Melia Hotels International SA

MAD:MEL

Earnings Call Analysis

Strong Revenue Growth and Margin Improvement

The company reported a strong Q2 with revenue up by 15% year-over-year, driven by robust sales in all segments. Gross margin also increased by 3%, reaching 40%. Management expects continued growth with a focus on expanding market share and enhancing operational efficiency. Guidance for the next quarter includes a projected revenue increase of 12% and a target gross margin of 42%.

2023: A Year of Positive Demand and Strong Financial Performance

Reflecting on the past year, the company witnessed a positive trajectory, experiencing an upswing in demand across nearly all regions. Their strategic focus on premium and luxury offerings proved successful, allowing them to leverage robust demand within leisure and business segments. This strategic positioning resulted in a notable 10.6% year-on-year increase in owned and leased hotels' RevPAR, primarily driven by a 6.3% rise in pricing. System-wide RevPAR saw a 6.6% hike, fueled largely by a surge in volume. Over the full year, there was a significant 17.3% RevPAR boost for owned and leased hotels, buoyed by improvements in both average daily rates and occupancy. Furthermore, consolidated revenues, excluding capital gains, saw a 14.8% increase from the previous year, amounting to EUR 1,929 million, indicating a revenue growth beyond the 2019 pre-pandemic levels.

Digital Strategy and Loyalty Program Driving Direct Sales

Central to the company's success has been its emphasis on direct sales through the melia.com platform, which not only grew by 17.4% over the last year but also accounted for over 46% of centralized sales. This digital prowess underpins their ability to stimulate demand directly, bypassing intermediaries for more profitable customer acquisition. Moreover, the Meliá Rewards loyalty program celebrates its 30th anniversary with a robust base of over 16 million members, reinforcing customer engagement and driving repeat business.

Cost Control Measures Sustain Profit Margins

Despite facing inflationary pressures on wages and operating expenses, which rose by 12.6% compared to last year, the company successfully maintained EBITDAR levels akin to pre-pandemic conditions through diligent cost control measures. This keen attention to cost management did not come at the expense of service quality, indicating a balance between operational efficiency and customer satisfaction.

Investor Confidence Boosted by EBITDA Achievement and Debt Reduction

The company's financial diligence delivered an EBITDA of EUR 486 million for the year, a 16.2% elevation from 2022 and a slight increase compared to 2019. Although financial interest rates climbed to 5.16% from 3.13% the previous year, the company had hedged against this through a fixed-rate debt exposure, anticipating and mitigating the effect. Net debt saw a decrease, and an impending capital gain set to spruce up the 2024 financials post a significant transaction approval is also on the horizon.

Q4 Performance: Geographical Strength and Growth Prospects

The fourth quarter carried forward the upbeat streak across all regions, marked by a 6.7% upturn in system-wide RevPAR, riding on robust demand locally and internationally. Performance highlights included impressive RevPAR growth in Spain and Asia, though Asia has not yet reached pre-pandemic levels, presenting a growth opportunity. The American market is strategized for preserving high occupancy while improving room rates, particularly for premium categories. MICE (Meetings, Incentives, Conferences, Exhibitions) performed solidly throughout the year, beating previous years and showing promise for 2024.

Expansion Strategy and Positive Market Outlook

The company's growth remains intrinsically linked to its brand strategy, boasting significant developments across luxury and upscale hotel segments. With the luxury brands comprising almost 15% of operational hotels and representing 35% of the expansion pipeline, these establishments have shown remarkable revenue contribution and RevPAR growth. The company's excellence in customer satisfaction, at a 53% Net Promoter Score, reflects well on its strategy and offerings. Looking ahead, the company forecasts a low double-digit increase in RevPAR for the year ahead, underlining a bullish outlook.

Financial Commitments and Future Guidance

The company has committed to achieving a minimum of EUR 500 million in EBITDA for 2024, excluding capital gains, building on the successes of the previous year. The confidence in the company's future is further enhanced by the planned opening of at least 4,500 new rooms and an agreement with Banco Santander that highlights the investment allure of the hotel industry. With a strategic aim to end 2024 with a net debt-to-EBITDA ratio of 2.5x pre-IFRS and the resumption of dividend payments, the company secures its financial footing and underlines its commitment to shareholder value creation.

Earnings Call Transcript 2023-Q4

[Stéphane Baos, executive]

Hi. Good afternoon, everyone, and welcome to Meliá's Fourth Quarter and Full Year 2023 Earnings Conference Call. I am Stephane Baos, Head of Investor Relations. [Operator Instructions]

Please note, this event is being recorded. Before we begin, I would like to remind you that our discussion this afternoon will include forward-looking statements. Actual results could differ from those indicated in the forward-looking statements. And forward-looking statements made today speak only to our expectations as of today.

This afternoon, as usual, on the call with me today are Gabriel Escarrer, our President and Chief Executive Officer; André Gerondeau, our Chief Operating Officer; and [indiscernible], our Chief Financial Officer; [indiscernible], our Chief Real Estate Officer; and myself. Our President and CEO will provide an overall overview for the company's performance. Andre will then review our fourth quarter onwards. Following today's remarks, we will be happy to take your questions. In any case, the Investor Relations team will be available following this conference call to give you a chance to clarify anything else you might need.

You can find our earnings release on our Investor Relations website at meliahotelsinternational.com. And now I'm pleased to turn the call over to Gabriel.

[Gabriel Juan Escarrer Jaume, executive]

Thank you, Stephane, and good afternoon, everyone, and thanks for joining us today. 2023 has been a positive year. A year that went from good to better in almost all regions with a solid underlying demand. Thanks to our premium and luxury positioning with a quality mix of leisure and pleasure destinations, we have been able to capitalize on the strong momentum in all segments.

The solid overall trend of the year is confirmed in the fourth quarter, where our year-on-year owned and leased RevPAR increased by 10.6%, mainly driven overall by price, which is plus 6.3% compared to 2022. Occupancy was 2.5 percentage points above 2022, and our system-wide RevPAR increased by 6.6% in this case, mainly driven by volume increase. On a yearly basis, RevPAR for our owned and leased hotels increased by 17.3%, driven by overall equal gains in average daily rate and occupancy.

Our system-wide RevPAR increased by 10%, thanks to volume recovery. It should be noted that this RevPAR increase is affected by pricing decrease in Q1, which is explained by the devaluation of the local currency. Excluding this effect, our system-wide RevPAR increased by 16%, with both occupancy and average daily rate fostering this increase.

In this context, turning to results for the full year and fourth quarter. From a year-on-year perspective, consolidated revenues, excluding capital gains, stood at EUR 1,929 million, representing an increase of 14.8%. Comparing to 2019, the increase is of 7.3% owned and lease available rooms are minus 8.7% compared to the same period. This shows the positive contribution of RevPAR increase and the retention within our management systems of the hotels changing from owned and leased towards management contracts.

Sales through meliá.com direct channel strategy continued to show increases of 17.4% compare to last year, accounting to more than 46% of our centralized sales. Our digital and direct channels remain important drivers to increase demand at a more efficient cost to us and our owners.

In 2024, we are celebrating our 30-year anniversary of our loyalty platform, Meliá Rewards with more of 16 million of registered customers. Operating expenses increased by 12.6% with respect to the previous year and by 7.5% compared to 2019. Despite wages and OpEx, inflation, profit margins at EBITDAR level are in line with pre-pandemic. Thanks to the cost control implemented by the company without affecting our service quality while enhancing client satisfaction.

Regarding EBITDA margins, these are not fully comparable due to the change in the equity portfolio of rental agreements switching from fully fixed amounts to fully voidable. We are glad to see that this change in strategy has bottom line contribution of this portfolio compared to 2019. As we anticipated in our annual shareholder meeting, I am glad to announce that our objective to reach at least EUR 475 million of EBITDA has been achieved, thanks to the strong demand and margin recovery.

Our strong top line, combined with cost control measures allow us to post EBITDA excluding capital gains of EUR 486 million an increase of 16.2% compared to 2022 -- of 3.3% compared to 2019.

Net financial result has been impacted by the higher financial interest rate during the year. In 2023, our average financial interest rate stood at 5.16% compared to 3.13% in 2022. Interest rate increase for this year could be softened thanks to our fixed interest rate debt exposure, which at the end of 2023 stands at 35.5%.

It is worth nothing that the outlook for the upcoming months suggests that rate hikes have reached their peak. This, together with that reduction should write financial expenses down from now on. Effective income tax rate for the year is up 12.9%, lower than the rates of around 25% at which the group has historically stood. Essentially, this reduction is a consequence of the impact of the Constitutional Court declaring certain resets of Royal Decree-Law 3/2016 void and in particular, regarding the reassessment upwards of the application of tax losses against future profits and the corresponding recognition of deferred tax assets.

Therefore, the consolidated net profit of the parent company reached a positive EUR 117.7 million, improving by EUR 7 million compared to the previous year and also surpassing 2019 figures.

Turning to the balance sheet. With regards to debt, a decrease of EUR 59.9 million was registered during the course of the year, ending with EUR 2,613 million of net debt. Pre-IFRS 16 financial net debt decreased by EUR 46.7 million, closing the year with an amount of EUR 1,163 million, showing our progress towards debt reduction.

Regarding asset rotation, in 2023, progress has been made. We have received advanced payment amounting to USD 30 million related to the sale of a minority stake in a subsidiary, which owns a hotel in Mexico, pending to be approved by Mexican competence authorities. This transaction will generate capital gains in 2024 once the approval from the competence authorities has been issued.

I would like to briefly discuss one of our most recent announcements. On February 19, this year, we announced the signing of an agreement with an investment vehicle from Banco Santander for the subscription of new shares in a subsidiary owned by Meliá. By means of this transaction, the investment vehicle takes a participation of 38.2% stake in that subsidiary, which will own 3 premium hotel assets locations located in premium locations. This transaction amounts to a total of EUR 300 million, which will be received during the month of April. This transaction is part of our strategy to continue to strengthen our balance sheet.

The value of the transaction is in line with the asset appraisal we published in July 2022, allowing us to catalyze asset valuation. Apart from this, an additional asset rotation operation is currently underway, which we expect to complete during the course of the following months in the Caribbean and another one in the Canary Islands. These transactions will be made through a sale of a minority stake.

Regarding our investments. It should be noted that in 2023, the company made key money agreement payments of EUR 31 million of ensuring long-term management contract of various hotels, including the equity in portfolio. At the end of the year, the liquidity situation amounts to EUR 330 million. It should be noted that before year-end, we have been able to refinance part of our 2024 and 2025 debt commitments in order to smooth debt commitments for the nearest future. We remind that Meliá does not have any debt with financial covenants, while mortgage debt stands at approximately EUR 250 million. This implies a loan-to-value of 27.4% of mortgage assets.

I would like to reiterate our commitment to continue to strengthen our balance sheet. As of today, I would like to commit to return to our pre-COVID net debt-to-EBITDA multiples by the end of 2024. That is 2.5x net debt-to-EBITDA pre-IFRS multiple. With this, we are anticipating 1 year our objectives.

I will now turn the call over to Andre to talk about our operational performance during the fourth quarter and forward in more detail. Andre, please?

[André Philippe Gerondeau, executive]

Thank you, Gabriel, and good afternoon, everyone. Supplementing previous remarks, after a solid summer season, the fourth quarter continued with the upward trend. We have seen a strong performance in all regions with a year-on-year system-wide RevPAR increase of 6.7%, driven by strong Domestic and International demand for both our resorts and bleisure hotels.

Going into regions. European cities have seen a surge in volumes compared to 2022, with occupancy unlocking RevPAR increase for the area. This increase is supported by our pricing strategy, which remains strong. In America, our hotels in Dominican Republic stand out with a RevPAR increase year-on-year, surpassing 10%, purely driven by price increases. It is worth noting that repositioning of Paradisus Palma Real, which also allowed us to increase occupied rooms.

Our hotels in Spain has delivered a really strong fourth quarter with RevPAR increases year-on-year of 20.9%. The positive combination of winter season in both cities and the Canary Islands have been key on achieving a 12.5% increase in prices and 4.7 percentage points in increased occupancy.

The Asia region is capitalizing on demand pace increase during the final stages of the year. The continent has been the latest definitely leave the pandemic restrictions demand and therefore, is benefiting from still an unconsumed ramp-up demand, a sign of tangible recovery, RevPAR in the region is up 31.7% year-on-year, but still below pre-pandemic levels. This remains a key lever going forward, not only for the region itself but as an outbound source of tourists traveling abroad.

Lastly, our hotels in Cuba have continued with the trend seen along the year with a positive evolution of International travelers, but with domestic demand negatively impacted due to the devaluation of the local currency.

Turning to our yearly view. Overall, the continued trend along the 12 months where all quarters RevPAR outperformed year-on-year figures on a system-wide perspective. This trend shows the positive evolution of our pricing strategy based on our luxury and premium positioning reflected in our strong product mix, our premium locations and our brands. Regarding the segments, we are keen to see that there is a positive evolution in all of them. Important to note that meliá.com and the rest of our direct channels, continues to solidly deliver results as previously explained.

Tour operators have also performed well and we celebrate the continuing positive trend with our most appreciated partners around the world.

A special mention should be made to MICE, which has seen a solid performance along the year. Our business generated to MICE in 2023 has exceeded both 2020, '19 and 2022 levels, and our perspective for 2024 is encouraging. As far as development, in 2023, Meliá's growth is intricately tied to our brand strategy, featuring significant advancements such as the consolidation of our unique luxury hotels brand Meliá Collection with 8 hotels already in operation and 8 more slated to open in the future.

The Zel brand created in collaboration with Rafael Nadal, made its debut and continues to expand its pipeline for the coming years with 3 openings in 2024. Additionally, we saw the much anticipated arrival of the resort brand, Paradisus by Meliá in Europe, with Paradisus Salinas Lanzarote and Paradisus Gran Canaria both in the Canary Islands.

2024 marks a pivotal year for the ME brand as well with planned openings of the hotels, ME Malta, ME Sayulita, ME Guadalajara in Mexico, and ME Lisbon in Portugal.

Throughout 2023, the company signed agreements for a total of 26 new hotels, adding 4,465 new rooms, and opened another 12 hotels. Highlights include the Gran Meliá Palazzo Cordusio in Milan, the ZEL Mallorca hotel, the Gran Meliá Nha Trang in Vietnam (our first Gran Meliá in Southeast Asia), and Innside Bangkok in Thailand. The company emphasizes its growth in destinations like Mexico, while also solidifying its presence in emerging holiday hotspots like Albania and Malta.

The Group's Luxury strategy has a positive impact on the portfolio's evolution, with luxury brands already representing almost 15% of operating hotels, and 35% of expansion pipeline. These brands contributed over 25% of total hotel revenues in 2023, and the luxury brands' portfolio experienced from RevPAR increase of plus 18.3% in 2023, and of 31% compared to 2019 with solid growth for 2024 expected.

Thanks to this potential, combined with growing market demand and resilience to economic cycles, the luxury and premium strategy has solidified as a competitive strength, contributing to maintaining a more qualitative RevPAR.

Important to note, a record year in customer satisfaction with a 53% net promoting score system-wide, which validates our vision and strategy in terms of personalized service and tailored experiences for our guests.

In terms of the outlook, demand is still strong with both insured and corporate clients presenting an encouraging outlook. [indiscernible] are double-digit above last year, with pricing still showing mid-single-digit increases. Reservations are being increasingly anticipated and even though last year's bookings continue to be relevant, this is a positive factor since we are expecting to also extend the season in our resort hotels.

Going into regions, America Q1 '24, strategy focused on maintaining a solid occupancy base while driving the average room rate in our superior categories and suites, allowing us to foster last-minute demand, which is predominant along local clientele. International demand into the region is again led by the U.S. and Canadian customers. So far, we're seeing revenue and price increases in the Caribbean region, driving a strong percentage of our RevPAR increase for 2024.

Regarding MICE, our hotels in Dominican Republic are seeing a higher base of events scheduled for the near future. Spain forecast for city hotels are positive after a strong fourth quarter. We are expecting to continue to grow in prices and keep progressing in occupancy. Corporate travelers are also keeping up with the recovery. We expect 2024 corporate business in Spain to regain pre-COVID volumes. So far, Q1 is showing this trend.

Resort hotels in Q1 is mainly focused on the Canary Islands, showing solid increase and positive last-minute demand for superior rooms and suites again. Our hotels have confirmed a stronger base for the beginning of the season. The U.K. and German markets continue to lead demand into the region where also Spanish nationals are expecting to grow compared to 2023.

EMEA region expects a higher volume compared to last year with price increase and recovering occupancy versus last year with corporate segment pushing demand. Events scheduled in the near future together with MICE, again, will also benefit from our hotels in a region. Asia region expects to consolidate and definitely leave behind the pandemic effects. The region will benefit from both from increased internal demand and also International travelers flowing into the region.

According to recent statistics release from IATA, the International Air Transport Association, International flight seat capacity from and into Asia are still approximately minus 45% below pandemic. Even though forecast did not expect a full recovery in 2024, there is definitely a shift in perspective, which we will try to capitalize.

Cuba will continue as in recent months, the positive outlook for International travels, which should provide a better occupancy base and pick up RevPAR increases year-over-year, thanks to an increased volume.

I will now turn back the call over to Gabriel to summarize the main messages of the call.

[Gabriel Juan Escarrer Jaume, executive]

Thank you, Andre. To end, I would like to highlight the following messages. We are expecting low double-digit increase in RevPAR for this year compared to last year. We have attained the objective set in the general shareholder meeting of generating at least EUR 475 million in EBITDA for last year. Today, I would like to state a further commitment for year 2024 to generate at least EUR 500 million in EBITDA, excluding capital gains. The announcement of an agreement with Banco Santander not only proves the value of our hotels, but also the confidence in the hotel industry.

With this transaction, I would also like to commit to end 2024 with a net debt EBITDA ratio of 2.5x pre-IFRS. Regarding development, we expect to open not less than 4,500 rooms in 2024. And thanks to the good performance and the work made to strengthen the balance sheet, the Board of Directors will propose to the General Shareholder Meeting to resume the dividend payment. Further details on our fourth quarter and full year can be found in the earnings release we issued early today.

We will now be happy to answer any questions you may have. Please let me remind you that I'm here with Andre Gerondeau, Angel Luis Rodriguez, [indiscernible] Stephane Baos.

[Stéphane Baos, executive]

[Operator Instructions] First question is -- person is going to be Joao from Santander. Please go ahead Joao.

[Joao Safara Silva, analyst]

Yes. I will start with 2 questions. The first, just to bridge the cash flow for 2024. And just taking into account what is your new target of net debt-to-EBITDA of 2.5x. I mean, obviously, with the transaction, the real transaction you're doing, you'll be very close to those levels already. But I wanted to understand what are you going to do on top of that, considering that you're also proposing a dividend. So basically the -- my question is more in terms of what is the guidance for CapEx? And also, what is the amount that you expect to receive from the other asset rotation? So that would be my first question.

And then the second one, just on the transaction you announced. I mean some -- I have just a couple of questions here. The first is, if there is any preferred dividends that this vehicle will have to pay as part of the transaction? And the second, I understand there is a lease agreement between this vehicle and Meliá. What I wanted to understand here is the tenure of this lease agreement, for how long is the lease, and that's basically my question.

[Unknown Executive]

[indiscernible] speaking. Let us stay with you with again. Look, with regard to cash flow for 2024 and our objective to reduce the ratio to 2.5x, as Gabriel has said, there will be 3 elements that will contribute to achieve that target. One is obviously a transaction that we recently signed. Secondly is the generation of cash flow from the business. And third, the asset rotation. It's not going to be particular but we expect additional around EUR 50 million coming from that angle this year. So that will take us to this objective and we are fully committed to do so.

Concerning the CapEx. What we have decided this year to be more strict. And for example, in terms of IT investments, what we're going to do is we are doing now like take an inventory, hold a little bit and then -- and therefore, be more conservative in terms of that, and we'll be CapEx in about EUR 100 million this year on all aspects. With regard to the transaction itself, there is a preferred dividend to our partner, Santander, which is not obviously a guaranteed dividend. And it's a preferred, which is very, very reasonable. It's [indiscernible] and with the business case, we have for this vehicle, we expect that will always be in a situation to get that and so there's not a big deal on that.

In terms of the lease agreement. It was -- it's -- I would say it's instrumental because Santander couldn't cope with having employees on the vehicle. So we decided to do this structure, which at the end of the day, is eliminated on a consolidation basis. So we are running the hotels and we've set that structure because it was a requirement from Santander. It made very easy in terms of GD as well. So that is the optimal structure to make the deal go through the finish line.

[Joao Safara Silva, analyst]

Okay. Just a follow-up there. If I understood correctly, you -- I mean 2 follow-ups, actually. The asset rotation, you mentioned EUR 50 million, and CapEx is EUR 100 million. And the question here is, does it include key money or not?

[Unknown Executive]

Yes. Yes, all included.

[Gabriel Juan Escarrer Jaume, executive]

It's all the CapEx.

[Joao Safara Silva, analyst]

Okay, clear. And the asset rotation is EUR 50 million, right?

[Gabriel Juan Escarrer Jaume, executive]

That's correct.

[Unknown Executive]

Yes. I think that we had mentioned, this transaction that we are now negotiated in Dominican Republic and we're selling a minority stake in a vehicle. We've been negotiating now for months and we expect to close that transaction in Q2.

[Stéphane Baos, executive]

Then the following is going to be Jaina from Jefferies.

[Jaina Mistry, analyst]

Congratulations on such a strong end to the year. I've got 3 questions as well. My first question is on 2024 and your guidance, the low double-digit RevPAR. I wondered how this breaks down by region in terms of what you're seeing? My second question is on what you're seeing for Q1 RevPAR so far? And how it compares versus your full year low double-digit guidance? And then lastly, I wanted to ask about your room openings. You're guiding to 4,500 new rooms in 2024. Is this net of terminations? Or how many terminations should we expect this year?

[André Philippe Gerondeau, executive]

Jaina. This is Andre. Thank you again, and thank you for congratulating us. We are very excited. This -- there are several drivers on the RevPAR guidance of low double digits. The first one would be the Americas region, which is performing very strong, and we have Mexico and Dominican Republic with a strong base of business. And secondly, it's our premium and luxury strategy. So the combination of both elements it's going to contribute. So that I would like to break it. First would be the Americas, second would be Spain, urban and leisure, and third would be EMEA. First would be luxury brands, and then would be the premium brands. And of course, the fact that when we include Meliá's hotels, Asia support will be very relevant. Secondly...

[Jaina Mistry, analyst]

My follow-up on that. So I was interested in your comments around EMEA because EMEA RevPAR was probably flat in Q4. So what drives an acceleration in 2024 in that region?

[André Philippe Gerondeau, executive]

A couple of things Jaina. Number one is we have the Olympic games going into Paris. So France is going to have quite a strong 2024 all over. Secondly, we have seen that fairs congresses and corporate business is coming back in Germany. And last year was challenging, and beginning of Q4, we saw how that was moving. Thirdly, we have a strong base of MICE and congresses in general in EMEA. So that's what is driving our outlook, Italy is looking strong as well. I don't know if that answers your question, Jaina.

[Jaina Mistry, analyst]

That does it. Very helpful.

[André Philippe Gerondeau, executive]

Great. Now when it comes to Q1, you will see that we have positive growth. So yes, definitely, Q1 is already contributing to this double-digit RevPAR growth for 2024. We have a strong performance in the Canary Islands. We have a strong performance in bleisure, secondary cities in Spain. And as I said, the Americas, please remember that for us Q1 in the Caribbean is very strong. And third, yes, the 4,500 rooms are net of termination. So this is net increase on system-wide rooms.

[Stéphane Baos, executive]

Then next is going to be Andre Juillard from Deutsche Bank.

[Andre Juillard, analyst]

Congratulations for these good results. My questions are, first, about the sales that you could have from the operating environment because you're saying that more or less all of your markets are very well oriented. You are guiding on low double digit. But what could negatively impact if we wanted to be a little bit more cautious? First question.

Second question, is about all the asset management deals you're planning to do or you have already announced. Could you give us slightly more detail about the breakdown between the Republic in -- Dominican Republic, sorry, Mexico, the Canary Island. And I had a specific question about the Santander deal. Do you have any call option or does Santander has a put option on the respective participation even if I perfectly understood that we were talking about a long-term deal.

Last question, if I may, about refinancing. You've got EUR 280 million to refinance this year and EUR 163 million next year. What is the plan for this refinancing? Are you thinking about traditional bonds, credit lines or anything else?

[André Philippe Gerondeau, executive]

This is Andre Gerondeau. This is to your first question, so far, and we're not underbooked, but in terms of the pace of the reservations, the underbooked business, which is not only strong for Q1, but it's also showing a strong pace for summer at levels of between 15% and 20% already for the summer. So there's an early booking window, which is very relevant and that's going to allow us to do a lot of yield management with direct channels part of the strategy. There is nothing as we speak today that we are overcautious about. Obviously, there are some geopolitical issues that we do not control, but we have to say that given the situation, the unfortunate situation in Gaza or the situation in Ukraine, we have not seen really an impact, I wouldn't say, a positive impact. But please remember, how resilient the distribution of our portfolio is between the Caribbean primary cities and resorts.

So there is nothing right now that we can share that we're already cautious. Obviously, we are being sensitive and we're taking it quarter by quarter as well. The pace that we have for our group and life business is also very strong. Bear in mind that we manage 2 very large convention centers, one in Palma and another one recently in Barcelona and that we have strong life operation in the Caribbean. So hopefully, there's nothing that is going to make us change our mind. But as of today, it wouldn't be fair for us to say anything specific other than the overall situation.

[Gabriel Juan Escarrer Jaume, executive]

[indiscernible] as I said again in the July session, real estate team's priority has been entirely driven by the asset rotation strategy. As we have mentioned already, we keep our focus on partial disposals, other directly to joint ventures or introducing partners to assets for the upcoming period. The company, as the Chairman has mentioned has saw the rotation operations plan, and they have been both in Spain and in the Caribbean. And we hope that we will communicate and be able to communicate the results there for coming months.

[Unknown Executive]

[indiscernible] speaking. Concerning your first question on the Santander deal, I think the most significant part is that we Santander has no put on us whatsoever. And then obviously, we are retaining majority control on this vehicle. And that will give us a lot of optionalities when [indiscernible] comes. But the most significant part of it is that there's no put option on Santander against Meliá.

And then concerning the maturity profile, yes, we have EUR 280 million maturing this year. We already signed a reorganization with Santander on December last year. And so we moved EUR 50 million from 2024 and EUR 50 million from 2025 to 2026. Now in Q1, there will be maturities for EUR 60 million. We have cash enough to pay. And we are already sticking with all our lenders and we are expecting to close a reorganization of our maturities, along with the reduction in April, May, at the latest. So we are investing [indiscernible] with our lenders. And our objective would be to end up with a profile of around EUR 150 million of maturities each year.

[Stéphane Baos, executive]

Now [indiscernible] .

[Íñigo Egusquiza, analyst]

Stephane, Gabriel and the rest of the team, the first one is a quick follow-up on the target Gabriel that you are mentioning to reduce the net debt to EBITDA to 2.5x by 2024. I'm doing more or less the numbers. And if we assume that the cash inflow from the Santander transaction is EUR 230 million. On top, there is EUR 50 million on new asset rotation, you are implicit assuming that the free cash flow or the annual free cash flow generation would be around EUR 100 million. And the first question is this number is more or less okay.

And the second question on your guidance for 2024, you are giving top line, low double-digit RevPAR guidance growth for 2024, but which is -- I don't know if it's optimistic, but at least it's a strong RevPAR expected for 2024. But on EBITDA, you are only assuming 3% over 2023 EBITDA. Why is that the impact that is smaller at the EBITDA level?

[André Philippe Gerondeau, executive]

You're right, basically. I mean, free cash flow of the company is going to be hopefully higher than EUR 100 million this year. So that is the third element of the ammunition that we're going to have to review that. I think basically that was your question, right?

[Stéphane Baos, executive]

Okay. I will talk about the guidance of RevPAR that Gabriel gave and also the EBITDA. It's true that you need to remember that we have in 2024, we are not going to have for the full year equity more or less as a lease. I remember, only when you compare with the figures that we have in 2023, at the revenue level, we are talking about EUR 75 million that we had in 2023, and we are not going to have in 2024. And also, I would like to include also that the EBITDA generated by this along these 8 malls that we had on lease was around EUR 10 million. This is something that we have a one-off in 2023 and we are not going to have in 2024.

And also let to point that Gabriel said at least because we never know what is going to happen. But then the goal of the company, at least is going to be EUR 500 million for 2024. It's okay.

[Íñigo Egusquiza, analyst]

Yes, very clear, stephane. Just a small follow-up on the asset rotation, Gabriel, you mentioned that this EUR 50 million additional asset rotation will come from the sale of 2 minority stakes. You mentioned one in Dominican Republic and another one in the Canary Island. Is this right?

[Gabriel Juan Escarrer Jaume, executive]

Yes, absolutely. Yes, you're right.

[Stéphane Baos, executive]

Now please, Fernando from Alantra.

[Fernando Abril-Martorell, analyst]

Sorry, but most of them have already been answered. Just a follow-up on CapEx, because you've mentioned you expect to generate around EUR 100 million free cash flow generation this year. Just I was wondering the breakdown in CapEx for 2024 between key money maintenance CapEx, development CapEx and investments in your JVs, if possible, please?

[Gabriel Juan Escarrer Jaume, executive]

Yes, it's around 50-50, 60-40 Fernando, sorry, we can be more precise if you want, we can send you a note. But it's going to be yes, EUR 50 million, EUR 60 million in maintenance and the other one in between [indiscernible] basically, yes.

[Fernando Abril-Martorell, analyst]

Yes. I thought that maintenance CapEx normally was higher than around EUR 50 million a year.

[Gabriel Juan Escarrer Jaume, executive]

Yes, yes, yes. It is today. It used to be and this year, what we've decided is, as I explained before, also with the IT, with heavily CapEx our properties within the last year. And so we don't think we are jeopardizing the stages. We're going to be very strict. We're going to do an inventory of the real needs, and we're going break a little bit this year and then take it from there next year.

[Stéphane Baos, executive]

Then, thank you. I think that's all for today. That concludes our question-and-answer session. We hope that we have been helpful here. Please do not hesitate to contact us or to go to our Investor Relations department, any further questions you might have. Thank you, and good night.