Meliá Nets €4.1M After €79.4M Cuba Provision, Underlying Profit Hits €83.5M

Meliá's H1 Results Marred by €79.4M Cuba Exit Charge

Meliá Hotels International booked a net profit of just €4.1 million in the first half of 2026, a figure that fell sharply from the prior year because of a one-off €79.4 million provision. The charge is linked to the group's definitive withdrawal from Cuba, executed through its subsidiary Ilha Bela. Excluding that extraordinary hit, consolidated net profit would have been €83.5 million, in line with the underlying operational performance.

The top line, however, showed solid momentum. Consolidated revenue excluding capital gains reached €1,047.4 million between January and June, 7.1% higher than the same period in 2025. Gross operating profit (EBITDA) before capital gains rose 2.5% to €244.8 million, though the growth was partly restrained by temporary closures for the renovation of certain properties.

Chairman and CEO Gabriel Escarrer defended the recurring strength, stating that the “potential of our model and the sustained improvement in recurring profits are the best basis to offset this extraordinary effect in the future.” For the full year, Meliá still expects to deliver EBITDA of at least €565 million, high single‑digit RevPAR growth at constant currencies, and a 200‑basis‑point improvement in the underlying operating margin.

Why the Cuba Write-Down Masks a Strong Operating Performance

What the Cuba Exit Really Means

The €79.4 million provision represents the cost of finally unwinding Meliá's exposure to Cuba, a market where the group has operated for years but which has become increasingly difficult due to geopolitical tensions, US sanctions, and local economic stress. By fully provisioning and exiting, Meliá removes a long-running drag on investor sentiment and frees management attention for higher‑return regions. The write‑off turns an accounting loss of €4.1 million into an adjusted profit of €83.5 million, underscoring that the operational engine remains strong.

Operational Strength Hidden by the One‑Off

Revenue growth of 7.1% to above €1 billion, and a 2.5% rise in EBITDA despite renovation‑related downtime at some assets, point to healthy demand and pricing power. Meliá’s focus on the premium and luxe segments in Europe and the Americas appears to be paying off. The group’s full‑year guidance – at least €565 million in EBITDA, high single‑digit RevPAR growth, and a 200‑basis‑point margin expansion – suggests management is confident that demand trends will continue into the second half, even after absorbing the renovation hit.

Asset Rotation and Expansion Ambitions

Alongside the results, Meliá also signalled that it is evaluating the disposal of non‑strategic assets with low cash generation to improve capital allocation. In the first half alone it signed agreements for 3,816 rooms and opened 14 hotels representing over 2,000 rooms. For the full year, the group expects to sign at least 40 hotels (about 8,400 rooms) and open a minimum of 30 (3,500 rooms), a pace of expansion that the removal of the Cuban overhang should make easier to execute. Borrowing costs remain under control, with the net‑debt‑to‑EBITDA ratio projected to stay in the 2‑2.5x corridor.

What Meliá's Guidance and Asset Shifts Mean for Investors

The Cuba provision, while significant, is a non‑cash, non‑recurring item that clears a historical liability. Investors and analysts should focus on these forward‑looking indicators:

• Recurring profit power: The adjusted net profit of €83.5 million on more than €1 billion in revenue demonstrates that the core business is delivering margins in line with pre‑Cuba guidance.
• Full‑year targets remain intact: The projected EBITDA floor of €565 million and 200‑bp margin gain are underpinned by a strong booking pipeline and favourable price trends, provided no new external shocks occur.
• Capital discipline with expansion: Plans to sell low‑yielding assets while signing 40 hotels and opening 30 suggest Meliá is simultaneously improving returns on capital and growing its footprint in more predictable markets.
• Debt stability: A net leverage ratio of 2–2.5x EBITDA implies that the group has enough headroom to fund its pipeline without materially increasing risk, even after absorbing the Cuban exit.
• Risks to watch: The renovation‑related closures that dampened first‑half EBITDA could weigh on near‑term performance if projects overrun; however, the group expects the renovated properties to return with stronger room rates.