In 2008, RevPAR for owned and leased hotels fell by 3.2%. The year was affected by 1) the economic downturn, 2) a weak summer season in Spain, 3) the depreciation of the pound sterling and the US dollar, and 4) the reduction of capital gains from asset rotation (3.8 million euros in 2008 compared to 43.1 million euros en 2007).

Sol Hotels

In 2008, RevPAR for the Sol brand (100% resort, 100% Spain) fell by 5.7% as a consequence of the fall in occupancy of 7.1%. The performance of the Balearic Islands was weak (RevPAR: -9.5%) due to the decrease in the number of bookings from the Spanish and UK markets, affected by 1) the global economic crisis, 2) the reduction in capacity by tour operators involved in the consolidation process in the industry (Thomson – First Choice and Thomas Cook – My Travel) and 3) the closure of some companies in the industry such as XL and Futura. On the other hand, the Canary Islands showed a small recovery over the year (RevPAR: +3.9%).

In 2008, Operational Costs (excluding leasing costs) decreased by -3.7%, assisted in part by the closure of several hotels, especially in areas such as Mallorca and Ibiza, so as to avoid greater costs. Ebitda decreased by 24.4%. The variation in the number of rooms available is due to the late opening of 4 seasonal hotels: Sol Príncipe (Malaga), Sol Costa Blanca (Alicante), Sol Guadalupe and Sol Trinidad (both in the Balearic Islands).

Tryp Hotels

In 2008, RevPAR for the Tryp brand (100% city; 73% Spain) fell by 4.6% due to the reduction in occupancy by -5.4% and the de- crease in weekend breaks which, although not starting until the second quarter, became more intense over the last quarter of 2008. Operational Costs (excluding leasing costs) fell in 2008 by 1.8% due in part to energy saving measures including the closure of unoccupied floors, the reduction in advertising costs and the decrease in the number of employees contracted, amongst others. Ebitda decreased by 21.7%.

The decrease in the number of rooms available is due to the sale of the Tryp Hidalgo and Paris Boulogne during the second and fourth quarter 2007 respectively.

Meliá Hotels & Resorts

During 2008, RevPAR for the Meliá brand (44% Spain, 21% LatAm, 35% EMEA) fell by -3.2% (-0.3% excluding exchange rate effects). Over the year the city hotel segment was affected by a gradual slowdown in the international leisure and business travel segments. Operational Costs (excluding leasing costs) and Ebitda changed by +7.9% and -6.3% respectively. Excluding changes in the perimeter, these parameters fell by -0.8% and -9.8% respectively due to the incorporation of the Innside brand. In 2008 the company implemented energy saving measures and reduced staff contracting due to the decrease in occupancy.

The incorporation of the Innside brand is behind the increase of 57.0% in leasing costs. Excluding these hotels, leasing costs increased by only 6.8%. The increase in the number of rooms available is due to the incorporation of the hotel Meliá Athens and the Innside branded hotels, partially compensated by the sales of the Meliá Cáceres, Meliá Mérida, Meliá Trujillo and Meliá Avenue Louise hotels in 2007.

Premium Brands

In 2008, RevPAR in the Premium brands (74% of the portfolio in the Americas) decreased by -3.5% (+1.8% excluding exchange rate effects). By brand, Paradisus decreased by -10.3% affected by the renovation of the Paradisus Punta Cana and in the Gran Meliá brand RevPAR fell by 1.3% due to the negative performance of the hotel in Puerto Rico. RevPAR in the ME by Meliá brand increased by 10.1% thanks to the performance of the company hotels in Cancun.

Operational Costs (excluding leasing costs) and Ebitda decreased by -0.6% and -20.3% respectively. The rooms available in the Premium brand decreased by 1.1% due to the renovation of the Gran Meliá Colón (218 rooms), re-opened on 3 February 2009, and the disaffiliation of the Gran Meliá Mofarrej in June 2008. These reductions in the number of rooms available were partially compensated by the enlargement of the Paradisus Palma Real (192 rooms) in the Dominican Republic.

Management Fees

The management fees obtained in 2008 decreased by -5.1%. On a like-for-like basis and excluding currency effects, fees increased by +3.3%, mainly due to the hotels in Cuba, whose management fees excluding currency effects increased by 8.7%.

Management fees for Sol branded hotels decreased by -0.5%, due to the performance of Spanish resort hotels, where fees decreased by 20.2%. This fact could not be compensated by the incorporation of 3 resorts en Bulgaria (Nessebar Palace, Nessebar Bay and Nessebar Mare) nor the positive performance of hotels in Croatia, where fees increased by 11.3%.

With respect to the Tryp brand, management fees decreased by -3.2% in 2008 due to two contrary effects: one the one hand the disaffiliation of the hotels Corobici (Costa Rica), Brooklin and Porto Alegre (Brazil) and, on the other hand, the positive results in Brazilian hotels, where fees increased by 14.6% (excluding the exchange rate effect and changes in the consolidation perimeter).

The management fees of the Meliá brand decreased by -6.3% mainly due to a reduced contribution from hotels, changes in the perimeter and exchange rate effects. Excluding currency depreciation and changes in the perimeter, management fees fell in 2008 by -1.0%.

With regard to the Premium brands, management fees decreased by -8.9% due to the disaffiliation of the hotel Bahía del Duque (Spain) and results of hotels in Cancun (-18.2%), affected by exchange rate changes. Using the same comparable basis and excluding exchange rate effects, management fees increased by 14.4%.