Spain's largest hotel chain, Meliá, delivered a stronger-than-expected third-quarter profit, showing that summer resort demand can fill the gap left by its exit from Cuba. The company reported €89.4 million in net profit for the July-to-September period, beating analyst forecasts, as peak-season travel helped offset the loss of 34 hotels it previously operated on the island.
The results mark a sharp turnaround from the first half of the year, when Meliá swung to a net loss of €7.5 million. That loss was largely tied to its decision to stop operating in Cuba between June and July, a move the company attributed to tighter US sanctions and the island's deteriorating economy. With that drag behind it, the third quarter showed the underlying strength of its resort-heavy portfolio.
Revenue and margins hold up
Third-quarter revenue rose 8% from a year earlier to €659.6 million, while earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 4% to €198.3 million, roughly in line with analyst expectations compiled by LSEG. That translates to an EBITDA margin of about 30%, a healthy level for a hotel group.
A key metric for hotel investors, revenue per available room (RevPAR), rose 7.5% in constant currency when stripping out Cuba. Management maintained its full-year forecast of high-single-digit RevPAR growth, suggesting confidence that the momentum can continue.
The company also flagged a potential risk for the coming months: demand in southern Spain could be affected by the deadly train crash on the Madrid–Seville line on October 28 and the subsequent suspension of service. That disruption could weigh on travel to the region, though it is too early to quantify the impact.
Direct bookings become a profit driver
Beyond the headline numbers, investors are paying closer attention to how Meliá sells its rooms. Management said fourth-quarter bookings through its direct channels are running at a double-digit percentage rate above last year. Direct bookings—made through the company's own website or app rather than third-party travel agencies—typically carry lower distribution costs and give the hotel more control over pricing and discounting.
That shift matters for profitability. With EBITDA margins already around 30%, even a small move toward direct sales can have an outsized effect on the bottom line. As Meliá continues to recover from the Cuba exit, the mix of bookings—not just the volume—will be a key driver of cash generation in the fourth quarter.
The broader travel industry is showing similar trends. Marriott's luxury resorts drove its Q3 international growth, and Norwegian Air beat profit forecasts on strong summer demand, underscoring that leisure travel remains resilient even as some regions face headwinds.
What it means for investors
For shareholders, Meliá's post-Cuba story is increasingly about efficiency rather than just expansion. The company has streamlined its portfolio, and the focus on direct bookings suggests management is working to improve margins even in a slower season.
The main question now is whether the summer strength carries into the quieter months. The train disruption in southern Spain is a reminder that even well-positioned hotel groups can face sudden demand shocks. But with RevPAR growth on track and direct bookings accelerating, Meliá appears to have a clearer path to sustained profitability than it did earlier this year.
As always, investors should watch how the fourth quarter unfolds, particularly any updates on booking trends and the impact of the Spanish rail disruption. The company's ability to maintain its full-year guidance will be a key test of whether the Cuba exit was a one-time setback or the start of a more focused, profitable era.
