Good morning, everyone, and welcome to Meliá fourth quarter and full year 2022 earnings conference call. I'm Stéphane Baos, Head of Investor Relations. All participants will be in the listen-only mode. After the presentation, anybody who is interested will have a chance to ask questions, so we can resolve any additional doubts. Please note this event is being recorded. Before we begin, we would like to remind you that our discussion this morning will include forward-looking statements. Actual results could differ from those indicated in the forward-looking statements. Forward-looking statements made today speak only to our expectations as of today. This morning, as usual, on the call with me today are Gabriel Escarrer, our Vice President and Chief Executive Officer, André Gerondeau, our Chief Operating Officer, Pilar Dols, our Chief Financial Officer, and Mark Hoddinott, our Chief Real Estate Officer.
Gabriel Escarrer will provide an overall overview for the company's performance. André will then review our fourth quarter onwards. Following the remarks, we will be happy to take your questions. In any case, the investor relation 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 in our investor relation website at meliahotelsinternational.com. Now, I am pleased to turn the call over to Gabriel.
Thank you, St é phane, and good morning, everyone, and thanks for joining us today. 2022 was definitely our comeback year. Our fourth quarter performance allow us to confirm the improvement of all performance metrics compared to 2019 figures for the second consecutive quarter, with RevPAR compared to 2019 at 19% above for our owned and leased hotels. Thanks to our improvement in average room rate by 27.7%. Revenues, excluding capital gains, were also above those registered in 2019 by 0.6%. 2022 is the year where international travelers return as international borders laid down mobility restriction and confidence was regained. For a company like ours with a global footprint, international travelers are really important to continue creating value for our stakeholders.
On a yearly basis, even though our first quarter significantly impacted by Omicron, where important regions for the company as the Caribbean and the Canary Islands are in high season, we managed to recover by April, and since then, RevPAR has been consistently above 2019. Our solid pricing strategy, thanks to our luxury and premium brands and our cost efficiency strategy, has allow us to contain the impact of inflation in our cost structure. For the last nine months, we've managed to increase our EBITDA margin by more than 100 basis points, and our EBITDA flow through stood at 42%. It is clear that the desire of people to travel, to reconnect, to live meaningful experiences after the pandemic were behind Meliá's positive full-year results.
This was undoubtedly supported by our solid business strategy, focusing on digital leadership and low capital intensive formulas together with our amazing human team, which I like to take the chance to thank. In this context, turning to results for the full year and fourth quarter. Despite the first quarter, full year system-wide RevPAR surpassed 2019 levels by 1.1%, mainly thanks to the improvement of the average room rate, which increases by 23.5% compared to 2019, while occupancy stands at - 11.9 percentage points. For our owned and leased hotels, RevPAR increases by 5.4%, average room rate increases by 21%, and occupancy stays at - 9.14 percentage points. The overall trend during the year has been an increase in RevPAR mainly through price power while occupancy stays below.
It's consistently closing the gap with 2019 figures. Fourth quarter results confirm that demand is still strong. System-wide ADR has increased by 28% while occupancy is -8.85 percentage points below 2019. Consequently, we present an increase of 9.7% in global RevPAR compared to 2019 figures. On a year-to-year basis, consolidated revenues, excluding capital gains, stood at EUR 1,680 million which have doubled compared to last year. If we compare to 2019, they are -6.1% below, mainly due to the impact of Omicron during the first quarter. It is worth noting that due to our international presence and focus on leisure segments, the first quarter is important for the company, and is considered high season in the Caribbean and Canary Islands.
We are glad to see that first quarter 2023 is performing really well. Sales through melia.com increased by 77% compared to last year, accounting to around 43% of our centralized sales. The strength of our direct channels are part of our digitalization strategy, as we recently launched the new melia.com, enhancing customer experience. Operating expenses increased by 61.1% with respect to the previous year, decreased by -4.6% compared to 2019. The effects of inflation have been softened, thanks to the efforts in the management of the organizational model, negotiation with energy suppliers, and more efficient use of resources. I'm glad to announce that we have attained our objective to surpass EUR 400 million of EBITDA excluding capital gains, as we reached EUR 418.5 million.
This compares to EUR 61 million attained in 2021, which implies an increase of 586%. Depreciation and amortization decreased by EUR 41.2 million compared to the previous year. This difference is mainly due to the reversal of impairments recorded at year-end, thanks to the new asset valuation and the general improvement of business. The net financial results improved by EUR 1.7 million compared to the same period in the previous year. On the one hand, there has been an improvement in other financial results by EUR 22.2 million, mainly due to the recording at fair value of derivatives associated to the purchase option of a hotel in Spain for EUR 13.7 million.
On the other hand, the change rate differences have worsened by EUR -12.2 million, mostly due to the appreciation of the U.S. dollar against the euro. Regarding bank financing expenses, the increase is EUR 6.3 million as our average interest rate was of 3.13% compared to 2.85% in 2021. Thanks to our balanced fixed variable interest, the increase in interest rates and its impact on financing costs could be contained. The net profit of the parent company reached a EUR +110.7 million, improving by EUR 303.6 million compared to the previous year, reaching 2019 figures. Turning to the balance sheet, and I'm happy to remember that the company has been generating positive cash flow since April.
During the fourth quarter, we presented the asset appraisal performed by Richard Ellis, which estimated a total asset value of EUR 4 billion on the full consolidation, together with an additional EUR 600 million for our share in the assets held by joint ventures. Total valuation was of EUR 4.6 billion, which implies an increase of +10.6% on comparable basis compared to 2018 appraisal. This appraisal reflects the value of our assets. With regard to debt, we ended the year with EUR 2,673 million of net debt, a decrease of EUR 180.2 million during the course of this year.
During this same period, the financial net debt pre-IFRS 16 decreased by EUR 75.5 million to EUR 1,210 million, showing our progress to reduce debt entirely by operating free cash flow. At the end of the year, the liquidity situation amounts to EUR 380 million. It should be noted that we have been able to refinance 75% of 2023 maturities while continuing to pursue debt reduction as a top priority through free cash flow and asset rotation. After refinancing, 43% of the debt is a fixed interest rate, allowing us to reduce the impact of sustained higher interest rates. We remind that Meliá does not have any debt with financial covenants.
While mortgage debt stands at approximately EUR 286 million, with a loan-to-value of 31.4% after the most recent valuation only for those mortgage assets. To close the chapter, I would like to reiterate our commitment to move towards a more robust financial situation for the future and to return to a pre-COVID net debt EBITDA in the medium term. I'd like to close my initial intervention with a few highlights regarding our ESG strategy. ESG integrates our strategy and our way of approaching hotel business while working towards a sustainable future from a responsible present. Into social perspective, in 2022, we were again granted the Top Employer distinctions. This recognize our efforts made regarding our human resources management in Spain, Mexico, and Dominican Republic, where 46% of our workforce is located.
I'm proud to say that in 2023, Germany and Italy were added. This milestone, among many others we are continually working on, have enabled us to regain the first position as the most sustainable company in the hotel and lodging industry by the Corporate Sustainability Assessment by Standard & Poor's Global. Other world leaders, ESG agencies, such as MSCI and Sustainalytics, are also recognizing our efforts, and we are improving our scores. I will now turn the call over to André to talk about our operational performance during the fourth quarter and forwards in more detail. André, please.
Thanks, Gabriel, and good morning, everyone. Complementing previous remarks, after a solid recovery in the third quarter where we surpassed 2019 figures, the fourth quarter saw a consolidation of the recovery in business with a strong demand for leisure and bleisure travel. Surpassing for the second consecutive quarter pre-pandemic figures, Q4 revenues, excluding capital gains, were EUR 406 million versus EUR 404 million in 2019. Operationally, our RevPAR in Q4 has been 58% above 2021 and 19% versus 2019 for our owned and leased hotels. System-wide RevPAR was 43.9% and 9.7% respectively. It is important to remind the strong pricing capabilities of our luxury and premium brands, representing now 60% of open portfolio.
Average rates in Q4 were EUR 24.5 million versus 2021, and EUR 27.5 million versus 2019 for our owned and leased portfolio. EUR 21 million versus 2021, and EUR 28 million versus 2019. Occupancy was still below 2019, but we're seeing a steady closing of the gap compared with pre-pandemic figures. Turning to a yearly view, almost all regions have recovered RevPAR compared with 2019, with higher average rates and lower occupancies as a dominant scenario. This trend was maintained month by month after the impact of Omicron affect our operations during the first three months of the year. After that, reservations made during April started to ramp up, while May confirmed the positive outlook.
Since then, almost all countries have performed with a strong pricing power while steadily closing the gap in terms of occupancy rates compared to 2019, taking into consideration the last three quarters of 2022. RevPAR stood at 14.3% versus 2019, ADR +24%, and occupancy at -7%. That being said, at the moment, we are not seeing any price drops for the near future while having extra potential in terms of occupancy recovery versus 2019. Regarding our segments, we're glad to see that our direct channel is now reaching 43% of centralized sales, but also important partners as OTAs and tour operators have quickly recovered and show positive outlook for the upcoming months. Together with the air capacity expecting to be at 95% of summer 2019 operations.
We are confident to see our direct channels as a solid strength, which we are enhancing with the aforementioned partnership with Logitravel to create Meliá Escapes, together with the renovation of the melia.com strategy. Other segments, like MICE, had started to come back later in the year, stronger in the Caribbean, and even though groups are smaller, they are higher in number. Corporate travel is also coming back and still shows room for improvement, where cities like Madrid, Barcelona, Frankfurt, and Milan are showing a really positive outlook. If we have to look at the major change during this year, that would be the return of international travelers. We're happy to see that this return has been possible by the rapid increase of air connectivity. I'd like to close this chapter with some highlights regarding our recent rebranding and most relevant opening during the year.
As announced, our luxury brands increased by incorporating The Meliá Collection, a group of singular luxury hotels like Maison Colbert and Villa Marquis in Paris and Tenuta di Artimino in Italy, or Villa Le Blanc, a Gran Meliá hotel in Menorca, among others. The repositioning of these hotels and the distinctive product they are offered allowed us to maximize average rate increases. Additionally, I'd like to point out our growth during the year in strategic destinations as Vietnam. Thanks to our alliance with Vinpearl, we incorporated 15 hotels and a total of more than 4,500 rooms under management contracts as part of our asset-lighter growth model. This allowed us to become the second-largest operator in the country and a solid foundation to remain growing in the region. Additionally, we have recently announced a partnership with Rafa Nadal to create a new brand, ZEL.
This lifestyle brand will be a collection of hotels that inspire the Mediterranean culture. The first hotel will be located in Mallorca, and we're expecting to open new hotels in the future. Also to consider our Paradisus resorts opening soon in Europe, with its debut in Gran Canaria and Lanzarote. In terms of outlook, even though the macroeconomic uncertainty at the moment, and after two months already gone, there is no impact on the books reservations. Actually, confirming a robust demand, we're seeing for around +29% compared with 2019 in terms of revenue. Price power remains strong, while occupancy is still slightly below 2019, but as after mentioned, steadily closing the gap. Up to the moment, reservations are still predominantly last minute, but advancing bookings for Easter and summer are starting to come back.
This is a clear indicator on rising confidence of travelers who are now certain about traveling internationally with no restriction. Expecting low double-digit RevPAR versus 2019 and similar increases versus 2024 as Q4 last year. Going into regions, America Q1 2023 is looking quite strong with an optimistic first normalized Q1 after COVID. We are expecting full recovery compared to 2019, with reservations quite solid. I'd like to point out that the MICE segment in the region is fostering sales, where in Mexico and Dominican Republic is expected to be among the most relevant segments. Our versatility nevertheless allows us to capitalize on vacation periods also for the rest of our customers, direct channels, OTAs and tour operators. At the moment, U.S.A. and Canadian markets are showing the greatest increases, both from tour operators and direct bookings.
European market is expected to benefit from increasing number of airlines connecting these markets. As far as Spain, forecast for our city hotels is positive, with double-digit percentage price increases and occupancy levels slightly lower or at par than in 2019. The difference between current results in the MICE segment and 2019 continues to narrow, while corporate travel is still showing further recovery potential. Resort hotels are also seeing positive results with strong on-the-book reservations. Special mention should be made to the U.K. and German domestic markets, showing an increase already bookings for the summer season. The Canary Island is expecting to surpass 2019 occupancy figures, thanks to the strength of wholesaler reservations and our direct channels. Sorry. EMEA region continues with the trend in the last quarter.
Countries more focused in corporate are still lightly affected, but corporate travel in the region is expected to recover further along the year. Fares in the region are forecasted to work well. Our locations in leisure destinations are seeing positive outlooks as international travelers are still fitting the major cities where we are located. The Asia region will benefit from the reopening of China, as it is a great feeder market for the region, seeing a notable increase in the number of reservations. We therefore expect a change in trend and a recovery in both business and leisure travel. In Southeast Asia, the start of the year is expected to be positive, coinciding with the high season in Thailand and Indonesia. Cuba will continue as in recent months, with a positive comparison to the same period in the previous year.
The recovery of air traffic points towards an increase in potential demand. People love traveling and enjoying differential experiences. We're confident that our know-how in leisure over more than 65 years of experience will be a key asset and a competitive advantage in those destinations where we are present and those where we will grow. Turning to development, our growth strategy is focused on strengthening our positioning as one of the leading hotel groups in upscale and premium hotels in the most important leisure and bleisure locations. In the following years, we continue to be focused in key destination holiday areas in the Mediterranean, Caribbean and Southeast Asia, together with key cities in Central and Southern Europe. During 2022, we added 33 new hotels with 7,610 rooms, mainly Vietnam, Croatia and Greece.
This implies a net unit growth of over 7,000 rooms or almost a 9% over 2021. The company also signed 33 new hotels which have been added to the pipeline, which stands at 59 hotels and close to 1,400 rooms, where 96% of those are under the asset-lighter model. This allows us to surpass more than 100,000 rooms within the current portfolio and pipeline. We are confident that our efficient distribution model and strong direct sales channels, together with our firm commitment to sustainability, will enable us to continue our growth. I will now turn back the call over to Gabriel to summarize the main messages of the call.
Thank you, André. To end, I would like to highlight the following messages. After the high level of uncertainty and changes in the last year for the world and Meliá, we can say that 2022 brought the consolidated recovery for the hotel and lodging industry. The extraordinary resilience of the sector and the willingness for our clients to reconnect has driven an overall positive year. We are not free from challenges such as inflation and rising interest rates. We must not forget that lodging is a cyclical business. We are therefore not immune to downturns in the macroeconomic environment. Having said that, to this date, we have not seen a softening in demand. Two months into Q1 2023, bookings and pricing remains strong. In terms of outlook, we remain optimistic about accelerated recovery across all segments.
We anticipate a strong leisure demand in America and other leisure destinations. Clients are starting to advance their bookings, a clear sign that confidence on planning holidays is coming back. Our strong direct channels being part of our digitalization strategy will be a strong advantage moving forwards. Tour operations and OTAs expectations are also quite strong, and we are happy to see that across markets as the U.K. and Germany, the outlook is strong, being the most reserved destinations among those where we are present. I would like to reiterate our strong commitment to achieve 300 basis points improvement on EBITDA margins compared to 2019 by 2024. For the last nine months, we managed to increase our EBITDA margin by more than 100 basis points, and our EBITDA flow through stood at 42%.
Finally, I reiterate the commitment of the company to continue working towards debt reduction. Further details on our fourth quarter and full year can be found in the earnings release we issued last night. We hope we have been able to explain the situation to your satisfaction. We will now be happy to answer any questions you may have. Please let me remind that I'm here with André Gerondeau, Pilar Dols, Mark Hoddinott and Stéphane Baos.
As previously mentioned, those interested in asking questions will have the opportunity to do so now. To do so, please dial star five, so we can assign you a turn to ask questions. Also, please remember to keep your microphone mute while others are speaking. João from Santander, please go ahead.
Yes. Hi, good morning, and thank you for taking my questions and congratulations on the results. I have three questions. The first on the margin on the margin target. If I understood correctly, you so you're guiding 300 basis points improvement from a well, roughly 26% level, which was the margin in 2019, by 2024. I mean, I'd like to understand a bit the well, the steps to get there. When I look at, for example, 2022 margin and adjusting for the compensations of COVID, and capital ventures, you're standing close to a 33% margin. In two years, you would have to improve by 600 basis points.
I understand that first quarter this year will be very strong versus previous quarter of last year. I believe that's part of the explanation. If you could give us some color on what are the drivers there? Also considering that when we look at your corporate overhead, they've been increasing for the past years. I mean, traditionally you stand between levels of EUR 35 million-EUR 40 million. This year, for example, it's closer to EUR 75 million. Maybe there's the delta is there. Anything that you could help us on trying to, I mean, just giving some color analysis and reach this margin improvement. This is my first question. Sorry for being so long. The other two will be short.
The second one has to do with the real estate disposals. I mean, mainly if you can give us a specific guideline on the disposal of your assets in the Caribbean. The third, regarding the equity in Meliá Portfolio, can you I mean, can you give a more updated view on how is that sale proceeding? In theory, Iberia would be the buyer, and you would have an agreement with Iberia to continue operating this property. If you could give us an update there too, I would appreciate. Thank you very much.
Thank you, João. We go ahead. We start with the-.
I can answer the number one.
Okay. The first one. Okay.
You wanna do it?
Go ahead, Gabriel, please.
Hi, João. This is Gabriel speaking. Regarding your question about margins, there's a clear commitment from our side to increase the percentage of revenue generated through our direct channels. This will have an impact to reduce the intermediary costs. On that sense, I believe that you should expect from us a big increase of the percentage of revenue generated by melia.com. This will allow us to improve our pricing strategy and not only the pricing but as well the occupancy, because we believe there is a big room for improvement in terms of occupancy compared to last year.
Not only that, you know that this year we've been able to open 33 hotels, and you should expect from us at least another 30 properties this year. Moving towards this asset-light model has helped us a lot as well to improve our EBITDA margins. Since most of these openings are in markets that we have already the critical mass, a good percentage of these fees will go directly to the EBITDA level. These are in the revenue side, and in the cost side, we still work in the organizational models and in the digitalization of the back processes. We feel confident that we will improve at least this 100 basis points per year to reach the 30% of EBITDA margin in 2024.
Okay. We go to the second question. Mark, if you want?
João, it's Mark speaking. Regarding asset rotation, after suffering continued delays in doing the specific operation that we had originally planned, we've made alternative plans and which will allow us to continue towards our objective on asset rotation and to enable us to reach a minimum of EUR 120 million as sales proceeds this year.
Okay. As far as equity, João, this is André Gerondeau. Thank you for your question. As you've probably heard, there is an investment fund quite interested in all of the equity portfolio, and we are supporting. Our goal is to retain all of the properties, and we're working towards that direction in a lighter model in a management agreement. You should be getting news within the next 90 days, I would assume.
Okay, João, I think we answered your question. You have anything else?
Yeah. Well, just to follow up, it's because the my line wasn't very good. The value that Mark mentioned was EUR 120 million?
Yes. In terms of the. We still maintain our overall objective of EUR 200 million. We are saying that we expect to have a minimum of EUR 120 million this year.
Okay. Clear. Thank you.
Thank you, João. We turn the question to Iván San Félix from Renta 4. Hi, Iván.
Yes. Good morning. Can you hear me?
Yeah, perfect.
Yeah. Well, thank you, Stéphane, and congratulations to all on an improving year. I'd like to ask a couple of questions, please. The first one is on the mix of the recovery. As of today, the recovery has been led mainly by pricing. I'd like to ask you on the reservations, for, you know, from now on, do you see any changes in the mix of the recovery? I mean, Are you still prioritizing pricing over occupancies? Do you think that the recovery from now on is going to be more lean toward towards occupancies?
Is there any change on the mix of the recovery? The second one would be on the China opening. Are you seeing any noticeable pickup in demand already, given that China is the main feeding market to Southeast Asia? Thank you very much.
Thank you very much for your question, Iván . This is André again. Listen, on the first one, the answer is yes, there is some mix on recovery. As we had mentioned, we now have on the books over 29% total revenues compared to 2019. The trend is very positive. It is for Q3, and it is for Q2 as well. Maybe what we need to understand is that most of the European bleisure destinations, excepting some corporate destinations in Germany mainly, are now gaining almost the same levels of occupancy as 2019. For our leisure destinations, all of them, meaning, the Caribbean, Mexico, Dominican Republic, actually Orlando, New York, Canary Islands, and some of the leisure destinations in Spain, like Mallorca and Palma, are performing above in occupancy.
Please remind, remember that we have a very interesting portfolio that has different brands and we cater to different segments. You will see that we will keep up the pricing strategy in our luxury portfolio because of the opening of new premium and luxury assets and because most of our product has been upgraded and refurbished. We will recover volume in some of those destinations that are more led towards wholesalers and tour operation, and this is why we're excited to see that the U.K. and Germany is also contributing very positively and that there is enough airlift available to continue growing. Our vision, as we've said, is that you will see for Q1, at least, and probably will go on, a low double-digit RevPAR growth.
The gap on volume will be reduced in a very important way. This is, again, thanks to the strategy of the company, the portfolio, and the location of our assets. It's not only because the market is moving, it's because our strategy, we believe, is very clear in that direction. Secondly, we're seeing a lot more volume China for China. You know, we have six properties and 10 between open and in the pipeline. Most of our destinations in China are now with a good pace in terms of domestic market. In terms of outbound, we're now seeing positive trends and reservations, mainly in some areas of Vietnam, for instance, Da Nang, and some other destinations in Thailand where the Chinese market's starting to travel.
There is an expectation that after May, probably the country will open up and we should expect for springtime and summer, more volume outbound from China. It is a positive trend that it's been like that for the past two or three months after the new year, Chinese New Year. I hope that I've answered your question, Iván .
Sure you have. Thank you very much.
Iván .
That was very helpful.
Thank you, Iván . Now the question for Guilherme from CaixaBank. Hi, Guilherme.
Hello. Good morning. Thank you for taking my questions. The first one is related to the asset sales. These EUR 230 million sales are still expected from the same deal that you plan to do in 2022? Second question is a follow-up on the margins improvement. You mentioned three levers. One was the increase in direct channel share. My question would be, what's your target in terms of in terms of direct channel share, and how do you plan to improve from the current levels of 2022? The second follow-up on this is the digitalization of the back office process. This is something that has been going on for some time.
How are we at the moment in terms of savings, and what are the incremental savings that could arise from this? Thank you very much.
I'm sorry, the third question, Guilherme, I didn't really clearly understand the third question. Could you please repeat?
Yes. You're carry out some, the digitalization of the back office areas over some years. You mentioned there's still some ramp up to go until the end of 2024. My question would be how we are in terms of this process, and what are the incremental savings that you still expect to obtain from this digitalization?
Okay, thank you. Mark, you go to the first one, to the...
Yeah. Guilherme, good morning, and thank you for your question. Regarding the asset rotation, part of the operations we are contemplating are the same assets that we had discussed last year, and there are some other changes. Yes, the majority regard the same assets.
Guilherme again, André. In terms of your question regarding margins, we do see our direct channels moving between 45% and 50%, 50% being the goal of the company. I think in addition to that, it's important to note that, as Gabriel has mentioned, there is at least a 15% higher revenue per guest when going through direct channels. Two additional levers of direct channels as well, but of the strategy of the group, one is related to food and beverage and other revenues.
Which consistently grow and spread out the potential for total RevPAR or total revenue per available room for each of the hotels. In terms of complementing the vision of the growth, as Gabriel well stated, please remember that there is a number of properties that have just opened and are just opening. We should see the ramp path of the management fees in most of these hotels in Southeast Asia and other destinations start building fees for the company in the next couple of years. As it's been said already, we already have the critical mass and the structure to support the services. There's gonna be a limited growth in overhead and other expenses for the regions.
In terms of how we are moving forward with the digital transformation, I think that it's a combination of the organizational model, which now clusterizes the company in general in a number of clusters worldwide. Within those clusters, there are a number of services which are related to back of the house, economies of scale, also related to centralized products like centralized kitchen, centralized services. At the same time, we are doing a centralized purchasing program, Coupa, which is now evolving. That's, I think, where the conversation is going, the direction where Gabriel was mentioning into the digital transformation, the back of the house. Please remember that we've done a very strong digital transformation in our revenue side, melia.com and our own direct channels.
That same energy is now being implemented in the back of the house. That's where most of our margins are coming from.
Guilherme, it's okay?
Okay. Thank you very much.
Thank you. Now The question come from Bosco, from UBS. Hi, Bosco.
Hi. Good morning. I just want to confirm, I'm not sure if I understood correctly, you said that you had an investment fund interested to buy all your properties, and you could be willing to sell part of the EUR 4 billion asset properties in a transaction, or were you referring to the disposal of the EUR 120 million? Also related to that, I mean, you reduced your disposal target from EUR 200 million to EUR 120 million. If you could give us a bit of background why you think you don't really need to dispose as much as the previous year. Also related to that, what is your long-term leverage target for the group?
Maybe just apologies for the follow-up, but the, I think you have around EUR 400 million refinancing this for two years. What are your plans on that, excluding the disposals? Thank you.
Good morning, Bosco. This is André. Let me answer the first question because probably I didn't explain myself correctly, and I thank you for bringing it up. What we mentioned is that there is an investment fund interested in the equity portfolio, so that you probably know it's a specific portfolio of 17 hotels, 2,300 rooms in Spain that has an interest from an investment fund. I think the original question came from Joao, and what we wanted to confirm is the interest of that fund and our position in keeping those hotels under a management contract, which has nothing to do with the rest of the portfolio or the rest of our assets.
Well, Mark can you...
Okay. Regarding your second question, in terms of background on the reduction of the massive disposal figure, we've seen certain delays in the creation of the investment vehicle that was expected initially. We continue with that goal of EUR 200 million of total asset disposals. As of today, we are saying that we will have EUR 120 million for this year. We continue to work on that, the difference, to get to the EUR 200 million total.
Regarding the leverage that where we would like to be, at the end, we want to come back to a normality previous to COVID. That mean we want to be pre-IFRS 16 numbers, we would like to be between 2 - 2.5 x. That mean net debt EBITDA slash Net debt to EBITDA need to be around 2 -2 x . 2.5, sorry. The goal is to achieve in the coming years, in the midterm. The last question, I don't remember. Sorry, Bosco. It was something about 2024. Could you please remember?
Yes. I was asking about what are your refinancing plans? I think you've got like EUR 400 million or EUR 500 million refinancing it for two years in 2023 and 2024.
No, that's completely correct. That mean the company has already done the work for 2023. As you know, we have refinanced 75% of the maturity that we get in 2023, and now is the work to do it for 2024. Remember that we have the free cash flow and also the asset sale that are going to help. It's the moment to work for next year. That mean now we have done the job for this year and the coming step is to try to refinance 2024, but also keeping in mind that we're going to sell some assets and with the free cash flow that we're going to generate.
Okay. Thank you.
The finance department will not stop it. I will continue on the way to work. Thank you, Bosco. Everything is okay?
Yes. Thank you. Goodbye. Thank you.
Bye, Bosco. Now the turn to André Juillard from Deutsche Bank. Hi, Andre. How are you?
Good morning. Congratulations for the strong results. Few questions, if I may. First one on Germany, could you give us some more color on this market, which seems to be a little bit under pressure in the beginning of the year? Do you have any visibility which would help us to better understand what is going on? Regarding the perimeter, you are mentioning EUR 120 million disposal to be done this year. Regarding the lease contracts, which were coming to maturity this year, can you help us on what could goes on and what could be the consequences on the number of hotels and operations this year?
Do we have to anticipate some exits, or some new hotels in the portfolio? Thank you.
Good morning, André. Thank you for your question. This is André Gerondeau. Listen, Germany, I think basically what we can say is that all of those, let's say, leisure destinations are moving forward at a better pace. Obviously, cities like Berlin, Munich, Dresden are moving forward. And those destination where there are fares. Fares are forecasted to do well. Cities like Frankfurt, for instance, Düsseldorf, have a certain positive pace. We might be facing some additional challenges in most of the corporate cities, but that would be, for instance, specifically Wolfsburg, where, you know, all the economy goes around Volkswagen, for instance. But all in all, prices are in good shape. We don't have any challenges with talent, service or other services.
I think it's just to wait for the comeback of the corporate market. This is where we have, I think, the most opportunity to recover volume throughout the year. Outbound business from Germany, very positive. I think this is important to note as Canary Islands have seen a very positive reaction from the German market, and we see a number of reservations already in the books for summer. As far as the lease contracts, I think that mainly what will perspire during 2023 is this equity portfolio of 17 properties, 2,300 rooms, that most likely will move from lease to management contracts. Other than that, there's not much movement on the lease side of the company.
As you know, over 90% of all our development pipeline is asset lighter, so it's either management or franchises. This is what we're focusing right now. I don't know if.
If I'm right, that means that you will lose some revenues, but you will gain on profitability.
Absolutely. It's gonna support both our margins and the flow through obviously of those management contracts.
Could you quantify the loss in terms of revenues and the gain in terms of profitability?
Hi, André. It's Stéphane. Comment ca va? In terms of revenues, in a normal year, that means the equity, the total revenue that the author that we get in rental with Equity Inmuebles was around EUR 100 million. That's in term of revenues. In term of EBITDA, but excluding, how we say, excluding the rentals payment, the lease payment, we were around, in a good years, around EUR 28 million-EUR 30 million, EUR 28 million. Once we include the rentals, then the bottom line to the level was EUR 2 million-EUR 3 million, more, no more than that.
Okay. Thank you.
The main driver of the transaction is really because it was not adding EBITDA to the group. That's exactly what we're moving for.
Okay. Understood.
That'll be done.
Maybe last question about the recovery of the 2-2.5x net debt on EBITDA ratio. When you say midterm, what do we need to think about? Is this 2025, or even longer?
2025, around this year. That's the goal of the company.
Okay. Very clear. Thank you very much.
Thank you to you, André. Now the call to Fernando Abril from Alantra. Bueno, Fernando.
Hola. Good morning. Thank you for taking my questions. I have three, please. First, you in free cash flow, you've cut debt by EUR 75 million, more or less, in 2022. You had some forex headwinds, but also some tailwinds from the government aids that you received. I guess that CapEx has been in, you know, CapEx efforts have been intensive during the year. I don't know if you can detail a bit where did you invest in 2022 in your hotel portfolio, equity, digitalization, whatever. Any detail on this would be very helpful. What is your expectation for CapEx to be in 2023? Second question is with regards the cost of debt.
It has increased, 30 basis points, something like that, to 3.1% in 2022. What do you expect, cost of debt to be in next year, sorry, this year, 2023, and the impact on interest payments, the increase in interest payments you expect. Third, just to clarify, you've mentioned that you expect low double-digit growth in RevPAR in Q1, and you reported 19% in Q4. Is this a smaller slowdown versus Q4? That's all. Thank you.
Do you want us to start the other way around? If you don't mind, Fernando, let me start by answering the third question. We reported 19% in Q4 versus 2019. Obviously Q1 has a different structure and different opportunities, but it's going to be more or less similar to what you've seen both in terms versus two years ago and I mean versus 2021 or Q1 2022 and versus 2019. You'll see a similar pace.
Okay.
Okay. Regarding the cost of the debt, you say 3.1%, that's been this year. The sensibility of 25 basis points, taking into consideration that right now we have 43%-44% of the debt fees, is that 25 basis points increase will impact in EUR 1.9 million. It was prior to the refinances. Remember that we were in 55%-54% fees, now moving to 43%. We have more impact on the variable expenses. Where we expect to be at the year-end, we have some increase for sure, we expect to be little below 4%. Regarding the CapEx for 2023, we expect around EUR 100 million, EUR 80 million-EUR 100 million. That's the maximum amount that we keep on mind.
As you say, the CapEx in 2022, I completely agree that with the CapEx of maintenance, that also includes the IT, all the digitalization costs, has been around EUR 77 million for this year. Additional to that, we have invested in Dominican Republic around EUR 50 million. That's the reason this year the free cash flow has been higher than the EUR 75 million. At the end, the company had decided to invest in Paradisus Palma Real . This is where the CapEx part of the investment has been made. I don't know if Fernando is okay with.
Yeah, and.
Is it okay?
Yes, just a quick follow-up. You don't expect also new growth CapEx in 2023? Do you just expect this EUR 80 million-EUR 100 million of maintenance CapEx?
That's correct.
Okay. Okay, thank you. Thank you very much.
All right, Fernando. Now we turn the question to Gonzalo de Cueto from BNP, Exane BNP. Hola, Gonzalo.
Hola, Stephane. Good morning, and thank you for taking my question. Most of them have already been answered, just a follow-up on your cost base expectations for this year. I would like to understand how do you expect your cost base to evolve this year, particularly labor expenses. How do you see this in 2023, not only in terms of wage increases, but also in terms of number of employees per hotel open? That will be it. Many thanks.
Gracias, Gonzalo.
Yeah. Gonzalo, good morning. André again. Listen, in terms of employees, a very similar basis than second half of the year in most cases. Only where those business opportunities on markets are evolving, whether it's semis or any other segment, you might see an evolution on overheads, but it's related to direct sales. That's very specific. Other than that, there are no increments. On the contrary, we continue to work on the organizational model to continue with the efficiencies. We are assuming around system-wise or around a 5% increase in wage and salaries for the year.
Okay. Many thanks.
Thank you, Gonzalo. Darragh O'Sullivan from Jefferies. Hello, Darragh.
Good morning. Thank you for taking my questions. Two for me, if that's all right. Could you talk about your net unit growth outlook for 2023? Secondly, could you walk us through your thoughts on OpEx inflation for 2023 and the key moving parts, please?
Darragh, would you mind repeating the questions, please?
Hi. Darragh, could you please repeat the question? If I really understand, you say which going to be the net unit growth for 2023, that's correct?
Yeah. Sorry, I was on mute. Could you also talk us through your thoughts on the OpEx inflation environment for 2023 and the key moving parts?
Okay, sorry. Of course. Okay. For the net unit growth, as we say in the goal, the idea of the company is to open around 7,000 rooms for this year, around 30 properties. That could represent around 7%-8% of net unit growth, the same that we had last year.
The most important thing, Darragh, and if I may, is that most of these new openings will take place in the areas where we have already the critical mass, and this is mainly the Caribbean, the Mediterranean rim, and Southeast Asia. A large percentage of these new fees will go in a good percentage straight to the bottom line.
Yeah, Darren, good morning again. Listen, in terms of OpEx, we see that payroll and direct costs are more or less under control in most of the destinations where we understand what, where the strategy is moving forward, how we've renegotiated with most of our suppliers. Maybe the key challenge right now remains electricity costs in Northern Europe. I would say that would be the number one challenge that we have today in terms of OpEx. The rest we believe is pretty much under control.
Not only that, if I may add as well, during last year, 2022, we have implemented a new procurement program called Coupa, and it's already well implemented. We believe this will add some benefits in terms of our procurement capabilities.
It's okay. Darragh?
Thank you very much.
Thank you. Now the last question is Fernando Abril again from Alantra. Hi, Fernando.
Sorry, to bother you again. Just one last question about rental payments. If we remove the Equity Inmuebles rentals, how much do you expect rentals to be in 2023?
The payments excluding the variable, only the fixed rental is going to be below EUR 200 million.
Okay. Okay, thank you.
Thank you. This concludes our question and answer session. We hope that we have been helpful here. Please do not hesitate to contact our investor relation department for any further questions you might have. I would like to turn the conference back to Gabriel Escarrer for any additional or closing remarks.
Thank you very much for your attention and your time. We are pleased to see that the much-awaited recovery has already arrived. To see that these last two years have turned around is pleasing for all of us. Fourth quarter numbers are very positive. While we are monitoring and watching the macro trends, we feel very good about what our current view in the business and advanced bookings. Me and my team are confident that our strategic strengths, combined with our know-how in the leisure and bleisure sector, will allow us to have a good year in 2023. We still have some challenges ahead of us. Meliá Hotels International has shown capable of dealing with the most difficult situations. We appreciate the time. We will look forward to catching up with everybody after the first quarter to give you more color into what we are seeing then.
Thank you, and have a great day. Thanks.
Bye.
Bye, everyone.