Bright and Breezy! SOL MELIA INVESTMENT CASE Joao Almeida UC3M Equity - - PowerPoint PPT Presentation

SOL MELIA INVESTMENT CASE

Bright and Breezy!

Joao Almeida Marta Calvário Hugo Fontinha David Jacques

UC3M Equity Research 1st May 2008 New York

Sol Melia

Company Description

• Major international chain in the hotel industry
• Ranking 2nd in Europe and 1st in Spain.
• Operates Resorts , City Hotels and Time‐Sharing
• Hotel business represents 80% of SOL’s EBITDA

Business Portfolio

Time‐Sharing SMVC Hotel Brands Asset Rotation Luxury Segment

Upper Segment

Midscale Segment

• Has an active Asset Rotation Plan
• Manages around 80,000 rooms
• Present in more than 30 countries
• Remarkable presence in Spain and LatAm

Overview

OVERVIEW

Economy & Hotel Sector Corporate Developments

We think SOL faces challenging times and believe it has compelling qualities to withstand a slowdown in the hotel business cycle.

Business by Business

BUSINESS BY BUSINESS

BUSINESS BY BUSINESS EUROPE

BUSINESS BY BUSINESS

34.8% EBITDA08E 22.8% EBITDA08E

BUSINESS BY BUSINESS AMERICAS

25.0% EBITDA08E 11.7% EBITDA08E 34.8% EBITDA08E 22.8% EBITDA08E

BUSINESS BY BUSINESS

5.8% EBITDA08E

Investment Case

INVESTMENT CASE

New Organizational Model Caribbean Prospects Spain as top tourism destination Management’s Commitment Time‐Sharing Trading at attractive multiples Shareholding Structure Condo Hotels

Investment Positives

Cyclical Industry Economic Slowdown Exposure to Spain Real Estate Credit Squeeze USD depreciation Execution & Acquisition Risks Leveraging Risk

Investment Negatives

Valuation & Recommendation

VALUATION & RECOMMENDATION

Valuation

Why not NNAV? Our approach YE08 Price Target: € 14.00

Recommendation

Industry Average SOL 9.1x 6.9x 16.2x 10.3x EV/EBITD A 08 P/E 08

BUY

Closing Price 25‐04‐2008

Q&A