Key Takeaways:
- Luxury Pivot: Meliá Hotels (MEL) is successfully repositioning its portfolio, with luxury rooms now accounting for just 20% of inventory but generating nearly 40% of total revenues.
- Price Projection: Our model projects the stock could climb to €10 per share by December 2027.
- Expected Returns: This target implies a solid 14.0% annualized return, positioning the stock as a “Buy” for investors riding the travel recovery wave.
- Operational Strength: System-wide RevPAR (Revenue Per Available Room) grew 5.8% in the second quarter, driven by strong performance in Spain and a rebound in corporate travel.
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Meliá Hotels International (MEL) is proving that quality beats quantity in the post-pandemic travel landscape.
The Spanish hotelier reported a solid first half of 2025, with revenue excluding capital gains rising 3.1%. The real story, however, is the “premiumization” of its earnings. By focusing on luxury brands like Gran Meliá and Paradisus, the company is extracting more value from every guest. Management noted that in urban hubs like Madrid and Seville, positive momentum is being supported by “recent openings and renovations in the premium and luxury segments”.
Deleveraging remains a priority. The company reduced its net debt (excluding leases) by €17.5 million in the semester, despite the seasonality of cash flows.
With the stock trading at €8.07, shares are priced below their potential if the company can maintain its margins and continue paying down debt.
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What the Model Says for MEL Stock
We evaluated Meliá’s potential through 2027, focusing on the continued strength of leisure travel and the margin benefits of its asset-light expansion.
Our model signals a “Buy.” Using a forecast of 2.5% Revenue Growth (CAGR) and 14.8% Operating Margins, the model projects the stock could reach €10 by the end of 2027.
This implies a 14.0% annualized return over the next two years.
This return profile suggests that the market has not yet fully appreciated the earnings power of Meliá’s renovated portfolio.
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for MEL stock:
1. Revenue Growth: 2.5%
Meliá is seeing resilience across the board. In the EMEA region, performance was “positive” even without major events like the Euro Cup to boost figures.
The company is also growing its footprint through an “asset-light” model. A key move was the expansion of the Paradisus brand in Europe, including a strategic transaction for the Paradisus Salinas Hotel in the Canary Islands.
We forecast conservative revenue growth of 2.5% CAGR through 2027. This assumes that occupancy rates normalize and growth comes primarily from price increases (ADR) and new management contracts.
2. Operating Margins: 14.8%
Efficiency is improving.
In Q2 2025, Meliá achieved an EBITDA margin of 28%, demonstrating its ability to control costs even as inflation lingers. First-semester margins stood stable at 24.7%, despite some one-off restructuring costs.
We project operating margins (EBIT) to expand to 14.8%, reflecting the continued shift toward higher-margin luxury rooms and the operational leverage of the group.
3. Exit P/E Multiple: 13.4x
Meliá currently trades at roughly 10.6x earnings.
Our model assumes an exit multiple of 13.4x by 2027.
We chose a multiple that reflects a return to a normalized valuation for a hotel operator with a strong brand and an improving balance sheet. As the debt load lightens, the equity should command a higher premium.
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What Happens If Things Go Better or Worse?
Investors should note a divergence between our short-term guided model and longer-term conservative scenarios (these are estimates, not guaranteed returns):
- Low Case: If travel demand contracts or debt servicing costs rise, the stock could stagnate, offering a -0.9% annual return through 2029.
- Mid Case: If the company grows steadily but valuation multiples do not expand as forecasted in our short-term model, returns could be a modest 3.5% annual return over the 4-year horizon.
- High Case: In a bullish scenario where the luxury strategy accelerates earnings growth to ~9%, returns could reach 6.9% annual return.
(Investor Note: The Guided Model (2-year view) is significantly more optimistic than the Advanced Model (4-year view). The 14% upside depends heavily on a near-term valuation re-rating.)
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How Much Upside Does Meliá Hotels Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
