
I. OPERATING PROFIT 7,457,260 22,718,797 29,395,648<br />
6. Financial expenses 90,158 4,883,404 9,415,580<br />
7. Changes in provisions for decline in value of investments 31,512 (14,534)<br />
8. Foreign currency losses 260,<strong>00</strong>7 5,452,105 6,986,389<br />
II. FINANCIAL PROFIT 106,916 - -<br />
9. Amortization of consolidation goodwill 231,119 304,151 443,670<br />
III. PROFIT FROM ORDINARY ACTIVITIES 7,912,946 18,394,943 20,601,728<br />
10. Losses arising from sale of fixed assets 497,417 122,713 82,105<br />
11. Changes in fixed asset provisions (47,721) 288,409<br />
12. Extraordinary expenses and losses 349,117 1,401,461<br />
13. Expenses and losses from prior years 851,565 1,513,441<br />
IV. EXTRAORDINARY PROFIT --- 884,574 3,458,069<br />
V. CON<strong>SOL</strong>IDATED PROFIT BEFORE TAXATION 7,738,464 19,279,517 24,059,797<br />
10. Corporation tax 752,314 3,611,561 4,321,366<br />
VI. CON<strong>SOL</strong>IDATED RESULT FOR THE YEAR (PROFIT) 6,986,150 15,667,956 19,738,432<br />
11. Result attributed to minority shareholders 70,375 1,024,201 992,642<br />
VII. RESULT FOR THE YEAR ATTRIBUTED TO<br />
PARENT <strong>COMP</strong>ANY (PROFIT) 6,915,775 14,643,755 18,745,790<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
78
CON<strong>SOL</strong>IDATED PROFIT AND LOSS ACCOUNT<br />
In thousands of Pesetas<br />
B. INCOME<br />
31/12/1998 31/12/1999 31/12/2<strong>00</strong>0<br />
1.Turnover net 11,207,266 104,565,401 140,965,519<br />
2. Other operating income 4,542,730 5,018,891 7,433,635<br />
I. OPERATING LOSSES - - -<br />
3. Income from share capital investments 62,578 572,395 180,219<br />
4. Other financial income 156,093 418,435 758,570<br />
5. Foreign currency gains 238,410 5,195,239 6,939,857<br />
II. FINANCIAL LOSSES --- 4,180,951 8,508,789<br />
6. Particip. in profits from companies consolidated<br />
by equity method 579,889 161,248 158,539<br />
III. LOSSES FROM ORDINARY ACTIVITIES - -<br />
7. Profit on disposal of fixed assets 7,637 251,5<strong>00</strong> 3,302,602<br />
9. Capital grants transferred to results for the year 5<strong>00</strong> 22,293 24,228<br />
10. Extraordinary income or profits 314,798 1,656,394 3,297,366<br />
11. Income or profit from previous years 230,062 119,288<br />
IV. EXTRAORDINARY LOSSES 174,482 - -<br />
V. CON<strong>SOL</strong>IDATED LOSSES BEFORE TAXATION - - -<br />
VI. CON<strong>SOL</strong>IDATED RESULT FOR THE YEAR (LOSSES - - -<br />
VII. RESULT FOR THE YEAR ATTRIBUTED TO<br />
PARENT <strong>COMP</strong>ANY (LOSSES) - - -<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
79
1 Group Activities<br />
The parent company, <strong>SOL</strong> <strong>MELIA</strong>, S.A., was formed in Madrid on June 24, 1986 with the name Investman, S.A. In<br />
February 1996 the Company modified its official name, becoming <strong>SOL</strong> <strong>MELIA</strong>, S.A., inscribed in the Mercantile Registry<br />
of the Balearic Islands, volume 1335 of the Companies Book, folio nº PM 22603, third inscription, with its registered<br />
address in Calle Gremio Toneleros, 24 of Palma de Mallorca.<br />
The activities of <strong>SOL</strong> <strong>MELIA</strong>, S.A and its subsidiaries (hereinafter “<strong>SOL</strong> <strong>MELIA</strong>” or the “Group”) basically consist of<br />
tourism in general and, specifically, in the management and operation of owned or rented hotels under management or<br />
franchise agreement. The activities also consist in the promotion of any type of business related to the tourist and hotel<br />
trade or related to leisure, recreation or amusement as well as in the participation in the creation, development and operation<br />
of new business, establishments or entities within the tourist and hotel trade and in any leisure, recreation or amusement<br />
activity. Some GROUP companies also carry out real estate activities, taking advantage of the synergies obtained<br />
from hotels development due to the great expansion process. These activities are carried out in Germany, Andorra,<br />
Argentina, Belgium, Brazil, Colombia, Costa Rica, Croatia, Cuba, Egypt, Spain, France, Greece, Guatemala, Indonesia,<br />
Italy, Malaysia, Morocco, Mexico, Panama, Peru, Portugal, Puerto Rico, United Kingdom, Dominican Republic, Thailand,<br />
Tunisia, Turkey, Uruguay, Venezuela and Vietnam.<br />
Public Offering of Acquisition of shares<br />
of Meliá Inversiones Americanas<br />
During July 2<strong>00</strong>0, Hoteles Mallorquines Agrupados, S.L., Hoteles Mallorquines Asociados, S.L., and Hoteles<br />
Mallorquines Consolidados, S.A. paid the related warrants. The corresponding price was 6.02 euros per share and the total<br />
amount of the transaction was Ptas. 4,845 million, which did not affect Sol Meliá, S.A.<br />
Integration of the Tryp Hotel Chain<br />
On December 1, 2<strong>00</strong>0, Sol Meliá S.A. formalised the acquisition of all the shares of the Tryp Hotel Chain, thereby concluding<br />
the agreement reached in August. With this acquisition 60 operating hotels are incorporated, with more than 9,7<strong>00</strong><br />
rooms, in addition to 15 establishments with signed agreements, thus strengthening Sol Meliá’s leadership in the Spanish<br />
hotel sector and extending its presence in Tunisia, Andorra, Cuba and Portugal.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
80
2 Consolidation Scope<br />
2.1 Subsidiaries<br />
The subsidiaries defined as the companies in which Sol Meliá, S.A. directly or indirectly holds more than 50% or a controlling<br />
position is exercised, are listed below:<br />
<strong>COMP</strong>ANY ADDRESS COUNTRY ACTIVITY DIR P. IND P. TOTAL HOLDER IND. PART<br />
AKUNTRA s. XXI S.L. Ronda de Sant Pere 17, Barcelona Spain Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% TRYP, S.A.<br />
APARTOTEL, S.A Orense 81 (Madrid) Spain Managing company 99.73% 99.73%<br />
AZAFATA, S.A. Autopista Aeropuerto S/N (Valencia) Spain Ownership and operating Azafata 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
BEAR SA de CV Paseo de la Reforma,1 (México) Mexico Owns and operates Mexico Reforma 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
BI<strong>SOL</strong> VALLARTA SA DE CV Paseo de la Marina Sur (Puerto Vallarta) Mexico Hotels ownership and operating 95.22% CALA FORMENTOR S.A. DE C.V.<br />
2.99% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
CADLO FRANCE, S.A. Rue de Caumartin 28 (Paris) France Managing company 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% <strong>SOL</strong> <strong>MELIA</strong> FRANCE<br />
CADSTAR FRANCE S.A. Rue Caumartin 28 (Paris) France Managing company 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% <strong>SOL</strong> <strong>MELIA</strong> FRANCE<br />
CALA FORMENTOR SA DE CV Boulevard Kukulkan (Cancún) Mexico Owns and operates Meliá Cancún 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
CARIBOTELS DE MEXICO S.A Playa Santa Pilar, Aptdo 9 (Cozumel) Mexico Owns and oper. Cozumel & Cabañas 17.98%<br />
5.93% OPERADORA ME<strong>SOL</strong> S.A.<br />
26.60% 50.51% <strong>MELIA</strong> INV. AMERICANAS N.V.<br />
CASINO PARADISUS S.A Playas de Bavaro (Higuey) Dom. Rep. Casino operating 50.<strong>00</strong>% 49.10% INVERSIONES AGARA S.A.<br />
CASINO TAMARINDOS, S.A Retama, 3 (Las Palmas) Spain Casino owner 99.50% 0.50% 1<strong>00</strong>.<strong>00</strong>% ME<strong>SOL</strong> MANAGEMENT S.L.<br />
COM.PROP.<strong>SOL</strong> Y NIEVE Plaza del Prado Llano (Sierra Nevada) Spain Owns and oper.Meliá Sol y Nieve 87.84% 87.84%<br />
<strong>COMP</strong>.TUNISIENNE GEST.HOT Cite Mahrajene-Imm Chiaaar, 1 (Tunis) Tunisia Managing company 0.10% 79.70% <strong>SOL</strong> MANINVEST B.V.<br />
10.<strong>00</strong>% M.I.H. S.A.<br />
0.10% MARKSERV B.V.<br />
10.<strong>00</strong>% <strong>SOL</strong> MELIÁ INVESTMENT N.V.<br />
0.10% 1<strong>00</strong>.<strong>00</strong>% ME<strong>SOL</strong> MANAGEMENT B.V.<br />
CONS.INMOB.ALCANO S.A Ctra. Málaga Km 437 (Granada) Spain Owner of Sol Inn Alcano 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
CONSORCIO EUROPEO, S.A. Darro 22, (Madrid) Spain Owner of Hotel Tryp Colon 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% TRYP, S.A.<br />
CONT.TUR. COZUMEL, S.A. Playa Santa Pilar, Aptdo 9 (Cozumel) Mexico Owner of Caribotels México 23.91% OPERADORA ME<strong>SOL</strong><br />
27.09% 51.<strong>00</strong>% <strong>MELIA</strong> INV. AMERICANAS N.V.<br />
CORBEIL HOT. PARIS COLOM. Rue Caumartin 28 (Paris) France Owns and oper. Hotels in France 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% CADSTAR FRANCE, S.A.<br />
CORP. HOT. HISP. MEX. Boulevard Kukulkan (Cancún) Mexico Owns and operates Turquesa 9.08% CALA FORMENTOR S.A. DE C.V.<br />
89.13% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
DARCUO S. XXI S.L. Ronda de Sant Pere 17, Barcelona Spain Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% TRYP, S.A.<br />
DES TURIST DEL CARIBE SA De Ruyterkade, 62 (Curaçao) Panama Marketing 98.21% 98.21% DES.TUR.DEL CARIBE N.V<br />
DES.HOT.SAN JUAN B.V Strawinskylaan, 307 (Amsterdam) Holland 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
DES.TUR.DEL CARIBE N.V De Ruyterkade, 62 (Curaçao) Neth. Antilles Holding 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
DESARROLLOS <strong>SOL</strong> S.A Lope de Vega, 4 (Santo Domingo) Dom. Rep. Holding 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
DOCK TELEMARKETING,S.A Orense 81 (Madrid) Spain Sales offices 95.09% 4.91% 1<strong>00</strong>.<strong>00</strong>% ME<strong>SOL</strong> MANAGEMENT S.L.<br />
DOMINICAN INVESTMENT NV The Ruyterkade, 62 (Curaçao) Neth. Antilles Holding 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
DOMINICAN MARKTING SERV De Ruyterkade, 62 (Curaçao) Neth. Antilles Marketing 98.21% 98.21% GESME<strong>SOL</strong>, S.A<br />
DORPAN, S.L Gremio Toneleros, 42 (Palma de Mallorca) Spain Trademarks owner 99.99% 0.01% 1<strong>00</strong>.<strong>00</strong>% ME<strong>SOL</strong> MANAGEMENT S.L.<br />
FARANDOLE B.V World Trade Center-Toer 17b (Amsterdam) Holland Holding 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
81
CON<strong>SOL</strong>IDATION SCOPE<br />
<strong>COMP</strong>ANY ADDRESS COUNTRY ACTIVITY DIR P. IND P. TOTAL HOLDER IND. PART<br />
GESME<strong>SOL</strong>, S.A Elvira Méndez, 10 (Panamá) Panama Managing company 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
GEST.HOT.TURISTICA ME<strong>SOL</strong> Gremio Toneleros, 42 (Palma de Mallorca) Spain Export to Cuba 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
GRUPO <strong>SOL</strong> ASIA LTD 1109/10 Admiralty Centre Tower Hong Kong Holding 60.<strong>00</strong>% 60.<strong>00</strong>%<br />
GRUPO <strong>SOL</strong> SERVICES 80, Raffles Place, 25-01 UOB Plaza Singapore Services 60.<strong>00</strong>% 60.<strong>00</strong>% GRUPO <strong>SOL</strong> ASIA LTD<br />
H MEL INTERN COLOMBIA SA Calle, 68 (Bogotá) Colombia Managing company 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% M.I.H. S.A.<br />
HOSTERIAS DE CASTILLA La Pesca, 5 (Salamanca) Spain Inactive 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
HOT.<strong>SOL</strong> INTERNACIONAL Edificio Banco do Brasil (Panamá) Panama Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
HOTEL ABBAYE THELEME S.A. Rue Ville de Saxe 9 (Paris) France Operating Hotel Saxe 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% CORBEIL HOT. PARIS COLOMBRES<br />
HOTEL ALEXANDER S.A. Avenue Víctor Hugo 102 (Paris) France Operating Hotel Alexander 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% LONDIM FRANCE S.A.<br />
HOTEL BELLVER S.A Av Ingeniero Gabriel Roca (Palma de Mca.)Spain Owner Hotel Bellver 66.95% 66.95%<br />
HOTEL BLANCHE FONTAINE S.A. Rue Fontaine 34 (Paris) France Oper. Colbert and Blanche Fontaine 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% CORBEIL HOT. PARIS COLOMBRES<br />
HOTEL BOULOGNE ADAGIO S.A. Rue des Abundances 22 (Paris) France Operates Hotel Adagio 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% LSO FRANCE INVESTMENTS S.A.<br />
HOT. CONVENTO DE EXTR. S.A. Plaza de San Juan 11-13 (Cáceres) Spain Owner of Extremadura Convent 51.32% 51.32%<br />
HOTEL FRANCOIS S.A. Boulevard MontMartre 3 (Paris) France Operating Hotel Francois 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% CADSTAR FRANCE, S.A.<br />
HOTEL MADELEINE PALACE Rue Cambon 8 (Paris) France Operating Madeleine Palace 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% CADLO FRANCE S.A.<br />
HOTEL METROPOLITAN S.A. Rue Cambon 8 (Paris) France Owns and oper. Madeleine Palace 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% CADLO FRANCE S.A.<br />
HOTEL ROYAL ALMA Rue Jan de Goujon 35 (Paris) France Operates hotel Royal Alma 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% CADSTAR FRANCE, S.A.<br />
HOTELES <strong>MELIA</strong>, S.L. Gremio Toneleros 24, (Palma de Mallorca) Spain Inactive 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
HOTELES <strong>SOL</strong> <strong>MELIA</strong>. S.L. Gremio Toneleros 24, (Palma de Mallorca) Spain Inactive 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
HOTELES <strong>SOL</strong> S.L. Gremio Toneleros 24, (Palma de Mallorca) Spain Inactive 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
HOTELES TURISTICOS S.A Orense 81 (Madrid) Sapin Owns and oper. Meliá Granada 94.48% 94.48%<br />
IHLA BELA GESTAO E TURISMO 31 de Janeiro 81 Founchal, Madeira Portugal Hotel management in Cuba 65.<strong>00</strong>% 65.<strong>00</strong>% TRYP, S.A.<br />
IMPULSE DEVELOPEMENT INCStrawinskylaan, 2<strong>00</strong>1 (Amsterdam) Holland Inactive 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% HOTELES TURISTICOS S.A<br />
IMPULSE HOT.DEVELOPEMENT Strawinskylaan, 2<strong>00</strong>1 (Amsterdam) Holland Inactive 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
INDUSTRIAS TURISTICAS Orense 81 (Madrid) Spain Owns and oper. Meliá Torremolinos 97.58% 97.58%<br />
INMOBILIARIA BULMES, S.A. Darro 22, (Madrid) Spain Owner of hotel Tryp Fénix 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% TRYP, S.A.<br />
INMOTEL INTERNACIONAL SA Edificio Banco do Brasil (Panamá) Panama Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
INMOTEL INV.ITALIA S.R.L Via Pietro Mascagni, 14 (Milano) Italy Owns and operates Meliá Milano 1.<strong>00</strong>% 99.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% MELIÁ EUR. HOLD. DE ENT. S.A.<br />
INV TURIST DEL CARIBE SA Lope de Vega, 4 (Santo Domingo) Dom. Rep. Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
INV. LATINOAMERICA 2<strong>00</strong>0 Gremio Toneleros, 24 (Palma de Mallorca) Spain Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
INV.EXPLOT.TURISTICAS Orense 81 (Madrid) Spain Hotels owner and operator 55.10% 55.10%<br />
INV.INMOB.IAR 1997 CA Avenida Casanova (Caracas) Venezuela Owns and oper. Caracas 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
INVERSIONES AGARA S.A Lope de Vega, 4 (Santo Domingo) Dom. Rep. Owns and operatesPunta Cana 98.21% 98.21% NEALE S.A.<br />
INVERSIONES CORO S.A Lope de Vega, 4 (Santo Domingo) Dom. Rep. Owns and operates Tropical 98.21% 98.21% DOMINICAN INVESTMENT N.V.<br />
INVERSIONES GUAMA S.A Lope de Vega, 4 (Santo Domingo) Dom. Rep. Owns and operates Caribe 98.21% 98.21% DESARROLLOS <strong>SOL</strong> S.A.<br />
INVERSIONES INVERMON Av. Venezuela, Edif.T. América (Caracas) Venezuela Inactive 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% M.I.H. S.A.<br />
INVERSIONES JACUEY, S.A. Lope de Vega, 4 (Santo Domingo) Dom. Rep. Owns and oper. Casino Palma Real 98.21% 98.21% INVERSIONES GUAMA S.A.<br />
IRTON <strong>COMP</strong>ANY N.V. The Ruyterkade, 62 (Curaçao) Neth. Antilles Marketing 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
LATIN AMERICA LOG.CORP 1<strong>00</strong>0, Brickell Av. suite 5<strong>00</strong> (Miami) U.S.A. Services 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
LAVANDERIAS <strong>COMP</strong>ARTIDAS Paseo Colorado, 26 (Torremolinos) Spain Laundry 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
LIRAX ltd Wickham's Cay road town (Tortola) Virgin Is. (U.K.)Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% <strong>SOL</strong> MANINVEST B.V.<br />
LOMONDO LTD Albany Street-Regents Park (Londres) U.K. Owns and operatesWhite House 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
LONDIM FRANCE S.A. Rue de Caumartin 28 (Paris) France Owns and operates Hotel Alexander 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% <strong>SOL</strong> <strong>MELIA</strong> FRANCE<br />
LSO FRANCE INVESTMENTS S.A.Rue Caumartin 28 (Paris) France Owns and operates Hotel Adagio 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% <strong>SOL</strong> <strong>MELIA</strong> FRANCE<br />
M.I.H., S.A Edificio Fiducidario (Panamá) Panama Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
M.I.H. U.K. LTD. Cent House-Upper Woburn Place (Lon) U.K. Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% M.I.H. S.A.<br />
MARINA INTERNAT. HOLDING Elvira Méndez, 10 (Panamá) Panama Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% M.I.H. S.A.<br />
MARKSERV B.V Parklaan, 81 (Amsterdam) Holland Management and Holding 51.<strong>00</strong>% 49.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% <strong>SOL</strong> MANINVEST B.V.<br />
MARK<strong>SOL</strong> TURIZM Calakli Manavgat (Antalya) Turkey Management 10.<strong>00</strong>% 90.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% MARKSERV B.V.<br />
MARKTUR TURIZM Daire 3, Gençlik Mahallesi (Antalya) Turkey Inactive 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
MARMER, S.A Lope de Vega, 4 (Santo Domingo) Dom. Rep. Owns and operates Bávaro 98.21% 98.21% DES.TURÍSTICOS DEL CARIBE S.A.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
82
CON<strong>SOL</strong>IDATION SCOPE<br />
<strong>COMP</strong>ANY ADDRESS COUNTRY ACTIVITY DIR P. IND P. TOTAL HOLDER IND. PART<br />
<strong>MELIA</strong> BRASIL ADMINISTRAC Avenida Cidade Jardim, 1030 (Sao Paulo) Brazil Hotels operations 20.<strong>00</strong>% LIRAX Ltd<br />
80.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% MARKSERV B.V.<br />
<strong>MELIA</strong> CATERING S.A. Gremiio Toneleros 24, Palma de Mallorca Spain Catering services 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
<strong>MELIA</strong> EUR.HOLD.ENTIDADESGremio Toneleros, 42 (Palma de Mallorca) Spain Holder of foreign securities 90.<strong>00</strong>% 10.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% HOTELES <strong>SOL</strong> INTNAL. S.A.<br />
<strong>MELIA</strong> INV.AMERICANAS N.V Strawinskylaan, 2<strong>00</strong>1 (Amsterdam) Holland Holding 80.78% 17.43% 98.21% <strong>SOL</strong> MELIÁ INVESTMENT N.V.<br />
<strong>MELIA</strong> MANAGEMENT, S.A Lope de Vega, 4 (Santo Domingo) Dom. Rep. Management 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% INV TURIST DEL CARIBE SA<br />
MEL<strong>SOL</strong> MANAGEMENT B.V Strawinskylaan, 307 (Amsterdam) Holland Management 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
MEL<strong>SOL</strong> PORTUGAL Avenida do Brasil, 43-8 (Lisboa) Portugal Management 80.<strong>00</strong>% 80.<strong>00</strong>%<br />
ME<strong>SOL</strong> MANAGEMENT, S.L Avda. Colón, 22 (Puerto de la Cruz) Spain Holding 95.<strong>00</strong>% 5.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% DORPAN S.L.<br />
MOT.GR.RUTAS ESPAÑOLAS Orense 81 (Madrid) Spain Owns and operates Hidalgo 74.54% 74.54%<br />
MOTELES ANDALUCES S.A Orense 81 (Madrid) Spain Owns and operates Caballo Blanco 74.42% 74.42%<br />
NEALE S.A Edificio Arango Orillac (Panamá) Panama Marketing 98.21% 98.21% HOTELES TURISTICOS S.A<br />
OP.PASEO DE LA REFORMA Paseo de la Reforma,119 (México) Mexico Land owner 98.21% 98.21% FARANDOLE B.V.<br />
OPERADORA COSTARI<strong>SOL</strong> Avenida Central, 8 (San José) Costa Rica Management 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% M.I.H. S.A.<br />
OPERADORA ME<strong>SOL</strong> SA DE CVBosque de Duraznos 69-b, (México D.F.) Mexico Management 90.<strong>00</strong>% 10.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% MARKSERV B.V.<br />
PARKING INTERNACIONAL, S.A.Darro 22, (Madrid) Spain Owner of parking hotel Fénix 99.<strong>00</strong>% 99.<strong>00</strong>% TRYP, S.A.<br />
PARQUE SAN ANTONIO S.A Rey 1, (Puerto de la Cruz) Spain Owns and oper. Parque San Antonio 72.33% 72.33%<br />
PLAYA SALINAS S.A Avenida Marítima, 1 (Santiago del Teide) Spain Land owner 49.<strong>00</strong>%<br />
47.81% INDUSTRIAS TURISTICAS<br />
1.89% 98.70% HOTELES TURISTICOS, S.A.<br />
PROP. EN ARRIENDO, S.L Gremio Toneleros, 42 (Palma de Mallorca) Spain Inactive 40.<strong>00</strong>% 60.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% CASINO TAMARINDOS S.A.<br />
PUNTA ELENA S.L San José, 33 (Tenerife) Spain Owns and operates Punta Elena 50.<strong>00</strong>% 50.<strong>00</strong>%<br />
RANDLESTOP CORP.N.V De Ruyterkade, 62 (Curaçao) Neth. Antilles Holding 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
REALTUR S.A Orense 81 (Madrid) Spain Owner of Meliá Madrid 96.49% 96.49%<br />
SAN JUAN INVESTMENT B.V Strawinskylaan, 307 (Amsterdam) Holland Holding 98.21% 98.21% MELIÁ INV. AMERICANAS N.V.<br />
SECADE s. XXI S.L. Ronda de Sant Pere 17, Barcelona Spain Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% TRYP, S.A.<br />
SECURI<strong>SOL</strong> S.A Gremio Toneleros, 42 (Palma de Mallorca) Spain Security 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
SILVERBAY, S.L. Rafael Salgado 7-5a Izq. (Madrid) Spain Owner of land in Cadiz 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
<strong>SOL</strong> FINANCE N.V De Ruyterkade, 62 (Curaçao) Neth. Antilles Inactive 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% HOTELES <strong>SOL</strong> INTNAL. S.A.<br />
<strong>SOL</strong> GROUP B.V Parklaan, 81 (Amsterdam) Holland Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
<strong>SOL</strong> GROUP CORPORATION 21<strong>00</strong>, Coral Way, suite 402 (Miami) U.S.A. Services 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% <strong>SOL</strong> GROUP B.V<br />
<strong>SOL</strong> HOTEL U.K. LTD Cent House-Upper Woburn Place (Lon) U.K. Sales office 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
<strong>SOL</strong> MANINVEST B.V Parklaan, 81 (Amsterdam) Holland Management and Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
<strong>SOL</strong> <strong>MELIA</strong> BENELUX B.V. Rue Blanche 4 (Bruselas) Belgium Owns and oper. Avenue Luis 99.99% 99.99%<br />
<strong>SOL</strong> <strong>MELIA</strong> CROACIA Vladimira Nazora, 6 (Rovijn) Croatia Management 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% <strong>SOL</strong> MANINVEST B.V.<br />
<strong>SOL</strong> <strong>MELIA</strong> EUROPE B.V Strawinskylaan, 307 (Amsterdam) Holland Issuer of convertible bonds 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
<strong>SOL</strong> <strong>MELIA</strong> FRANCE Rue Caumartin 28 (Paris) France Management of French companies 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
<strong>SOL</strong> <strong>MELIA</strong> GUATEMALA S.A Primera Avenida, 8-24 (Guatemala) Guatemala Management 99.95% M.I.H. S.A.<br />
0.05% 1<strong>00</strong>.<strong>00</strong>% MARKSERV B.V.<br />
<strong>SOL</strong> <strong>MELIA</strong> INVESMENT, N.V Strawinskylaan, 2<strong>00</strong>1 (Amsterdam) Holland Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>% INV. LATINOÁMERICA 2<strong>00</strong>0 S.L.<br />
<strong>SOL</strong> <strong>MELIA</strong> PERU, S.A. Av. Salaberri 2599, San Isidro, Lima Peru Management Meliá Lima 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
<strong>SOL</strong> <strong>MELIA</strong> SERVICE S.A Rue de Chantemerle (Friburgo) Switzerland Services 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
TALON. CINCO NOCHES, S.L Gremio Toneleros, 42 (Palma de Mallorca) Spain Travel agency 99.94% 0.06% 1<strong>00</strong>.<strong>00</strong>% DORPAN S.L.<br />
TENERIFE <strong>SOL</strong> S.A Gremio Toneleros, 42 (Palma de Mallorca) Spain Hotels ownership and management 50.<strong>00</strong>% 50.<strong>00</strong>%<br />
TORRE<strong>SOL</strong> DES.TURISTICOS Gremio Toneleros, 42 (Palma de Mallorca) Spain Land owner 80.<strong>00</strong>% 80.<strong>00</strong>%<br />
TRIBENOL S.L. Alameda de Mazarredo 5 Bilbao-Viscaya Spain Holding 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
TRYP MEDITERRANEÉ Hammamet Yasmine 8050,Tunez Tunisia Management of hotels in Tunisia 85.40% 85.40% TRYP, S.A.<br />
TRYP S.A. Mauricio Legendre 16, Madrid Spain Management of hotels in Spain 67.58% 32.42% 1<strong>00</strong>.<strong>00</strong>% TRIBENOL, S.L.<br />
URME REAL S.L Orense 81 (Madrid) Spain Parking Meliá Madrid 92.80% 92.80% REALTUR S.A.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
83
CON<strong>SOL</strong>IDATION SCOPE<br />
The consolidation of these companies has been prepared according to the full consolidation method.<br />
The sole and exclusive authorised activities of Meliá Brasil Administraçao are those which relate to the management of<br />
hotels. In spite of this fact, since the hotels are under joint ownership and are not legally authorised to carry out operating<br />
activities, in view of the local requirements, Meliá Brasil Administraçao had to assume the operating of the hotels in Brazil<br />
on behalf of the joint owners. For this reason, the Company includes only the remuneration from the operation of the<br />
hotels received by the Group and does not include related income and expenses in the consolidated profit and loss account.<br />
Meliá Inversiones Americanas is quoted on the Madrid Stock Exchange.<br />
2.2 Associated companies<br />
The companies associated with the Group, defined as those in which the direct or indirect participation ranges between<br />
20% and 50%, or with a lower participation but with a significant influence over management, are listed below:<br />
<strong>COMP</strong>ANY ADDRESS COUNTRYACTIVITY DIR P. IND P. TOTAL HOLDER IND. PART.<br />
AGOTEL GMBH Josef Haumann Strasse 1 (Bochum) Germany Hotels operating 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
APARTHOTEL BOSQUE, S.A Gremio Toneleros 42 (Palma de Mallorca) Spain Owns and oper. H. Sol Bosque 25.<strong>00</strong>% 25.<strong>00</strong>%<br />
C.P.COSTA DEL <strong>SOL</strong> Paseo Marítimo 11 (Torremolinos) Spain Community property owners 0.33% 18.69% 19.02% APARTOTEL S.A.<br />
COM.PROP.<strong>MELIA</strong> CASTILLA Capitán Haya 43 (Madrid) Spain Community property owners 28.80% 28.80%<br />
HELLENIC HOTEL MANAGEMENT Panepistimiou 40 (Atenas) Greece Managing company 40.<strong>00</strong>% 40.<strong>00</strong>%<br />
HOTEL CAMPUS, S.L. Villa Universitaria, Bellaterra C. (Barcelona) Spain Owns and oper. H. Meliá Campus 40.<strong>00</strong>% 40.<strong>00</strong>%<br />
INV.TUR.CASAS BELLAS S.A Barrio de Chamberí s/n (Sta. Cruz Tenerife) Spain Land owner 23.75% 23.75%<br />
<strong>MELIA</strong> MERIDA S.L Moreno de Vargas, 2 (Mérida) Spain Owner Hotel Meliá Mérida 44.14% 44.14%<br />
NEXPROM S.A Avda. del Lido s/n (Torremolinos) Spain Owns and oper. D. Pedro & D. Pablo 14.39% 5.67% 20.06% PROMEDRO<br />
PROMEDRO S.A Avda. del Lido s/n (Torremolinos) Spain Holding 20.<strong>00</strong>% 20.<strong>00</strong>%<br />
SOFIA HOTELES S.L. Mariano de los Cobos 1 (Valladolid) Spain Hotels management in Spain 49.01% 49.01% TRYP S.A.<br />
<strong>SOL</strong> HOTI PORTUGAL HOTELS Avda. da Republica 85 1º Esq. (Lisboa) Portugal Hotels management 45.<strong>00</strong>% 45.<strong>00</strong>%<br />
<strong>SOL</strong> <strong>MELIA</strong> TRAVEL S.A. Gremio Toneleros 42, (Palma de Mallorca) Spain Travel agency 1<strong>00</strong>.<strong>00</strong>% 1<strong>00</strong>.<strong>00</strong>%<br />
VIVA TOURS S.A. Trespanede 29 (Madrid) Spain Touroperator 21.98% 21.98%<br />
Sol Meliá Travel, S.A, has initiated its activity during the year as a travel agency and is presently involved in the development<br />
of tools for sale by Internet. The Company has decided to consolidate this company by the equity method to avoid<br />
distorting the information in the profit and loss account, which is not homogeneous with the other Group companies.<br />
During the current year the share in Agotel GMBH. increased up to 1<strong>00</strong>%. Nevertheless, pending the definitive control of<br />
the company’s management, the financial statements of this company have been consolidated by equity method.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
84
CON<strong>SOL</strong>IDATION SCOPE<br />
2.3 Companies excluded from the consolidation scope<br />
There is a group of companies which, although they do meet the aforementioned requirements, are not included in the Group’s<br />
consolidation scope. These companies are listed below:<br />
<strong>COMP</strong>ANY ADDRESS COUNTRY ACTIVITY DIR P. IND P. TOTAL HOLDER IND. PART.<br />
CARIBOOKING & RESERVAT, N.V. De Ruyterkade 62 Curaçao, Antilles Neth.Antilles Inactive 98,21% 98,21% DES.TUR. DEL CARIBE N.V.<br />
CARIBOOKING & RESERVAT, N.V. Guernsey Inactive 98,21% 98,21% DES.TUR. DEL CARIBE N.V.<br />
CORP. HOTELERA METOR Faustino Sánchez Carrión s/n (Lima) Peru Hotels ownership and operations 40,03% MARINA INTERNATIONAL H.<br />
19,61% 59,64% <strong>MELIA</strong> INV AMERICANAS<br />
DES. HOTELERA DEL NORTE, S. EN C.S.E. C.3 S. Coco Beach 955-I (Río Gde) Puerto Rico Hotels ownership and operations 47,50% SAN JUAN INVESTMENT B.V.<br />
47,50% 95,<strong>00</strong>% DES. HOTELEROS SAN JUAN B.V.<br />
DETUR PANAMA, S.A. Residencial Espinar, Colon Aptdo 2268 Panama Concessionaire Panama Canal 31,79% 20,<strong>00</strong>% 51,79% MELIÁ INT HOTELS S.A.<br />
GUPE INMOBILIARIA Estrada da Luz, 90 6ºF, (Lisboa) Portugal Hotels management 99,99% 99,99% TRYP, S.A.<br />
HOTEL LAS AMERICAS, S.A Las Américas 9 (Ciudad de Guatemala) Guatemala Hotels ownership 20,<strong>00</strong>% 20,<strong>00</strong>% MARINA INTERNATIONAL H.<br />
HOTEL NET B2B.COM, S.L. Gremio Tejedores 5 (Palma de Mallorca) Spain Portal de Internet wholesaler 24,50% 24,50%<br />
M.I.H. EUROPE & M. Cavendish Square, 6 (London) U.K. Inactive 1<strong>00</strong>,<strong>00</strong>% 1<strong>00</strong>,<strong>00</strong>% MELIÁ INT. HOTELS S.A.<br />
MOGAN PROMOC. S.A. de C.V. (Cancún) Mexico Land owner 33,33% 33,33% MARKSERV B.V.<br />
PROM. PYA. BLANCA S.A. de C.V. Pza. San Ángel,15 (Cancún) Mexico Land owner 33,33% 33,33% MARKSERV B.V.<br />
PUNTA CANA RESERVAT., N.V. De Ruyterkade 62 Curaçao, Antillas Neth.Antilles Marketing 98,21% 98,21% RANDELSTOP CORP. N.V.<br />
<strong>SOL</strong> <strong>MELIA</strong> SUISSE, S.A. Rue de Messe 8-10 (Geneva) Switzerland Holding 1<strong>00</strong>,<strong>00</strong>% 1<strong>00</strong>,<strong>00</strong>%<br />
The Company intends to sell the share in Detur Panamá, S.A., and for this reason the short-term portfolio balance was<br />
reclassified and is not included in this year’s consolidation. Likewise, no provision for decline in value is included since the<br />
Company does not expect that any loss will arise from the transaction.<br />
Corporación Hotelera Metor has initiated the operation of a hotel in Lima during the current year. On the closing date of<br />
the accompanying annual accounts the Company has no standardized balance sheet and profit and loss account available<br />
to include this transaction in the consolidation. The value of the participation is stated at cost (See Note 12.2.)<br />
At the year-end closing the Group has no accounting information available for Hotel Las Américas, S.A., and therefore<br />
the latter is not included in the consolidated annual accounts, despite the fact that it holds 20% share of this company. Its<br />
portoflio is duly provided for.<br />
Desarrolladora Hotelera del Norte, S. en C.S.E., was formed in view of the construction of a hotel complex in Puerto Rico.<br />
The company’s balance sheet includes assets amounting to 9.5 million dollars and current assets of 1<strong>00</strong>.3 million dollars,<br />
resulting from the capital contribution of 39 million dollars and from a loan received to start the hotel development of 70.8<br />
million dollars. The company is not included in the consolidation since activities have not yet begun.<br />
The other companies excluded from the consolidation are either dormant or are being integrated into the Group at<br />
December 31, 2<strong>00</strong>0.<br />
The exclusion of these companies from the consolidation scope has no significant effect on the net equity, financial position<br />
and results of the consolidated companies, their shares being valued at cost in the accounting records.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
85
CON<strong>SOL</strong>IDATION SCOPE<br />
2.4 Changes in the consolidation scope<br />
Shares of Meliá Inversiones Americanas were acquired during 2<strong>00</strong>0, so that the participation in the latter at year-end is of<br />
98.21%. This participation increase is also reflected in the increase in the participation in its subsidiaries.<br />
At the end of 1999 the Sol Meliá Group in France acquired companies that own (A) eight hotels. These companies were<br />
not included in the consolidation scope of the 1999 annual accounts and the investment was recorded at cost. In 2<strong>00</strong>0,<br />
after integrating their management, these companies are consolidated under the full consolidation method in the Group’s<br />
financial information.<br />
Shares of Controladora Turística Cozumel, S.A. de C.V. were acquired and in 2<strong>00</strong>0 a participation of 50.51% is held in this<br />
company which, in turn, is the owner of 1<strong>00</strong>% of Caribotels S.A. de C.V., which owns and operates the hotels Paradisus<br />
Cozumel and Sol Cabañas del Caribe.<br />
As explained in Note 1, the companies (B) forming the Tryp S.A. Hotel Chain were acquired and therefore their financial<br />
information is included under the full consolidation method. The participation in Sofía Hoteles S.L., manager of the hotel<br />
Sofía Parquesol, was included by the equity method.<br />
The Group has increased its participation from 8.7% up to 97.23% in Azafata S.A., which owns and operates the hotel<br />
Meliá Confort Azafata, and was consolidated in the current year by the equity method.<br />
In May the Group acquired 40% of Hotel Campus S.L., which owns and operates the hotel Meliá Campus. Therefore it<br />
will be consolidated by the equity method.<br />
Meliá Catering S.A., with a 1<strong>00</strong>% participation of Sol Meliá, was formed to render catering services in view of the company’s<br />
experience in the restaurant trade.<br />
Sol Meliá has also acquired Sol Meliá Benelux, S.A., which owns and operates the Meliá Avenue Louise Boutique, a hotel<br />
in Belgium. The participation is 1<strong>00</strong>% and its financial information is consolidated under the full consolidation method.<br />
The changes that took place in the consolidation scope in 2<strong>00</strong>0 are indicated below:<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
86
CON<strong>SOL</strong>IDATION SCOPE<br />
ADDITIONS INCREASE OF PARTICIPATION % DISPOSALS<br />
(B) AKUNTRA s. XXI S.L. AGOTEL GMBH LAVADORAS INDUSTRIALES DE<br />
GUADALAJARA (*)<br />
AZAFATA S.A. BI<strong>SOL</strong> VALLARTA S.A. SAFIVIC, S.A. (*)<br />
(A) CADLO FRANCE S.A. CALA FORMENTOR S.A. SERVICIOS CORPORATIVOS ME<strong>SOL</strong> (**)<br />
(A) CADSTAR FRANCE S.A. CASINO PARADISUS S.A. <strong>SOL</strong> HOLDING CORPORATION (***)<br />
CARIBOTELS DE MEXICO S.A COM PROP <strong>MELIA</strong> CASTILLA <strong>SOL</strong> HOTEL MANAG <strong>COMP</strong>ANY (***)<br />
(B) CONSORCIO EUROPEO, S.A. COM PROP <strong>MELIA</strong> <strong>SOL</strong> Y NIEVE <strong>SOL</strong> HOTEL MIAMI BEACH (***)<br />
CONTROLADORA TURISTICA COZUMEL CORP HOT HISPANO MEXICANA<br />
(A) CORBEIL H.P. COLOMBRES<br />
DES HOT SAN JUAN B.V.<br />
(B) DARCUO s. XXI S.L.<br />
DES TUR DEL CARIBE N.V.<br />
(A) HOTEL ABBAYE THELEME S.A.<br />
DES TURISTICOS DEL CARIBE<br />
(A) HOTEL ALEXANDER S.A.<br />
DESARROLLOS <strong>SOL</strong><br />
(A) HOTEL BLANCHE FONTAINE S.A.<br />
DOMINICAN INVESTMENT<br />
(A) HOTEL BOULOGNE ADAGIO S.A.<br />
DOMINICAN MARKETING SERV<br />
HOTEL CAMPUS S.L.<br />
FARANDOLE B.V.<br />
(A) HOTEL FRANCOIS S.A.<br />
HOTELES TURISTICOS S.A.<br />
(A) HOTEL MADELEIN PALACE INV INMOBILIARIAS IAR 1997<br />
(A) HOTEL METROPOLITAIN<br />
INV TURISTICAS CASAS BELLAS<br />
(A) HOTEL ROYAL ALMA<br />
INVERSIONES AGARA S.A.<br />
HOTELES <strong>MELIA</strong> S.L.<br />
INVERSIONES CORO S.A.<br />
HOTELES <strong>SOL</strong> <strong>MELIA</strong> S.L.<br />
INVERSIONES GUAMA<br />
HOTELES <strong>SOL</strong> S.L.<br />
IRTON <strong>COMP</strong>ANY N.V.<br />
(B) IHLA BELA GESTAO E TURISMO<br />
LATINAMERICAN LOGISTIC<br />
(B) INMOBILIARIA BULMES, S.A.<br />
MARMER S.A.<br />
INVERSIONES JACUEY<br />
<strong>MELIA</strong> INVERSIONES AMERICANAS<br />
(A) LONDIM FRANCE<br />
MOT GRANDES RUTAS ESPAÑOLAS<br />
(A) LSO FRANCE INVESTMENTS S.A.<br />
NEALE, S.A.<br />
<strong>MELIA</strong> CATERING<br />
NEXPROM S.A.<br />
(B) PARKING INTERNACIONAL, S.A.<br />
OP. PASEO DE LA REFORMA S.A.<br />
PROPIDADES EN ARRIENDO, S.L.<br />
PLAYA SALINAS<br />
(B) SECADE s. XXI S.L.<br />
RANDLESTOP CORP. N.V.<br />
SILVERBAY S.L.<br />
SAN JUAN INVESTMENT<br />
(B) SOFIA HOTELES S.L.<br />
URME REAL S.R.<br />
<strong>SOL</strong> <strong>MELIA</strong> BENELUX B.V.<br />
(A) <strong>SOL</strong> <strong>MELIA</strong> FRANCE<br />
<strong>SOL</strong> <strong>MELIA</strong> PERU<br />
<strong>SOL</strong> <strong>MELIA</strong> TRAVEL S.A.<br />
(B) TRIBENOL S.L.<br />
(B) TRYP MEDITERRANEE<br />
(B) TRYP S.A.<br />
(A)<br />
(B)<br />
Companies of the Sol Meliá Group in France<br />
Companies of the Tryp Hotel Chain<br />
(*) Sold companies<br />
(**) Merger with operadora mesol<br />
(***) Dissolved companies<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
87
3 Basis of Presentation of the<br />
Consolidated Annual Accounts<br />
The accompanying consolidated annual accounts consist of the consolidated balance sheet and profit and loss account for the<br />
years 2<strong>00</strong>0 and 1999 and of the consolidated Notes thereto for the year 2<strong>00</strong>0. In addition, the consolidated balance sheet and<br />
profit and loss account, together with the breakdown of some balance sheet and profit and loss data as well as other consolidated<br />
information relating to the year 1998, are also included.<br />
3.1 True and fair view<br />
The consolidated balance sheet and profit and loss account have been prepared from the internal accounting records of the<br />
parent company, Sol Meliá, S.A. and from the accounting records of the other companies included in the consolidation as detailed<br />
above. The figures of the consolidated balance sheet, consolidated profit and loss account and of the Notes to the accounts<br />
are expressed in thousands of pesetas, unless otherwise indicated.<br />
3.2 Comparison of information<br />
The consolidated annual accounts at December 31, 2<strong>00</strong>0 are presented following the structure established in the Spanish<br />
General Chart of Accounts, and also reflect the comparative figures of the two preceding year.<br />
In relation to the consolidation scope, the main changes, which took place in 2<strong>00</strong>0 with respect to the preceding year, are explained in Note 2.<br />
During 1999, Sol Meliá, S.A. has concluded the Public Offering of Acquisition of Shares of MIA and the merger with Inmotel<br />
Inversiones, S.A. and includes in the 2<strong>00</strong>0 balance sheet and profit and loss account the financial statements of the hotels acquired<br />
in France as well as the incorporation of the Tryp Hotel Chain. Given the circumstances indicated above, the balance sheet<br />
and profit and loss account figures for 2<strong>00</strong>0, 1999 and 1998 are not comparable.<br />
3.3 Consolidation principles<br />
The consolidation has been prepared according to the full consolidation method for the subsidiaries in which <strong>SOL</strong> <strong>MELIA</strong>,<br />
S.A. holds directly or indirectly more than 50% of the shareholding or exercises a control position. Minority interests in the net<br />
equity and results of the consolidated companies are presented under a separate heading in the consolidated balance sheet liabilities<br />
and in the consolidated profit and loss account, respectively.<br />
The companies with no direct or indirect majority holding by <strong>SOL</strong> <strong>MELIA</strong>, S.A. (between 20 and 50%), and those with a lower<br />
participation but in which the Company has significant influence, are presented in the consolidated balance sheet under the<br />
heading of Investments, “Participations consolidated by the equity method” for the book value of the participation. The participation<br />
of these companies in the consolidated results for the year is reflected in the accompanying consolidated profit and loss<br />
account as “Participation in profits of Companies consolidated by the equity method”.<br />
The Group’s “significant influence” relates to participations exceeding 3% in companies that are quoted on the Stock Exchange or where<br />
a significant influence exists with respect to the company’s management in case of companies that are not quoted on the Stock Exchange.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
88
4 Appropriation of Results<br />
The Board of Directors of each company will propose the appropriation of results to the General Shareholders Meeting.<br />
The parent company, Sol Meliá, S.A., will propose that results be appropriated as follows:<br />
BASIS OF APPROPRIATION<br />
Profit and Loss (Net profit for 2<strong>00</strong>0) 7,996,917<br />
APPROPRIATION<br />
To legal reserve 87.999<br />
To reserves for investments in the Canary Islands 3,265,636<br />
To voluntary reserves 233,478<br />
To dividends 4,409,804<br />
At the General Shareholders’ Meeting, the Board of Directors will propose the distribution of a dividend of Ptas. 23’8660 per<br />
share, excluding own shares, for which a dividend of Ptas. 24’<strong>00</strong> per share will be paid.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
89
5 Accounting Principles<br />
The most significant accounting principles applied in the preparation of the 2<strong>00</strong>0 consolidated annual accounts are as follows:<br />
5.1 Goodwill and negative differences on consolidation<br />
The valuation differences between the investment and the equity, whenever these could not be attributed to specific assets<br />
or liabilities at purchase time are reflected, when first consolidated, under two possible headings:<br />
• Goodwill on consolidation<br />
The differences between the acquisition price of subsidiaries or associated companies (Note 2) and their net book value,<br />
whenever these are not attributable as a higher value of specific fixed assets of the acquired companies, are recorded as<br />
goodwill, which is amortised on a straight-line basis over a 10 year period for those existing at December 31, 1998 and<br />
over 20 years for the differences arising after that date. The reason for amortising over more than 10 years is due to<br />
the fact that this is considered as the period during which the investment will contribute to generate profits for the<br />
Group (See Note 6).<br />
The surplus assigned to specific assets is amortized, when applicable, based on the actual depreciation.<br />
• Negative consolidation differences<br />
The negative consolidation difference is calculated by taking into account the difference between the book value of<br />
the participation, direct or indirect, of the parent company in the subsidiary’s share capital and the value of the proportional<br />
part of the subsidiary’s equity attributable to such participation on the first consolidation date (See Note<br />
7). Negative consolidation differences are recorded under liabilities in the consolidated balance sheet.<br />
5.2 Minority shareholders and results<br />
• Minority shareholders:<br />
This heading in the balance sheet liabilities includes the proportional part of the shareholders’ equity on the first consolidation<br />
date that corresponds to third parties not belonging to the Group (See Note 19).<br />
• Results attributed to minority shareholders<br />
This is the participation in the consolidated profit or losses for the year that corresponds to minority shareholders (See<br />
Note 19).<br />
5.3 Transactions between consolidated companies<br />
Results arising from internal operations within the consolidated group are eliminated, whenever the amount is significant,<br />
and deferred until they are realised with third parties outside the Group.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
90
ACCOUNTING PRINCIPLES<br />
Credits and debits between the companies included in the consolidation as well as internal income and expenses have been<br />
eliminated in the consolidated annual accounts.<br />
5.4 Uniformity<br />
It has not been necessary to adjust the individual accounts of the Group’s companies to unify them since, in general, the same<br />
uniform internal norms exist and are applied.<br />
The annual accounts year-end closing date for all the consolidated companies is December 31, 2<strong>00</strong>0.<br />
5.5 Conversion of annual accounts of foreign companies<br />
All assets, rights and obligations of the foreign companies included in the consolidation are converted into pesetas by applying<br />
the exchange rate prevailing on December 31, 2<strong>00</strong>0.<br />
The items of the profit and loss account have been converted by applying an appropriate weighted average exchange rate<br />
in view of the volume of the transactions during each period.<br />
The difference between the amount of the foreign companies’ equity, including the balance of the profit and loss account<br />
calculated according to the preceding paragraph, converted at the historical exchange rate, and the net worth resulting from<br />
the conversion of the assets, rights and obligations according to the first paragraph, are recorded as gains or losses, whenever<br />
applicable, in the shareholders’ equity of the consolidated balance sheet under the heading “Foreign currency<br />
gains/(Losses)”, after deducting the part of such difference that corresponds to the minority shareholders recorded in<br />
“Minority shareholders” on the liabilities side of the consolidated balance sheet (See Notes 18.5 and 18.6).<br />
5.6 Start-up expenses<br />
The start-up expenses of the different companies included in the consolidation are valued at cost, net of the corresponding<br />
amortisation which is calculated using the straight-line method over 5 years (See Note 9).<br />
5.7 Intangible fixed assets<br />
Intangible fixed assets relate to sundry software applications and rights derived from financial leasing contracts.<br />
Software applications are valued at cost and are amortised on the straight-line method over a five-year period.<br />
Acquisition goodwill is amortised on the straight-line method over 5 to 20 years.<br />
The cost of the assets acquired by financial leasing contracts does not include financing charges but it does include the value<br />
of the legal revaluation according to Royal Decree Law 7/1996, of June 7th (See Note 11 and 18) and is accounted for in<br />
accordance with the prevailing Spanish General Chart of Accounts.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
91
ACCOUNTING PRINCIPLES<br />
The amount of the fixed assets revaluation was established by applying, to the purchase or production cost and to the<br />
corresponding annual amortisation charges considered as deductible expenses for fiscal purposes, coefficients in view of the<br />
purchase year of the items and the figures thereby obtained were reduced by 40% to take into account the financing conditions,<br />
in compliance with such rulings.<br />
The annual amortisation/depreciation charge is calculated on the straight-line method over the estimated useful lives of the<br />
different assets, which are as follows:<br />
Buildings<br />
Installations<br />
Machinery<br />
Furniture<br />
Software<br />
Vehicles<br />
30-50 years<br />
8-18 years<br />
8-18 years<br />
10-15 years<br />
5-8 years<br />
6-10 years<br />
5.8 Tangible fixed assets<br />
Tangible fixed assets are stated at acquisition price which includes any additional expenses incurred until the item is put to<br />
use, and increased by the legal revaluations commented on in Note (11). No financing cost is included. In 1996 tangible<br />
fixed assets were revalued in accordance with Royal Decree Law 7/1996 of June 7th, (See Notes 11 and 18).<br />
The amount of the fixed assets revaluation was established by applying, to the purchase or production cost and to the<br />
corresponding annual depreciation charges considered as deductible expenses for fiscal purposes, coefficients in view of the<br />
purchase year of the items and the figures thereby obtained were reduced by 40% to take into account the financing conditions<br />
in compliance with such rulings.<br />
Repairs which do not represent an extension of the useful life and maintenance expenses are charged directly to the profit<br />
and loss account. Costs which prolong or improve the useful life of the asset are capitalised as an increase in their value.<br />
The Group’s tangible fixed assets are depreciated using the straight-line method over the estimated useful life of the assets<br />
which are as follows:<br />
Buildings<br />
Installations<br />
Machinery<br />
Furniture<br />
Software<br />
Vehicles<br />
Other fixed assets<br />
30-50 years<br />
8-18 years<br />
8-18 years<br />
10-15 years<br />
5-8 years<br />
6-10 years<br />
4-8 years<br />
The net book value of tools and fittings corresponds to the value as per stocktakings carried out in the different centres at year end.<br />
The revaluations and capital gains attributable to tangible fixed asset items are depreciated following the same criteria applied<br />
to the revalued and/or affected items.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
92
ACCOUNTING PRINCIPLES<br />
5.9 Investments<br />
The investments in associated companies have been recorded according to the equity method based on the net book value<br />
which is adjusted, when applicable, by the specific valuation made of their assets and liabilities (See Note 8). Results for<br />
the year obtained by these companies are reflected in the consolidated profit and loss accounts as “Participation in profit<br />
(losses) of companies consolidated by the equity method” (See Note 25).<br />
Unquoted securities are valued at cost of acquisition less the corresponding amortisation when applicable.<br />
Securities, both of fixed and variable interest, included under the Investments and Short-term investments headings are<br />
valued at their acquisition price upon subscription or purchase and include the expenses inherent to each operation.<br />
Non-trade credits are recorded for the amount paid and corrected at year-end, whenever applicable, by the corresponding<br />
provision to cover risks involved due to possible insolvencies. At year-end, provisions are applied to the appropriate concept.<br />
5.10 Deferred expenses<br />
Expenses for fomalisation of debts are valued at cost.<br />
Expenses for deferred interest relate to the difference between the repayment value and the nominal value of the relevant debts.<br />
These expenses are written down over the period of maturity of the corresponding debts and according to a financing plan.<br />
5.11 Non-trade loans<br />
Both short and long-term non-trade loans are shown at repayment value on the assets side of the consolidated balance sheet.<br />
5.12 Inventories (Trade inventories, raw materials and other supplies)<br />
Raw and ancillary materials are valued at their average acquisition cost which is, generally, lower than the realisable value.<br />
The acquisition price includes the amount invoiced plus all additional expenses incurred until the goods are stored in the<br />
warehouse. In the case of real estate inventories, the accounting values include tacit capital gains recorded for consolidation<br />
purposes only (See Note 14).<br />
5.13 Clients<br />
Clients’ balances are reflected in the balance sheet at real value and corrected, whenever applicable, by the corresponding<br />
provision to cover risks involved due to possible insolvencies. Such provisions are applied when the debt is considered as<br />
irrecoverable.<br />
The Group has ceded accounts receivable (factoring) for a total mount of Ptas.5,705 million to the company Compas Sigma.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
93
ACCOUNTING PRINCIPLES<br />
5.14 Capital grants<br />
Capital grants are not repayable and are recorded for the amount received at the time of the grant as deferred income, which<br />
is released to results using the straight-line method over the useful life of the assets thereby financed (See Note 20).<br />
5.15 Provisions for pensions and similar obligations<br />
Certain Collective Wage Agreements prevailing and applicable in 2<strong>00</strong>0 establish that the permanent staff retiring between<br />
60 and 65 years of age will be entitled to a cash premium equivalent to a number of monthly salaries proportional to the<br />
number of years of service.<br />
During the year an evaluation of these commitments was performed in accordance with the actuarial assumptions contained<br />
in the externalization Regulations, by applying the calculation method known as the “projected unit credit” and the<br />
population assumptions corresponding to the GRM95-GRF95 tables. According to this study, the commitments accrued<br />
at December 31, 2<strong>00</strong>0 in accordance with the Externalization Regulations amount to Ptas. 2,701 million. The provision<br />
for liabilities and charges covers these commitments as well as the commitments acquired with six executives of the company<br />
absorbed in 1999.<br />
5.16 Provisions for liabilities and charges<br />
In addition to the accounting provisions for potential insolvencies (estimated) relating to accounts receivable, the Group<br />
also books long-term provisions in the balance sheet liabilities, estimated according to the principle of prudence and following<br />
conservative criteria, to cover the different risks and contingencies due to the different possible interpretation of the<br />
prevailing fiscal rulings, contingent risks for bank and other guarantees given, legal claims and lawsuits under way and other<br />
possible liabilities arising from operations. At year end, provisions are applied to the respective concepts.<br />
5.17 Non-trade debts<br />
Both short and long-term non-trade debts are recorded at their repayment value. The difference between this value and the<br />
amount received is accounted for under the assets heading “Deferred expenses”, and released to results on a yearly basis<br />
according to a financial criteria (See Note 22).<br />
5.18 Short and long-term classification<br />
The short and long-term classification depends on the expected term of maturity, disposal or cancellation of the Company’s<br />
obligations and rights. A period of more than 12 months as from the year-end closing date is considered long-term.<br />
5.19 Income and expenses<br />
Income and expenses are recorded according to the accruals principle, regardless of when actual payment or collection<br />
occurs (See Note 25).<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
94
ACCOUNTING PRINCIPLES<br />
5.20 Corporation Tax<br />
Corporation Tax is calculated according to the results for the year and taking into account the differences between the<br />
accounting and fiscal results (taxable income) and their “permanent” and “temporary” nature in order to determine the corporation<br />
tax for the year.<br />
Fiscal credits deriving from the carryforward tax losses are recorded for an amount no higher than the deferred taxation<br />
figure accounted for at that date and do not imply, therefore, any cash outlay.<br />
The deferred tax liabilities balance maintained in the balance sheet relates mainly to differences arising from the fiscal treatment<br />
applied to financial leasing contracts and to the deferral of taxation for capital gains from reinvestments.<br />
The eventual deferred taxation which would relate to the revaluation recorded according to Law 29/1991 is not accounted<br />
for since the sale of the revalued buildings is not included in the Company’s corporate purpose.<br />
The tax criteria applied to financial leasing contracts signed after January 1, 1996 consist of applying amortisation rates<br />
which are twice the maximum rates established in the tax charts. The effect of this temporary difference is reflected in the<br />
corporation tax expense (See Note 23).<br />
5.21 Transactions in foreign currency<br />
Debit and credit balances in foreign currency are valued at the exchange rate prevailing on the corresponding transaction<br />
date and are converted at year end at the rate then in force.<br />
Unrealised foreign currency losses are considered as expense of the year in which they are incurred while unrealised foreign<br />
currency gains are considered when arising as deferred income. Nevertheless, if unrealised foreign currency losses were<br />
recorded during the year or in previous years, the unrealised foreign currency gains would be considered income of the<br />
period for the same amount of unrealised foreign currency losses. Remaining unrealised foreign currency gains would be<br />
accounted for as deferred income.<br />
5.22 Severance payments<br />
In accordance with the prevailing labour agreements in some countries where the Group operates, the companies are obliged<br />
to pay severance to employees dismissed without due cause. Given that there is no staff reduction plan, no provision<br />
is deemed necessary for this concept.<br />
5.23 Parent company shares<br />
The own shares held by Sol Meliá, S.A. are valued at the lower of the acquisition or purchase price and the quotation price<br />
at December 31, 2<strong>00</strong>0.<br />
The Options Programmes for executives, establishing their right to purchase up to 2<strong>00</strong>,<strong>00</strong>0 old shares of Sol Meliá, S.A.,<br />
in 1999 (50,<strong>00</strong>0 shares) and in the year 2<strong>00</strong>0 (150,<strong>00</strong>0 shares), have been cancelled during the year.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
95
ACCOUNTING PRINCIPLES<br />
5.24 Provision for bad debts<br />
The provision for bad debts aims to cover the possible losses that might incur in the full recovery of the accounts receivable.<br />
This provision appears under “Debtors” on the assets side of the consolidated balance sheet. At year end, the provisions<br />
are applied to the respective concepts.<br />
5.25 Subsidiaries and associated companies<br />
In this respect, please see Note 2 where subsidiaries and associated companies are detailed.<br />
5.26 Modifications to the consolidation scope<br />
Modifications to the consolidation scope are identified and explained in Note 2.<br />
5.27 Income from time-sharing<br />
Income from time-sharing is accounted for according to cash criteria, which is more prudent than the sale criteria applied<br />
to the building, whose ceded right of use is equivalent to the useful life.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
96
6 Goodwill on Consolidation<br />
Goodwill on consolidation and its amortisation are detailed below:<br />
6.1 Companies consolidated by full consolidation method<br />
(Thousands of pesetas)<br />
Balance 12/31/1998 Balance 12/31/1999 Amortisation 2<strong>00</strong>0 Additions Transfers Disposals Balance 12/31/2<strong>00</strong>0<br />
Akuntra XXI S.A. 21 21<br />
Apartotel, S.A. 263,392 227,474 (35,917) 191,557<br />
Azafata, S.A. (16,576) 497,283 480,707<br />
Tamarindos, S.A. 237,804 (37,548) 2<strong>00</strong>,256<br />
Cadlo France, S.A. (12,280) 245,609 233,329<br />
Darcuo XXI S.A. 21 21<br />
Dock Telemarking, S.A. 2,702 2,333 (369) 1,965<br />
Dorpan, S.L. 50,631 43,726 (6,904) 36,822<br />
Grupo Sol Asia Ltd. 40,861 35,288 (5,572) 29,717<br />
Hotel Alexander, S.A. (28,995) 579,9<strong>00</strong> 550,905<br />
H. Boulogne Adagio (20,596) 411,911 391,316<br />
H.C. Extremadura, S.A. 85 85<br />
H.Meliá Internacional de Colombia 2,907 2,510 (396) 2,114<br />
Ihla Bela de Gestao e Turismo, S.A. 42,965 42,965<br />
Inmotel I. Italia, S.R.L. (104) 104<br />
Inversiones Latinoamérica 2.<strong>00</strong>0, S.L. 275<br />
Inversiones Turísticas de Caribe, S.A. 14,117 12,191 (1,925) 10,267<br />
Inversiones y Explotaciones Tur. S.A. 56 56<br />
Lirax 423,282 380,597 (42,684) 337,914<br />
Lomondo Ltd. 671,032 (38,913) 92,949 725,069<br />
Londim France (32,171) 643,417 611,246<br />
M.I.H. U.K. LTD 1,992 1,719 (272) 1,449<br />
Markserv, B.V. 94,451 81,571 (12,880) 68,692<br />
Marksol Turizm 28,255 24.,401 (3,853) 20,551<br />
Melia International Hotels, S.A 118,594 102,421 (16,172) 86,250<br />
Melsol Management B.V. 863 744 (118) 628<br />
Mesol Management, S.L. 733 632 (1<strong>00</strong>) 533<br />
Operadora Mesol, S.A. de C.V. 163,090 140,850 (33,192) 69,364 177,023<br />
Playa Salinas,S.A. 9 9<br />
Secade XXI S.A 21 21<br />
Sevicios Corp. Mesol, S.A. de C.V. 80,316 69,363 (69,364)<br />
Sol Group B.V. 31,324 27,051 (4,272) 22,781<br />
Sol Hotel Miami Beach 3,236 2,794 (2.794)<br />
Sol Hotel U.K. LTD 166,104 143,453 (22,650) 120,803<br />
Sol Maninvest, B.V. 4,543 3,923 (620) 3,304<br />
Sol Meliá Benelux, S.A. (3,128) 250,225 247,097<br />
Sol Meliá Croacia 317,424 283,414 (34,<strong>00</strong>9) 249,404<br />
Sol Meliá France, S.A.S. (5) 101 96<br />
Sol Meliá Perú S.A. 10,596 10,596<br />
Talonario 5 Noches, S.L. 72,4<strong>00</strong> 62,526 (9,873) 52,654(0)<br />
Tribenol, S.L. 18,783,941 18,783,941<br />
Tryp Meditérranée, S.A. 361,447 361,447<br />
Tryp S.A. 41,571,166 41,571,166<br />
TOTAL 1.,881,494 2,557,898 (422,092) 63,491,740 (2.794) 65,624,776<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
97
GOODWILL ON CON<strong>SOL</strong>IDATION<br />
Additions and disposals arise mainly from the changes introduced in the Group’s consolidation scope, as explained in Note 2.<br />
Sol Meliá has acquired Tryp, S.A.’s shares, with goodwill of Ptas. 60,758 million. The conclusion date of the acquisition<br />
contract was December 1, 2<strong>00</strong>0 when all legal actions agreed upon in the contract were completed. In view of the fiscal<br />
implications to be taken into account for the deductibility of goodwill and in order to be coherent in the application of<br />
accounting policies, both in the parent company and in the consolidation, Sol Meliá’s directors have postponed until next<br />
year, when the companies are expected to merge, the tax treatment of goodwill, and do not question its economic and<br />
accounting efficiency at the present time.<br />
Likewise, tacit surplus existing on the acquisition date of the corresponding share and attributable to land and buildings<br />
was included in fixed assets and inventories. This surplus is amortised over the useful life and the breakdown by company<br />
is as follows:<br />
(Thousands of pesetas)<br />
BALANCE AMORTISATION ADDITIONS DISPOSALS BALANCE<br />
31/12/99 2.<strong>00</strong>0 31/12/<strong>00</strong><br />
Apartotel, S.A. 149,860 (3,234) 146,628<br />
Casino Tamarindos, S.A. 446,424 (16,333) 430,092<br />
Consorcio Europeo S.A. 1,773,621 1,773,621<br />
Corbeil H.Paris Colombes, S.A. (73,425) 7,342,504 7,269,079<br />
Desarrollos Sol, S.A. 3,227,646 3,227,646<br />
H. Metropolitan, S.A. (31,277) 3,127,703 3,096,426<br />
Inmobiliaria Bulmes S.A. 5,682,915 5,682,915<br />
LSO France Investiments, S.A. (12,768) 638,413 625,645<br />
Parking Internacional S.A. 7,955 7,955<br />
Playa Salinas, S.A. 1,120,983 593 1,121,577<br />
Realizaciones Turísticas, S.A. 2,147,880 (34,924) (55,297) 2,057,659<br />
Silverbay S.L. 361,492 361,492<br />
Urme Real, S.L. 397,572 (7,782) (13,990) 375,801<br />
TOTAL FIXED ASSETS 7,490,366 (179,744) 18,935,196 (69,286) 26,176,535<br />
Desarrollos Sol, S.A. 1,120,577 (112,269) 1,<strong>00</strong>8,308<br />
TOTAL INVENTORIES 1,120,577 (112,269) 1,<strong>00</strong>8,308<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
98
GOODWILL ON CON<strong>SOL</strong>IDATION<br />
6.2 Companies consolidated by the equity method<br />
The breakdown of goodwill on consolidation in companies consolidated by the equity method is as follows:<br />
(Thousands of pesetas)<br />
BALANCE BALANCE AMORT. ADDITIONS DISPOSALS BALANCE<br />
31/12/1998 31/12/1999 2<strong>00</strong>0 31/12/2<strong>00</strong>0<br />
Agotel Gmbh 409 409<br />
Aparthotel Bosque, S.A. 86,483 74,690 (11,793) 62,897<br />
Casino Tamarindos, S.A. 275,352<br />
Hotel Campus, S.L. (1,470) 117,6<strong>00</strong> 116,130<br />
Inversiones Turísticas Casas Bellas, S.L. 216 (216)<br />
Meliá Mérida, S.L. 14 14<br />
Touroperador Viva Tours,S.A. 157,895 (8,315) 149,580<br />
TOTAL 361,835 233,211 (21,578) 117,614 (216) 329,030<br />
Additions and disposals arise mainly from the changes introduced in the Group’s consolidation scope, as explained in Note 2.<br />
In like manner, the tacit surplus attributable to tangible fixed assets items existing on the acquisition of these participations<br />
was included as an increase in the value of the participation with the corresponding proportion. This surplus is amortised<br />
over the useful life and the breakdown by company is as follows:<br />
(Thousands of pesetas)<br />
BALANCE AMORT. ADDITIONS DISPOSALS BALANCE<br />
31/12/99 2.<strong>00</strong>0 31/12/<strong>00</strong><br />
Aparthotel Bosque, S.A. 2,595 (70) 649 3,174<br />
Hotel las Américas, S.A. 301,711 (301,711)<br />
Nexprom, S.A. 2<strong>00</strong>,587 (5,497) 622 195,712<br />
TOTAL 504,893 (5,567) 1,270 (301,711) 198,886<br />
The effect on the balance sheet is included under “Participations in companies consolidated by the equity method” for the<br />
corresponding participation (See Note 8).<br />
The disposal in Hotel Las Américas, S.A. is due to the departure of this company from the consolidation scope, as indicated<br />
in Note 2.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
99
7 Negative Consolidation Differences<br />
The negative consolidation differences are listed below:<br />
7.1 Companies consolidated by full consolidation method<br />
(Thousands of pesetas)<br />
BALANCE AMORTISATION ADDITIONS DISPOSALS BALANCE<br />
31/12/99 2<strong>00</strong>0 31/12/<strong>00</strong><br />
Bear S.A. De C.V. 2,282,816 2,282,815<br />
C.Tunissienne de G.H. 396 396 396<br />
Controladora Turística Cozumel, S.A. De C.V. 1,201,903 1,201,903<br />
Gesmesol, S.A. 154,466 154,466 154,466<br />
Grupo Sol Services 31,913 31,913 31,913<br />
Impulse Hotel Development 16 16<br />
Inversiones Jacuey 1,919 1,919<br />
Irton Company, S.A. 4 5<br />
Meliá Brasil Adminitraçao, S.A. 27,782 27,782 27,782<br />
Meliá Mérida S.L. 11 (11) 0<br />
Meliá Venezuela S.A. 12,409 12,409 12,409<br />
Melsol Portugal, S.A. 1,611 1,611 1,611<br />
Sol Group Co. 974 974 974<br />
Sol Holding Co. 7,583 7,583 (7.583) 0<br />
Sol Holding Management Co. 958 958 (958) 0<br />
Sol Meliá Benelux, S.A. 18 18<br />
TOTAL 238,091 2,520,938 1,203,839 (8,552) 3,716,226<br />
Additions and disposals arise mainly from the changes introduced in the Group’s consolidation scope, as explained in Note 2.<br />
7.2 Companies consolidated by the equity method<br />
(Thousands of pesetas)<br />
BALANCE 31/12/99 ADDITIONS DISPOSALS BALANCE 31/12/<strong>00</strong><br />
Sofía Hoteles S.L. 32,633 32,633<br />
TOTAL 32,633 32,633<br />
The share in the managing company of Hotel Sofía Parque Sol is incorporated as a result of the acquisition of the Tryp<br />
Hotel Chain.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
1<strong>00</strong>
8 Participations by the Equity Method<br />
The investments corresponding to participations in associated companies have been valued in accordance with the equity<br />
method of consolidation. The amounts obtained by the equity method are as follows:<br />
(Thousands of pesetas)<br />
BALANCE BALANCE RESULT ADDITIONS DISPOSALS EXCHANGE BALANCE<br />
31/12/98 31/12/99 2<strong>00</strong>0 DIFFERENCE 31/12/<strong>00</strong><br />
Agotel Gmbh (269.567) (69.025) 706.096 (269.566) 97.938<br />
Aparthotel Bosque, S.A. 166.854 179.092 14.367 (16.064) 177.395<br />
C.P. Meliá Castilla 311.248 252.734 5.052 (233.729) 335.306<br />
C.P.Meliá Costa del Sol 237.306 238.948 91.948 (70.556) 260.343<br />
Casino Tamaindos, S.A. 1.665.178<br />
Hellenic Hotel Management 28.669 15.131 (18.167) (274) (3.309)<br />
Hotel Campus S.L. (25.028) 82.4<strong>00</strong> 57.372<br />
Hotel Las Américas, S.A. 406.523 383.318 (383.318)<br />
I.Turísticas Casas Bellas, S.L. 1.499.790 (2) 461 (1.617) 1.498.632<br />
Meliá Inversiones Americanas, N.V. 10.678.746<br />
Meliá Mérida, S.L. (2.361) 204.986 202.625<br />
Nexprom/Promedro 346.680 57.088 1.162 404.931<br />
Sofía Hoteles S.L. (11.027) 140.431 129.404<br />
Sol Hoti Portugal Hoteis 6.877 17.916 (1.520) 16.396<br />
Sol Meliá Travel, S.A. (65.218) 329.504 264.287<br />
Touroperador Viva Tours, S.A. 220.574 (65.251) (9.945) 145.378<br />
TOTAL 13.190.153 2.943.132 158.539 1.470.092 (984.795) (274) 3.586.697<br />
Additions and disposals arise mainly from the changes introduced in the Group’s consolidation scope, as explained in Note<br />
2, and from the adjustments arising from the write-off of provisions and dividends made in the consolidation process.<br />
The value of the participations includes tacit surplus relating to buildings not recorded by the subsidiaries. This surplus is<br />
amortised over the useful life of the different buildings it relates to. (See Note 6).<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
101
9 Start-up Expenses<br />
The breakdown of this consolidated balance sheet heading is as follows:<br />
(Thousands of pesetas)<br />
BALANCE BALANCE AMORT. ADDITIONS DISPOSALS CONV. BALANCE<br />
31/12/98 31/12/99 DIF. 31/12/<strong>00</strong><br />
Formation expenses 1,952 15,302 (5,840) 22,348 50 31,860<br />
Initial set-up expenses 514,807 1,910,398 (394,681) 438,032 (159,301) 47,020 1,841,480<br />
Other deferred expenses 168,548 625,633 (192,132) 365,764 7,627 806,894<br />
Share capital increase 839,673 934,752 (482,305) 340,536 1 792,982<br />
TOTAL 1,524,980 3,486,086 (1,074,958) 1,166,679 (159,301) 54,698 3,473,216<br />
The additions in “Other deferred expenses” relate mainly to the acquisition of Tryp, S.A.<br />
The additions in “Share capital increase” relate to the share capital increase resulting from the non-monetary contribution<br />
for the acquisition of the Tryp Hotel Chain.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
102
10 Intangible Fixed Assets<br />
The breakdown of the cost and accumulated amortisation of intangible fixed assets is as follows:<br />
(Thousands of pesetas)<br />
COST BALANCE AT BALANCE AT ADDITIONS TRANSFER DISPOSALS CONV. BALANCE AT<br />
31/12/98 31/12/99 TANG. ASSETS DIF. 31/12/<strong>00</strong><br />
Land 273 540,174 3,071 (27,226) (62,431) 453,588<br />
Buildings 81,831 23,011,612 6,233,692 (14,513,742) (207,618) 3,215 14,527,158<br />
Installations 5,431,109 6,285,961 (508,848) 11,208,222<br />
Machinery 602,031 475,607 (82,272) 995,365<br />
Tools 436,<strong>00</strong>5 2,4<strong>00</strong> (236,933) (903) 2<strong>00</strong>,569<br />
Furniture 5,271,652 2,125,623 (393,<strong>00</strong>1) 7,<strong>00</strong>4,274<br />
Data processing equip. 85,986 381,385 (24,845) 442,526<br />
Vehicles 30,406 10,645 1,989,617 2,030,668<br />
Ind.Prop rights/R+D exp. 897,671 187,361 493,873 (11,993) 669,241<br />
Goodwill 1,257,444 164,341 7,320 1,429,105<br />
Transfer rights 786 12,8<strong>00</strong>,598 (196,177) 12,605,208<br />
Software 177,<strong>00</strong>8 365,517 2,814,907 (7,352) 429 3,173,5<strong>00</strong><br />
TOTAL COST 1,156,783 37,219,295 18,992,291 (996,652) (278,304) (197,206) 54,739,424<br />
ACCUMULATED BALANCE AT BALANCE AT CHARGE FOR ADDITIONS TRANSFER DISPOSALS DIF. BALANCE AT<br />
AMORTISATION 31/12/98 31/12/99 THE YEAR TANG. ASSETS CONV. 31/12/<strong>00</strong><br />
Buildings 17,315 801,991 178,010 45,714 (527,8<strong>00</strong>) (38,253) 439 460,1<strong>00</strong><br />
Installations 406,181 484,194 1,282 (98,928) 1 792,731<br />
Machinery 43,329 46,528 (15,<strong>00</strong>0) 74,857<br />
Tools and fittings 32,196 7<strong>00</strong> (938) (230) 31,728<br />
Furniture 479,233 421,015 5,562 (94,144) (1) 811,665<br />
Data processing equip. 28,488 16,982 (9,882) 35,588<br />
Vehicles 2,682 103,026 (1,036) 104,672<br />
Ind.Prop rights/R+D exp. 126,268 234 1,082 455,902 (11,398) 445,821<br />
Goodwill 295,720 159,525 147,465 (5,321) 597,389<br />
Transfer rights 392,772 169,367 (17,236) 544,903<br />
Software 26,897 116,874 1<strong>00</strong>,784 15,811 (1,972) 271 231,768<br />
Provisions 152,<strong>00</strong>0 152,<strong>00</strong>0<br />
TOTAL ACCUM. AMORT. 170,480 2,358,929 1,903,918 672,436 (578,361) (40,455) (33,245) 4,283,168<br />
NET BOOK VALUE 986,303 34,860,366 50,456,255<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
103
INTANGIBLE FIXED ASSETS<br />
There are 1,622 financial leasing contracts pending maturity at December 31, 2<strong>00</strong>0, of which 791 expire between 1 and 2<br />
years, 42 in 3 years, 785 up to 5 years and 4 between 6 and 10 years. The instalments pending payment at December 31,<br />
2<strong>00</strong>0 amount to a total of Ptas. 18,591 million, of which Ptas. 7,245 are short-term and the rest long-term. The total residual<br />
value of the contracts in force amounts to Ptas. 1,086 million (See Note 22).<br />
The main additions recorded during the year relate to sundry repairs and refurbishments carried out by the Group in<br />
various hotels operated by Group companies as well as to the incorporation of software applications for several areas of<br />
the Company, which will permit the integration of the different management areas of the hotels and provide support to<br />
the Group’s growth and globalisation processes. Among them are the front office, selling points, SAP and Internet<br />
applications.<br />
The amount recorded for reclassified transfer rights relates to the leasehold contract of Lomondo Ltd.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
104
11 Tangible Fixed Assets<br />
The movements of the different headings of tangible fixed assets and the accumulated depreciation during 2<strong>00</strong>0 are as<br />
follows:<br />
(Thousands of pesetas)<br />
COST BALANCE AT BALANCE AT ADDITIONS TRANSFER DISPOSALS EXCHANGE BALANCE AT<br />
31/12/98 31/12/99 FROM INTANGIBLE DIFFERENCES 31/12/<strong>00</strong><br />
Land 170,777 59,857,662 14,373,725 27,226 (1,543,871) 1,577,796 74,292,535<br />
Buildings 1,080,132 165,951,840 31,011,689 4,672,573 (8,109,730) 10,058,395 203,584,769<br />
Sub-Total 1,250,909 225,809,503 45,385,414 4,699,799 (9,653,601) 11,636,192 277,877,304<br />
Installations 218,893 17,990,582 6,781,894 626,344 (242,133) (11,570) 25,145,117<br />
Machinery 67,954 4,334,916 1,071,650 (33,276) (290,402) (51) 5,082,837<br />
Sub-Total 286,847 22,325,498 7,853,544 593,068 (532,535) (11,621) 30,227,956<br />
Furniture 237,547 34,570,172 7,486,204 790,706 (7,652,462) 1,248,164 36,442,784<br />
Tools 3,158 480,473 93,178 1,836,083 (19,145) 67,207 2,457,791<br />
Sub-Total 240,705 35,050,645 7,579,382 2,626,789 (7,671,608) 1,315,372 38,9<strong>00</strong>,575<br />
Vehicles 44,6<strong>00</strong> 2,582,419 129,190 (1,989,519) (201,440) 24,310 544,960<br />
Data processing equip. 416,273 3,510,165 760,906 35,943 (315,747) 118,854 4,110,094<br />
Other fixed assets 85,140 2,211,427 5,689,217 241,131 (1,251,358) 1,892 6,892,309<br />
Sub-Total 546,013 8,304,011 6,579,313 (1,712,446) (1,768,545) 145,055 11,547,363<br />
Works in progress 3,567 4,624,763 10,032,979 (5,210,558) (5,619,568) 77,605 3,905,221<br />
TOTAL COST 2,328,041 296,114,438 77,430,632 996,652 (25,245,857) 13,162,603 362,458,420<br />
ACCUMULATED BALANCE AT BALANCE AT CHARGE FOR ADDITIONS TRANSFER DISPOSALS EXCHANGE BALANCE AT<br />
DEPRECIATION 31/12/98 31/12/99 THE YEAR FROM INTANGIBLE DIFFERENCES 31/12/<strong>00</strong><br />
Buildings 148,718 39,309,154 4,636,632 4,186,277 (2,371,238) (2,571,274) 1,845,381 45,034,931<br />
Installations 40,816 9,938,422 1,343,647 2,940,391 96,703 (222,370) (1,798) 14,094,995<br />
Machinery 12,174 2,140,819 325,712 354,475 350,471 (182,577) 998 2,989,898<br />
Sub-Total 201,708 51,388,395 6,305,991 7,481,143 (1,924,063) (2,976,221) 1,844,581 62,119,824<br />
Furniture 79,924 13,754,136 2,550,618 3,403,881 2,259,970 (2,839,718) 893,577 20,022,464<br />
Tools and fittings 2,212 7,<strong>00</strong>7 3,520 131,413 3,247 (644) (86) 144,457<br />
Vehicles 28,216 281,789 345,979 81,977 (24,766) (140,821) (554) 377,522<br />
Data processing equip. 241,183 2,252,813 416,201 510,044 80,647 (213,094) 91,551 3,138,162<br />
Other fixed assets 77,844 759,693 1,382,786 177,240 183,327 (1,586,697) (11,551) 1,093,371<br />
Provisions 0 97,540 554 402,228 0 0 21 5<strong>00</strong>,343<br />
Sub-Total 429,379 17,152,978 4,699,657 4,706,784 2,502,425 (4,758,481) 972,958 25,276,320<br />
TOTAL ACCUM. DEP. 631,087 68,541,373 11,<strong>00</strong>5,648 12,187,927 578,361 (7,734,697) 2,817,539 87,373,658<br />
NET VALUE 1,696,954 227,573,065 275,084,761<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
105
TANGIBLE FIXED ASSETS<br />
In case of merger, or non-monetary contributions of activities, in accordance with the norms on formulation of consolidated<br />
annual accounts, the difference between the book value of the participation in the absorbing company and the net book<br />
value of such participation according to the books of the absorbed company may be attributed to the corresponding assets<br />
and up to the limit of their market value. For this reason, Sol Meliá, S.A. has recorded as additions for the year the surplus<br />
recorded in several hotels as a result of the merger with Inmotel Inversiones, S.A.for an amount of Ptas. 5,157 million, of<br />
which Ptas. 2,745 million correspond to Meliá Lebreros, Ptas. 1,748 million to Meliá Sevilla and Ptas. 664 million to Sol<br />
Elite Barbados.<br />
The main tangible fixed assets additions recorded during the year are as follows:<br />
• Incorporation to the consolidated Group of the companies that own the eight hotels acquired in France in November<br />
1999 for a net value of Ptas. 12,681 million.<br />
• Acquisition of the hotels Fénix and Colon for Ptas. 7,749 and 3,343 million, respectively.<br />
• Acquisition of building sites of tourist interest in the Canary Islands, the purchase value of which is of Ptas. 1,050<br />
million in case of execution.<br />
• Incorporation of Azafata, S.A., owner of Hotel Azafata for Ptas. 8<strong>00</strong> million.<br />
• Incorporation of Caribotels de México, S.A. de C.V., owner of Hotel Paradisus Cozumel for Ptas. 6,8<strong>00</strong> million.<br />
• Incorporation of Sol Melia Benelux, B.V., owner of Hotel Melia Avenue Louise for Ptas. 1,450 million.<br />
• The main tangible fixed assets disposals recorded during the year are as follows:<br />
• Sale of Hotel Sol Las Olas, located in Corralejo-Fuerteventura, the selling price of which was Ptas. 2,3<strong>00</strong> million.<br />
• Sale of Hotel Sol Bardinos, located in Gran Canaria-Las Palmas, the selling price of which was Ptas. 1,4<strong>00</strong> million.<br />
• Sale of Hotel Melia Bavaro, located in Playa Bavaro-Santo Domingo, for 55 million of US-dollars.<br />
The Company is also carrying out important repairs and refurbishments in many of its hotels, which has given rise to<br />
important additions and disposals of tangible fixed assets.<br />
The sales of Hotel Sol Las Olas and Hotel Bardinos are subject to the fulfilment by Sol Meliá, S.A. of certain requirements<br />
which are being processed on the formulation date of these annual accounts. The directors do not expect that any significant<br />
contingencies will arise from this transitory situation.<br />
After the integration of the Tryp Hotel Chain, the Group operates under leasing contracts a total of 67 hotels, of which<br />
5 are five-star hotels with 784 rooms, 36 are four-star hotels with 6,087 rooms, 19 are three-star hotels with 3,680<br />
rooms, 4 are two-star hotels with 212 rooms and 3 are establishments of three-key apartments with 784 apartments. In<br />
addition, leasing contracts are signed for 35 hotels which will be operated in 2<strong>00</strong>1, 2<strong>00</strong>2 and 2<strong>00</strong>3, with an approximate<br />
total of 6,927 rooms.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
106
TANGIBLE FIXED ASSETS<br />
The net capital gains derived from the revaluations of assets carried out prior to 1997 by having recourse to sundry legal<br />
regulations and voluntary revaluations in order to correct the effects of inflation, are as follows, in thousands of pesetas:<br />
(Thousands of pesetas)<br />
Revaluation Law 76/61 9,210<br />
Revaluation Law 12/73 429,130<br />
Revaluation Budget Law 1979 4,980,884<br />
Revaluation Budget Law 1980 4,8<strong>00</strong>,546<br />
Revaluation Budget Law 1981 719,368<br />
Revaluation Budget Law 1982 4,405,826<br />
Revaluation Law 1983 239,080<br />
Voluntary revaluation prior to 1990 523,432<br />
Revaluation R.D.L. 796 9,718,258<br />
TOTAL REVALUATIONS 25,825,734<br />
Additionally, the balance sheet at December 31, 2<strong>00</strong>0 includes revaluations of land and buildings for a total cost of Ptas.<br />
29,312 million that were recorded as required by Law 29/1991.<br />
Several owned buildings are mortgaged to guarantee various loans.<br />
All the fixed assets investments, both in tangible and intangible fixed assets, relate to buildings and other assets related to<br />
operations.<br />
At December 31, 2<strong>00</strong>0 Sol Meliá has a purchase option right for Hotel Balmoral.<br />
Some Group companies located in countries with high rates of inflation restate their financial statements in order to adjust<br />
the real value of their fixed assets. The accumulated amount included for this reason in the above tangible fixed assets table<br />
is as follows:<br />
(Thousands of pesetas)<br />
1999 2<strong>00</strong>0<br />
Land 9,483,720 13,111,259<br />
Buildings 38,056,030 50,436,937<br />
Furniture 5,170,765 6,357,142<br />
Data processing equip. 193,324 361,499<br />
Vehicles 43,425 57,122<br />
Accumulated depreciation (12,629,775) (16,902,272)<br />
TOTAL 40,317,489 53,421,688<br />
The depreciation charge referred to in the previous paragraph amounted to Ptas. 2,145 million for the current year.<br />
The 1998 figures are not included since the companies that record inflation restatement in their financial statements belong to<br />
Melia Inversiones Americanas, and the latter has been consolidated by the full consolidation method as from 1999 onwards.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
107
12 Investments<br />
12.1 Loans to subsidiaries<br />
(Thousands of pesetas)<br />
1999 2<strong>00</strong>0<br />
ARE<strong>SOL</strong> CABOS, S.A. de C.V. 1,234,672 1,355,384<br />
CARIBOTELS DE MEXICO S.A. de C.V. 1,554,981<br />
CORPORACION HOTELERA METOR 469,369 116,034<br />
DETUR PANAMÁ 435,217<br />
F.S.P.TURIZM 1,364,270<br />
MOGAN PROMOCIONES 376,525 391,959<br />
MELIÁ MÉRIDA S.L. 130,<strong>00</strong>0<br />
TOTAL 4,999,817 2,428,594<br />
The balance of Ptas. 1,355 million of Aresol Cabos S.A de C.V. relates to a loan granted by Operadora Mesol, S.A. de C.V.<br />
The loan to F.S.P. Turizm has been cancelled during the year.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
108
INVESTMENTS<br />
12.2 Long-term securities portfolio<br />
The participations by holding company, in thousands of pesetas, are listed below:<br />
(Thousands of pesetas)<br />
INVESTMENTS PARTIC. % BALANCE BALANCE ADDITIONS DISPOSALS CONVERSION BALANCE<br />
31/12/98 31/12/99 DIF. 31/12/<strong>00</strong><br />
<strong>SOL</strong> MELIÁ S.A. 22,158,564 14,163,907 9,155,067<br />
Azafata S.A. 8.70% 45,<strong>00</strong>0 45,<strong>00</strong>0 (45,<strong>00</strong>0)<br />
D.H. Guanacaste 15.<strong>00</strong>% 1,675,<strong>00</strong>0 1,962,764 140,184 2,102,948<br />
D.I.Guanacaste 15.<strong>00</strong>% 132,<strong>00</strong>0 132,<strong>00</strong>0 132,<strong>00</strong>0<br />
Edificaciones Gobelas, S.A. 20.<strong>00</strong>% 255,387<br />
Grupo Inmotel Inversiones 18.85% 16,643,<strong>00</strong>0<br />
Detur Panamá S.A. 31.78% 733,089 (733,089)<br />
H. Sancti Petri 19.50% 195,<strong>00</strong>0 195,<strong>00</strong>0 195,<strong>00</strong>0<br />
Horotel S.A. 12.40% 50,<strong>00</strong>0 50,<strong>00</strong>0 50,<strong>00</strong>0<br />
Hotel Net B2B.com S.A. 24.50% 518,519 518,519<br />
I.H. Los Cabos 15.<strong>00</strong>% 550,<strong>00</strong>0 550,<strong>00</strong>0 550,<strong>00</strong>0<br />
I.H. Playa del Duque 5.<strong>00</strong>% 446,282 446,282 446,282<br />
Inmobiliaria Conchal Pacífico 15.<strong>00</strong>% 46,<strong>00</strong>0 46,<strong>00</strong>0 46,<strong>00</strong>0<br />
Lanzarote 6 S.A. 5.56% 249,912 249,912<br />
Orgesa Holding 14.17% 1,195 1,195 1,195<br />
P.T. Surlaya Internacional 16.52% 1,5<strong>00</strong>,<strong>00</strong>0 1,5<strong>00</strong>,<strong>00</strong>0 1,5<strong>00</strong>,<strong>00</strong>0<br />
Port Cambrils Inv. 15.<strong>00</strong>% 48,760 48,760<br />
Prodigios Interactivos S.A. 12.84% 3,506,313 (376,604) 3,129,709<br />
Propiedades en Arriendo. S.l. 1<strong>00</strong>.<strong>00</strong>% 2<strong>00</strong> 2<strong>00</strong> (2<strong>00</strong>)<br />
Sol Meliá France S.A. 1<strong>00</strong>.<strong>00</strong>% 8,286,124 (8,286,124)<br />
Sol Meliá Suisse S.A. 1<strong>00</strong>.<strong>00</strong>% 5,242 5,242<br />
Turismo de Invierno S.A. 19.47% 179,5<strong>00</strong> 179,5<strong>00</strong> 179,5<strong>00</strong><br />
Tuoroperador Viva Tours, S.A. 21.98% 440,<strong>00</strong>0<br />
Varios u/p 31,511 (31,511)<br />
INEXTUR S.A. 391 391<br />
Oblig. Club Marítimo Marbella u/p 391 391<br />
APARTOTEL S.A. 70,885 70,885<br />
Plaza Puerta del Mar S.A. 7.10% 70,885 70,885<br />
CASINO TAMARINDOS S.A. 50,407 50,107<br />
Obligaciones del Gobierno de Canarias u/p 50,107 50,107<br />
Propiedades en Arriendo 3<strong>00</strong> (3<strong>00</strong>)<br />
PARQUE SAN ANTONIO S.A. 5<strong>00</strong> 5<strong>00</strong><br />
Aguas Teide u/p 5<strong>00</strong> 5<strong>00</strong><br />
TRYP, S.A. 9,129<br />
Gupe Inmobiliaria 99.99% 9,129 9,129<br />
RANDLESTOP CORP, N.V. 994 1,060<br />
Punta Cana Reservations N.V. 1<strong>00</strong>.<strong>00</strong>% 994 66 1,060<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
109
INVESTMENTS<br />
INVESTMENTS PARTIC. % BALANCE BALANCE ADDITIONS DISPOSALS CONVERSION BALANCE<br />
31/12/98 31/12/99 DIF. 31/12/<strong>00</strong><br />
DES. TUR. CARIBE N.V. 994 1,060<br />
Caribooking & Reservations N.V. 1<strong>00</strong>.<strong>00</strong>% 994 66 1,060<br />
D HOTELEROS SAN JUAN B.V. 3,219,994<br />
Desarrolladora Hot. Del Norte 47.50% 3,219,994 3,219,994<br />
SAN JUAN INVESTMENT B.V. 3,219,994<br />
Desarrolladora Hot. Del Norte 47.50% 3,219,994 3,219,994<br />
MARKSERV B.V. 145 103,262 822,244<br />
Mogan Promociones 33.33% 145 282 282<br />
Promociones Playa Blanca S.A. 33.<strong>00</strong>% 102,980 717,235 820,215<br />
Sol Meliá Marruecos 1<strong>00</strong>.<strong>00</strong>% 1,747 1,747<br />
<strong>MELIA</strong> INV AMERICANAS N.V. 906,465 536,201<br />
Corporación H. Metor 19.97% 536,203 (2) 536,201<br />
Controladora T. Cozumel 51.<strong>00</strong>% 370,262 (370,262)<br />
OPERADORA ME<strong>SOL</strong>, S.A. DE C.V. 45,217 54,715<br />
Controladora T. Cozumel 51.<strong>00</strong>% 45,217 54,715 (54,715)<br />
MARMER S.A. 232<br />
Inversiones Guizá 50.<strong>00</strong>% 232 232<br />
<strong>MELIA</strong> INTNAL HOTELS S.A. 149,483 339,343 8,325<br />
C.A.H.T. Puerto La Cruz 0.38% 2,524 2,932 195 3,127<br />
Corp. Hotelera Halmel 1.07% 4,197 4,875 324 5,199<br />
Detur Panamá S.A. 20.<strong>00</strong>% 142,762 331,536 (331,536)<br />
MARINA INTNAL HOLDING 651,737 1,225,074<br />
Corporación H. Metor 40.03% 651,737 43,232 694,969<br />
Hotel Las Américas 20.<strong>00</strong>% 530,106 530,106<br />
TOTAL 22,353,409 16,343,6<strong>00</strong> 12,162,126 (10,229,341) 43,881 18,320,265<br />
PROVISIONS PARTIC. % BALANCE BALANCE ADDITIONS DISPOSALS CONVERSION BALANCE<br />
31/12/98 31/12/99 DIF. 31/12/<strong>00</strong><br />
<strong>SOL</strong> MELIÁ S.A. (28,873)<br />
Sol Meliá Suisse S.A. 1<strong>00</strong>.<strong>00</strong>% (58) (58)<br />
Hotel Net B2B.com S.A. 24.50% (28,815) (28,815)<br />
MARINA INTNAL HOLDING (265,053)<br />
Hotel Las Américas 20.<strong>00</strong>% (265,053) (265,053)<br />
TOTAL (293,926) (293,925)<br />
NET VALUE 22,353,409 16,343,6<strong>00</strong> 11,868,2<strong>00</strong> (10,229,341) 43,881 18,026,340<br />
U.P.: Unquantified percentage<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
110
INVESTMENTS<br />
Disposals for the year relate to changes in the consolidation scope, as explained in Note 2.<br />
The disposal in the provisions balance appearing in the 1999 balance sheet (Ptas. 1,364 million) relates to the application<br />
of the provision covering the loan granted by Hoteles Sol Internacional, S.A. to F.S.P. Turizm.<br />
The registered address, activity and accounting data of the companies are indicated below, except for those with an insignificant<br />
participation:<br />
(Thousands of pesetas)<br />
NET NET<br />
<strong>COMP</strong>ANY ADDRESS COUNTRY ACTIVITY CAPITAL RESERVES RESULT % BOOK INVESTM.<br />
VALUE VALUE<br />
IBOOKING & RESERV. N.V. De Ruyterkade 62 (Curaçao) DUTCH ANT. Marketing 1,060 1<strong>00</strong>.<strong>00</strong>% 1,060 1,060<br />
CORP .HOTELERA METOR Faustino Schez. Carrión s/n (Lima) PERU Hotels owner 1,663,271 12,614 (370,437) 60.<strong>00</strong>% 783,269 1,231,170<br />
DES. HOT. GUANACASTE Central y ocho C 33 (San José) C. RICA Hotel development 9,284,285 4,164,088 (912,560) 15.<strong>00</strong>% 1,880,372 2,102,948<br />
DES. INM. GUANACASTE Central y ocho C 33 (San José) C. RICA Golf and apart. Dev. 715,745 70,442 15.<strong>00</strong>% 117,928 132,<strong>00</strong>0<br />
HOROTEL, S.A. Marqués Villanueva del Prado s/n SPAIN Hotels owner 540,<strong>00</strong>0 607,659 143,320 12.40% 160,081 50,<strong>00</strong>0<br />
HOT. SANCTI PETRI, S.A. G.Toneleros 24 (Palma de Mca.) SPAIN Hotels owner 1,<strong>00</strong>0,<strong>00</strong>0 (138,765) (7,226) 19.50% 166,532 195,<strong>00</strong>0<br />
INM. CONCHAL PACIFICO Central y ocho C 33 (San José) C. RICA Land owner 56 270,819 15.<strong>00</strong>% 40,631 46,<strong>00</strong>0<br />
INV. HOT. LOS CABOS Samuel Lewis C 33 (Panamá) PANAMA Holding 6,657,251 (332,463) 1,299 15.<strong>00</strong>% 948,913 550,<strong>00</strong>0<br />
INV. HOT. PYA. DEL DUQUE Barrio Chamberrí s/n (Tenerife) SPAIN Hotels owner 432,392 3,194,174 2,310,211 5.<strong>00</strong>% 296,839 446,282<br />
MOGAN PROMOCIONES Quintana Roo, Cancún MEXICO Hot. in construction 945 (29,346) 33.33% (9,466) 282<br />
ORGESA HOLDING Collomas de Chapultepec MEXICO Hotels owner 6,<strong>00</strong>6 3,540,740 731,285 14.17% 606,197 1,195<br />
P.T.S.A.I. Jalan Taman Patra, XIV (Jakarta) INDONESIA Hotels owner 585,699 1,428,349 (1,271,843) 16.52% 122,612 1,5<strong>00</strong>,<strong>00</strong>0<br />
PLAZA PUERTA DEL MAR S.A. Pza. Puerta del Mar, 3 (Alicante) SPAIN Hotels owner 998,316 (7,317) (76,136) 7.10% 64,955 70,885<br />
PROM. PYA. BLANCA S.A. de C.V. Pza. San Ángel,15 (Cancún) MEXICO Hot. in construction 2,366,199 33.<strong>00</strong>% 780,846 820,215<br />
PUNTA CANA RESERV. N.V. De Ruyterkade 62 (Curaçao) DUTCH ANT. Marketing 1,060 1<strong>00</strong>.<strong>00</strong>% 1.,060 1,060<br />
<strong>SOL</strong> <strong>MELIA</strong> SUISSE S.A. Rue de Hesse, 8-10 (Ginebra) SWITZERLAND Inactive 10,369 1<strong>00</strong>.<strong>00</strong>% 10,369 5,184<br />
TURISMO DE INVIERNO Plaza Pradollano s/n (Monachil) SPAIN Hotels owner 114,<strong>00</strong>0 624,485 79,546 19,47% 159,271 179,5<strong>00</strong><br />
HOTEL NET B2B.COM S.A. Gremio Tejedores, 5 (Palma de Mca.) SPAIN Internet portal B2B 18,181 1,982,819 (117,611) 24.50% 461,430 299,704<br />
PRODIGIOS INTERACTIVOS S.A. ParcBit. Camí ca'n Manuel s/n (Palma) SPAIN Internet portal 94,844 35,826,223 (431,182) 12.84% 4,556,901 3,129,709<br />
PORT CAMBRILS INV. Sin Definir SPAIN Hotels owner n/c n/c n/c 15.<strong>00</strong>% n/c 48,760<br />
LANZAROTE 6 S.A. Av. Ansite 3-1º (Las Palmas de G.C.) SPAIN Hotels owner n/c n/c n/c 5.56% n/c 249,912<br />
GUPE INMOBILIARIA Estrada da Luz, 90 6º-F (Lisboa) PORTUGAL Hotels management 8,319 99.99% 8,318 9,129<br />
DESARR. DEL NORTE S.enC. S.E. Carr.3,S. Coco Beach 955-I (Rio Grande)P.RICO Owns and oper. hotels 6,901,876 95.<strong>00</strong>% 6,556,783 6,439,988<br />
HOTEL LAS AMÉRICAS S.A. Las Américas, 9 (Ciudad de Guatemala) GUATEMALA Owns and oper. hotels 805,198 (286,459) (171,667) 20.<strong>00</strong>% 69,414 265,053<br />
TOTAL LONG-TERM 32,205,072 50,928,062 5,179 17,808,370 17,965,036<br />
DETUR PANAMA S.A. Elvira Méndez, 10 .Bco do Brasil PANAMA Hotels owner 2,473,827 (695,494) 35.<strong>00</strong>% 622,417 1,227,980<br />
TOTAL SHORT-TERM 2,473,827 (695,494) 622,417 1,227,980<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
111
INVESTMENTS<br />
Sol Meliá, S.A. has subscribed and paid up the capital increase (Ptas. 518 million ) carried out in Hotel Net B2B. COM,<br />
S.A., a company engaged in marketing hotel services.<br />
Sol Meliá, S.A. has subscribed and paid up the share capital increase (Ptas. 249 million.) carried out in Lanzarote 6, S.A.,<br />
owner of land for the construction of a hotel.<br />
Sol Meliá, S.A. has subscribed and paid up the share capital increase (Ptas. 48 million ) carried out in Port Cambrils<br />
Inversions, S.A., a hotel operating company.<br />
Sol Meliá, S.A. has subscribed and paid up the share capital increase (Ptas. 3,129 million) carried out in Prodigios<br />
Interactivos, S.A., a company engaged in developing business through internet.<br />
The increment in Desarrollos Hoteleros Guanacaste is the result of its last share capital increase.<br />
No provision is booked for the participation in P.T.S.A.I., because it maintains its level of activity since most of its income<br />
is earned in dollars. The directors therefore consider that no loss will be incurred.<br />
No provision is booked either for the companies, which present underlying capital gains due to the favourable forecast of<br />
results and to the value of their buildings.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
112
INVESTMENTS<br />
12.3 Other long-term receivables<br />
(Thousands of pesetas)<br />
1998 1999 2<strong>00</strong>0<br />
AGOTEL 217,246<br />
BANCA DI ROMA 1,031,176<br />
BANCA NAZIONALE DEL LAVORO 1,031,176<br />
CLIENTES TIEMPO <strong>COMP</strong>ARTIDO 1,213,353 1,968,7<strong>00</strong><br />
GOLDEN ASSET <strong>COMP</strong>ANY LTD. 356,650 414,275 441,755<br />
HOTELES CIBELES S.A. 36,9<strong>00</strong> 45,259<br />
SAUCISSE 546,824<br />
URINCASA S.A. 245,575 245,575<br />
AURELIA CENTRO 267,417<br />
MUNA TURIZM 153,497<br />
HOTELES REX, S.L. 105,838<br />
DAELLOS, S.A. 77,421<br />
I. CAUNEL,GOLF Y H. ARENA GORDA 195,935<br />
OTROS 1,458 39,098 2,375<br />
LONG-TERM LOANS 575,354 2,496,025 5,566,125<br />
<strong>SOL</strong> <strong>MELIA</strong> S.A. 2,788,790<br />
HOTELES TURISTICOS S.A. 3,089<br />
MOTELES ANDALUCES S.A. 1,317<br />
TENERIFE <strong>SOL</strong> S.A. 102,838<br />
DEFERRED TAX ASSETS 2,896,034<br />
<strong>SOL</strong> <strong>MELIA</strong> S.A. 1<strong>00</strong>,631 59,847<br />
DESARROLLOS TURISTICOS DEL CARIBE S.A. 165,710<br />
DOCK TELEMARKETING S.A. 1<strong>00</strong> 1<strong>00</strong><br />
INDUSTRIAS TURISTICAS S.A. 167 167<br />
INVERSIONES Y EXPLOTACIONES TURISTICAS S.A. 210 483<br />
LAV. INDUST.GUADALAJARA 326<br />
ME<strong>SOL</strong> MANAGEMENT S.L. 10,<strong>00</strong>0<br />
MOTELES ANDALUCES S.A. 205 205<br />
TENERIFE <strong>SOL</strong> S.A. 60<br />
TRYP S.A. 81,542<br />
INMOBILIARIA BULMES S.A. 16,997<br />
AZAFATA S.A. 351<br />
PARKING INTERNACIONAL S.A. 52<br />
H.BOULOGNE ADAGIO 1,954<br />
LONG-TERM GUARANTEE DEPOSITS 277,409 161,699<br />
<strong>SOL</strong> <strong>MELIA</strong> S.A. 1,4<strong>00</strong>,460 10,594<br />
C.T.G.H. 597 1,319<br />
HOTELES TURISTICOS S.A. 437 437<br />
LOMONDO LTD. 177,068 174,354<br />
MARKTUR TURIZM 67<br />
TENERIFE <strong>SOL</strong> S.A. 6<strong>00</strong> 6<strong>00</strong><br />
GRUPO <strong>SOL</strong> MELIÁ EN FRANCIA 50,087<br />
IHLA BELA 1,590<br />
TRYP MEDITERRANEE 265,185<br />
INMOTEL INV. ITALIA S.L. 860<br />
MOTELES GRANDES RUTAS ESP. S.A. 41<br />
LONG-TERM DEPOSITS 1,579,229 505,067<br />
BILLS RECEIVABLE 1,205,387<br />
TOTAL OTHER LONG-TERM RECEIVABLES 575,354 7,248,697 7,438,278<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
113
INVESTMENTS<br />
Sol Meliá, S.A is the holder of two bank deposits in Italian Lira for an equivalent in pesetas of 2,061 million, which<br />
guarantee credit transactions of the subsidiary Inmotel Inversiones Italia, S.R.L., in relation to the construction of a<br />
hotel in Milan.<br />
Grupo Sol Asia Ltd. has granted a loan of US-$ 2.5 million to the hotel Sol Twin Towers (Golden Asset Company Ltd.)<br />
which bears interest at the rate of LIBOR plus 2%. Steps are being taken to recover the loan, nevertheless, in case of nonpayment,<br />
this balance would be covered by the provision for liabilities and charges.<br />
The loans granted to Aurelia Centro SRL. for Lira 1.7 million and up to Euros 1.8 million are intended to finance its trading<br />
activities.<br />
The loan to Hotel Cibeles, S.A. bears no interest.<br />
The loan granted to Muna Turizm, AS up to 5 million German Marks is intended to finance its trading activities.<br />
The disposal in the deferred tax assets balance is explained in Note 22.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
114
13 Deferred Expenses<br />
(Thousands of pesetas)<br />
BALANCE AT ADDITIONS DISPOSALS BALANCE AT<br />
31/12/99 31/12/<strong>00</strong><br />
Arrangement of loans 168,255 118,376 (38,237) 248,395<br />
Issue of Convertible bonds 781,564 (168,416) 613,148<br />
Interest on purchase of fixed assets 1,6<strong>00</strong>,536 1,801,709 (632,524) 2,769,721<br />
TOTAL 2,550,355 1,920,085 (839,177) 3,631,264<br />
The interest for purchase of fixed assets relates mainly to leasings for renovation of hotels and for the construction of the<br />
Hotel Meliá Milano.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
115
14 Inventories<br />
The Group has no firm purchase or sales commitments nor any other limitations affecting inventories.<br />
The main supplier with a turnover figure higher than Ptas. 1,<strong>00</strong>0 million was Carma (Ptas. 3,607 million), a related company.<br />
None of the other suppliers has reached a figure higher than Ptas. 5<strong>00</strong> million.<br />
(Thousands of pesetas)<br />
31/12/98 31/12/99 31/12/<strong>00</strong><br />
Goods 201,856 417,420<br />
Raw materials 724,326 763,472<br />
Fuel 53,375 82,604<br />
Spare parts 159,663 542,232<br />
Cleaning materials 345,045<br />
Ancillary materials 106,941<br />
Advertising and entertainment materials 47,812<br />
Replacement articles 8,974<br />
Sundry materials 21,262 535,369 8,331<br />
Office equipment 147,148 185,796<br />
Real estate assets 1,550,645 1,774,794<br />
Prepayments to suppliers 860,604 1,709,086<br />
TOTAL 21,262 4,232,986 5,992,508<br />
Sol Meliá, S.A. includes in inventories several buildings of no tourist interest, all of them for sale, which are included in<br />
the real estate assets balance shown above.<br />
The real estate assets item also includes a balance from Desarrollos Sol, S.A. relating to an important real estate development<br />
in Santo Domingo, which is not intended for tourist operations and is consequently for sale. Ptas. 1,<strong>00</strong>8 million are<br />
also included for tacit capital gains relating to building sites for sale.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
116
15 Debtors<br />
The breakdown of the short-term debts with subsidiaries is presented in Note 22.<br />
The other increments in the debtors heading are due to the business growth and to the new acquisitions of the Group as<br />
well as to the sales of buildings carried out by the Company.<br />
16 Short-term Investments<br />
The increase in the short-term securities portfolio mainly relates to the transfer of the participation in Detur Panamá, S.A.<br />
as explained in Note 2.2., and to financial investments from the Sol Meliá Group companies in France.<br />
The reduction of loans to subsidiaries relates to the cancellation of the loan from Sol Meliá, S.A. to Sol Meliá France,<br />
S.A.S., since the latter is consolidated in 2<strong>00</strong>0 by full consolidation method (See Note 2.3).<br />
The movement of the other loans balance shows an increase due to the short-term deposit of US-$ 5 million of Melia<br />
International Hotels, S.A. in the B.B.V.A.<br />
Sol Meliá, S.A. has deposited Ptas. 1,4<strong>00</strong> million in Bankinter to guarantee a loan to Mirador del Duque S.L. for the construction<br />
of a hotel in Tenerife. This deposit earns 3.03% interest.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
117
17 Own Shares<br />
The breakdown and movement of the own shares are as follows:<br />
(Thousands of pesetas)<br />
AVERAGE<br />
AVERAGE<br />
SHARES PRICE PRICE AMOUNT AMOUNT<br />
PTAS. EUROS PTAS. EUROS<br />
Balance at 12/31/1999 6<strong>00</strong>,<strong>00</strong>0 2,044,89 12,29 1,226,936,462 7,374,037<br />
Acquisitions of the year 630,362 1,699,70 10,22 1,071,428,509 6,439,415<br />
Disposals of the year (195,425) (2,044,89) 12,29 (399,623,072) (2,401,783)<br />
TOTAL 1,034,937 1,834,64 11,03 1,898,741,899 11,411,669<br />
Provisions (96,273,821) (578,617)<br />
TOTAL OWN SHARES 1,034,937 1,741,62 10,47 1,802,468,078 10,833,052<br />
Disposals for the year arise from the non-monetary contribution for the acquisition of the shares of Azafata, S.A.<br />
The Options Programmes for executives, establishing their right to purchase up to 2<strong>00</strong>,<strong>00</strong>0 old shares of Sol Meliá, S.A.,<br />
have been cancelled during the year.<br />
At December 31, 2<strong>00</strong>0 the total own shares represent 0.56 per cent of share capital.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
118
18 Equity<br />
The breakdown and movements of the items in this heading of the accompanying 2<strong>00</strong>0, 1999 and 1998 balance sheets<br />
are shown below:<br />
(Thousands of pesetas)<br />
BALANCE BALANCE DISTRIBUTION OF ADDITIONS TRANSFERS DISPOSALS BALANCE<br />
31/12/98 31/12/99 1999 RESULTS 31/12/<strong>00</strong><br />
Capital 3,1<strong>00</strong>,<strong>00</strong>0 5,708,859 439,995 6,148,854<br />
Non-distributable reserves 1,101,089 1,837,935 426,942 688,992 2,953,870<br />
Share premium 33,095,450 1<strong>00</strong>,418,656 32,559,608 (679,363) 132,298,9<strong>00</strong><br />
Reserves REV. R.D.I. 7/96 8,032,947 8,032,947<br />
Reserve Inv. Canary I. 951,121 2,033,319 1,231,808 3,265,127<br />
Voluntary reserves 18,270 725,580 7,351,279 448,674 (3,432,770) 5,092,764<br />
Reserves Cies. full cons. 4,623,663 26,064,671 5,472,480 7,349,787 (457,313) (245,211) 38,184,435<br />
Reserves Cies. Eq. Method 339,506 392,171 161,249 6,459 (990) (193,913) 364,978<br />
Conv.dif. Cies. full cons. (290,189) 6,378,310 3,487,057 9,865,367<br />
Conv. Dif. Cies. Eq. Method (610,117) (18,963) 15,487 (3,475)<br />
Interim dividend (1,240,<strong>00</strong>0)<br />
Consolidated P/L. 6,986,150 15,667,956 (15,667,956) 19,738,432 19,738,432<br />
Minority interest P/L. (70,375) (1,024,201) 1,024,201 (992,642) (992,642)<br />
TOTAL 48,<strong>00</strong>4,568 166,217,239 62,604,155 0 (3,871,893) 224,949,526<br />
18.1 Share capital<br />
The share capital of <strong>SOL</strong> <strong>MELIA</strong>, S.A. at December 31, 2<strong>00</strong>0 comprises 184,776,777 bearer shares with a par value of<br />
Euros 0.2 each, fully subscribed and paid up.<br />
All the shares comprising share capital quote on the Stock Exchange and have the same rights, except for the own shares.<br />
At the Ordinary and Extraordinary General Shareholders’ Meeting held on May 29, 2<strong>00</strong>0, the shareholders empowered<br />
the Board of Directors to increase share capital without their prior consent, up to a maximum of Euros 17,155,647<br />
(Ptas. 2,854 million). The Board of Directors was also authorised to issue convertible bonds within a maximum period<br />
of 5 years and up to Euros 17,155,467, thereby nullifying, with regard to the pending execution period, the authorisation<br />
given by the shareholders at the General Shareholders’ Meeting held on July 16, 1999 for the application of Euros<br />
3.9 million.<br />
The Board of Directors, empowered by the shareholders at the General Extraordinary Shareholders’ Meeting held on<br />
October 23, 2<strong>00</strong>0, agreed in its meeting of November 20 to increase share capital by Euros 2,644,421.40 euros by issuing<br />
and putting into circulation a maximum of 13,222,107 new ordinary shares with a par value of Euros 0.2 each and with a<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
119
EQUITY<br />
share premium of Euros 14.8 per share. This share capital increase, arising from the purchase of the shares of Tryp, S.A.<br />
(See Note 1), was subscribed and paid up by the non-monetary contribution of shares that represent 55 per cent of the shares<br />
of Tribenol, S.L. and 38.4 per cent of the shares of Tryp, S.A.<br />
At December 31, 2<strong>00</strong>0 the main shareholders with direct or indirect participation in <strong>SOL</strong> <strong>MELIA</strong>, S.A. are as follows:<br />
SHAREHOLDERS PARTICIPATION %<br />
Hoteles Mallorquines Consolidados, S.A. 27.90%<br />
Hoteles Mallorquines Asociados S.A. 16.30%<br />
Hoteles Mallorquines Agrupados S.A. 6.20%<br />
Other control shareholders 10.50%<br />
Others 39.10%<br />
TOTAL 1<strong>00</strong>%<br />
18.2 Reserves from parent company<br />
18.2.1 Share premium<br />
The increase in share premium during the year arises from the purchase of the shares of the Tryp Hotel Chain<br />
explained in Note 1.<br />
18.2.2 Legal reserves<br />
<strong>SOL</strong> <strong>MELIA</strong>, S.A. has the obligation of transferring 10% of the profits for the year to constitute the legal reserve<br />
until this equals at least 20% of the share capital. This reserve is not distributable to the shareholders and may only<br />
be used to offset losses, should no other reserves be available.<br />
18.2.3 Reserves for own shares<br />
This reserve was set up for the acquisition of own shares (1,034,937 shares) and is unavailable until the disposal of<br />
said shares at acquisition cost, less the provision charge recorded at year-end. These shares are recorded in assets in<br />
the balance sheet of these annual accounts (See Note 17).<br />
18.2.4 Reserve Law 19/94 Reinvestment in the Canary Islands<br />
This reserve is unavailable since it was created based on <strong>SOL</strong> <strong>MELIA</strong>, S.A.’s commitment to invest in new fixed<br />
assets located in the Canary Islands, with a 3 years investment term, an amount equal to the abovementioned reserve<br />
for investments in the Canary Islands Law 19/94.<br />
18.2.5 Revaluation reserve R.D.L. 7/1996 of June 7<br />
This reserve, incorporated as a result of the merger in the balance sheet included in the balance sheet of the 1996<br />
annual accounts of Inmotel Inversiones, S.A., is the consequence of the revaluations of the intangible and tangible<br />
fixed assets carried out according to the relevant rulings, less 3% of the revaluations amount for taxation.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
120
EQUITY<br />
The breakdown of the balance of the Revaluation reserve is as follows:<br />
(Thousands of pesetas)<br />
Revaluation of intangible fixed assets 242,271<br />
Revaluation of tangible fixed assets 8,099,422<br />
Taxation - 3% of revaluation (308,746)<br />
TOTAL REVALUATION RESERVE 8,032,947<br />
This reserve may be applied to offset losses, to increase the Company’s share capital and, after December 31, 2<strong>00</strong>6 (10 years<br />
starting from the date of the balance sheet including the revaluation), this reserve will be freely distributable. The balance<br />
of the reserve cannot be distributed, directly or indirectly, unless the revaluation value has materialized by the sale or full<br />
depreciation of the revalued items.<br />
18.2.6 Results from prior years<br />
Results from prior years relate to retained earnings and are freely distributable.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
121
EQUITY<br />
18.3 Reserves of companies consolidated by full consolidation method<br />
The most significant movements in this consolidated balance sheet heading during 2<strong>00</strong>0 relate to the distribution of the<br />
1999 results.<br />
The breakdown of this item of the consolidated balance sheet, by companies and in thousands of pesetas, is as follows:<br />
(Thousands of pesetas)<br />
BALANCE AT BALANCE AT 1999 ADDITIONS TRANSFERS DISPOSALS BALANCE AT<br />
31/12/98 31/12/99 RESULTS 31/12/<strong>00</strong><br />
Apartotel, S.A. (43,811) (17,384) 73,246 26,614 82,476<br />
Bear S.A. De C.V. 161,270 (37,305) 555,864 679,828<br />
Bisol Vallarta S.A. De C.V. 1,364,068 (242,379) 924,417 2,046,106<br />
C.Tamarindos, S.A. 167,961 (52,797) (37,548) (33,874) 43,742<br />
C.H.H. Mexicana, S.A. De C.V. 2,366,319 (195,818) 776,726 2,947,227<br />
C.I. Alcano, S.A. 230,108 1,423 231,532<br />
C.P. Sol y Nieve 226,255 52,481 634 (43,918) 235,452<br />
C.Tunissienne de G.H. 10,829 8,560 21,445 190 (21,369) 8,825<br />
C.T. Cozumel/Caribotels de México (1) 81,339 81,339<br />
Cala Formentor S.A. De C.V. 6,058,246 229,648 1,526,784 7,814,678<br />
Casino Paradisus 20,168 86,968 3,739 (58,317) (6,671) 45,887<br />
D.H. San Juan (102) 28 (1) (74)<br />
D.Mk.Services/Inversiones Coro (1) 89,433 (457,855) 269,199 (5,556) (104,778)<br />
D.T.C./Marmer (1) 117,024 155,468 1,148,951 1,421,443<br />
D.T.Caribe N.V. (1,690) (730) 1,608 (813)<br />
Desarrollos Sol S.A. 273,653 52,995 326,648<br />
Dock Telemarking, S.A. 441 1,311 1,941 (369) 2,884<br />
Dominican Investment NV (47,781) (407) (283) (48,471)<br />
Dorpan, S.L. 16,871 21,979 19,017 (6,893) 34,104<br />
Farandole B.V. (73,035) (11,519) (584) (85,137)<br />
G.H.T. Mesol, S.A. (1,788) 5,494 3,706<br />
Gesmesol, S.A. 843,937 1,663,154 920,110 (13) 2,583,251<br />
Grupo Sol Asia Ltd. 122,719 215,030 55,287 (5,572) 264,745<br />
Grupo Sol Meliá en Francia (1) 58,870 8 58,876<br />
Grupo Sol Services 10,085 10,487 7,550 2,096 20,133<br />
H.C. Extremadura, S.A. 227 227<br />
H.Meliá Internacional de Colombia 370 (74) 475 322 723<br />
Hosterias De Castilla, S.A. (37) 140,922 (140,922) (37)<br />
Hotel Bellver, S,A. 586,489 20,140 (19,973) (112) 586,544<br />
Hoteles Sol Internacional 9,694,548 (178,147) 726,955 10,243,356<br />
Hoteles Turísticos, S.A. 649 36,744 131 (36,697) 827<br />
Impulse H. Development 17,219 (19,579) 434,958 432,597<br />
Industrias Turísticas, S.A. 0 42,752 (42,751) 1<br />
Inmotel Internacional (90) (758) 702 725 580<br />
Inmotel Inversiones Italia, S.R.L. (521) (22,233) 22,233 231 (290)<br />
Inmpulse Development Inc. (3,439) (5,417) 2 (434,958) (443,813)<br />
Inversiones Inmobiliarias IAR 3,382,511 (621,054) 1,094,305 3,855,763<br />
Inversiones Latinoamerica 2.<strong>00</strong>0, S.L. (2,934,120) (4,542) 25 (2,938,637)<br />
Inversiones Turísticas del Caribe (2,561) 13,777 2,590 (1,927) 14,440<br />
Inversiones y Explotaciones Tur. S.A. 2,618 265,813 (265,283) 3,148<br />
Irton Co./Inversiones Guamá (1) (191,607) 337 (1,713) (192,983)<br />
Latin America Logistics Co, 8,636 (38,491) (214) (30,069)<br />
Lavanderias Compartidas, S.A. 20 8,988 9,<strong>00</strong>8<br />
Lavanderias Ind. Guadalajara, S.A. 8,147 1,757 (9,905)<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
122
EQUITY<br />
(Thousands of pesetas)<br />
BALANCE AT BALANCE AT 1999 ADDITIONS TRANSFERS DISPOSALS BALANCE AT<br />
31/12/98 31/12/99 RESULTS 31/12/<strong>00</strong><br />
Lirax 4,163 2,196 (42,682) (40,486)<br />
Lomondo Ltd. 309,617 (14,277) 295,340<br />
M.I.H. U.K. LTD (2,<strong>00</strong>6) (2,335) (52) (268) (2,654)<br />
Marina International Holding 30,981 30,385 (303) (2,578) 27,504<br />
Markserv, B.V. (10,855) (20,509) (209,701) 309,013 78,803<br />
Marksol Turizm 40,206 57,053 (22,629) 54,104 88,528<br />
Marktur Turizm (21,326) (21,885) (3,578) (46,790)<br />
eliá Brasil Administraçao. 55,789 82,954 68,981 (49) 151,886<br />
Meliá Europa Holding de Entidades, S.A. 12,316 2<strong>00</strong>,286 (746,993) (534,391)<br />
Melia International Hotels, S.A 2,689,578 3,877,020 1,399,557 (15,503) 5,261,074<br />
Melia Inversiones Americanas, N.V. (6,440,231) 1,281,428 (33,260) (5,192,063)<br />
Melia Management Co. 19,254 106,651 29,517 (258) 135,909<br />
Meliá Venezuela S.A. (99,522) (108,303) 16,696 512 (91,094)<br />
Melsol Management B.V. (63) (51,230) (3,633) 26 (54,837)<br />
Melsol Portugal 4,217 4,372 13,705 14,327 32,404<br />
Mesol Management, S.L. (574) 2,210 (31,838) 1,729 (27,899)<br />
Moteles Andaluces, S.A. (0) 7,748 (7,748) (0)<br />
Moteles Grandes Rutas Españolas, S.A. 73 13,109 739 (12,903) (16) 1,<strong>00</strong>3<br />
Neale/Inversiones Agara (1) 492,720 837,680 (79,825) 1,250,574<br />
Op. Paseo de la Reforma, S.A. De C.V. 132 1 134<br />
Operadora Costarisol 13,818 168,849 (348,253) 434 (178,970)<br />
Operadora Mesol, S.A. De C.V. 375,420 790,549 173,766 377,397 34,780 1,376,492<br />
Parque San Antonio S.A. 602,615 49,202 (46,989) (20) 604,808<br />
Playa Salinas,S.A. 874 874<br />
Propiedades en Arriendo, S.L. (32) (32)<br />
Punta Elena, S.L. 6,308 6,619 12,927<br />
Randlestop 329 (1,309) 361 (619)<br />
Realizaciones Turísticas, S.A. 26,869 83,710 110,579<br />
Safivic, S.A. (0) 14,870 (14,870)<br />
San Juan Investment (102) 28 (1) (74)<br />
Securi Sol , S.A. (33) (859) 859 (32)<br />
Servicios Corp. Mesol, S.A. De C.V. 25,535 4,657 (13,567) 8,910<br />
Sol Finance (33,406) (1,021) (34,426)<br />
Sol Group B.V. 29,905 27,305 (4,518) (3,128) 19,660<br />
Sol Group Co. (37,714) (37,866) 39,679 1,813<br />
Sol Holding Corporation (241) (406) (559) 965<br />
Sol Hotel Management Co. (1,546) (1,588) (20) 1,607<br />
Sol Hotel Miami Beach (2,311) (2,777) (134) 2,910<br />
Sol Hotel U,K. Ltd. 90,748 78,064 (25,799) 413,481 (22,650) 443,095<br />
Sol Maninvest, B.V. (47,688) 4,544 (68,915) 65,294 923<br />
Sol Melià (458,303) 23,107 458,303 23,107<br />
Sol Meliá Croacia 4,943 22,113 (34,<strong>00</strong>8) (6,952)<br />
Sol Melia Europe, B.V. (1,727) 2,447 720<br />
Sol Melia Guatemala 10 28,463 58,301 86,765<br />
Sol Meliá Investment NV (605) (1,779) (2,384)<br />
Sol Meliá Sevice 521,823 779,416 691,159 6,803 (101,202) 1,376,176<br />
Talonario 5 Noches, S.L. (34,144) 72,318 15,407 (25,246) 62,479<br />
Tenerife Sol, S.A. 2,170,377 560,095 2,730,472<br />
Torresol Desarrollos Turísticos, AIE (3) (3)<br />
Urme Real, S.L. (4,206) (6,695) (10,901)<br />
TOTAL RESERVES OF <strong>COMP</strong>ANIES<br />
BY FULL CON<strong>SOL</strong>IDATION 4,623,663 26,064,671 5,014,176 7,349,787 990 (245,211) 38,184,435<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
123
EQUITY<br />
The balances of the above table are broken down by each Group subsidiary in which the parent company owns a direct or<br />
indirect share (See Note 2). Nevertheless, the companies (1), which have the same business line, given the shareholding<br />
structure of the subsidiaries, are presented jointly to faciliate comprehension of their contribution to the consolidated<br />
Group.<br />
The additions in the companies residing in Mexico (Bear. S.A. de C.V., Bisol Vallarta, S.A. de C.V., Corporación Hotelera<br />
Hispano Mexicana, S.A. de C.V.,Controladora Turística Cozumel S.A. de C.V., Caribotels de México, S.A. de C.V., Cala<br />
Formentor, S.A. de C.V., and Operadora Mesol, S.A. de C.V.) and Venezuela (Inversiones Inmobiliarias IAR), countries<br />
with high inflation rates, are due mainly to these companies’ obligation to restate their financial statements.<br />
Additions included for the D.T.C./Marmer group of companies relate mainly to a dividend collected for the sale of Hotel<br />
Meliá Bavaro.<br />
The other movements relate mainly to the changes introduced in the consolidation scope as described in Note 2.3. and to<br />
the adjustments for write-off of provisions and dividends made in the consolidation process.<br />
18.4 Reserves of companies consolidated by the equity method<br />
The movements in this heading of the liabilities side of the consolidated balance sheet relate to the distribution of the 1999<br />
results.<br />
The breakdown of this heading of the consolidated balance sheet, by companies, is as follows:<br />
(Thousands of pesetas)<br />
BALANCE AT BALANCE AT 1999 ADDITIONS TRANSFERS DISPOSALS BALANCE AT<br />
31/12/1998 31/12/1999 RESULTS 31/12/2<strong>00</strong>0<br />
Agotel Gmbh (195,357) (131,644) (269,693) (596,694)<br />
Aparthotel Bosque, S.A. 43,789 35,893 17,182 (24,293) (6,064) 22,718<br />
C.P. Meliá Castilla 256,870 234,9<strong>00</strong> 5,052 (180,522) (4,064) 312,236<br />
C.P.Meliá Costa del Sol 154,616 219,368 82,661 (63,081) (594) 238,357<br />
Casino Tamarindos, S.A. 205,271<br />
Hellenic Hotel Management (8,685) (13,664) 25,592 3,243<br />
Hotel Campus, S.L.<br />
Hotel Las Américas, S.A. 26,940 (72,025) (26,039) 98,065<br />
I.Turísticas Casas Bellas, S.L. 6 245 (1,617) (1,366)<br />
Meliá Inversiones Americanas, N.V. (91,367)<br />
Meliá Mérida, S.L.<br />
Nexprom, S.A. 153,911 34,147 1,162 (73,052) 116,168<br />
Promedro, S.A. (2,813) 5,887 (3,074)<br />
Sofía Hoteles, S.L.<br />
Sol Hoti Portugal Hoteis 257 5,<strong>00</strong>9 11,029 16,038<br />
Sol Meliá Travel, S.A.<br />
Touroperador Viva Tours, S.A. (53,216) 317,440 (9,945) 254,279<br />
TOTAL 339,506 392,171 161,249 6,459 (990) (193,913) 364,978<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
124
EQUITY<br />
The balances of the above table are broken down by each Group subsidiary with direct or indirect participation of the<br />
parent company (See Note 2).<br />
The additions and disposals mainly relate to the changes introduced in the consolidation scope as described in Note 2 and<br />
to the adjustments for write-off of provisions and dividends made in the consolidation process.<br />
18.5 Exchange differences of companies consolidated by full consolidation method<br />
(Thousands of pesetas)<br />
BALANCE BALANCE BALANCE BALANCE BALANCE BALANCE<br />
31/12/1998 31/12/1999 31/12/2<strong>00</strong>0 31/12/1998 31/12/1999 31/12/2<strong>00</strong>0<br />
Bear S.A. de C.V. 326,638 815,431 Markserv, B.V. 4,180 947 2,767<br />
Bisol Vallarta S.A. de C.V. (85,975) (93,125) Marksol Turizm (40,452) (60,018) (48,803)<br />
C.H.H.M. S.A. de C.V. 983,065 1,617,262 Marktur Turizm 14,<strong>00</strong>2 17,725<br />
C.T. Cozumel/Caribotels de Mésxico (1) 140,673 Meliá Brasil Administraçao (14,533) (30,120) (40,789)<br />
C.Tunissienne de G.H. (541) (2,256) 218 Melia International Hotels, S.A 195,676 917,783 1,255,861<br />
Cala Formentor S.A. de C.V. 3,251,821 4,873,370 Melia Inversiones Americanas NV 191,068 191,894<br />
Casino Paradisus (26,887) (50,347) Melia Management Co. (35,625) (50,915) (87,014)<br />
D.H. San Juan 87 90 Meliá Venezuela S.A. 15,823 13,950 13,539<br />
D.Mk.Services/Inversiones Coro (161,676) (59,645) Melsol Management B.V. (388) (121) (122)<br />
D,T.C./Marmer (56,201) (1,209,189) Melsol Portugal 29 (14,271) (14,270)<br />
D.T.Caribe N.V. 525,835 995,415 Neale/Inversiones Agara 281,389 647,910<br />
Desarrollos Sol S.A. 4,492 19,948 Operadora Costarisol (17,566) (6,765) (31,821)<br />
Dominican Investment NV 13,276 26,926 Operadora Mesol, S.A. De C.V. (217,579) 67,061 218,267<br />
Farandole B.V. (156) (180) O. Paseo de la Reforma S.A. de C.V. 21 170,054<br />
Gesmesol, S.A. 8,505 401,678 603,209 Randlestop 119,060 220,353<br />
Grupo Sol Asia Ltd. (6,476) 23,763 40,042 San Juan Investment 87 90<br />
Grupo Sol Services (2,564) 3,484 2,015 Servicios Corp. Mesol, S.A. de C.V. (8,825) 13,334<br />
H.Meliá Intnal de Colombia (968) (1,053) (2,296) Sol Finance (5,314) (7,863)<br />
Hoteles Sol Internacional 1,071 1,030 Sol Group B.V. (37) (22) (22)<br />
Ihla Bela de Gestao e Turismo 0 (742) Sol Group Co. 9,113 24,291 35,540<br />
Impulse Development Inc. 0 397 Sol Holding Co. 899 2,2<strong>00</strong><br />
Impulse H. Development (15) (17) Sol Hotel Management Co. 1,059 1,128<br />
Inmotel I. Italia (0) (37.327) Sol Hotel Miami Beach (541) (1,607)<br />
Inmotel Internacional 123 731 Sol Hotel U.K. Ltd (24,941) (53,274) (289,154)<br />
Inversiones Inmobiliarias IAR (141,186) (223,622) Sol Maninvest, B.V. 4,966 2,999 2,998<br />
Inversiones Jacuey 0 (6,470) Sol Meliá Croacia (826) 1,1<strong>00</strong> 1,096<br />
Inversiones Turísticas del Caribe 342 (2,249) (2,995) Sol Melia Guatemala (2,668) (1,334) 3,639<br />
Irton Co./Inversiones Guamá (1,860) 101,799 Sol Meliá Investment NV (142,093) (182,782) (182,817)<br />
Latin America Logistics Co. (1,138) (3,045) Sol Meliá Perú S.A. 0 (231)<br />
Lirax 184 272 Sol Meliá Sevice 17,021 14,916 105,195<br />
Lomondo Ltd. 96,543 161,513 Tryp Meditérranée 0 (7,394)<br />
M.I.H. U.K. LTD (225) (830) (935)<br />
Marina International Holding (30,954) (31,062) (21,668)<br />
TOTAL (290,189) 6,378,310 9,865,367<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
125
EQUITY<br />
18.6 Exchange differences of companies consolidated by the equity method<br />
(Thousands of pesetas)<br />
BALANCE BALANCE BALANCE BALANCE BALANCE BALANCE<br />
31/12/1998 31/12/1999 31/12/2<strong>00</strong>0 31/12/1998 31/12/1999 31/12/2<strong>00</strong>0<br />
Agotel Gmbh 12 26 Meliá Inv. Americanas, N.V. (591,234)<br />
Hellenic Hot Mgment Co.HB,.SA. (3,368) (3,242) (3,516) Sol Hoti Portugal Hoteis L.D.A. 3 14 15<br />
Hotel Las Américas, S.A. (15,518) (15,747)<br />
TOTAL (610,117) (18,963) (3,475)<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
126
19 Minority Interest<br />
Some consolidated companies have minority shareholders, which represent the following amounts of the companies’ equity<br />
and results:<br />
(miles de pesetas)<br />
BALANCE AT BALANCE AT 2<strong>00</strong>0 ADDITIONS TRANSFERS DISPOSALS EXCHANGE BALANCE AT<br />
31/12/98 31/12/99 RESULTS DIFFERENCES 31/12/<strong>00</strong><br />
Apartotel, S.A. 1,108 1,475 78 188 1,741<br />
Bisol Vallarta S.A. De C.V. (1,219) (2,353) 35,122 1,693 33,242<br />
C.H.H. Mexicana, S.A. De C.V. 78,887 (9,802) (7,577) 11,883 73,391<br />
C.P. Sol y Nieve 33,228 (3,195) (634) 29,4<strong>00</strong><br />
C.T. Cozumel/Caribotels de México (1) (201,467) 2,025,634 2,867 1,827,035<br />
Cala Formentor S.A. De C.V. 252,299 1,559 (35,806) 14,762 232,815<br />
Casino Paradisus 113,116 36,637 (51,758) 3,561 101,556<br />
D.H. San Juan 3 15,033 (2) 15,033<br />
D.Mk.Services/Inversiones Coro (1) (14,203) (8,493) 9,278 1,928 (11,490)<br />
D.T.C./Marmer (1) (51,920) 2,983 55,127 662 6,852<br />
D.T.Caribe N.V. 5,136 (568) (66,842) 6,414 (55,860)<br />
Desarrollos Sol S.A. 7,103 (5,246) (1,933) 1,147 1,071<br />
Dominican Investment NV (1,210) (21) 564 254 (414)<br />
Farandole B.V. (2,163) (1,519) 608 (3,074)<br />
Grupo Sol Asia Ltd. 112,462 169,479 15,401 10,853 195,734<br />
Grupo Sol Services 6,112 14,347 1,195 418 15,961<br />
H.C. Extremadura, S.A. 185,199 646 185,846<br />
Hotel Bellver, S.A. 363,347 10,526 112 373,985<br />
Hoteles Turísticos, S.A. 49,496 3,197 (356) 52,337<br />
Ihla Bela de Gestao e Turismo 15,806 87,250 (4<strong>00</strong>) 102,656<br />
Industrias Turísticas, S.A. 25,422 1,495 26,918<br />
Inversiones Inmobiliarias IAR 66,859 (6,431) 156 (814) 59,769<br />
Inversiones Jacuey 1,629 (2) (116) 1,511<br />
Inversiones y Explotaciones Tur. S.A. 1,252,596 338,685 1,591,282<br />
Irton Co./Inversiones Guamá (1) (4,954) (15,301) 1,365 1,927 (16,963)<br />
Latin America Logistics Co. (792) (124) 208 (20) (727)<br />
Lavanderias Ind. Guadalajara, S.A. 23,084 (578) (23,085) (578)<br />
Melia Inversiones Americanas NV 851,287 64,383 (249,057) 666,613<br />
Meliá Mérida S.L. 199,989 (199,989)<br />
Melsol Portugal 4,253 4,104 4,423 (3,199) 5,329<br />
Moteles Andaluces, S.A. 31,071 7,044 38,115<br />
Moteles Grandes Rutas Españolas, S.A. 29,257 1,848 (739) 30,365<br />
Neale/Inversiones Agara (1) 36,302 9,984 (7,310) 5,612 44,586<br />
Op. Paseo de la Reforma, S.A. 1 3,101 3,102<br />
Parking Internacional S.A. 48 3,119 3,167<br />
Parque San Antonio S.A. 260,083 21,485 (13,835) 267,734<br />
Playa Salinas,S.A. 10 (5) 6<br />
Punta Elena, S.L. 163,177 47,778 210,955<br />
Randlestop 1,153 (16) 981 1,871 3,989<br />
Realizaciones Turísticas, S.A. 118,497 3,181 121,678<br />
Safivic, S.A. 10,714 1,784 (10,714) 1,784<br />
San Juan Investment 3 15,033 (2) 15,033<br />
Tenerife Sol, S.A. 2,961,036 558,236 3,519,270<br />
Torresol Desarrollos Turísticos, AIE 19 (1) 19<br />
Tryp Meditérranée 68,157 (53,112) (1,264) 13,781<br />
Urme Real, S.L. 18,715 (497) (3,201) 15,017<br />
TOTAL 123,935 7,250,035 992,642 2,222,811 (729,157) 63,242 9,799,570<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
127
20 Deferred Income<br />
20.1 Capital grants<br />
The breakdown of the grants reflected in the balance sheet for each company and their accrual in the profit and loss account<br />
of the current year are as follows:<br />
(Thousands of pesetas)<br />
BALANCE 31/12/98 BALANCE 31/12/99 BALANCE 31/12/<strong>00</strong> ADDITIONS<br />
B/S. P/L. B/S. P/L. B/S. P/L. 2<strong>00</strong>0<br />
AZAFATA, S.A. 4,180 849 5,028<br />
DOCK TELEMARKETING, S.A. 3,<strong>00</strong>0 5<strong>00</strong> 2,5<strong>00</strong> 5<strong>00</strong> 2,<strong>00</strong>0 5<strong>00</strong><br />
HOTELES TURISTICOS, S.A. 18,436 2,179 16,257 2,179<br />
INDUSTRIAS TURISTICAS, S.A. 7,261 443 6,818 443<br />
INV. y EXPLOTACIONES TURISTICAS, S.A. 58,440 2,962 62,515 3,423 7,498<br />
MOT. GRANDES RUTAS DE ESPAÑA, S.A. 1,059 41 1,019 41<br />
<strong>SOL</strong> <strong>MELIA</strong>, S.A. 493,071 16,168 512,449 16,794 36,172<br />
TOTAL 3,<strong>00</strong>0 5<strong>00</strong> 580,767 22,293 605,237 24,228 48,699<br />
These grants were used mainly to finance purchases of tangible fixed assets.<br />
20.2 Other deferred income<br />
The breakdown of other deferred income reflected in the balance sheet for each company is as follows:<br />
(miles de Pesetas)<br />
BALANCE BALANCE BALANCE<br />
30/12/98 31/12/99 31/12/<strong>00</strong><br />
BEAR, S.A. De C.V. 91,491 91,491<br />
CALA FORMENTOR, S.A. De C.V. 341,954<br />
M.I.H. U.K. Ltd. 5,449<br />
MARK<strong>SOL</strong> TURIZM 11,360<br />
MELIÁ INVERSIONES AMERICANAS, B.V. 561,451 302,175<br />
<strong>SOL</strong> MELIÁ CROATIA, S.A. 969 33,274<br />
<strong>SOL</strong> MELIÁ, S.A. 252,775 554,679 677,379<br />
Unrealised foreign currency gains 252,775 1,567,352 1,104,319<br />
Deferred interest 16,847 11,830<br />
Deferred time sharing income 1,069,463 1,967,654<br />
TOTAL 252,775 2,653,662 3,083,803<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
128
21 Provisions for Liabilities and Charges<br />
The balance sheet reflects in the long-term liabilities a balance of Ptas. 9,437 million as Provisions for liabilities and charges.<br />
As indicated in Note 5 this heading includes the Group’s commitments with its personnel (movement and breakdown<br />
not specifically quantified) as well as the provisions recorded to cover the various liabilities and contingencies arising from<br />
operations, the commitments acquired and guarantees given to third parties, risks for legal claims and lawsuits and possible<br />
liabilities deriving from the different possible interpretations of prevailing legal regulations. It also includes the provisions<br />
for taxation from previous years, which are being appealed or are pending court resolution according to the following<br />
details, in thousands of pesetas:<br />
TAXES YEARS 12/31/2<strong>00</strong>0<br />
Tax on business location 1980, 1983 and 1987 6,456<br />
Turnover tax 1977, 1978 and 1977 121,<strong>00</strong>0<br />
Urban land tax 1979, 1980, 1984, and 1986 to 1988 15,096<br />
Luxury taxes 1975 a 1980, 1984 and 1985 17,209<br />
Tax on real estate 1990 5,<strong>00</strong>0<br />
Appealed additional tax assessments 157,103<br />
TOTAL 321,864<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
129
22 Non-trade Debts<br />
22.1 Issue of debentures<br />
On September 15, 1999 Sol Meliá, S.A. carried out the so-called “Issue of Convertible Debentures of Sol Meliá, S.A.,<br />
September 1999”, amounting to Euros 2<strong>00</strong> million, the main characteristics of which are as follows:<br />
Amount of the issue € 2<strong>00</strong>,<strong>00</strong>0,<strong>00</strong>0<br />
Par value of bond: € 1,<strong>00</strong>0.<strong>00</strong><br />
Maturity:<br />
5 years<br />
Debt status:<br />
Senior (Not subordinate)<br />
Issue price: 1<strong>00</strong>.<strong>00</strong>%<br />
Issue date: September 15, 1999<br />
Maturity date: September 15, 2<strong>00</strong>4<br />
Coupon:<br />
1.<strong>00</strong>% (e10,<strong>00</strong>) annual upon maturity<br />
Maximum and minimum conversion price: 16.81 / 15.<strong>00</strong> (35.54% / 21.<strong>00</strong>%)<br />
Minimum conversion premium: 21.<strong>00</strong>%<br />
Conversion ratio:<br />
66.6489 shares per Bond<br />
Redemption price: 112.02%<br />
Bond yield upon maturity: 3.25%<br />
Possibility of cancellation by issuer: After the third year. (Subject to limit of 130%<br />
e19.51)<br />
Credit quality:<br />
BBB+<br />
Maximum of shares to be issued: 13,329,779<br />
The balance at December 31, 2<strong>00</strong>0 is as follows:<br />
Issue principal 33,277,2<strong>00</strong><br />
Accrued interest at 2.25% 1,035,534<br />
TOTAL 34,312,734<br />
Sol Meliá, S.A. guarantees this issue of debentures amounting to Euros 2<strong>00</strong> million with the Total Equity of the Company.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
130
NON-TRADE DEBTS<br />
On December 7, 2<strong>00</strong>0 Sol Meliá Europe, B.V. carried out a private placing of debentures among investors of Deutsche<br />
Bank for a total of Euros 206 million under the following terms:<br />
Amount of the issue € 206,<strong>00</strong>0,<strong>00</strong>0<br />
Par value of bond: € 10,<strong>00</strong>0.<strong>00</strong><br />
Maturity:<br />
114 days<br />
Issue price: 98.26%<br />
Issue date: December 7, 2<strong>00</strong>0<br />
Maturity date: March 30, 2<strong>00</strong>1 (February 12, 2<strong>00</strong>6)<br />
Redemption price: 1<strong>00</strong>%<br />
Bond yield upon maturity: 5.644%<br />
The balance at December 31, 2<strong>00</strong>0 is as follows:<br />
Issue principal 34,275,516<br />
TOTAL 34,275,516<br />
For presentation purposes, on the Group’s Financial Statements the balance of Ptas. 34,276 million has been reclassified to<br />
long-term. This balance relates to the private placing of bonds of Euros 206 million, which was formalised to cover<br />
termporarily the financing of the acquisitions made during the year and which, on the formulation date of the<br />
accompanying annual accounts, has been covered by the issue of bonds of Euros 340 million with five-year maturities, as<br />
explained in Note 27.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
131
NON-TRADE DEBTS<br />
22.2 Debts with credit institutions<br />
(Thousands of pesetas)<br />
LOANS AND CREDIT LINES<br />
DETAILS OF CREDIT LINES<br />
S/T L/T TOTAL LAST LIMIT BALANCE BALANCE CURRENCY<br />
MATURITY MATURITY MATUR. MATUR. BALANCE AVAILABLE USED<br />
AZAFATA, S.A.<br />
LEASING 6,493 6,726 13,219 PTA.<br />
BEAR S.A. de C.V.<br />
SOMEX 18,084 18,084 USD<br />
BCO. SABADELL 260,222 5,453,948 5,714,170 23/6/2011 USD<br />
SUB-TOTAL 278,306 5,453,948 5,732,254<br />
CALA FORMENTOR, S.A. de C.V.<br />
B.B.V. 1,269,946 8,254,651 9,524,597 30/6/2<strong>00</strong>8 USD<br />
CARIBOTELS de MEXICO S.A. de C.V. 83,174 83,174 USD<br />
COM. PROP. <strong>SOL</strong> y NIEVE<br />
BANKINTER 125,<strong>00</strong>0 375,<strong>00</strong>0 5<strong>00</strong>,<strong>00</strong>0 17/9/2<strong>00</strong>4 PTA.<br />
LEASING 70,182 238,676 308,858 PTA.<br />
INTEREST PAYABLE 963 963<br />
SUB-TOTAL 196,145 613,676 809,821<br />
DOCK TELEMARKETING, S.A.<br />
LEASING 3,679 4,069 7,748 PTA.<br />
HOTEL BELLVER, S.A.<br />
CAJA MADRID 4,<strong>00</strong>0 20,<strong>00</strong>0 24,<strong>00</strong>0 3/7/2<strong>00</strong>6 PTA.<br />
CAJA MADRID 6,<strong>00</strong>0 30,<strong>00</strong>0 36,<strong>00</strong>0 3/7/2<strong>00</strong>6 PTA.<br />
CAJA MADRID 10,<strong>00</strong>0 70,<strong>00</strong>0 80,<strong>00</strong>0 1/7/2<strong>00</strong>8 PTA.<br />
SA NOSTRA 20,<strong>00</strong>0 20,<strong>00</strong>0 PTA.<br />
LEASING 22,195 40,639 62,834<br />
INTEREST PAYABLE 2,065 2,065 PTA.<br />
SUB-TOTAL 64,260 160,639 224,899<br />
HOTEL CONVENTO DE EXTREMADURA, S.A<br />
BCO. DE EXTREMADURA 231,902 231,902 19/5/2017 5<strong>00</strong>,<strong>00</strong>0 268,098 231,902 PTA.<br />
HOTELES TURÍSTICOS, S.A.<br />
LEASING 55,242 94,824 150,066 PTA.<br />
INDUSTRIAS TURISTICAS, S,A.<br />
LEASING 7,148 4,235 11,383 PTA.<br />
INMOBILIARIA BULMES, S.A.<br />
B.B.V.A. 1,314,<strong>00</strong>0 1,314,<strong>00</strong>0 28/2/2<strong>00</strong>1<br />
INMOTEL INVERSIONES ITALIA S.R.L.<br />
LEASING 494,741 8,080,758 8,575,499 LIT<br />
INVERSIONES AGARA, S.A.<br />
BANCAJA 349,817 1,661,631 2,011,448 16/7/2<strong>00</strong>6 USD<br />
INTEREST PAYABLE 32,613 32,613 USD<br />
SUB-TOTAL 382,430 1,661,631 2,044,061<br />
INVERSIONES CORO, S.A.<br />
POPULAR DOMINICANO 699,634 1,049,451 1,749,085 30/4/2<strong>00</strong>3 USD<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
132
NON-TRADE DEBTS<br />
(Thousands of pesetas)<br />
LOANS AND CREDIT LINES<br />
DETAILS OF CREDIT LINES<br />
S/T L/T TOTAL LAST LIMIT BALANCE BALANCE CURRENCY<br />
MATURITY MATURITY MATUR. MATUR. BALANCE AVAILABLE USED<br />
INVERSIONES GUAMA, S.A.<br />
BANCAJA 583,028 2,915,142 3,498,170 27/8/2<strong>00</strong>6 USD<br />
INTEREST PAYABLE 83,211 83,211 USD<br />
SUB-TOTAL 666,239 2,915,142 3,581,381<br />
INVERSIONES INMOBILIARIAS IAR 1997 CA<br />
B.S.C.H. 665,340 2,656,613 3,321,952 3/11/2<strong>00</strong>5 USD<br />
BCO. SABADELL 429,993 2,432,540 2,862,534 12/2/2<strong>00</strong>6 USD<br />
SUB-TOTAL 1,095,333 5,089,153 6,184,486<br />
INVERSIONES Y EXPLOTACIONES TURÍSTICAS, S.A.<br />
HIPOTECARIO 90,<strong>00</strong>0 1,790,363 1,880,363 15/5/2<strong>00</strong>9 PTA.<br />
C.A.M. 1<strong>00</strong>,<strong>00</strong>0 1,<strong>00</strong>0,<strong>00</strong>0 1,1<strong>00</strong>,<strong>00</strong>0 12/4/2011 PTA.<br />
LEASING 82,318 111,547 193,865 PTA.<br />
INTEREST PAYABLE 23,054 23,054 PTA.<br />
SUB-TOTAL 295,372 2,901,911 3,197,283<br />
LOMONDO LTD.<br />
B.B.V. 487,454 9,951,914 10,439,368 20/1/2016 LUK<br />
BARCLAYS 422,038 857,264 1,279,302 14/7/2<strong>00</strong>3 LUK<br />
INTEREST PAYABLE 405,708 405,708 LUK<br />
SUB-TOTAL 1,315,199 10,809,178 12,124,378<br />
ME<strong>SOL</strong> MANAGEMENT, S.L.<br />
LEASING 449,836 1,611,904 2,061,740 PTA.<br />
MOTELES ANDALUCES, S,A.<br />
LEASING 1,519 2,536 4,055 PTA.<br />
MOTELES GRANDES RUTAS DE ESPAÑA, S.A.<br />
LEASING 12,774 18,102 30,876 PTA.<br />
PARQUE SAN ANTONIO, S.A.<br />
LEASING 19,975 6,426 26,401 PTA.<br />
<strong>SOL</strong> <strong>MELIA</strong>, S.A.<br />
B.B.V. 199,029 1,990,291 2,189,320 1/12/2011 PTA.<br />
B,N.L. 250,<strong>00</strong>0 750,<strong>00</strong>0 1,<strong>00</strong>0,<strong>00</strong>0 30/10/2<strong>00</strong>4 PTA.<br />
B.S.C.H. 160,<strong>00</strong>0 1,6<strong>00</strong>,<strong>00</strong>0 1,760,<strong>00</strong>0 28/12/2011 PTA.<br />
C.A.M. 66,461 156,889 223,350 19/2/2<strong>00</strong>4 PTA.<br />
C,A,M, 31,012 76,510 107,522 24/3/2<strong>00</strong>4 PTA,<br />
C.A.M. 95,885 273,360 369,245 26/7/2<strong>00</strong>4 PTA.<br />
CAJA CANARIAS 99,697 493,251 592,948 30/3/2<strong>00</strong>7 PTA.<br />
CAJA CANARIAS 34,745 172,194 206,939 30/3/07 PTA.<br />
EXTERIOR 226,667 2,266,667 2,493,334 19/12/2011 PTA.<br />
EXTERIOR 85,101 112,158 197,259 30/4/2<strong>00</strong>3 PTA.<br />
EXTERIOR 79,943 112,<strong>00</strong>3 191,946 31/5/2<strong>00</strong>3 PTA.<br />
LA CAIXA 92,988 929,878 1,022,866 30/6/2011 PTA.<br />
LA CAIXA 110,<strong>00</strong>0 880,<strong>00</strong>0 990,<strong>00</strong>0 1/1/2<strong>00</strong>9 PTA.<br />
LA CAIXA 151,010 113,256 264,266 27/8/2<strong>00</strong>2 YEN<br />
MARCH 297,450 1,563,383 1,860,833 1/6/2<strong>00</strong>6 PTA.<br />
RHEINHYP 572,125 2,288,5<strong>00</strong> 2,860,625 27/6/2<strong>00</strong>5 PTA.<br />
RHEINHYP (1) 4,061,567 4,061,567 30/6/2<strong>00</strong>1 SWAP<br />
RHEINHYP (1) 2,411,555 2,411,555 30/6/2<strong>00</strong>1 SWAP<br />
RHEINHYP (1) 190,386 190,386 30/6/2<strong>00</strong>1 SWAP<br />
B,B.V. 4,923,148 4,923,148 19/6/2<strong>00</strong>1 5,<strong>00</strong>0,<strong>00</strong>0 76,852 4,923,148 PTA.<br />
B.B.V. 479,090 479,090 19/6/2<strong>00</strong>1 8<strong>00</strong>,<strong>00</strong>0 320,910 479,090 PTA.<br />
B.N.L. 474,659 474,659 19/7/2<strong>00</strong>1 5<strong>00</strong>,<strong>00</strong>0 25,341 474,659 PTA.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
133
NON-TRADE DEBTS<br />
(Thousands of pesetas)<br />
LOANS AND CREDIT LINES<br />
DETAILS OF CREDIT LINES<br />
S/T L/T TOTAL LAST LIMIT BALANCE BALANCE CURRENCY<br />
MATURITY MATURITY MATUR. MATUR. BALANCE AVAILABLE USED<br />
B.S.C.H. 970,540 970,540 7/5/2<strong>00</strong>1 1,<strong>00</strong>0,<strong>00</strong>0 29,460 970,540 PTA.<br />
B.S.C.H. 783,906 783,906 26/11/2<strong>00</strong>2 1,<strong>00</strong>0,<strong>00</strong>0 216,094 783,906 PTA.<br />
BANCA DI ROMA 178,024 178,024 20/5/2<strong>00</strong>2 187,5<strong>00</strong> 9,476 178,024 PTA.<br />
BANCAJA 367,649 367,649 22/10/2<strong>00</strong>2 4<strong>00</strong>,<strong>00</strong>0 32,351 367,649 PTA.<br />
BANESTO 3,468,716 3,468,716 29/6/2<strong>00</strong>1 3,5<strong>00</strong>,<strong>00</strong>0 31,284 3,468,716 PTA.<br />
BANKINTER 507,477 507,477 19/2/2011 5<strong>00</strong>,<strong>00</strong>0 (7,477) 507,477 PTA.<br />
BANKINTER 971,732 971,732 21/4/2011 1,<strong>00</strong>0,<strong>00</strong>0 28,268 971,732 PTA.<br />
BARCLAYS 910,827 910,827 28/7/2<strong>00</strong>2 1,<strong>00</strong>0,<strong>00</strong>0 89,173 910,827 PTA.<br />
C.A.M. 1,897,173 1,897,173 16/12/2<strong>00</strong>1 1,<strong>00</strong>0,<strong>00</strong>0 (897,173) 1,897,173 PTA.<br />
CAIXA CATALUNYA 296,902 296,902 31/7/2<strong>00</strong>1 5<strong>00</strong>,<strong>00</strong>0 203,098 296,902 PTA.<br />
CAJA MADRID 1,464,928 1,464,928 1/1/2<strong>00</strong>2 1,5<strong>00</strong>,<strong>00</strong>0 35,072 1,464,928 PTA.<br />
CREDITO BALEAR 66,143 66,143 3/10/2<strong>00</strong>1 1<strong>00</strong>,<strong>00</strong>0 33,857 66,143 PTA.<br />
CHASE MANHATTAN 1,482,094 1,482,094 2/3/2<strong>00</strong>3 1,5<strong>00</strong>,<strong>00</strong>0 17,906 1,482,094 PTA.<br />
DEUTSCHE BANK 279,350 279,350 8/9/2<strong>00</strong>2 1,<strong>00</strong>0,<strong>00</strong>0 720,650 279,350 PTA.<br />
DRESDNER 1.<strong>00</strong>3,205 1,<strong>00</strong>3,205 30/1/2<strong>00</strong>2 1,<strong>00</strong>0,<strong>00</strong>0 (3,205) 1,<strong>00</strong>3,205 PTA.<br />
HERRERO 304,310 304,310 20/2/2<strong>00</strong>1 4<strong>00</strong>,<strong>00</strong>0 95,690 304,310 PTA.<br />
LA CAIXA 3,011,996 3,011,996 30/4/2<strong>00</strong>3 3,<strong>00</strong>0,<strong>00</strong>0 (11,996) 3,011,996 PTA.<br />
MARCH 228,026 228,026 15/10/2<strong>00</strong>6 250,<strong>00</strong>0 21,974 228,026 PTA.<br />
MARCH 251,708 251,708 15/10/2<strong>00</strong>6 3<strong>00</strong>,<strong>00</strong>0 48,292 251,708 PTA.<br />
POPULAR 243,382 243,382 13/4/2<strong>00</strong>1 250,<strong>00</strong>0 6,618 243,382 PTA.<br />
SA NOSTRA 541,116 541,116 30/9/2<strong>00</strong>2 750,<strong>00</strong>0 208,884 541,116 PTA.<br />
<strong>SOL</strong>BANK 987,515 987,515 4/9/2<strong>00</strong>3 1,<strong>00</strong>0,<strong>00</strong>0 12,485 987,515 PTA.<br />
LEASINGS 6,972,701 10,860,206 17,832,907 PTA.<br />
INTEREST PAYABLE 297,326 297,326 PTA.<br />
SUB-TOTAL 16,485,648 50,732,162 67,217,810 27,437,5<strong>00</strong> 1,343,884 26,093,616<br />
<strong>SOL</strong> <strong>MELIA</strong> CROACIA<br />
LEASING 666 666 KUNA<br />
TENERIFE <strong>SOL</strong>, S.A.<br />
LEASING 16,557 2,316 18,873 PTA.<br />
TRYP, S.A.<br />
B.B.V.A. 17,663 17,663 14/9/2<strong>00</strong>1 3<strong>00</strong>,<strong>00</strong>0 282,337 17,663 PTA.<br />
BANC SABADELL 26,730 26,730 22/6/2<strong>00</strong>1 1<strong>00</strong>,<strong>00</strong>0 73,270 26,730 PTA.<br />
BANCO DE VALENCIA 2,016 2,016 8/7/2<strong>00</strong>1 50,<strong>00</strong>0 47,984 2,016 PTA.<br />
BANCO GALLEGO 59,474 59,474 17/3/2<strong>00</strong>1 1<strong>00</strong>,<strong>00</strong>0 40,526 59,474 PTA.<br />
BANCO ZARAGOZANO 2/11/2<strong>00</strong>1 1<strong>00</strong>,<strong>00</strong>0 1<strong>00</strong>,<strong>00</strong>0 PTA.<br />
BANESTO 21/2/2<strong>00</strong>1 150,<strong>00</strong>0 150,<strong>00</strong>0 PTA.<br />
BANESTO 1,696 1,696 17/3/2<strong>00</strong>1 1<strong>00</strong>,<strong>00</strong>0 98,304 1,696 PTA.<br />
BANKINTER 164,850 164,850 23/2/2<strong>00</strong>1 3<strong>00</strong>,<strong>00</strong>0 135,150 164,850 PTA.<br />
BCO. POPULAR ESPAÑOL 12/4/2<strong>00</strong>1 125,<strong>00</strong>0 125,<strong>00</strong>0 PTA.<br />
CAJA MADRID 214,917 214,917 27/10/2<strong>00</strong>1 3<strong>00</strong>,<strong>00</strong>0 85,083 214,917 PTA.<br />
DEUTSCHE BANK 302,721 302,721 14/10/2<strong>00</strong>1 150,<strong>00</strong>0 (152,721) 302,721 PTA.<br />
LA CAIXA 47,588 47,588 25/2/2<strong>00</strong>1 1<strong>00</strong>,<strong>00</strong>0 52,412 47,588 PTA.<br />
LEASING 36,031 36,031 PTA.<br />
BILLS DISCOUNTED 82,<strong>00</strong>0 82.<strong>00</strong>0 PTA.<br />
INTEREST PAYABLE 3,822 3,822 PTA.<br />
SUB-TOTAL 923,477 36,031 959,508 1,875,<strong>00</strong>0 1,037,345 837,655<br />
TRYP MEDITERRANEE, S.A.<br />
CREDITS 44,223 3,771 47,994 DINAR<br />
INTEREST PAYABLE 21,238 21,238 USD<br />
SUB-TOTAL 21,238 21,238<br />
TOTAL 24,805,414 101,142,984 125,948,398 29,812,5<strong>00</strong> 2,649,327 27,163,173<br />
(1) On December 29, 1995 an agreement was reached with Caja Madrid guaranteeing the payments of principal and interest in pesetas.<br />
Most of the loans and credit lines detailed above are backed by mortgage guarantee.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
134
NON-TRADE DEBTS<br />
As indicated in Note 27, on February 9, 2<strong>00</strong>1 bonds with five-year maturities were issued for Euros 340 million to finance<br />
the operations carried out during the current year, which were applied to repay the balances used of nearly all the shortterm<br />
credit lines. Therefore, all the balances of the credit lines maturing in less than one year used to finance these operations<br />
have been reclassified to long-term in order to give a true and fair view of the Group’s net financial position in the<br />
presentation of the financial statements.<br />
On the formulation date of these annual accounts, the loan of Inmobiliaria Bulmes, S.A. with B.B.V.A. for Ptas. 1,314<br />
million was cancelled and a new loan was granted by EURO HYPO for Ptas. 8,240 million which matures in 2018. For<br />
this reason, this balance was reclassified to long-term to better reflect the Group’s net financial position in the notes to the<br />
consolidated annual accounts.<br />
The breakdown of maturities in millions of pesetas is as follows:<br />
(Thousands of pesetas)<br />
YEAR<br />
AMOUNT<br />
2<strong>00</strong>1 24.805<br />
2<strong>00</strong>2 14.540<br />
2<strong>00</strong>3 12.344<br />
2<strong>00</strong>4 9.580<br />
2<strong>00</strong>5 and following 64.679<br />
TOTAL 125.948<br />
The average interest rate accrued by the aforementioned loans plus the issue of bonds during the current year is 5.67%.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
135
NON-TRADE DEBTS<br />
22.3 Balances with subsidiaries<br />
The short-term Group companies’ balances with subsidiares are detailed below:<br />
(Thousands of pesetas)<br />
BALANCE 31/12/98 BALANCE 31/12/99 BALANCE 31/12/<strong>00</strong><br />
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT<br />
Apartotel Bosque, S.A. 3,203 57,249 61,310 59,857<br />
Agotel, Gmbh 551,528<br />
Bisol Investment, N.V. 11,630<br />
C.P. Meliá Castilla 338,487 21<br />
C.P. Meliá Costa del Sol 72,849<br />
Caribotels de Mexico, S.A. de C.V. 10,430<br />
Casino Tamarindos, S.A. 510,384<br />
Corporación H. Metor 191,183<br />
Deserrolladora H. Del Norte 310,613<br />
Detur Panama 2,788 30,424<br />
F.S.P.Tourizm 25,507<br />
Gupe-Inmobiliária, S.A. 177,540<br />
Helenic Hotel Management 12,978 9,282 33,990<br />
Hotel las Américas S.A. 69,457<br />
Melia Inversiones Americanas 63,518<br />
Melia Mérida, S.L. 127.662<br />
Mogan Promociones, S.A. De C.V.<br />
Nexprom, S.A. 651 99,282<br />
Santo Domingo Logistics 17,323<br />
Sofía Hoteles, S.L. 26,478<br />
Sol Hoti Portugal Hotels 415 4,336 478 7,432 78 7,992<br />
Sol Melia France, S.A. 270<br />
Sol Melia Marruecos, S.A. 159<br />
Sol Melia Travel, S.A. 1,537 193,975<br />
TOTAL 80,114 571,969 110,716 7,432 1,542,070 779,993<br />
22.4 Other non-trade debts<br />
The breakdown of this heading by concepts is as follows:<br />
(Thousands of pesetas)<br />
SHORT-TERM<br />
LONG-TERM<br />
DEFERRED TAXES ON PROFIT 401,565 12,216,954<br />
GUARANTEE DEPOSITS RECEIVED 93,351 491,431<br />
REMUNERATION PENDING PAYMENT 2,379,561<br />
PUBLIC TREASURY 2,989,321 84,886<br />
SOCIAL SECURITY 869,941<br />
PUBLIC TREASURY VAT PAYABLE 401,158<br />
FIXED ASSETS SUPPLIERS 763,194<br />
OTHERS 344,367 705,468<br />
TOTAL OTHER CREDITORS 8,242,457 13,498,739<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
136
23 Fiscal Situation<br />
23.1 Taxable income<br />
In accordance with the prevailing legal regulations, tax returns cannot be considered final until they have been inspected by<br />
the tax authorities or the 4-year inspection period has elapsed, which may be extended due to tax inspection proceedings.<br />
In this regard the Group companies are open to tax inspection for the following taxes and years:<br />
CORPORATION TAX YEARS 1996 to 1999<br />
SALARY WITHHOLDINGS FOR INCOME TAX YEARS 1997 to 2<strong>00</strong>0<br />
V.A.T. YEARS 1997 to 2<strong>00</strong>0<br />
CANARY ISLANDS GENERAL TAX YEARS 1997 to 2<strong>00</strong>0<br />
Inmotel Inversiones, S.A. (company absorbed in 1999) has been inspected for individual and consolidated corporation tax<br />
for 1994 to 1997, V.A.T. and withholdings on interest for 1995 to 1997 and for salary income tax withholdings for 1995<br />
to 1998. For this reason, the statute of limitations for inspection of Inmotel Inversiones, S.A. (absorbed company) is only<br />
1998 for corporation tax, V.A.T. and withholdings on interest and 1997 and 1998 for the Canary Islands general tax.<br />
The tax credits derived from tax losses pending set-off are recorded for the amount of the deferred taxes existing at<br />
year-end.<br />
23.2 Deferred tax assets and liabilities<br />
The breakdown of deferred tax assets and liabilities, in thousands of pesetas, is as follows:<br />
(Thousands of pesetas)<br />
CREDITORS<br />
SHORT-TERM LONG-TERM<br />
DEFERRED TAX ON PROFIT 401,565 12,216,954<br />
TOTAL 401,565 12,216,954<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
137
FISCAL SITUATION<br />
23.3 Tax credits<br />
In accordance with Law 19/94 on investments in the Canary Islands, Sol Meliá, S.A. is required to invest in new fixed<br />
assets located in the Canary Islands during the following three years, as per the following details, in thousands of pesetas:<br />
YEAR OF AMOUNT REINVESTED PENDING REINVESTMENT<br />
ORIGIN TO BE REINVESTED AMOUNT REINVESTMENT EXPIRATION<br />
1996 396,864 396,864 31/12/99<br />
1997 554,257 554,257 31/12/<strong>00</strong><br />
1998 1,082,197 1,082,197 31/12/01<br />
1999 1,231,808 1,231,808 31/12/02<br />
2<strong>00</strong>0 3,265,635 3,265,635 31/12/03<br />
TOTAL 6,530,761 3,265,126 3,265,635<br />
The breakdown of tax losses pending set-off of Sol Meliá, S.A. and its consolidated tax group, in thousands of pesetas, is<br />
as follows:<br />
AVAILABLE THOUSANDS OF<br />
YEAR UNTIL PESETAS<br />
1997 2<strong>00</strong>8 217,177<br />
The breakdown of the tax deductions for export activities pending application by Sol Meliá, S.A. at December 31, 2<strong>00</strong>0<br />
and deducted for tax purposes during the year are as follows, in thousands of pesetas:<br />
PORTFOLIO INVESTMENT DEDUCTION DEDUCTIONS PENDING<br />
INVESTMENTS AMOUNT AMOUNT 1999 2<strong>00</strong>0 DEDUCTIONS<br />
Bear, S.A. de CV 2,982,219 745,555 745,555<br />
Lomondo Limited 1,935,798 483,950 284,154 199,796<br />
Sol Meliá France, SAS 8,286,124 2,071,531 0 431,159 1,640,372<br />
Agotel, GMBH 706,209 176,552 0 176,552<br />
Sol Meliá Benelux, S.A. 1,255,373 313,843 0 313,843<br />
TOTAL 15,165,723 3,791,431 1,029,709 630,955 2,130,768<br />
Inmotel Inversiones, S.A. has taken advantage in 1996 of the tax benefits resulting from the reinvestment of extraordinary<br />
profits, not including in its taxable income the proceeds obtained from the transfer of assets, of Ptas. 8,193 million, through<br />
the corresponding adjustment to taxable income, and maintaining, subject to reinvestment, a total of Ptas. 10,724 million.<br />
This tax profit was adjusted during the inspection of Inmotel Inversiones, S.A. and following the inspection, Ptas. 5,231<br />
million is pending reinvestment. The resulting total deemed tax exempt due to reinvestment amounts to Ptas. 4,060 million.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
138
FISCAL SITUATION<br />
As a result of the inspection adjustments, Sol Meliá, S.A. has applied tax losses amounting to Ptas. 7,248 million and tax<br />
liabilities and assets have decreased by Ptas. 1,476 and 2,550 million, respectively, with the corresponding effect on the profit<br />
and loss account. This was the main reason for the increase in the tax rate of the Group’s parent company in 2<strong>00</strong>0 when<br />
compared with the previous year.<br />
The tax benefits of Sol Meliá, S.A., arising from the sale of assets and tax exempt due to reinvestment, as well as the disposal<br />
amounts to be reinvested, in thousands of pesetas, are as follows:<br />
AMOUNT PROFIT PENDING EXPIRATION<br />
YEAR SALE OF SALE ON SALE REINVESTED REINVESTMENT DATE<br />
1996 Sundry assets 5,231,169 4,060,445 5,231,169 0 1999<br />
1997 H. Don Manolo 578,<strong>00</strong>0 259,108 578,<strong>00</strong>0 0 2<strong>00</strong>0<br />
1998 Sundry assets 1,469,773 977,146 1,469,773 0 2<strong>00</strong>1<br />
1999 H. Sol Canarios 825,<strong>00</strong>0 369,669 825,<strong>00</strong>0 0 2<strong>00</strong>2<br />
2<strong>00</strong>0 Lav. Industrial de Guadalajara 215,250 172,801 0 215,250 2<strong>00</strong>3<br />
TOTAL 8,319,192 5,839,169 8,103,942 215,250<br />
The 1996 amounts reflect the write-off of balances previously applicable to reinvestments, which have been adjusted at the aforementioned<br />
inspection.<br />
As indicated in Note 5 above, the tax criteria applied to financial leasing contracts signed after January 1, 1996 were modified<br />
in 1999.<br />
The information stipulated in Article 98 of Law 43/95, of December 27, on Corporation Tax, and on mergers and spin-offs of<br />
activities carried out in previous years is included in the first Notes to the consolidated annual accounts approved after each<br />
transaction, the summary of which is as follows:<br />
Inmotel Inversiones, S.A.: 1993, 1996, 1997 and 1998<br />
Sol Meliá, S.A.: 1999<br />
The breakdown of tax deductions applicable for new fixed assets acquired in the Canary Islands by Sol Meliá, S.A. is:<br />
YEAR INVESTMENT DEDUCTION APPLICATION PENDING<br />
(QUOTA)<br />
1999 2,457,6<strong>00</strong> 614,4<strong>00</strong> 5<strong>00</strong>,<strong>00</strong>0 114,4<strong>00</strong><br />
2<strong>00</strong>0 624,577 156,144 0 156,144<br />
TOTAL 3,082,177 770,544 5<strong>00</strong>,<strong>00</strong>0 270,544<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
139
FISCAL SITUATION<br />
23.4 Reconciliation between taxable income and accounting results of the parent company<br />
(Thousands of pesetas)<br />
TAX<br />
INCREASE DECREASE EFFECT<br />
Accounting results for the year (Profit before taxation): --- --- 10,203,210<br />
TEMPORARY DIFFERENCES:<br />
Amortisation of residual value of financial leasing contracts 25,323<br />
Deductible financial leasing instalments 119,591<br />
Amortisation of intangible fixed assets 484,370<br />
Interest of financial leasing contracts 51,545<br />
Double amortisation of financial leasing 2,703,865<br />
Indemnities to personnel 76,475 261,392<br />
PERMANENT DIFFERENCES:<br />
Reserve for investments in the Canary Islands Law 19/94 3,265,635<br />
Sundry Community of Owners 72,650<br />
Adjustment Sol Gelat 13,719<br />
Fiscal transparency released to results 18,013<br />
Current accounts interest of commercial Group 507,4<strong>00</strong><br />
Disallowable expenses Fines and Sanctions 27,298<br />
Disallowable expenses 41,385<br />
Reinvestment of extraordinary profits 112,698 172,801<br />
Adjustment of monetary reinvestment 629,277<br />
Provisions 257,557<br />
Provision Group companies 464,455<br />
Provision Associated companies 31,265<br />
PRELIMINARY TAXABLE INCOME 2,034,830 7,301,884 4,936,156<br />
TAX QUOTA (35%) 1,727,655<br />
Deduction National double taxation 20,648<br />
Deduction International double taxation 55,706<br />
ADJUSTED TAXABLE INCOME 1,651,301<br />
DEDUCTIONS FOR THE YEAR<br />
Export activities 577,955<br />
Fixed assets Canary Islands 5<strong>00</strong>,<strong>00</strong>0<br />
TAXABLE INCOME FOR THE YEAR 573,346<br />
On-account payments and withholdings (1,526,298)<br />
TAX RECEIVABLE (952,952)<br />
The Company applies the consolidated taxation system for corporation tax with the following Group companies:<br />
Apartotel, S.A<br />
Casino Tamarindos, S.A.<br />
Dock Telemarketing. S.A.<br />
Dorpan, S.L.<br />
Gestión Hotelera Turística Mesol, S.A.<br />
Hosterías de Castilla, S.A.<br />
Hoteles Melia, S.L.<br />
Hoteles Sol Meliá, S.L.<br />
Hoteles Sol, S.L<br />
Hoteles Turísticos, S.A.<br />
Industrias Turísticas, S.A<br />
Inversiones Latinoamérica 2.<strong>00</strong>0, S.L.<br />
Lavanderías Compartidas. S.A.<br />
Melia Catering, S.A.<br />
Mesol Management, S.L.<br />
Propiedades en Arriendo, S.L.<br />
Realizaciones Turísticas, S.A.<br />
Securisol, S.A<br />
Sol Meliá Travel, S.A<br />
Talonario Cinco Noches, S.L<br />
Urme Real, S.A.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
140
FISCAL SITUATION<br />
2<strong>00</strong>0 Consolidated Corporation Tax<br />
Individual preliminary taxable income<br />
Apartotel, S.A. 202,871<br />
Casino Tamarindos, S.A. 13,458<br />
Dock Telemarketing, S.A. 25,230<br />
Dorpan, S.L. 29,823<br />
Gestión Hotelera Turística Mesol, S.A. 4,592<br />
Hosterías de Castilla, S.A. 0<br />
Hoteles Meliá, S.L. 0<br />
Hoteles Sol Meliá, S.L. (1)<br />
Hoteles Sol, S.L. (1)<br />
Hoteles Turísticos, S.A. 68,295<br />
Industrias Turísticas, S.A. 92,452<br />
Inversiones Latinoamérica 2.<strong>00</strong>0, S.L. (5,543)<br />
Lavanderías Compartidas, S.A. (12,565)<br />
Meliá Catering, S.A. 9,439<br />
Mesol Management, S.L. (143,749)<br />
Propiedades en Arriendo. S.L. (20)<br />
Realizaciones Turísticas, S.A 231,326<br />
Securisol, S.A. 0<br />
Sol Meliá, S.A. 4,936,156<br />
Sol Meliá Travel. S.A. (1<strong>00</strong>,335)<br />
Talonario Cinco Noches, S.L. 12,882<br />
Urme Real, S.A. 1,336<br />
CON<strong>SOL</strong>IDATED PRELIMINARY<br />
TAXABLE INCOME 5,365,646<br />
Tax Quota 35% 1,877,976<br />
Deductions<br />
Double taxation 76,353<br />
ADJUSTED TAXABLE INCOME 1,801,623<br />
Deductions<br />
Export activities 630,955<br />
Fixed assets 764<br />
Fixed assets in Canary Islands 5<strong>00</strong>,<strong>00</strong>0<br />
TAXABLE INCOME 669,904<br />
On-account payments and withholdings (1,528,589)<br />
TAX RECEIVABLE (858,685)<br />
Due to the different interpretations of tax rulings in foreign countries some tax contingencies might exist which cannot be<br />
objectively quantified. However, in the management’s opinion, should contingencies materialise, the amounts involved would<br />
not be significant.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
141
24 Guarantees, commitments and contingencies<br />
The parent company has not booked any specific provision to cover the possible contingencies derived from Egeda’s claims<br />
since management does not consider that such claims may prosper. In any case, it is assumed that the general provision for<br />
liabilities and charges would cover such contingency.<br />
The guarantee deposits maintained as guarantees given to third parties and other contingent liabilities are detailed below:<br />
(Thousands of pesetas)<br />
AMOUNT<br />
Security deposits for rentals 346,362<br />
Guarantee deposits for tax settlements 1,284,846<br />
Sundry 2,311,646<br />
Guarantee deposits in favour of third parties on behalf of Agotel GMBH 142,659<br />
Pledged deposit in favour of Mirador del Duque, S.L. 1,4<strong>00</strong>,<strong>00</strong>0<br />
Guarante deposit on loans granted to Community of Owners Meliá Castilla 375,<strong>00</strong>0<br />
Pledged deposits for loans granted to Inmotel Inversiones Italia 2,062,320<br />
Credit line for guaranteeing factoring 1,346,576<br />
TOTAL 9,269,409<br />
Sol Meliá, S.A. guarantees with the Company’s Total Equity the issue of debentures amounting to Euros 2<strong>00</strong> million (See<br />
Note 22) of September 15, 1999 and the issue of bonds of Euros 206 million of December 9, 2<strong>00</strong>0. The latter was integrated<br />
in the issue of bonds of Euros 340 million of February 2<strong>00</strong>1 (See Note 27).<br />
Sol Meliá, S.A. is the guarantor of Detur Panamá, S.A., owner of Hotel Meliá Panamá Canal, with Banca March, for<br />
51.79% of a credit line of US-$ 10 million, US-$ 8.9 million of which were used at December 31. The guaranteed amount<br />
therefore amounts to US-$ 4.6 million.<br />
Sol Meliá, S.A. secures with BBVA through mortgages on owned hotels and via personal guarantee a bank guarantee line<br />
of Ptas. 1,5<strong>00</strong> million. These guaranteed credit lines have not been used either by the Company or its subsidiaries. The<br />
maturity date is December 19, 2<strong>00</strong>1.<br />
Sol Meliá, S.A. is the guarantor, by deposit pledged in favour of Mirador del Duque, S.L., for a loan granted to the latter to build a hotel.<br />
A confirming line was granted to Sol Meliá for a maximum of Ptas. 4,<strong>00</strong>0 million.<br />
Sol Meliá is the guarantor with Banco Central Hispano for two loans granted for US-$ 10 and 5 million, respectively.<br />
The shares of Inversiones Hoteleras Los Cabos are pledged to guarantee a loan granted by Bancomex to its subsidiary<br />
Aresol Cabos, S.A. de C.V. which matures in 2<strong>00</strong>4.<br />
The shares of Desarrollos Inmobiliarios Guanacaste and Desarrollos Hoteleros Guanacaste are deposited as guarantee for<br />
a loan received by Desarrollos Hoteleros Guanacaste.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
142
GUARANTEES,<br />
COMMITMENTS AND CONTINGENCIES<br />
Sol Meliá, S.A. has acquired the commitment of financing, if needed, up to Ptas. 2,<strong>00</strong>0 million of the construction of one<br />
of the hotels it will rent and of mortgaging other owned assets.<br />
Sol Meliá, S.A. is the guarantor of Lomondo Ltd. (a Group company) and Promociones Playa Blanca, S.A. for loans formalised<br />
with banks, the debts of which at December 31, 2<strong>00</strong>0 amount to Sterling Pounds 15.6 million and Euros 4.8<br />
million, respectively.<br />
Sol Meliá, S.A., Meliá Inversiones Americanas, N.V. and Inmotel Inversiones, S.A. (absorbed company) signed a Global<br />
Agreement in March 1998 in order to regulate certain aspects of the intercompany relationship. The main terms of the<br />
Global Agreement are:<br />
Non-competition Covenant: Inmotel Inversiones, S.A. and Sol Meliá, S.A agreed not to compete in the tourist business in<br />
Latin American and the Caribbean area unless otherwise authorized by Meliá Inversiones Americanas, N.V.<br />
First refusal right: Meliá Inversiones Americanas, N.V. has granted to Sol Meliá, S.A. the first refusal right of operating<br />
any hotel owned by Meliá Inversiones Americanas. N.V. that the latter may acquire or use.<br />
Management contracts: The following standard terms will be applied to any management contract signed by Meliá<br />
Inversiones Americanas, N.V.and Sol Meliá, S.A. or by any of their subsidiaries:<br />
Initial period for the management contract<br />
20 years<br />
Sales fees<br />
4% on gross income<br />
Fees on G.O.P 10%<br />
Market price: All the transactions between Meliá Inversiones Americanas, N.V. and Sol Meliá, S.A. which might imply a<br />
clash of interests will be carried out at market price.<br />
Sol Meliá, S.A. has firm rental commitments, which range between one and eighteen years, including documentary commitments<br />
for approximately Ptas. 15,<strong>00</strong>0 million, in accordance with the maturities of the corresponding rentals.<br />
Sol Meliá has agreed with Tryp, S.A. (a Group company) that any amount it may receive from the former owners of the<br />
said company to cover risks materialised in the Tryp Group would be handed over to Tryp, S.A.<br />
Sol Meliá secures up to Euros 1,5<strong>00</strong> million the fulfilment by the subsidiary Sol Meliá Europe, B.V. of any assumed obligation<br />
relating to the issue of “Euro Medium-Term Note Programme” Bonds to be carried out by the subsidiary. At<br />
December 31, 2<strong>00</strong>0 Sol Meliá Europe, B.V. had issued Bonds for Euros 206 million, which mature on March 30, 2<strong>00</strong>1.<br />
During the year, Hoteles Mallorquines Agrupados, S.A., Hoteles Mallorquines Asociados, S.A. and Hoteles Mallorquines<br />
Consolidados, S.A., have paid to Sol Meliá, S.A. all the expenses and payments deriving from the warrants given to the<br />
shareholders of Melia Inversiones Americanas, N.V., who accepted the Public Offering of Acquisition of Shares of Melia<br />
Inversiones Americanas, N.V. approved by the Spanish National Stock Market Committee on December 30, 1998.<br />
Claims for damages were lodged with a United States Court against various Group companies by a guest of one of the<br />
hotels managed in Mexico. The lawyer has affirmed that he cannot as yet give an opinion on the final outcome. The<br />
Company’s directors consider, however, that these claims will not have a significant impact on the Group’s results and<br />
equity since Sol Meliá has a minority holding in the company that owns and operates the hotel, and in any case the Group<br />
has an insurance policy to cover such contingencies.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
143
25 Income and Expenses<br />
25.1 Consolidated income distributed according to type of income<br />
The amounts corresponding to operating income according to geographical markets are as follows:<br />
(Thousands of pesetas)<br />
1998 1999 2<strong>00</strong>0<br />
Spanish market 10,409,505 78,931,425 99,425,948<br />
International market 5,340,491 30,652,867 48,973,206<br />
Total 15,749,996 109,584,292 148,399,154<br />
The breakdown of income by type of service is as follows:<br />
(Thousands of pesetas)<br />
1,998 1,999 2,<strong>00</strong>0<br />
Net turnover 11,207,266 104,565,401 140,965,519<br />
Hotels income 94,845,175 129,735,296<br />
Casinos income 2,055,793 2,064,<strong>00</strong>6<br />
Time sharing income 1,930,741 2,426,<strong>00</strong>1<br />
Management income 6,651,872 3,251,352 3,821,497<br />
Administration income 4,247,970 2,095,026 2,481,216<br />
Franchise income 307,424 387,314 437,503<br />
Other operating income 4,542,730 5,018,891 7,433,635<br />
TOTAL OPERATING INCOME 15,749,996 109,584,292 148,399,154<br />
Financial income 457,082 6,186,069 7,878,646<br />
Extraordinary income 322,935 2,160,249 6,743,484<br />
TOTAL CON<strong>SOL</strong>IDATED INCOME 16,530,013 117,930,610 163,021,284<br />
25.2 Consolidated average number of employees during 2<strong>00</strong>0<br />
The consolidated average number of employees during the year is 14,033 people, distributed as follows by job category:<br />
1998 1999 2<strong>00</strong>0<br />
EXECUTIVES 34 282 318<br />
HEADS OF DEPARTMENT 36 818 843<br />
TECHNICIANS 242 5.220 5,584<br />
AUXILIARY STAFF 47 4,871 7,288<br />
TOTAL 359 11,191 14,033<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
144
INCOME AND EXPENSES<br />
25.3 Consolidated personnel expenses<br />
The breakdown of the consolidated personnel expenses is as follows:<br />
(Thousands of pesetas)<br />
1998 1999 2<strong>00</strong>0<br />
SALARIES, WAGES AND RELATED EXPENSES 2,198,493 25,844,228 34,321,572<br />
SOCIAL SECURITY 336,071 7,270,556 8,960,218<br />
INDEMNITIES 45,768 211,804<br />
OTHER WELFARE EXPENSES 298,306 1,521,614 1,828,980<br />
TOTAL 2,832,870 34,682,166 45,322,574<br />
25.4 Extraordinary results<br />
The breakdown of extraordinary results is as follows:<br />
(Thousands of pesetas)<br />
1998 1999 2<strong>00</strong>0<br />
PROFIT ON DISPOSAL OF FIXED ASSETS 7,637 251,5<strong>00</strong> 3,302,602<br />
CAPITAL GRANTS RELEASED TO RESULTS 5<strong>00</strong> 22,293 24,228<br />
EXTRAORDINARY INCOME 314,798 1,656,394 3,297,366<br />
INCOME AND PROFITS FROM PRIOR YEARS 230,062 119,288<br />
TOTAL 322,935 2,160,249 6,743,484<br />
LOSSES ON DISPOSAL OF FIXED ASSETS 122,713 82,105<br />
CHANGES IN FIXED ASSETS PROVISIONS (47,721) 288,409<br />
EXTRAORDINARY EXPENSES 497,417 349,117 1,401,461<br />
EXPENSES AND LOSSES FROM PRIOR YEARS 851,565 1,513,441<br />
TOTAL 497,417 1,275,674 3,285,415<br />
TOTAL EXTRAORDINARY RESULTS (174,482) 884,575 3,458,069<br />
“Extraordinary income and expenses” for the year include gains or losses arising from the restatement of financial statements<br />
in countries with high inflation rates. For the current year the net extraordinary profit arising therefrom amounted<br />
to Ptas. 564 million.<br />
A net amount of Ptas. 1,696 million relating to income obtained by the subsidiaries for operations in Puerto Rico is included<br />
in “Extraordinary income.”<br />
“Extraordinary expenses” includes an amount of Ptas. 5<strong>00</strong> million relating to the extraordinary charge for retirement premiums<br />
to personnel.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
145
INCOME AND EXPENSES<br />
The breakdown of the balance of “Profit on disposal of fixed assets” for the year, in millions of pesetas, is as follows:<br />
Hotel Bardinos 588<br />
Hotel Las Olas 534<br />
Hotel Melia Bavaro 1,892<br />
Other 288<br />
TOTAL 3,302<br />
25.5 Contribution of each company to consolidated results for the year<br />
(Thousands of pesetas)<br />
1998 1999 2<strong>00</strong>0<br />
CON<strong>SOL</strong>. MINOR. P/L. CON<strong>SOL</strong>. MINOR. P/L. CON<strong>SOL</strong>. MINOR. P/L.<br />
P/L INT. PARENT CO. P/L INT. PARENT CO. P/L INT. PARENT CO<br />
<strong>SOL</strong> <strong>MELIA</strong> S.A. 3,357,111 3,357,111 9,010,030 9,010,030 8,125,913 8,125,913<br />
ABBAYE DE THELEME 71,539 71,539<br />
AKUNTRA XXI,S.L. (34,921) (34,921)<br />
APARTOTEL S.A. 73,444 (198) 73,246 28,819 (78) 28,742<br />
AZAFATA, S.A. 53,053 53,053<br />
BEAR S.A. DE C.V. 62,523 (169) 62,353 (37,305) (37,305) (15,652) (15,652)<br />
BI<strong>SOL</strong> VALLARTA S.A. DE C.V. (248,568) 6,189 (242,379) (131,456) 2,353 (129,103)<br />
C.T. COZUMEL S.A. De C.V. (1,555) 769 (786)<br />
CADLO FRANCE (1,106) (1,106)<br />
CADSTAR FRANCE (1,464) (1,464)<br />
CALA FORMENTOR S.A. DE C.V. 244,244 (14,596) 229,648 87,113 (1,559) 85,554<br />
CARIBOTELS S.A. De C.V. (405,574) 2<strong>00</strong>,698 (204,876)<br />
CASINO PARADISUS S.A. 178,378 (91,410) 86,968 71,985 (36,637) 35,348<br />
CASINO TAMARINDOS S.A. (52,797) (52,797) 58,034 58,034<br />
COM. PROP. <strong>MELIA</strong> <strong>SOL</strong> Y NIEVE 59,883 (7,401) 52,481 (26,271) 3,195 (23,076)<br />
<strong>COMP</strong>.TUN.GESTION HOTEL. (2,269) (2,269) 21,445 21,445 (51,072) (51,072)<br />
CONS. INMOB. ALCANO, S.A. 1,423 1,423 1,352 1,352<br />
CONSORCIO EUROPEO, S.A. 30,542 30,542<br />
CORBEIL HOTEL PARIS-COLOMBES 68,176 68,176<br />
CORP. HOT. HISPANO-MEXICANA (2<strong>00</strong>,819) 5,<strong>00</strong>0 (195,818) (547,6<strong>00</strong>) 9,802 (537,798)<br />
CROATIAN HOTELS&RESORTS 25,627 25,627 22,113 22,113 54,126 54,126<br />
D.Mkt.SERVICES/ I. CORO (1) (469,547) 11,692 (457,855) (474,482) 8,493 (465,989)<br />
D.T.C./ MARMER (1) 159,438 (3,970) 155,468 166,645 (2,983) 163,662<br />
DARCUO XXI, S.L. (31,687) (31,687)<br />
DES. HOT. SAN JUAN B.V. 29 (1) 28 839,833 (15,033) 824,8<strong>00</strong><br />
DES.TUR. DEL CARIBE N.V (749) 19 (730) (31,740) 568 (31,172)<br />
DESARROLLOS <strong>SOL</strong> 280,641 (6,988) 273,653 (293,065) 5,246 (287,819)<br />
DOCK TELEMARKETING S.A. 1,238 1,238 1,941 1,941 9,038 9,038<br />
DOMINICAN INVESTMENT N.V. (418) 10 (407) (1,174) 21 (1,153)<br />
DORPAN S.L. 12,<strong>00</strong>1 12,<strong>00</strong>1 19,017 19,017 19,724 19,724<br />
FARANDOLE N.V. (11,813) 294 (11,519) (84,882) 1,519 (83,362)<br />
GESME<strong>SOL</strong> 819,217 819,217 920,110 920,110 1,051,868 1,051,868<br />
GEST. HOT.TURISTICA ME<strong>SOL</strong> 5,494 5,494 2,425 2,425<br />
GRUPO <strong>SOL</strong> ASIA Ltd. 163,138 (65,255) 97,883 92,145 (36,858) 55,287 38,504 (15,401) 23,102<br />
GRUPO <strong>SOL</strong> SERVICES 2,745 (1,098) 1,647 12,583 (5,033) 7,550 2,989 (1,195) 1,793<br />
H. ALEXANDER 118,170 118,170<br />
H. BLANCHE FONTAINE 70,112 70,112<br />
H. BOULOGNE ADAGIO 94,388 94,388<br />
H. CONVENTO DE EXTREMADURA S.L. 442 (215) 227 1,328 (646) 681<br />
H. FRANÇOIS 88,308 88,308<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
146
INCOME AND EXPENSES<br />
(Thousands of pesetas)<br />
1998 1999 2<strong>00</strong>0<br />
CON<strong>SOL</strong>. MINOR. P/L. CON<strong>SOL</strong>. MINOR. P/L. CON<strong>SOL</strong>. MINOR. P/L.<br />
P/L INT. PARENT CO. P/L INT. PARENT CO. P/L INT. PARENT CO<br />
H. MADELEINE PALACE 55,806 55,806<br />
H. METROPOLITAN (7,895) (7,895)<br />
H. ROYAL ALMA 201,445 201,445<br />
H.<strong>MELIA</strong> INT. de COLOMBIA 1,130 1,130 475 475 (2,379) (2,379)<br />
HOSTERIAS DE CASTILLA 140,922 140,922<br />
HOTEL BELLVER S.A. 30,082 (9,942) 20,140 31,849 (10,526) 21,323<br />
HOTELES <strong>SOL</strong> INTNAL. S.A. (178,147) (178,147) (88,566) (88,566)<br />
HOTELES <strong>SOL</strong> MELIÁ, S.L. (1) (1)<br />
HOTELES <strong>SOL</strong>, S.L. (1) (1)<br />
HOTELES TURISTICOS S.A. 38,907 (2,163) 36,744 57,922 (3,197) 54,725<br />
IHLA BELA DE GESTAO E TURISMO 45,159 (15,806) 29,353<br />
IMPULSE HOT. DEVELOPMENT (5,417) (5,417) (4,199) (4,199)<br />
IMPULSE HOT. DEVELOPMENT B.V. (19,579) (19,579) (1,565) (1,565)<br />
INDUSTRIAS TURISTICAS S.A. 43,812 (1,060) 42,752 61,775 (1,495) 60,280<br />
INMOBILIARIA BULMES, S.A. 25,230 25,230<br />
INMOTEL INTERNACIONAL, S.A. (758) (758) (23,064) (23,064)<br />
INMOTEL INV. ITALIA, S.R.L. (22,233) (22,233) (103,487) (103,487)<br />
INV. EXPLOT.TURISTICAS S.A. 482,420 (216,606) 265,813 754,310 (338,685) 415,625<br />
INV. INMOBILIARIAS I.A.R. 1997 (636,913) 15,859 (621,054) (359,279) 6,431 (352,848)<br />
INV.LATINOAMERICA 2<strong>00</strong>0 S.L. (3,268) (3,268) (4,542) (4,542) (3,253) (3,253)<br />
INV.TUR. del CARIBE (2,846) (2,846) 2,590 2,590 747 747<br />
INVERSIONES JACUEY 91,018 (1,629) 89,389<br />
IRTON <strong>COMP</strong>ANY/ I. GUAMA (1) (196.5<strong>00</strong>) 4,893 (191,607) (854,824) 15,301 (839,522)<br />
LATIN AMERICA LOGÍSTICS CO. (39,474) 983 (38,491) (6,918) 124 (6,794)<br />
LAV. IND. GUADALAJARA, S.A. 2,341 (584) 1,757 (2,317) 578 (1,739)<br />
LAVANDERIAS <strong>COMP</strong>ARTIDAS S.A. 8,988 8,988 (12,636) (12,636)<br />
LOMONDO Ltd. 309,617 309,617 (308,266) (308,266)<br />
LONDIM FRANCE (42,093) (42,093)<br />
LSO FRANCE INVESTIMENTS (37,814) (37,814)<br />
M.I.H. 1,202,944 1,202,944 1,399,557 1,399,557 2,694,061 2,694,061<br />
M.I.H. U.K. Ltd. (55) (55) (52) (52) 4,770 4,770<br />
MARINA INT. HOLDING (596) (596) (303) (303) (272,201) (272,201)<br />
MARKSERV B.V. (168,997) (168,997) (209,701) (209,701) (146,320) (146,320)<br />
MARK<strong>SOL</strong> TURIZM 27,313 27,313 (22,629) (22,629) (3,609) (3,609)<br />
MARKTUR TURIZM (21,885) (21,885) (1,461) (1,461)<br />
<strong>MELIA</strong> BRASIL ADMINIST. 55,606 55,606 68,981 68,981 91,465 91,465<br />
MELIÁ CATERING, S.A. 9,439 9,439<br />
<strong>MELIA</strong> E. HOLDING de ENT., S.A. 2<strong>00</strong>,286 2<strong>00</strong>,286 225,594 225,594<br />
<strong>MELIA</strong> INV. AMERICANAS N.V. 1,328,488 (47,060) 1,281,428 3,596,807 (64,383) 3,532,424<br />
<strong>MELIA</strong> MANAGEMENT 87,397 87,397 29,517 29,517 (17,439) (17,439)<br />
<strong>MELIA</strong> VENEZUELA (8,843) (8,843) 16,696 16,696 8,184 8,184<br />
MEL<strong>SOL</strong> MANAGEMENT (52,048) (52,048) (3,633) (3,633) 1,269 1,269<br />
MEL<strong>SOL</strong> PORTUGAL 19,263 (3,853) 15,411 17,131 (3,426) 13,705 22,116 (4,423) 17,692<br />
ME<strong>SOL</strong> MANAGEMENT S.L. 39 39 (31,838) (31,838) (93,644) (93,644)<br />
MOT. ANDALUCES S.A. 10,411 (2,663) 7,748 27,538 (7,044) 20,494<br />
MOT. GRANDES RUTAS ESP.,S.A. 17,744 (4,635) 13,109 7,257 (1,848) 5,409<br />
NEALE/ I. AGARA (1) 859,071 (21,391) 837,680 557,744 (9,984) 547,761<br />
OPERADORA COSTARI<strong>SOL</strong> 155,031 155,031 (348,253) (348,253) 53,434 53,434<br />
OPERADORA ME<strong>SOL</strong> 451,316 451,316 173,766 173,766 (138,950) (138,950)<br />
PARKING INTERNACIONAL, S.A. 4,836 (48) 4,788<br />
PARQUE SAN ANTONIO S.A. 68,024 (18,822) 49,202 77,647 (21,485) 56,162<br />
PLAYA SALINAS S.A. 884 (10) 874<br />
PROPIEDADES EN ARRIENDO, S.L. (13) (13)<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
147
INCOME AND EXPENSES<br />
(Thousands of pesetas)<br />
1998 1999 2<strong>00</strong>0<br />
CON<strong>SOL</strong>. MINOR. P/L. CON<strong>SOL</strong>. MINOR. P/L. CON<strong>SOL</strong>. MINOR. P/L.<br />
P/L INT. PARENT CO. P/L INT. PARENT CO. P/L INT. PARENT CO<br />
PUNTA ELENA S.L. 13,238 (6,619) 6,619 95,555 (47,778) 47,778<br />
RANDLESTOP CORP. (1,342) 33 (1,309) (890) 16 (874)<br />
REALTUR S.A. 86,755 (3,045) 83,710 90,616 (3,181) 87,435<br />
SAFIVIC, S.A. 19,827 (4,957) 14,870 7,138 (1,784) 5,353<br />
SAN JUAN INVESTMENT B.V. 29 (1) 28 839,833 (15,033) 824,8<strong>00</strong><br />
SECADE, XXI, S.L. (29,406) (29,406)<br />
SECURI<strong>SOL</strong>, S.A. (859) (859) 3,218 3,218<br />
SERV. CORP. ME<strong>SOL</strong> (9,825) (9,825) (13,567) (13,567)<br />
<strong>SOL</strong> FINANCE (1,021) (1,021) (1,185) (1,185)<br />
<strong>SOL</strong> GROUP B.V. 1,672 1,672 (4,518) (4,518) (1,680) (1,680)<br />
<strong>SOL</strong> GROUP CORP. 39,679 39,679 (89,896) (89,896)<br />
<strong>SOL</strong> H.MANAG. CO. (42) (42) (20) (20)<br />
<strong>SOL</strong> HOLDING CORP. (606) (606) (559) (559)<br />
<strong>SOL</strong> HOTEL MIAMI BEACH (22) (22) (134) (134)<br />
<strong>SOL</strong> HOTEL U.K. Ltd. (81,399) (81,399) (25,799) (25,799) (19,775) (19,775)<br />
<strong>SOL</strong> MANINVEST B.V. (62,405) (62,405) (68,915) (68.915) (74,740) (74,740)<br />
<strong>SOL</strong> <strong>MELIA</strong> BENELUX (78,229) (78,229)<br />
<strong>SOL</strong> MELIÁ EUROPE N.V. (1,727) (1,727) (32,075) (32,075)<br />
<strong>SOL</strong> <strong>MELIA</strong> FRANCE, S.A.S. (754,210) (754,210)<br />
<strong>SOL</strong> <strong>MELIA</strong> GUATEMALA 28,453 28,453 58,301 58,301 31,297 31,297<br />
<strong>SOL</strong> <strong>MELIA</strong> INVESTMENT (605) (605) (1,779) (1,779) (1,919) (1,919)<br />
<strong>SOL</strong> <strong>MELIA</strong> PERÚ, S.A. 6,582 6,582<br />
<strong>SOL</strong> <strong>MELIA</strong> SERVICE 348,144 348,144 691,159 691,159 683,830 683,830<br />
TALONARIO 5N S.L. (21,821) (21,821) 15,407 15,407 48,289 48,289<br />
TENERIFE <strong>SOL</strong>, S.A. 1,120,189 (560,095) 560,095 1,116,472 (558,236) 558,236<br />
TORRE<strong>SOL</strong> DES.TURISTICOS (4) 1 (3) (3) 1 (2)<br />
TRYP MEDITEERRANEE 466,829 (68,157) 398,672<br />
TRYP, S.A. 2,085,645 2,085,645<br />
URME REAL S.A. (7,271) 576 (6,695) (6,914) 497 (6,416)<br />
RESULT BY FULL CON<strong>SOL</strong>IDATION 6,406,261 (70,375) 6,335,886 15,506,707 (1,024,201) 14,482,506 19,579,893 (992,642) 18,587,251<br />
AGOTEL GMBH (131,644) (131,644) (69,025) (69,025)<br />
APART.BOSQUE 82,690 82,690 17,182 17,182 14,367 14,367<br />
C.P.COSTA DEL <strong>SOL</strong> 3,841 3,841 82,661 82,661 91,948 91,948<br />
CASINO TAMARINDOS, S.A. 58,393 58,393<br />
COM, DE PROP. <strong>MELIA</strong> CASTILLA 234,9<strong>00</strong> 234,9<strong>00</strong> 252,734 252,734<br />
HELLENIC HOT.MANAG. (13,664) (13,664) (18,167) (18,167)<br />
HOTEL CAMPUS, S.L. (25,028) (25,028)<br />
HOTEL LAS AMERICAS (26,039) (26,039)<br />
INV TURÍSTICAS CASAS BELLAS S.L. 6 6 (2) (2)<br />
<strong>MELIA</strong> INVERSIONES AMERICANAS 471,777 471,777<br />
<strong>MELIA</strong> MERIDA, S.L. (2,361) (2,361)<br />
NEXPROM, S.A. (8,685) (8,685) 34,147 34,147 61,064 61,064<br />
PROMEDRO, S.A. 5,887 5,887 (3,976) (3,976)<br />
SOFIA HOTELES, S.L. (11,027) (11,027)<br />
<strong>SOL</strong> HOTTI PORTUGAL 4.752 4,752 11,029 11,029 (1,520) (1,520)<br />
<strong>SOL</strong> MELIÁ TRAVEL, S.A. (65,218) (65,218)<br />
TOUROPERADOR VIVA TOURS S.A. (32,879) (32,879) (53,216) (53,216) (65,251) (65,251)<br />
RESULT BY EQUITY METHOD 579,889 579,889 161,249 161,249 158,539 158,539<br />
CON<strong>SOL</strong>IDATED TOTAL 6,986,150 (70,375) 6,915,775 15,667,956 (1,024,201) 14,643,755 19,738,432 (992,642) 18,745,790<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
148
26 Retribution and other Benefits<br />
to the Board of Directors<br />
The retribution paid to the members of the Board of Directors of Sol Meliá, S.A. during 2<strong>00</strong>0 was as follows, in thousands<br />
of pesetas:<br />
(Thousands of pesetas)<br />
31/12/98 31/12/99 31/12/<strong>00</strong><br />
Allowances for meetings attendance 35,<strong>00</strong>0 44,<strong>00</strong>0 62,5<strong>00</strong><br />
Civil liability insurance 2,236 1,864 6,922<br />
Retribution 20,275 113,837 95,<strong>00</strong>0<br />
TOTAL 57,511 159,701 164,422<br />
None of the directors has received any type of loan or advance and the Company has not assumed any obligations with<br />
Board members.<br />
27 Post-balance Sheet Events<br />
On February 9, 2<strong>00</strong>1, the subsidiary Sol Meliá Europe B.V. proceeded to issue the Bonds of the “Euro Medium-Term Note<br />
Programme” for Euros 340 million. Sol Meliá, S.A. secures the fulfilment by the subsidiary of any assumed obligation in relation<br />
to the mentioned issue (See Note 24). This amount has been handed over to Sol Meliá, S.A. by virtue of a loan contract<br />
formalised on February 12, 2<strong>00</strong>1 with a maturity date of February 12, 2<strong>00</strong>6, at an annual interest rate of 6.375 per cent.<br />
On February 5, 2<strong>00</strong>1 Sol Meliá, S.A. sold 29,096 shares of Prodigios Interactivos, S.A. for a total of Euros 11.2 million<br />
(Ptas. 1,896 million).<br />
No other significant event that might affect the Group’s financial statements has occurred.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
149
Formulation of Accounts<br />
The formulation of the accompanying annual accounts has been approved by the Board of Directors, in its meeting of March 26,<br />
2<strong>00</strong>1, with a view to the auditors’ verification and subsequent approval by the General Shareholders’ Meeting. These accounts<br />
comprise 67 pages, all of them signed by the Secretary of the Board. The last page is signed by all the members of the Board.<br />
Signed: Gabriel Escarrer Juliá<br />
Chairman<br />
Signed: Juan Vives Cerdá<br />
Vice Chairman<br />
Signed: Sebastián Escarrer Jaume<br />
Second Vice Chairman<br />
Signed: Gabriel Escarrer Jaume<br />
Managing Director<br />
Hoteles Mallorquines Consolidados S.A.<br />
Signed by proxy by María Antonia Escarrer Jaume<br />
Director<br />
Ailemlos S.L.<br />
Signed by proxy by Ariel Mazin Mor<br />
Director<br />
Signed: Oscar Ruíz del Río<br />
Director<br />
Signed: Alfredo Pastor Bodmer<br />
Independent Director<br />
Signed: Eduardo Punset Casal<br />
Independent Director<br />
Signed: Emilio Cuatrecasas Figueras<br />
Independent Director<br />
Represented by<br />
Mr. Alfredo Pastor Bodmer<br />
Signed: José Joaquín Puig de la Bellacasa Urdampilleta<br />
Independent Director<br />
Signed: José Mª Lafuente Lopez<br />
Secretary of the Board<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
150
This report analyses trends in the business activity and the consolidated results of Sol Meliá, S.A. and its subsidiaries<br />
(hereinafter “Sol Meliá” or the “Group”) for 2<strong>00</strong>0.<br />
1 Purchase of Own Shares<br />
Following authorisation from the General Shareholders’ Meeting held in July 1997, Sol Meliá, S.A., acquired 50,<strong>00</strong>0 shares<br />
in 1997, 1<strong>00</strong>,<strong>00</strong>0 in 1998 and 50,<strong>00</strong>0 in 1999 at an average acquisition price of Ptas. 5,298, Ptas, 7,158 and Ptas. 4,912,<br />
respectively. The three for one split of August 9, 1999 affected the number of shares acquired during this period.<br />
The exercise of the voting right and of the other political rights applicable to these shares is in abeyance. The economic<br />
rights inherent to said shares, except for the right of free transfer of new shares, will be attributed proportionally to the<br />
other shares.<br />
These shares will be included in the calculations of capital needed to carry out the agreements adopted by the General<br />
Meeting.<br />
The options program prevailing until 1999 was cancelled during the year.<br />
During the year the Company contributed 195,425 own shares to the purchase of shares of Azafata, S.A.<br />
At December 31, 2<strong>00</strong>0 the Company has a total of 1,034,937 own shares with a par value of Euros 0.2, which represent<br />
0.56% of the Company’s share capital.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
152
2 Business Trends<br />
In view of the agreements reached as a result of the acquisition of Tryp S.A., the Balance Sheet, Profit and Loss Account<br />
and Notes thereto for the year 2<strong>00</strong>0 include the consolidated figures of the Tryp Group for the last six months of the year.<br />
2.1 Property business<br />
Tryp figures for the second half year, which are included in the consolidated profit and loss account, have also been included in<br />
statistics.<br />
RevPar in the Property Business – including owned and leased hotels – has increased by 18.6%, driven by the positive performance<br />
of the three Divisions in which Sol Meliá operates owned and leased hotels.<br />
With an accumulated RevPar increase of 11.2% -10.4% without Tryp-, the European Resort Division has evolved very satisfactorily<br />
thanks in great part to an outstanding summer season. The almost 16% increase in ADR was possible thanks to the<br />
refurbishment program and the positive trend of the resort business in Spain. The Company believes that the favourable trend<br />
of the resort business will go on in 2<strong>00</strong>1, taking into account the evolution of sales to date. In the future, the renovations carried<br />
out in our resort properties will promote the Congress and Conventions market segments.<br />
The 13.3% -14.9%, without Tryp, RevPar increase in the European City Division confirms the positive trend of the city business<br />
in Europe, specially in Spain. 10% is due to the evolution of the Spanish city hotels and to the incorporation of the Paris<br />
hotels and the Meliá White House in London, with significantly higher ADR’s, 42% and 50%, respectively.<br />
We expect to achieve important increases in ADR’s in the forthcoming years as a consequence of the existing gap between<br />
Spanish city hotels and other European properties in terms of prices. The Company believes that the Euro currency will help<br />
to clarify rate differences between European Regions, with a positive impact on results.<br />
The Company would also like to emphasise the recovery in the America Division during 2<strong>00</strong>0, with a RevPar increase of 29.5%.<br />
This increase has been further boosted by the conversion of Dollars – the currency used in our hotels in Latin America – to<br />
Pesetas. Excluding the conversion factor, the increase in RevPar would have reached 12.3%. Furthermore, without taking into<br />
account the latest hotel incorporations, most of which have still not yet reached maturity in 2<strong>00</strong>0, the RevPar increase would<br />
have been 28.5%, mainly due to the good performance of our resorts in Mexico and the Dominican Republic.<br />
The Company has positive expectations for the America Division in the light of the recovery in the Latin American economy,<br />
the maturity of some units acquired in the last 18 months and the positive trend of hotel performance in the region so far.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
153
BUSINESS TRENDS<br />
Statistics for the owned and leased hotels.<br />
Table 1<br />
Hotel statistics <strong>00</strong>/99 (RevPar & A.D.R. in pesetas.)<br />
Owned and leased hotels Dic-<strong>00</strong>/99 % OCCUPANCY RevPar A.D.R.<br />
EUROPEAN RESORT 2<strong>00</strong>0 79.6% 6,127 7,682<br />
%o/1999 -4.<strong>00</strong>% 11.20% 15.84%<br />
1999 83.09% 5,510 6,631<br />
EUROPEAN CITY 2<strong>00</strong>0 70.55% 9,617 13,632<br />
%o/1999 -2.47% 13.35% 16.22%<br />
1999 72.34% 8.485 11.729<br />
AMERICA 2<strong>00</strong>0 63.72% 9,085 14,259<br />
%o/1999 1.60% 29.48% 27.43%<br />
1999 62.71% 7,017 11,189<br />
TOTAL 2<strong>00</strong>0 74% 7,861 10,654<br />
%o/1999 -3.57% 18.63% 23.03%<br />
1999 76.52% 6,627 8,660<br />
Without taking into account Tryp Hotels, the RevPar increase in the European City and European Resort Divisions would have<br />
been 10.4% and 14.9%, respectively.<br />
Please find below a breakdown of the components of growth in room revenues at the hotel level for owned and leased hotels.<br />
The increases in RevPar and in available rooms, consequence of the Tryp acquisition, explain the increase in Room Revenues<br />
in the European Division.<br />
The increase corresponding to the America Division is explained by the increase in available rooms due to the new incorporations<br />
in this Division – Meliá Mexico Reforma, Paradisus Cozumel, Sol Cabañas del Caribe (Mexico), Meliá Caribe<br />
(Dominican Republic) and Gran Meliá Caracas apartments (Venezuela) – as well as the increase in RevPar.<br />
Table 2<br />
Breakdown of room revenues owned/leased hotels <strong>00</strong>/99<br />
% Increase Dic-<strong>00</strong>/99 EUROPEAN EUROPEAN AMERICA TOTAL<br />
RESORT CITY<br />
RevPar 11.2% 13.3% 29.5% 18.6%<br />
Available rooms 3.9% 43.7% 17.9% 17.8%<br />
Room revenues 15.6% 62.9% 52.7% 39.8%<br />
The following table shows the revenue split at the hotel level. The increase of “Other Revenues” in the American Division<br />
is due to meeting-room rental revenues generated by Congress and Convention activities.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
154
BUSINESS TRENDS<br />
This is also reflected in F&B increases, particularly in the America Division. Last year Sol Meliá incorporated 18 meeting<br />
rooms with capacity for 3,4<strong>00</strong> people in its hotels in the Caribbean. The increase in total revenues in the European Resort<br />
and City Divisions, without Tryp, would have been 3% and 25%, respectively.<br />
Table 3<br />
Hotel revenue split <strong>00</strong>/99 for owned/leased hotels.<br />
Dic-<strong>00</strong>/99 EUROPEAN RESORT EUROPEAN CITY AMERICA TOTAL<br />
(Millions of pesetas) <strong>00</strong> %o/99 99 <strong>00</strong> %o/99 99 <strong>00</strong> %o/99 99 <strong>00</strong> %o/99 99<br />
ROOMS 28,542 16% 24,694 33,140 63% 20,345 15,065 53% 9,867 76,747 40% 54,907<br />
F&B 18,105 15% 15,808 12,446 61% 7,754 13,176 41% 9,370 43,727 33% 32,932<br />
OTHER REVENUES 2,443 4% 2,356 3,516 54% 2,282 3,305 40% 2,368 9,264 32% 7,<strong>00</strong>6<br />
TOTALREVENUES 49,091 15% 42,859 49,102 62% 30,382 31,545 46% 21,604 129,739 37% 94,845<br />
2.2. Management Business<br />
As it appears in the table below, management fees have increased by 17.6%. The Gross Operating Profit G.O.P. of these<br />
hotels has increased by 45.53%<br />
The fees of the European Resort Division have increased by 22.8%, in good part due to the better performance of the<br />
Croatian resorts during the year.<br />
The positive performance of the European City hotels explains the 13% increase of management fees. The evolution of the<br />
managed hotels in this division has been satisfactory as reflected by the 22% G.O.P. increase.<br />
The 22.7% increase in the America Division reflects an improvement in the performance of its hotels. The improvement<br />
cannot be attributed to any specific area, being applicable to all the countries in which the Company operates.<br />
Management fees in the Cuban Division have increased by almost 10%, in spite of the -6,8% decrease in Incentive Fees.<br />
The nominal percentage of Incentive Fees is charged according to the level of G.O.P. reached. In 2<strong>00</strong>0 the Cuban Division<br />
has not reached the G.O.P. margins achieved in 1999.<br />
Table 5<br />
Management fees of hotels managed for third parties.<br />
Fee revenue (Millions of pesetas) Dec-<strong>00</strong> Incr. <strong>00</strong>/99 Dec-99<br />
EUROPEAN RESORT Basic 1,032 18.8% 869<br />
Incentive 741 28.9% 575<br />
1,773 22.8% 1,443<br />
EUROPEAN CITY Basic 998 14.9% 869<br />
Incentive 324 7.5% 302<br />
1,322 13.0% 1,171<br />
AMERICA Basic 670 17.6% 570<br />
Incentive 709 28.0% 554<br />
1,380 22.7% 1,124<br />
Fee revenue (Millions of pesetas) Dec-<strong>00</strong> Incr. <strong>00</strong>/99 Dec-99<br />
ASIA-PACIFIC Basic 313 20.8% 259<br />
Incentive 311 29.9% 239<br />
624 25.2% 498<br />
CUBA Basic 1,245 16.2% 1,072<br />
Incentive 396 -6.8% 425<br />
1,642 9.7% 1,497<br />
TOTAL BASIC 4,259 17.1% 3,639<br />
TOTAL INCENTIVE 2,481 18.4% 2,095<br />
TOTAL 6,740 17.6% 5,734<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
155
3 Post-balance Sheet Events.<br />
On February 9, 2<strong>00</strong>1 bonds were issued for Euros 340 million at a fixed interest rate of 6.25% with five-year maturities in<br />
order to finance the acquisition of Tryp and to refinance part of the existing debt. This issue is part of the EMTN’s program<br />
(European Medium-Term Notes) of Euros 1,5<strong>00</strong> million carried out in 2<strong>00</strong>0.<br />
On February 5, 2<strong>00</strong>1, Sol Meliá sold part of its participation in Prodigios Interactivos S.A. to Banco Santander Central<br />
Hispano for Euros 11.2 million. This sale gave rise to capital gains of Euros 7.5 million.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
156
4 Foreseeable Outlook<br />
The outlook for the Group is directly linked to the business prospects in the main operation areas of Sol Meliá and to the<br />
results of its five functional divisions.<br />
In the European Resort Division, dependent on the main tourist destinations in Spain and the Mediterranean area, prospects<br />
are positive due to the ongoing refurbishment plan and to the incorporation of new hotels in the area.<br />
The European City Division has experienced a diversification process over the last few years, with an opening from Spain<br />
towards other countries such as United Kingdom, France, Italy, Belgium and Germany. The prospects in these markets are<br />
good, especially for Spain where the Company has increased its capacity after the acquisition of Tryp hotels, a well-positioned<br />
company in the Spanish city segment. The incorporation of Tryp Hotels will be especially profitable in Madrid, the<br />
most important European centre for Congress and Convention holding.<br />
The foreseeable price increases in this segment in Spain and the good location of both existing and acquired hotels, as well<br />
as the addition of various new hotels to be incorporated in next 18 months in Spain, Italy and Portugal allow us to predict<br />
positive prospects for this division in 2<strong>00</strong>1.<br />
Given the economic recovery of Latin America since 1999, prospects for both city and resort hotels in the area are good.<br />
For Sol Meliá, specifically, the full development of the hotels acquired over the last 18 months in Mexico, Dominican<br />
Republic, Peru, Panama, Venezuela, Brazil and Argentina will benefit the performance of this division. During the next<br />
two years a great many hotels in Puerto Rico, Brazil, Mexico and Peru will be incorporated to the Group.<br />
Cuba will continue to be one of the main tourist destinations in the Caribbean during both the current and forthcoming<br />
years. Sol Meliá, with 25 hotels and 11,<strong>00</strong>0 rooms, holds 37% of the market share on the island with a dominant presence<br />
in the most important resort and city destinations.<br />
As for the Asia Division, tourism prospects are favourable in the region for 2<strong>00</strong>1, specially in Indonesia where a 30% increase<br />
of revenues is expected. 70 per cent of Sol Meliá’s hotels in the region are located in Indonesia.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
157
5 Research and Development<br />
Sol Meliá is constantly investigating its clients’ needs so as to offer them the products and services best adapted thereto.<br />
Such investigation includes clients’ questionnaires, opinion inquiries, quality audits, etc.<br />
Furthermore, it endeavours to optimise quality and costs relating to the hotel operations and procedures. Sol Meliá has a<br />
hotel technology department that investigates each one of these operations and procedures, setting up optimum working<br />
methods and keeping up to date with the latest innovations in hotel technology and the possible application thereof.<br />
2<strong>00</strong>0 was the “e-transformation” year of Sol Meliá, with an investment of Ptas. 6,5<strong>00</strong> million in technological infrastructure<br />
and involvement in joint venture projects. Within the e-transformation framework, Sol Meliá is launching the projects<br />
meliaviajes.com, solmelia.com y hotelnetB2B.com (B2B portal for hotel companies, which comprises 18 companies<br />
of the sector that represent more than 9<strong>00</strong> hotels in 21 countries).<br />
AOL Avant , initially known as Prodigios, was formed with a participation of Sol Meliá and an exclusive right agreement<br />
was signed whereby travel services will be provided by the Virtual Travel Agency meliaviajes.com.<br />
The Company aims to complete satisfactorily its e-transformation and the various initiatives. The process of attaining culmination<br />
and interactivity in real time for the different systems will be carried out during 2<strong>00</strong>1.<br />
The introduction of the new information and communication technologies in the industry will not only mean cost savings,<br />
but is also essential to developing and maintaining competitive advantages in the future.<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
158
Formulation of the Management Report<br />
The formulation of this management report has been approved by the Board of Directors, in its meeting of March 26, 2<strong>00</strong>1.<br />
This management report comprises 8 pages, all of them signed by the Secretary of the Board. This last page is signed by<br />
all the members of the Board.<br />
Signed: Gabriel Escarrer Juliá<br />
Chairman<br />
Signed: Juan Vives Cerdá<br />
Vice Chairman<br />
Signed: Sebastián Escarrer Jaume<br />
Second Vice Chairman<br />
Signed: Gabriel Escarrer Jaume<br />
Managing Director<br />
Hoteles Mallorquines Consolidados S.A.<br />
Signed by proxy by María Antonia Escarrer Jaume<br />
Director<br />
Ailemlos S.L.<br />
Signed by proxy by Ariel Mazin Mor<br />
Director<br />
Signed: Oscar Ruíz del Río<br />
Director<br />
Signed: Alfredo Pastor Bodmer<br />
Independent Director<br />
Signed: Eduardo Punset Casal<br />
Independent Director<br />
Signed: Emilio Cuatrecasas Figueras<br />
Independent Director<br />
Represented by<br />
Mr. Alfredo Pastor Bodmer<br />
Signed: José Joaquín Puig de la Bellacasa Urdampilleta<br />
Independent Director<br />
Signed: José Mª Lafuente Lopez<br />
Secretary of the Board<br />
S OL<br />
M ELIÁ<br />
A NNUAL R EPORT 2<strong>00</strong>0<br />
159