SOL MELIA INVESTMENT CASE

Bright and Breezy!

Joao Almeida

Marta Calvário

Hugo Fontinha

David Jacques

UC3M Equity Research

1st May 2008           New York

Sol MeliaCompany Description

• Major international chain in the hotel industry

• Ranking 2nd in Europe and 1st in Spain. 

• Operates Resorts , City  Hotels and Time‐Sharing 

• Hotel business represents 80% of SOL’s EBITDA

Business Portfolio

Time‐SharingSMVC

Hotel BrandsAsset 

Rotation

LuxurySegment Upper

SegmentMidscaleSegment

• Has an active Asset Rotation Plan

• Manages around 80,000 rooms

• Present in more than 30 countries

• Remarkable presence in Spain and LatAm

Overview

OVERVIEW

Economy & Hotel Sector Corporate Developments

We think SOL faces challenging times and believe it has compelling qualities to withstand a slowdown in the hotel business cycle.

Business by Business

BUSINESS BY BUSINESS

BUSINESS BY BUSINESS

EUROPE

BUSINESS BY BUSINESS

34.8%EBITDA08E

22.8% EBITDA08E

BUSINESS BY BUSINESS

AMERICAS

25.0% EBITDA08E

11.7% EBITDA08E

34.8%EBITDA08E

22.8% EBITDA08E

BUSINESS BY BUSINESS

5.8% EBITDA08E

Investment Case

INVESTMENT CASE

New Organizational Model

Caribbean Prospects

Spain as top tourism destination

Management’s Commitment

Time‐Sharing

Trading at attractive multiples

Shareholding Structure

Condo Hotels

Investment Positives

Cyclical Industry

Economic Slowdown

Exposure to Spain

Real Estate

Credit Squeeze

USD depreciation

Execution & Acquisition Risks

Leveraging Risk

Investment Negatives

Valuation & Recommendation

VALUATION & RECOMMENDATION

Valuation

Why not NNAV?

Our approach

YE08 Price Target: € 14.00

Recommendation

Industry Average

SOL

9.1x

6.9x

16.2x

10.3x

EV/EBITDA 08

P/E 08

BUYClosing Price 25‐04‐2008

Q&A