In 1956, when he was 21 years old, Gabriel Escarrer Juliá founded what is now Meliá Hotels International, when he bought and managed a 60-room hotel on the island of Majorca, his birthplace, and where the business, one of the most successful hotel groups in the world, still has its head offices. Over the six decades that he has been CEO, the Group first consolidated its leadership of the Spanish market, birthplace of holiday tourism in Europe, subsequently expanding to the Caribbean and South-east Asia, in the 1990s extending its strategy to urban hotels in Spain, Europe, Asia and America. This is a vision that has afforded the Group recognition as one of the driving forces behind the internationalisation of Spanish business, and one of the most important figures in international tourism.
The Company has also grown via the acquisition of other chains: in 1984 the business founded by Escarrer purchased two of the largest European hotel chains of the time, Hotasa and Meliá. This was a key step forward in the history of the Group, completed in 2000 with the takeover of Tryp, and later the German group Innside. Its customer-orientated focus and its vision led the Group to build up, at an early stage, a large portfolio of hotel brands intended for different customer profiles, which today is one of the greatest strengths of Meliá.
In 1996, the Company was listed on the stock exchange, marking a new era of growth, reinforced with subsequent strategies, and under the management of the second generation of the family, a deep cultural transformation began in the Group, in order to face the new 21st century business setting.
Having recovered strongly from the great financial crisis that shook the sector from 2008 to 2013, and ensuring that the Company was in the best possible hands, Gabriel Escarrer Juliá retired from his executive position in December 2016, with his son Gabriel Escarrer Jaume taking over as Vice Chairman and CEO. The founder of the company is now Non-Executive Chairman, presiding over the Group’s Board of Directors and Group Shareholders’ Board.
Meliá Hotels International has grown from its first hotel in Palma de Mallorca into one of the largest hotel groups in the world. What do you consider to have been the keys to its success along the way?
I think that in general, the fact that it is Company with a large family background – although we have traded on the stock market since 1996 and are listed on Ibex (the only company from the tourist industry on this index) – has helped us to maintain our long-term vision, and the values that have sustained our strategy. In short, our leadership and commitment to our people.
If I had to summarise the keys to our success in three factors, first I would mention innovation: our Group has seen continuous growth for 6 decades and today we can say that it is stronger than ever, thanks to the fact that we have never stopped innovating and reinventing ourselves as a company, at the same time keeping our corporate values and Mediterranean culture intact.
Secondly, one of the main keys to this 60-year evolution was our early, and intense internationalisation (from Bali in the 1980s, to the Caribbean, Europe and Asia-Pacific in the 1990s, the Middle East and USA from 2010… Present today in 42 countries) that has allowed us to grow, learn from other cultures, and minimise the risk of exposure to just one, or a mere handful of markets.
Thirdly, it has been fundamental to have a wide portfolio of brands for all segments and customer profiles (Paradisus, Gran Meliá, ME by Meliá, Meliá, Innside by Meliá, Tryp or Sol), brands that are developing to keep ahead of new customer demands, and that today are the key to standing out in a competitive environment, not just the hotel industry, but with new ground-breaking business models.
You are investing heavily in the Asia-Pacific region. What are your goals in this area in the short, medium and long term?
Asia is a huge market, both as a destination (for in-bound tourism) and from the out-bound perspective, or “supplier” of tourists to other regions, such as Europe and America, where Meliá has hotels. It is a market that is growing at an exceptional rate in terms of the number of international tourists, and whose domestic markets are also multiplying as the middle classes are “hatching”. For this reason, for the past three years we have been reinforcing our corporate structure in the region, with a central office in Shanghai with almost 50 people, and we have significantly strengthened our expansion, with our 2013 portfolio due to have multiplied five-fold by 2022.
Meliá has the experience, and a series of competitive strengths for successful growth in the region: on one hand, although in some countries such as China we are “newcomers”, in countries such as Indonesia we have been operating for 30 years now, as in 1986 we opened our first international hotel in Bali, the Meliá Bali, and since then we have continuously increased our presence and our links with Indonesia, Malaysia, Vietnam, Myanmar, Thailand and, more recently, China.
In addition, the nature of our company means that it has other characteristics that “facilitate” expansion in Asia, such as the fact that we are a family business – in a region where large family groups have a strong influence – our clear vocation as hotel managers (compared with other large international companies more focused on franchise models) – and our powerful service culture, which fits perfectly with the hospitable and welcoming spirit of many of these places.
Our mid-term goals are to double the number of hotels by 2018, in a selective way with strategic criteria, consolidating our position of leadership in holiday and urban leisure hotels (the so-called bleisure sector), and to earn recognition and a reputation on the Asian markets, where trust is essential for doing business. Specifically, furthermore, as international leader in the holiday resorts segment, our goal is to develop resorts under our brand Paradisus by Meliá, in holiday destinations in China and South-east Asia. Until now this brand has been based exclusively at Caribbean beach resorts.
In which other markets are you planning to expand over the next five years?
Our group is currently present in 42 countries, and in general, our policy is to consolidate our presence and brand recognition in our large traditional markets, and increase growth in more dynamic emerging markets, as well as in markets where we have no historical presence, such as the English-speaking Caribbean or North America.
Our expansion map therefore defines a set of priorities in each of the strategic regions: for Europe, the goal will be to consolidate the portfolio of our top “bleisure” brands, Meliá and Innside by Meliá, in major cities. In South America, we plan to strengthen our presence in major beach and urban destinations in countries such as Brazil, Colombia, Chile and Peru, continue growing in the Mexican Caribbean, and in North America we plan to expand our portfolio in cities with a Latin area, in particular New York and Miami. In the Middle East and Africa we plan to continue to grow in Arab countries and particularly in those in the Gulf, and Northern Africa, mainly via brands such as Meliá, Innside, Gran Meliá or ME by Meliá.
Overall, our pipeline (signed hotels in the process of incorporation or opening) includes 62 hotels with over 16,500 rooms, distributed across the regions mentioned above.
Gran Meliá Hotels & Resorts, Paradisus Resorts, ME by Meliá, Meliá Hotels & Resorts, Innside by Meliá, Sol Hotels & Resorts are some of the brands that make up Meliá Hotels International. What are the pros and cons for the company of working with different brands?
The customer profile of today is more varied than ever, not only in terms of demographics and age, such as the baby-boomers, Gen-Y, Millennials or Gen-Z,, but also in terms of different well-defined “psychographic” groups, characterised by their attitudes and lifestyles, such as techie customers, empty-nesters (mature couples travelling alone once more after their children have left home), clubbers, LGBT collectives, etc.
For this reason, the key today is hyper-segmentation: we need to be able to offer a different, personalised product for each customer profile, with an appropriate value proposal. At Meliá we have achieved this through our portfolio of six hotel brands (Paradisus by Meliá, Gran Meliá, ME by Meliá, Meliá, Innside, and Sol Hotels) Our future strategy tends towards reinforcing the portfolio of upscale brands and luxury brands in comparison to mid-scale brands, and in general, we have a wiser and more demanding client base, who know just what they want, and who tend to trust and remain loyal to a specific brand. Finally, the predominant trend in urban hotels today is the so-called bleisure customer, who combines the urban business experience with leisure, extends visits, and demands a more complex and sophisticated offer, in which some of our brands, such as Meliá and Innside by Meliá, are specialists.
There are therefore countless advantages in having different and powerful brands in terms of product differentiation and customer loyalty, especially the higher the quality and distance from the low-cost sector, which basically works with “rooms” as just another commodity. Brands are also essential if we want to compete with the “disruptive” accommodation business models, such as holiday rental websites, etc., which cannot compete with the experience and personalised services offered by our hotel brands.
What strategies do you use in order to provide a personalised service to each of your customers?
Firstly, it is important to stress the significant role of digital technology, which allows us to “customise” our value proposal for almost every client, a client who we can now get to know, and evolve with as their lifestyle and consumer profile evolves. We can anticipate their expectations, thus offering greater satisfaction, brand loyalty and profitability for hotels. Customer relations are grown as a significant asset for our company.
Secondly – and equally as important – I must say that Meliá has always been a customer-centric company, and for this reason our top corporate value is our “vocation for service”; this is a feature that our customers acknowledge and particularly value in all our brands, regardless of level or type of service. The hotel industry is based on customer care and service, and this is the main factor that adds value to the customer experience. That is why the culture service is a key element in the continuous training of our employees, including the corporate ones.
Finally, what role does new technology play in the hotel industry?
Today, technology is key to providing a better service and better tools for our customers for making bookings, but not just that: today, digitalisation marks a new paradigm in consumption, communication, etc., which as companies we need to know and integrate, by digitalising not only our sales tools, but also all our processes, our means of communicating, etc. Meliá has always been on the cutting edge of its industry, and in order to achieve this, we undertook a far-reaching project called “be more digital”, which would lay down the route map for a transition into the digital era.
Under this project, digital technology has become a central part of our strategy, for meeting our goals and strengthening our globalisation and competitiveness, but at the same time, we are convinced that our industry has always been and will continue to be a people’s industry, in which the service element cannot easily be replaced by machines.
Some hotels may replace personalised service with machines to reduce staff costs, but we believe in doing the opposite: adding value through technology and the personalisation that it allows us, to what we offer, improving customer experience and satisfaction, improving the price customers are willing to pay, and at the same time, increasing customer brand loyalty and return rate. Digitalisation has therefore become our best ally in offering an excellent, more personalised product and service.