MADRID—Spain’s leading hotel group, Sol Meliá, inaugurated its fourth ME property this month in the seaside city of Barcelona as part of a plan to continue largely self-financed growth even as the industry faces uncertain times. The ME hotel is Sol Melia’s five-star, “personality” flag.
“We’re not stopping our expansion even though there is a crisis,” Gabriel Escarrer, co-vice president, said at the inauguration of the new property. “We’ll be opening hotels using our own finances along with additional money from some partners.”
Nevertheless, the shrinking economy and its impact on the group’s bottom line has forced Sol Meliá to rein in its plans.
Last spring, the Majorca-based group, whose brands include Gran Meliá, Paradisus, Meliá, Innside, Tryp and Sol Hotels, announced it had set aside €300 million (US$404 million) to invest in new ventures. It has since cut that figure back to €200 million (US$269 million).
“We want to be prudent, although we believe that Sol Meliá is solid enough to meet the challenge,” he told journalists.
A drop in Spanish consumer confidence in the economy, coupled with an oversupply of rooms, has reduced demand on the group’s home turf. In the first half of this year, Sol Meliá’s net profits were down 41 percent to €36 million (US$48 million).
Despite the hard times in the local market, Escarrer said the group’s properties were doing well in Latin America and Asia. In 2009, Sol Meliá is set to manage or rent new hotels in Tenerife, Rome and Crete.
The group also has ambitious plans for its ME properties, which are known for their high-tech, minimalist design, prime locations, cutting-edge entertainment systems in all rooms and hip restaurants and bars.
The ME flag targets affluent and young clientele traveling to hot destinations such as Madrid, Cancún, Cabo San Lucas and now, Barcelona.
Located in a 29-story skyscraper, the newest ME boasts 259 rooms and suites with views of the Mediterranean Sea in one direction and mountains surrounding the city in the other. Its luxury hotel-within-a-hotel is The Level, occupying eight floors with 24 rooms and 23 suites.
Construction recently began on the 255-room ME Vienna, the brand’s next property, also situated in a skyscraper. A Sol Meliá spokeswoman said an opening date is yet to be announced.