Significant changes are taking place at Sol Melia Hotels (SMH) following what it says have been two years of “difficult trading” and two years of consolidating
its portfolio.

In fact, portfolio consolidation was started later – end-2002/start-2003. At that time it said it would add about 50 hotels to its 350 over the subsequent
three years. But the actual pace may be slower – about 15 will have been opened this year, of which ten were its Tryp brand, an easier brand to expand than Melia.

One company statement at that time was that SMH would “reinforce its current position...but the choice of those [projects] it undertakes [will be] much more selective”. But, apart from the slowdown in business and portfolio growth, the key developments are deals with Cendant, Rank, and Warner Bros:

Cendant – an agreement for Cendant to promote the Melia Vacation Club timeshare business. SMH is coy about the fact that Cendant owns not only hotel brands (some of which compete with SMH brands), Avis and Budget,
and the Galileo GDS, but RCI – the world’s leading timeshare exchange company.
Thus this deal for SMH’s timeshare operation looks as though SMH has sold out that division to Cendant/RCI.

Rank – an agreement with SMH to develop the Hard Rock hotel brand in Europe and the USA (in Asia Pacific, the franchise is with Singapore-based HPL). SMH calls Hard Rock a “new concept”. In fact the Hard Rock Hotel is more than ten years old, but one that did not expand as well as expected.
The first under this new deal with SMH is a 381-room hotel in downtown Chicago.

Warner – an agreement to development another entertainment hotel brand – Flintstone hotels, after a cartoon and movie series, under the Sol Flintstone
brand. Initially, this involves splitting brands – existing Sol hotels will become Sol Flintstones, two in Mallorca and two in Menorca.