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Should You Be Concerned About Meliá Hotels International, S.A.’s (BME:MEL) ROE?

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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.

BME:MEL Return on Equity July 24th 2025

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.



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Hotels & Accommodations

Blackpool hotel reptile market plan in animal rights row

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PA Media

The event will involved the sale of animals including lizards (above in a stock image), the organisers say

A row has broken out over plans to host a reptile market at a Blackpool hotel this summer.

The event at the Norbreck Castle will see people “buy and sell their surplus animals and offspring”, according to the International Herpetological Society (IHS).

But some animal charities have condemned the market as a “gross violation” of reptile welfare and have urged Britannia Hotels to cancel it.

Blackpool Council said its officers would be at the event to make sure it complied with standards, while the IHS said its markets were “fully compliant with UK law”.

The IHS, which was founded in 1969, said it was “committed to the ongoing research and propagation of all reptile, amphibian and chelonian species”.

It added “animal care is paramount” at its events and creatures were “transported and displayed in temporary containers for the animals’ safety during the event only”.

The soceity added that two veterinary professionals were “always present and any concerns are taken extremely seriously”.

Plans for a similar market in Doncaster in 2022 were halted by the town’s council after complaints from some animal charities.

Event controversy

Elaine Toland, director of the Animal Protection Agency, said it “strongly urges Britannia Hotels to cancel this event and refuse to be complicit”.

Laura Walton, campaigns manager at Freedom for Animals, added it “sincerely hoped” the hotel chose not to let the event go ahead.

Charlotte Regan, wildlife campaigns manager at World Animal Protection, said the animals were “not products to be bought and sold at makeshift stalls”.

“These kinds of events are outdated and have no place in modern society.”

The IHS said it found it “deeply upsetting to be constantly under fire” and none of its previous events had been “cancelled, refused or changed venues due to welfare issues or legal contravention by the IHS”.

It said the events had instead been called off because of “adverse publicity”.

Britannia Hotels has been approached for comment.



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Fashionable hotel merch for taking your holiday home with you

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Call it the White Lotus effect, but recent years have seen the emblematic crests of the world’s most luxurious and exclusive hotels – from the Ritz to Il Pelicano – become as valuable to such storied institutions as the rooms themselves. Such is the power of hotel ’merch’ – a way to demonstrate your affinity with the heady world of five-star hospitality, without the necessity of even staying a single night. The more obscure, the better: like an embroidered trio of fish on a bathrobe, which, for those in the know, will show you have stayed the night at Lake Como’s Passalacqua hotel – long a bolthole for the upper echelons, from world leaders to Hollywood royalty (or simply found your way to its webstore).

Here, as chosen by the Wallpaper* style team, a selection of these contemporary status symbols: from the cult Ritz Paris x Frame cap (now in its fourth iteration) to Jacquemus’ banana-hued accessories as part of his 2025 takeover of the Monte-Carlo Beach Club, and a T-shirt adorned with a perennial piece of Hollywood iconography: the Chateau Marmont sign.



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This is world tallest hotel, no one has checked in for decades, It’s not in US, UAE, or Japan…, it’s located in …, name is…

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Hotel Ryugyong is the world’s tallest hotel, which is located in North Korea’s Pyongyang. But no one has checked in to this hotel in decades. The reason is…

This is world’s tallest hotel, no one has checked in for decades, It’s not in US, UAE, or Japan…, it’s located in …, name is…

World’s Tallest Hotel: Whenever we think about magnificent buildings, we think of the United States or the United Arab Emirates (UAE). And when we think about North Korea, our mind thinks of nuclear missiles and bombs. But what if we say that the world’s tallest hotel is located in North Korea? Surprising right, but it’s true. The building’s structure reminds one of the Egyptian pyramids. We are talking about Hotel Ryugyong, which is also known for its bad luck. Let’s know more about Hotel Ryugyong.

Hotel Ryugyong

Hotel Ryugyong is surely a marvellous building that resembles an Egyptian pyramid because of its structure. Its height is just a little less than twice that of the Statue of Unity. The height of the Statue of Unity is 182 meters, while the height of this hotel is 330 meters. Hotel Ryugyong has 105 floors. But sadly, the luxurious hotel is still waiting for its first guest. Yes, no guest has come here to date.

Built with big dreams and plans, Hotel Ryugyong is the world’s tallest hotel but today it is known as a desolate and deserted building. The hotel’s exterior is fitted with LEDs, which are used for nightly displays of promotional material and symbols during major national events.

Inauguration Not Done

After knowing about the Hotel Ryugyong, you must be wondering why no guests have checked in here. Well, the answer is that it has not been inaugurated yet.

Incomplete Construction Work

The hotel has not been inaugurated yet because the construction work inside this building is not yet completed. This building is ready only from the outside, but the inside is still deserted.

Work started in 1987

As per reports, the construction of this building started in 1987 and it was completed in 1992. Further construction work was stopped due to the economic crisis, as aid stopped after the collapse of the Soviet Union.

The work was completed by 2011

In 2008, an Egyptian company started a USD180 million exterior glass and aluminium cladding project. The work was completed in 2011. However, the hotel has been in need of interior work ever since.






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