Room for Manoeuvre – Optimising Working Capital with Receivables Finance

With an eye on working capital efficiency, Meliá Hotels’ treasury team was looking to access faster and more flexible liquidity as a means of speeding up the cash conversion cycle. After careful consideration, treasury decided to implement a receivables finance programme with HSBC that would respond to the company’s current and future needs. Since then, the programme has gone from strength to strength, with the facility being extended to EUR 100m in 2017.

Turn the clock back to 2010: the year that a volcanic ash cloud halted European air traffic, 33 Chilean miners survived 69 days trapped underground, and Spain won the FIFA World Cup. It was also the year that Spanish-headquartered Meliá Hotels International (Meliá Hotels) decided to flip the script on its approach to working capital efficiency.

Operating more than 370 hotels in 43 countries across four continents, Meliá Hotels is one of the world’s largest hotel companies – and the market-leading hotel chain in Spain. Like any multinational corporation, working capital efficiency is a high priority for Meliá Hotels’ treasury team. Not only does treasury need to support the day-to-day running of the business, it must also help to position the company for ongoing growth – whilst responding to the growing needs of shareholders. This means demonstrating effective balance sheet management through key metrics such as Free Cash Flow (FCF), Days Sales Outstanding (DSO) and gearing.

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