Hotels & Accommodations
Should You Be Concerned About Meliá Hotels International, S.A.’s (BME:MEL) ROE?
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. To keep the lesson grounded in practicality, we’ll use ROE to better understand Meliá Hotels International, S.A. (BME:MEL).
Return on equity or ROE is a key measure used to assess how efficiently a company’s management is utilizing the company’s capital. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
How Is ROE Calculated?
ROE can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for Meliá Hotels International is:
16% = €167m ÷ €1.1b (Based on the trailing twelve months to March 2025).
The ‘return’ is the amount earned after tax over the last twelve months. That means that for every €1 worth of shareholders’ equity, the company generated €0.16 in profit.
Check out our latest analysis for Meliá Hotels International
Does Meliá Hotels International Have A Good ROE?
By comparing a company’s ROE with its industry average, we can get a quick measure of how good it is. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. If you look at the image below, you can see Meliá Hotels International has a lower ROE than the average (21%) in the Hospitality industry classification.
That certainly isn’t ideal. However, a low ROE is not always bad. If the company’s debt levels are moderate to low, then there’s still a chance that returns can be improved via the use of financial leverage. When a company has low ROE but high debt levels, we would be cautious as the risk involved is too high. To know the 2 risks we have identified for Meliá Hotels International visit our risks dashboard for free.
How Does Debt Impact ROE?
Virtually all companies need money to invest in the business, to grow profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders’ equity. That will make the ROE look better than if no debt was used.
Combining Meliá Hotels International’s Debt And Its 16% Return On Equity
It’s worth noting the high use of debt by Meliá Hotels International, leading to its debt to equity ratio of 2.26. There’s no doubt its ROE is decent, but the very high debt the company carries is not too exciting to see. Debt does bring extra risk, so it’s only really worthwhile when a company generates some decent returns from it.
Summary
Return on equity is useful for comparing the quality of different businesses. In our books, the highest quality companies have high return on equity, despite low debt. If two companies have around the same level of debt to equity, and one has a higher ROE, I’d generally prefer the one with higher ROE.
Having said that, while ROE is a useful indicator of business quality, you’ll have to look at a whole range of factors to determine the right price to buy a stock. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So you might want to check this FREE visualization of analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Hotels & Accommodations
“Only ate at 5-star hotels, still got 4 types of Salmonella”: American influencer explains why he fell sick in India, internet reacts
But not everyone’s convinced. And the internet is on fire.
‘White Tourists Come Here to Slum It’, An Indian Woman’s Video Started It All
It all began when an Indian woman posted a now-viral video slamming white travellers for “romanticising poverty” in India. She accused them of living in worse conditions than the country’s poor, just to go back and call India “pathetic.”
The YouTuber fired back with a post on X (formerly Twitter), saying he wasn’t “slumming it.” He was staying in 5-star hotels and still ended up catching four strains of Salmonella. “Only ate in 5-star hotels and still contracted 4 types of Salmonella,” he wrote. The reason? According to him, the hotel likely sourced eggs from a chicken farm next to a literal mountain of trash.
“Not Racist to Talk About Hygiene”
Tyler insisted that criticising India’s sanitation issues isn’t racism, it’s reality. “There are serious hygiene issues that must be addressed in India. It is NOT racist to address the poor quality of life most Indians are subjected to while the upper caste insulates themselves from reality,” he posted.
To back up his claims, he even attached medical reports proving his illness. But that didn’t stop the flood of angry comments calling him out for “defaming India.”
The $100-a-Night Argument
When people accused him of travelling on a budget, Tyler clarified: “The 5-star hotels were about $100 a night. It was budget travel relative to American standards.” He even took a dig at India’s wealth gap: “Ambani has a billion-dollar tower overlooking the slums. Your anger is misplaced,” he said.The internet remains divided. Some Indians echoed his concerns, saying it’s time India stops being defensive and starts fixing real problems. Others slammed him for reducing an entire country to a bad stomach bug.
Inputs from agencies
Resort World Sentosa partners with Marriott to open The Laurus, a luxury hotel at Sentosa Island, Singapore, offering suites, dining, and spa.
The 183 all-suite hotel, ‘The Laurus’ — named after laurel leaves historically used to crown victors and honour achievements — will open by the end of the year.
“Our landmark collaboration with Marriott International to bring the very first The Luxury Collection branded property to Singapore further exemplifies our commitment to redefine luxury guest experiences. The Laurus, a luxury collection resort, embodies the very essence of our ongoing pivot to offer curated destination experiences as part of RWS’ transformational expansion plans,” Tan Hee Teck, Chief Executive Officer, RWS, said.
He said the new hotel will offer guests experience the Singapore’s rich heritage, the captivating beauty of Sentosa’s flora and fauna while experiencing RWS’ hallmark hospitality.
“The Laurus at RWS stands as a shining beacon, heralding a new era of exceptional luxury and hospitality, further cementing RWS’ esteemed status as Asia’s premium lifestyle destination resort,” he said.
According to Marriott International the tie-up is a milestone which reflects its commitment to the evolving luxury landscape of the island city.
“Drawing inspiration from Singapore’s storied past and rich cultural heritage, The Laurus, a Luxury Collection Resort, will celebrate the essence of the city, and we look forward to welcoming global explorers and collectors to experience Singapore’s captivating charm through the lens of our brand,” said Rajeev Menon, President, Asia Pacific excluding China, Marriott International.
The Laurus offers suites as well as courtyard spaces and a function room spanning across five floors, the company said, adding that the hotel will have a bar, a landscaped outdoor swimming pool and spa and all-day-dining concept restaurant.
Spanning 49 hectares, the hotel is home to world-class attractions like the Universal Studios Singapore, S.E.A. Aquarium, Dolphin Island and Adventure Cove Waterpark, it said.
Complementing the adventure and adrenaline of its theme parks and attractions are six unique luxury hotels, the premier Resorts World Convention Centre, and a casino.
The integrated resort also offers world-class entertainment from star-studded concerts to immersive exhibitions.
RWS is the first integrated resort to be inducted into the TTG Travel Hall of Fame in 2023 after being named “Best Integrated Resort” for 10 consecutive years at the TTG Travel Awards, which recognises the best of Asia-Pacific’s travel industry.
The Cork-based President of the Irish Hotels Federation has outlined that plans to cut Vat for the hospitality sector would be an important step to support the industry.
The comments from Michael Magner, who also owns the Vienna Woods Hotel in Cork, come following on from an interview on RTÉ Radio 1 with Minister for Enterprise, Tourism and Employment Peter Burke who defended government plans to cut Vat for the hospitality sector.
The current Programme for Government contains a commitment to reduce the Vat rate in the hospitality sector from 13.5% to 9%.
Speaking to , Mr Magner said the proposal would assist vulnerable food led businesses that have faced an uncertain future and rising cost challenges in recent years.
“The commitment from the Minister to stand over the commitment that is in the programme for government towards the reduction of the Vat rate to 9% is welcome.
“It is needed on the basis of the food sector. The cut in Vat hospitality is for food businesses. Therefore it doesn’t apply to hotel accommodation as is our understanding.
“The current government has been formed since the start of this year. With that, we see tourism and hospitality being moved into the Department of Enterprise, Trade and Employment.
“We now have a Minister in Peter Burke, who is really supportive of our industry and understands the complexities of the sector.
Mr Magner added that with the right policies and a positive businesses environment, he believes tourism and hospitality can have a positive future ahead.
“The isn’t a case of whereby businesses are trying to profiteer or return what could be seen as super normal profits.
“This is actually about ensuring businesses have a chance of survival and that is what it comes down to.”
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