Meliá Hotels International, S.A. (MEL) Earnings Call Transcript

Good afternoon, and welcome to Meliá Hotels International First Half 2026 Webcast. I'm Stephane Baos, Head of Investor Relations. Before we begin, we would like to remind you that our presentation will include forward-looking statements. As our results could differ from those indicated in our forward-looking statements, and forward-looking statements made today speak only to our expectations as of today. Unless otherwise stated, our RevPAR occupancy, average daily rates and P&L comments refer to year-over-year change for the comparable period. For the purposes of this presentation, our President and Chief Executive Officer, Gabriel Escarrer together with our Chief Operating Officer, André Gerondeau will walk you through the key highlights and main topics. You can find our earnings release on our Investor Relations website at meliahotelsinternational.com. We will now see a short reel with the main KPIs, followed by the presentation. [Presentation]

Thank you, Stephane. Good afternoon, everyone, and welcome once again to Meliá Hotels International's First Half 2026 Results Webcast. We are presenting today solid first half results, demonstrating the strength of our positioning and portfolio in well-established leisure and bleisure destinations. This strong execution was delivered despite a highly volatile environment marked by the development of new conflicts, which continue to affect sentiment and pose risks to the tourism sector. As an introduction, to frame the results we are presenting today, I would like to highlight 4 key ideas, 2 relate to areas of strength, while the other 2 reflect dynamics that are important to consider when reviewing the period's performance. First, demand across our consolidated destinations remained strong. Leisure travel trends continue to be healthy, supporting solid operating performance across the majority of our key markets. As a result, we are delivering on our goals set at the beginning of the year across almost all regions, with the exception of Mexico, which was temporarily affected by specific local events and Cuba. Second, growth continues to be driven by a strong RevPAR performance, where we remain the leaders together with our expansion strategy. Recent acquisitions and the growing contribution from our joint ventures are increasing both the scale and diversification of our earnings base. Third, a specific security-related events affected booking patterns and impacted the performance in Mexico during part of the semester. And finally, we completed the process of totally ceasing operations in Cuba. As a result, the business is now reported as discontinued operations. Before turning to the financials, let me provide some additional context on Cuba as this is the main factor affecting the group's bottom line performance during the period. Over recent years, the operating environment in Cuba has become increasingly challenging, driven by a combination of geopolitical and macroeconomic factors. These conditions have significantly impacted the country's tourism industry and the operating environment for hotel companies. Against this backdrop we concluded that exiting the market was the most prudent and responsible course of action. This was by no means an easy decision. Meliá has had a presence in Cuba for more than 3 decades and has played a pioneer role in the development of the country's tourism industry. However, our responsibility is to safeguard the long-term interest of the company and all of our shareholders as we believe that this decision was the right one. As a consequence and in accordance with applicable accounting standards, the Cuban business is now reported as a discontinued operations. As a result, we recognized a nonrecovering impact of approximately minus EUR 79 million at the bottom line, largely reflecting the impairment of our remaining exposure in the country, which has been completely impaired. This is a nonrecurring accounting adjustment with no cash impact. This decision completes our exit from the market and removes a source of volatility. Turning into the financials. For the second quarter and half year in order facilitate year-on-year comparability, the 2025 contribution from the Cuban business has been reclassified. Consolidated revenue, excluding capital gains for the first half of the year increased by plus 7.1% and plus 8.5% in the second quarter alone, which was particularly strong. This is also explained by the perimeter evolution and the strength of our operations in almost all destinations. Operating expenses, the increase was of plus 7.4% for the first half and plus 9.3% for the second quarter. This increase is also reflecting perimeter changes. The first half figures reflect the addition of several hotels under variable leases agreements, most of which were incorporated in June 2025, resulting in a plus EUR 10.4 million increase. First half EBITDA, excluding capital gains, reached plus EUR 244.8 million, representing a plus 2.5% increase year-on-year. This growth was delivered despite higher variable leases costs and the temporary absence of a full contribution from Paradisus Cancun and Gran Meliá Don Pepe, 2 of our key owned hotels. The impact on EBITDA of these 2 hotels is more than EUR 20 million during this semester. As these hotels progressively return to operation, we expect to recover this contribution and unlock further earnings growth in the coming quarters with Paradisus Cancun having reopened in April 2026 and Gran Meliá Don Pepe expected to reopen in December 2026. Below EBITDA, net financial results improved by plus EUR 4.2 million year-on-year, mainly reflecting a more favorable foreign exchange contribution, partially offset by nonrecurring effects recorded within other financial results last year. Cost of debt remained stable at 4.1%. Profit from associates and joint ventures amounted to EUR 5.1 million during the first half. The year-on-year comparison is largely explained by one-off items recorded in the prior year, including a capital gain from the disposal of an asset in the Canary Islands. With all that and considering that was previously explained regarding the situation in Cuba, profit and loss from continuing operations stood at EUR 83.5 million, decreasing 2% compared to last year. Meanwhile, profit and loss from discontinued operations in Cuba was minus EUR 79.4 million, reflecting the accounting impact of receivables, inventories and Emasa stake impairment. This is a one-off impact. Consequently, group's net profit reached EUR 4.1 million affected significantly by the aforementioned situation. Regarding margins and -- although margins remain under pressure during both the first and second quarter, this reflects a combination of temporary factors rather than any deterioration in the underlying business. We also continued to face some headwinds from foreign exchange movements, which affected both the revenue and cost base of the group during the period. Driving margin expansion remains a key priority across the group, and we are confident in our ability to steadily progress towards our long-term profitability objectives. Turning to the balance sheet. Net debt decreased by EUR 51.7 million during the first half while net debt, excluding leases, increased by EUR 65.1 million, reflecting the investments made during the period, which I will review in a short moment. With no significant maturities ahead and a comfortable liquidity position, we have both the flexibility and the visibility required to continue investing in the business while maintaining a disciplined financial profile. Turning to investments. During the first half, we continued to deploy capital strategy, focusing on opportunities that strengthen our portfolio. We completed several acquisitions and investments in strategic destinations such as Italy, Spain and the United States, while increasing our exposure to assets where we already have strong operational expertise and in some cases, were previously under lease agreements. Cash on cash expected returns for these investments reached double-digit numbers. Importantly, these were high-quality assets already in operation and requiring limited additional investment. At the same time, Paradisus Cancun resumed operations in April following its repositioning while the renovation of Gran Meliá Don Pepe remains fully on track. Altogether, these initiatives further strengthen the quality of our portfolio and its future earnings potential. I would like to confirm that we remain fully committed to a disciplined approach to leverage with a clear objective of keeping our net debt-to-EBITDA ratio below 2.5x in the years ahead. This discipline reflects the strength of our underlying cash generation, not a reliance on portfolio actions. Separately, as part of our ongoing focus on capital allocation and balance sheet optimization, we continue to review opportunities to dispose of selected noncore assets. I will now turn the call over to André to talk about our operational performance during the second quarter and forward in more detail. Please, André.

Thank you, Gabriel. Good afternoon, everyone. Let me now provide some additional detail on the operational performance across our regions, where we continue to see healthy demand trends and solid execution across most of our key destinations. While geopolitical tensions in the Middle East have increased uncertainty, our exposure to mature and well-diversified destination has allowed us to navigate the situation without any meaningful impact on demand or operations. Owned and leased RevPAR increased by 0.2% in Q2 and 1.3% in the first half. Growth was stronger on a consistent currency and comparable portfolio basis, reaching 3.1% in Q2 and 5.1% in the first half. This underlying strength was reflected in our luxury brands in Spain and EMEA, where RevPAR delivered a comfortable mid-single-digit increase. Also, our operations in Dominican Republic were particularly strong, achieving double-digit RevPAR increase in the period. Looking at system-wide RevPAR, growth was 14.2% in Q2 and 11.7% for the first half. This includes an uplift derived due to our exit from Cuba. Excluding this effect, system-wide RevPAR growth would have been 5.8% in Q2 and 5.6% for the first half. Available rooms during the first half increased by 6.1% in our owned and leased portfolio, while system-wide available rooms decreased by 5%. The decline at system-wide level was primarily driven by the progressive reduction of our exposure to Cuba, and the subsequent cease of operations in line with our previous market communications and as disclosed in today's H1 earnings release. Meliá.com and our direct channels remain a key competitive advantage. They represented almost 48% of our centralized sales during the period, supporting both demand generation and customer loyalty combined with the diversification of our source markets. This provides greater resilience, commercial flexibility and an increasingly valuable platform for both total RevPAR growth and value creation for owners of managed hotels. By regions, the performance of our system-wide portfolio for this semester was as follows: Starting with Spain, Urban performance remained positive in the first half, mainly driven by rate growth and portfolio maturity. Madrid continues with a solid trend, especially in luxury and premium hotels, while Barcelona improved towards the end of the semester. Other cities have also benefited from recent openings, renovations and repositioning initiatives. RevPAR increased by 8.9% in the second quarter and 6.7% in the semester. In Spain resorts, trading remained very healthy across the semester. The Canary Islands continued to be our strongest contributor, while the Balearic Islands delivered growth in both rates and occupancy. Direct customers and tour operators were the main drivers of demand, complemented by the continued strong momentum of Club Meliá. It is also worth noting that these results were achieved despite the temporary closure of Gran Meliá Don Pepe for renovation works. RevPAR increased by 7.3% in the second quarter and 4.6% in the semester. Across EMEA, results were generally positive, although performance varied by market, Italy delivered an excellent performance supported by strong demand in Milan and the continued strength of the luxury segment in Rome, while the U.K. also recorded healthy growth led by London and the MICE segment. On the other hand, Germany faced a more demanding comparison due to the absence of major events that benefited the prior year, while France experienced some temporary pressure from disruptions linked to the Middle East conflict and air connectivity. In Asia, Southeast Asia once again stood out as one of the strongest growth regions benefiting from healthy leisure demand, improve connectivity and a more diversified mix of source markets, particularly in Vietnam, Thailand and Indonesia. China continued its gradual recovery with occupancy improving although the pricing conditions remain competitive. Relevant to note the positive performance of the rebranded Paradisus Bali, a key differentiator of Meliá in the region with high potential for development. Turning to the Americas. Performance in the Dominican Republic remained particularly strong throughout the semester. Demand trends were healthy. Occupancy levels remain robust, and the contribution from our key assets continue to grow, supported by the diversification of the source markets and the strength of the destinations, tourism fundamentals, benefiting to some extent from displaced demand from other destinations. Looking at Mexico, the start of the year was positive, although demand was temporarily affected by specific local events during part of the semester. Our commercial teams reacted quickly, focusing on direct channels and profitable business. It is also worth noting that these events coincided with the reopening period of Paradisus Cancun as the hotel is in its ramp-up period. This naturally limited the impact on the region during the semester, while leaving us with a significantly stronger product and a much better starting point for future performance. Before reviewing the outlook by region, let me highlight that we continue to see a supportive demand environment across most of our markets despite the geopolitical uncertainty that remains present in the background. The summer season is developing positively supported by strong booking levels, healthy estimated demand and the strength of our positioning in established and highly resilient destinations. We strongly believe that our brand strategy is a key contributor to the strong performance in Spain and EMEA together with the improved results in Dominican Republic. With this in mind, we're optimistic regarding Mexico's recovery going forward. Focus on our luxury and premium properties has allowed for further RevPAR growth across these brands, while the design of personalized experiences such as private [ boat ] events in Ibiza, Menorca and Mallorca, wellness programs and F&B offerings with recognized partners and beach clubs among others has contributed to higher guest satisfaction and stronger brand affinity. Examples of this, to name a few, the strong reposition of our Meliá brand with the opening of Malaga, ME Marbella and ME Lisbon, and the evolution of our Gran Meliá and Meliá Collection portfolio. All of these efforts are translating into the steady improvement of our NPS scores. At the same time, the renewal of our top employer certification once again validates the strength of our culture and the quality of our teams. We strongly believe that talent has become one of the most important levers in our industry and a key enabler of the personalized service, attention to detail and memorable experiences for our guests. On-the-books reservations remain ahead of last year by double digits, giving us good visibility for the quarter, combined with a favorable events calendar in several markets. This supports our confidence for the remainder of the summer season. Briefly by region. Spain continues to show a very positive momentum across both resort and urban destinations. In our resort portfolio, strong on-the-books demand is complemented by healthy last-minute bookings with the Canary and Balearic Islands performing well. In our urban hotels, growth continues to be supported by recent additions to the portfolio, repositioned assets and strong direct customer performance. Across EMEA, trends remain supportive overall. Italy continues to benefit from a favorable events calendar in Milan and resilient luxury demand in Rome. The U.K. is showing positive momentum, supported by major sporting events and corporate activity, while Germany should benefit from the strong September events calendar. France remains more moderate in the near term, although we expect some improvement as corporate activities resumed after the summer period. In the Americas, Mexico continues to operate in a volatile environment with demand remaining highly booking windows sensitive. Our focus remains on direct channels and active revenue management, while the reopening of Paradisus Cancun progressively strengthens the destination positioning. In the Dominican Republic, demand remains strong across all segments, supported by a diversified mix of source markets and particularly healthy trends from the U.K., U.S. and Canada. In Asia, we remain encouraged by the outlook. China continues to recover gradually, while Southeast Asia remains one of our strongest growth regions, led by Vietnam, Thailand and Indonesia, supported by healthy leisure demand and improving connectivity. Turning to development. Development remains a key pillar of our growth strategy. We continue to add high-quality projects mainly under asset-light structures, reinforcing our presence in strategic destinations and supporting our long-term growth. Until July, we opened 14 hotels adding about 2,000 rooms to the portfolio, while our team signed 17 new projects, adding over 3,800 rooms to the pipeline. Among the highlights, our entry into Tunisia stands out. The entry into the country was made possible through a strategic partnership. This collaboration will allow us to progressively build a platform of up to 3,000 rooms in one of the most promising leisure destinations in the Mediterranean, increasing the depth of our portfolio. However, while our vision for gross unit growth remains around 5%, net unit growth reported figure will naturally be impacted by the exit from Cuba. This does not reflect a slowdown in our development activity, but rather a strategic portfolio decision. Our growth strategy remains firmly focused on high-quality assets, stronger destination and opportunities that enhance the long-term value of the portfolio. Let me briefly comment on some of the most relevant openings we've had in the semester. In addition to the previously mentioned Paradisus Bali, a particularly important milestone was the reopening of Paradisus Cancun following its comprehensive transformation. This landmark investment has significantly elevated the resort positioning and guest experience reinforcing its leadership within the luxury segment. Having resumed operations in April, we expect the property to progressively unlock its fourth earnings potential, becoming an increasingly meaningful contributor to growth from 2027 onwards. Another highlight during the period was the opening of INNSiDE Mexico Roma Norte, strengthening our presence in one of the most dynamic urban markets in the Americas and reinforcing our commitment to the fast-growing bleisure segment. This opening further diversifies our footprint in one of the group's most important markets. Holiday World Resort in Benalmádena reinforces our leadership in the Costa del Sol, adding 900 rooms to a high-quality family-oriented resort complex, operated and affiliated by Meliá. It represents the type of partnership we're looking for, strong assets in leading destinations with significant growth potential for our brands and commercial platforms. In addition, in the Andalusian region, particularly noteworthy are the opening of ME Málaga and Hacienda del Mar, a Meliá Collection hotel in Estepona. We were also pleased to celebrate the opening of Zel Fuerteventura for the first Zel property in the Canary Islands and another important milestone of expansion of the brand. The hotel strengthens our position in premium leisure destinations and first part of our vision to create a unique well-being hub together with Paradisus Fuerteventura. I will now turn back the call over to Gabriel to summarize the main messages of the call.

Thank you, André. As a summary, I would like to highlight the following messages. Our first half results once again demonstrate the resilience of our operating model. Despite a volatile geopolitical backdrop, we continued to lead system-wide RevPAR growth, reflecting the strength of our brands, our distribution system, the quality of our repositioned portfolio and our exposure to well-established and highly attractive destinations that continue to resonate strongly with travelers worldwide. EBITDA excluding capital gains increased by plus 2.5% during the first half. This performance was achieved despite the higher contribution of new variable lease contracts and the fact that 2 of our most important owned hotels Paradisus Cancun and Gran Meliá Don Pepe has not yet contributed at their full earnings potential due to the reopening and renovation activities. As these assets progressively normalize that contribution, we see upside for further profitability improvement going forward. The period was, however, significantly affected by the situation in Cuba, which resulted in a minus EUR 79 million impact classified under discontinued operations in accordance with the applicable accounting standards. While this had a substantial effect on reported net profit, it reflects the prudent accounting treatment of our exit from the market, with the remaining book value of our exposure in Cuba now fully impaired. I repeat, this is a one-off event with no cash impact. We have taken a more active approach to expansion, investing in strategic assets and opportunities that strengthen the quality of our portfolio and support future growth. As we look ahead for the second half of the year, our expectation for 2026 remain positive and can be summarized as follows: current booking trends remained very encouraging with -- on-the-book reservations are up with double digits compared to last year, supporting our confidence for the remainder of the summer season. The continued strength of the meeting and incentive segment further enhanced business visibility supported by a high level of forward booking and contracted demand, which is double digit above same day last year. We are reaffirming our full year guidance to increase RevPAR in the high single-digit range on the constant currency, leaving 1 more year in the market, improving operational margins by 200 basis points on a like-for-like basis and generate at least EUR 565 million of EBITDA. In terms of development, up to date, we have signed 17 new hotels. On a full year basis, signature goal is to reach at least a total of 40 hotels. We remain committed to maintaining a disciplined financial profile, with a clear objective of keeping leverage below 2.5x, having flexibility to pursue growth or repositioning opportunities. As part of our ongoing focus on capital allocation and balance sheet optimization, we continue to review opportunities to dispose of selected noncore assets. Further details on our second quarter and half year can be found in the earnings release we issued today, together with the release of this webcast. Thank you very much for your attention and continued interest in Meliá. We look forward to welcoming you to our live conference call and Q&A session scheduled for tomorrow, Friday, July 31, at 9:30 a.m. where we'll be pleased to further discuss our results and outlook with you. Best regards. [Presentation]

Good morning, everyone, and welcome to Meliá First half 2026 Q&A Conference Call. I'm Stephane Baos, Head of Investor Relations. As you may know, yesterday, together with the release of our results, we made available a webcast presented by our President and Chief Executive Officer, Gabriel Escarrer and our Chief Operating Officer, André Gerondeau. It provides an overview of the key operational trends in the first half 2026 and outline the company's outlook for the next quarter ahead. We hope you have had the opportunity to review and that it has been to your satisfaction. In today's live session, we will begin with a brief introduction summarizing the most relevant points of the year. Afterwards, we will be opening the Q&A session. This morning, as usual, on the call with me today are Gabriel Escarrer, our President and Chief Executive Officer; André Gerondeau, our Chief Operating Officer; and Angel Mendizabal, our Chief Financial Officer; and Juan Ignacio Pardo, our Chief Real Estate and Sustainability Officer. [Operator Instructions] Additionally, we would like to remind you that the discussion from the company may include forward-looking statements. These comments reflect our expectation as of today only. And actual results might differ from those expressed or implied. I am pleased to turn the call over to Gabriel.

Thank you, Stephane, and good morning, everyone. Before we move to the Q&A, I would like to briefly highlight a few key messages from our first half 2026 performance. First, I'm pleased to say that our business continues to show strong resilience and attractive growth fundamentals. Despite a volatile geopolitical environment and some isolated challenges in specific destinations, demand across most of our key markets remained healthy throughout the first half of the year. Spain, our core markets continue to perform very well, both in resorts and urban destinations. We also saw a strong momentum across several European markets, particularly Italy and the United Kingdom, while the Dominican Republic once again delivered an outstanding performance. These results confirm the strength of our brands, the attractiveness of our portfolio and the resilience of the destinations where we operate. Second, our strategy continues to deliver results. Beyond the solid operational performance, growth is increasingly supported by the expansion of our portfolio, recent acquisitions and the growing contribution of our joint ventures. At the same time, our focus on premium and luxury brands together with ongoing investment in repositioning and asset enhancement is allowing us to continue improving the quality and earnings potential of the group. Third, I would like to briefly address Cuba, that is clearly the most relevant element affecting our reported net profit during the period. As explained in the webcast and earnings release, our subsidiary Ilha Bela Gestao e Turismo has decided to cease all of its operation in Cuba. And accordingly, the group has reclassified its business in the country as a discontinued operation. This completed the exit from the Cuban market and fully impaired to the remaining exposure. This resulted in a nonrecurring accounting impact of approximately EUR 79 million reported within discontinued operations. Importantly, this adjustment has no cash impact and does not affect the strength of our underlining business, our cash generation capacity or our financial flexibility. If we focus on continuing operations, the businesses delivered solid results supported by healthy demand trends, good commercial execution and continued progress in our strategic priorities. Looking ahead, we remain confident about the remainder of the year. Current booking trends continue to be encouraging. On-the-books reservations remain ahead of last year by double digits and demand patterns across our main destinations remain supportive. As a result, we are reaffirming our full year guidance, including high single-digit RevPAR growth at constant currency further like-for-like operational margin improvement and at least EUR 565 million of EBITDA. Finally, I would like to thank all our shareholders, investors and analysts for your continued interest and support of Meliá. We appreciate your confidence in our long-term strategy and remain committed to delivering sustainable growth, maintaining a disciplined financial profile and creating value for all stakeholders. With that, let us move directly to your questions. Please, operator.

Thanks, Gabriel. [Operator Instructions] We have the first question coming from Ricardo Benevides. Ricardo from Banco Santander.

Just one question from my end. In the results release, you mentioned currently evaluating asset rotation opportunities. I was just wondering if you could get some additional details on where these assets could be located, up to which amounts would you be willing to sell? And overall, what would you do with the proceeds originated from these sales?

Juan Igancio Pardo speaking. It's true that the company is reviewing the sale of certain noncore assets. The plan is to carry out all these disposals gradually between the second half of '26 and the '27 -- first half of '27 with the final timing, as you may imagine, will depend on each of the transactions and market conditions. Most of these assets are plots -- land plots that do not currently generate income, some of them located in Spain, some of them in foreign countries and have little or no impact on EBITDA or cash flow. The company also is reviewing a small number of hotel-related assets. Some of them, including minority stakes together with our partners in next rotations. The objective is to release capital from assets that are not strategic or generate limited cash and use that capital for high-return opportunities. Based on the current assessments and the list of assets that we have, these disposals could generate around an amount above EUR 100 million net cash proceeds since most of the assets have no operating contribution, as I mentioned before, the company does not expect a material impact on its recurring earnings. And of course, more details will be provided once we -- the transactions have been developed and executed.

Ricardo, Angel speaking. Just for clarity, for the avoidance of doubt, the use of those funds will be mainly devoted to ensure the strength of our balance sheet and as an activity of rotation to somehow finance the investment opportunities that we have executed and some more that will -- might may come.

The next question are coming from Artem from UBS.

I have 3 questions. So firstly, on margins, EBITDA and EBIT margins have remained under pressure so far. So what gives you confidence in delivering the 200 basis points margin improvement as per your full year guidance? And are you still committed to the target of reaching 30% EBITDA margin by 2027 that you outlined previously after FY '25 results? And secondly, on Stoneshield. So from the Stoneshield's investment and Board representation, should we expect any changes to Meliá strategic priorities, capital allocation or balance sheet management over time. And finally, on the recent wildfires in Spain and France, have you seen any impact on bookings, cancellations, customer behavior in affected regions? And do you expect any broad implications for summer trading?

Okay. Thanks for your question. The first one regarding the margins, I think first half is true that we didn't see a nice flow-through coming from the revenues to go into EBITDA. I think a big part of the impact from that margin going down was due to the fact that we have been closed, 2 of the big or key markets -- 2 key hotels, sorry, like Don Pepe -- Gran Meliá Don Pepe and Paradisus Cancun, they have been on refurbishments. And you know that the impact in H1 was around EUR 20 million compared with last year in EBITDA levels. And it's not the only thing that we -- you don't have income, but you have also some expenses linked to the hotel closure and also the reopening in Q1 from the from the Paradisus Cancun and that has made a lot of damage to the margins. Also, another thing that has made some damage has been the performance in Mexico. I make a calculation. I know sometimes it's easy to make numbers, but the underlying EBITDA -- sorry, underlying operational margins, excluding these 2 effects, the Mexico situation and the closure of these 2 hotels, we have improved around 200 basis points on the EBITDA level from the operational point of view. And I think the company is making some efforts to go through that. And I think we will see -- probably it's going to be next year when these 2 hotels are going to be open, and we will see some improvements in the Mexico destination. The market will see increase in margins, for sure.

So our -- coming in line with this, the company is fully committed and 1 of the main programs that we have in place, and it's on our day-to-day operations is the margin 30% target for next year, 2027. It is true that this year, the fact that -- some of our best hotels in terms of EBITDA margin are closed impacts, the Mexico factor as well as Stephane has just mentioned. But we are working towards that objective. The part that has to do with the headquarters and corporate expenses is underway and is working fine. The development expansion, as I'm sure Andre will explain later, is okay. And so as soon as these hotels, big contributors of margin reopen, we are sure that we'll be on track to meet the target. With respect to Stoneshield, I think the company has repeatedly communicated the strategy to the market, and it hasn't necessarily to be changed because of the entry of a new shareholder.

And if I may, Artem, this is André. Just in terms of the wildfires, the unfortunately wildfires in the south of France and in Spain, there is no impact in our performance. To be honest with you, those are regions which are not really leisure and resort region. So it's very unfortunate, but we have no impact on the performance.

[indiscernible] Artem, with the answer.

Just a quick follow-up on EBITDA 30%, just wanted to confirm, is it -- should we look at EBITDA ex capital gains or EBITDA -- EBITDA rather, when we look at this 30% target?

Look, it's EBITDA without capital gains. And as you know, the fact that also we have changed some of our leases to variable leases and that has an impact on the margin. We would love to have the EBITDA target. But our President is pushing us to get the EBITDA even if we change the perimeter of some of our leases and convert them into variable. So it's pure operating recurring excluding capital gains and EBITDA.

Then the next question is coming from Guilherme Sampaio from Caixa Banco.

So, 3 if I may. So the first one, if you could provide more details regarding the rationale behind the several hotel stake acquisitions carried out in the second quarter of this year. The second question regarding Mexico. So you provided expectations of some stabilization in Mexico for the second half of the year? Is there any color that you could add on this? And third, in recent weeks, several companies have been commenting about normalization of bookings performance in the most affected corridors by the crisis. Have you seen any normalization of bookings growth into Spain versus early conflict run rate?