Magaluf Hotels Report A Record-Breaking August For Guest Numbers And Profitability According To Meliá Hotels International
In early August, the Palmanova-Magaluf Hotel Association presented a provisional report on the summer season which showed significant progress in customer segmentation in this traditional holiday destination, with the return of family groups and more affluent travellers to the detriment of younger customers and, in particular, the so-called “hooligan tourist”.
Melia Hotels International has more than 3,500 rooms in the area, and over the last four years has played a key role in the improvement and repositioning of Magaluf through its Calvià Beach project, involving the renovation of nine hotels and an investment of 130 million euros. The company has now presented a summary of the season up to August which confirms the positive trend in the destination in both quantitative and qualitative terms.
All of the company hotels in the area now have 4 stars (including the Sol Antillas, Sol Barbados, Sol House Guadalupe, Sol Katmandu Park & Resort, Sol House Trinidad, Sol Palmanova Mirlos Tordos, Sol Wave House and Sol Beach House Cala Blanca ) or are in the luxury segment (such as the ME Mallorca), and since 2011 have increased revenues by 64%, with growth of 45% in average room rates and 48% in the average revenue per available room (RevPAR).
This increase in hotel profitability is accompanied by a significant social and economic impact in the community. Among other parameters, the number of employees has increased by nearly 40%, with new jobs created over the whole period, social security contributions in the hotels involved in the project have increased by 47%, and payments to suppliers (mostly local businesses) have doubled.
In August 2015, RevPAR grew by 17% compared to the same month in the previous year, with revenues increasing by 14% and average rates up by 6%. In addition, average occupancy reached 88%, with two hotels reporting a completely full house for the month.
Thanks to its high potential, the renovation of this mature destination has also provided an excellent base for the launch of new concepts derived from the traditional Sol Hotels & Resorts brand, namely Sol Hotels, Sol House, Sol Beach House and Sol Kathmandu Park & Resort, all of which have already been extended to other resort destinations and promise a successful future as international brand concepts.
A paradigm shift
For the Meliá team, the transformation of a destination such as Magaluf is more than just a product renovation. It is a genuine change in the tourism model for Magaluf. The numbers already show how the youth market which was partly attracted by the promises of excess and drunkenness promoted by some businesses in recent years is now in decline, replaced by the family holiday segment which traditionally dominated Magaluf. Similarly, feeder markets have also begun to diversify, with a growing presence of Swedish, German and Italian tourists, among others, reducing dependence on the British market.
The complementary facilities in the resort also have a very important role to play in this paradigm shift. As Mark Hoddinott, the Meliá VP for Real Estate explains, “the more affluent customer which Magaluf aims to attract requires a range of superior-quality complementary facilities in the destination at the same level as their hotel. If they don’t find it, they may choose another destination or never come back.”
In this regard, Hoddinott highlighted the role of public-private partnerships, as well as recognising the efforts made by the municipal government team in Calvià and their explicit support for the important actions that remain to be made up to 2017, when the company expects to have 11 renovated hotels in the destination after an investment of €190 million with its joint venture partners.
Priorities: destination safety, security and reputation
For the people and authorities involved, one of the greatest achievements in the restructuring of the tourism model in Magaluf has undoubtedly been the reverse of the downward trend that led to the specialisation in low-cost, younger travellers with a liking for excess alcohol. For Gabriel Escarrer, Vice Chairman and CEO of Meliá Hotels International, “the summer of 2015 was a turning point for Magaluf during which the destination has begun to leave behind an obsolete model and implement a profitable and sustainable model for the future, thanks to the example that our commitment has set for other businesses and the fundamental collaboration of the public sector. We may now say that the hardest part is over.”
The commitment of Magaluf residents, businesses and authorities to changing the dynamics of degradation and obsolescence and restoring cohabitation and the reputation of the area came to fruition in 2015 with new regulations and a commitment from security forces that has allowed the eradication of some of the worst practices, reducing the number of incidents and crimes that made Magaluf a source of scandal and bad news every summer. Hotel general managers, such as Raul Palomo at the ME Mallorca, confirm this: “our customers are pleasantly surprised when they arrive because the messages they receive about Magaluf are completely different to the peaceful and idyllic destination they find in the hotel and its surroundings. We think this is now true of the majority of guests in Magaluf and that the previous unsustainable model will be completely laid to rest in a very short time. ”
For the next summer season, Meliá Hotels International faces two key milestones that will put the finishing touches to the Calvià Beach project: the renovation and re-branding in 2016 of the Sol Antillas Hotel under the Meliá Hotels & Resorts brand, with its 350 rooms forming a landmark hotel which crowns Magaluf bay in the west; and the renovation of the Sol Jamaica hotel, a key factor in the revitalisation of the Avenida de Magaluf street which runs parallel to the seafront which is scheduled for inauguration in the summer of 2017.
The latter project will modernise the main artery of the area behind the seafront, connecting it with the beachside facilities and raising quality to similar levels, adding a new pedestrianised area and superior-quality retail facilities, essential for promoting and attracting tourism in low season and also bringing in local residents to Magaluf.