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Meliá Hotels International Gabriel Escarrer Outlines Its Response to The Major Challenges in The Industry In 2017 At Fitur

February 6, 2017 Hotel Developments No Comments Email Email

Geopolitical risks: “We have chosen international diversification, prioritizing safe destinations such as Asia, the Caribbean and the Mediterranean”

Brexit: “although we do not expect a major impact on the UK feeder market, we will compensate the slowdown expected in high season and in more expensive segments with demand from other feeder markets”

Regional macroeconomic variability: “our management and asset-light model minimizes risk and allows us to grow faster”

Collaborative economy and hyper-segmentation of demand: “our response is more brands, more service and more quality, and, of course, our leadership in resorts”

Industry consolidation: “we do not want to be the biggest, we want to specialize and be the strongest company in the resort environment”

Digital challenge: “Meliá has managed to transform itself and lead the digital evolution of the business, using new tools and B2B and B2C channels”

The need for a new tourism model in Spain: “we have two objectives: to reposition mature resort products and destinations, and to transform cities with large hotels in the luxury and bleisure segments”

At the FITUR Tourism Trade Fair in Madrid, Meliá Hotels International has presented a summary of 2016, a year which its Vice Chairman and Chief Executive Officer, Gabriel Escarrer, defined as very positive for the results of the company and for laying the foundations for more qualitative and profitable growth in the coming years.

At the operational level, all of the regions, including city hotels in Spain, report RevPAR (revenue per available room) figures above those at the peak of the cycle in 2007, with increases close to double digits. According to Escarrer, the company expects these strong results to be reflected in EBITDA and Net Profit figures slightly above market expectations.

At the financial level, Escarrer highlighted the significant reduction in company debt, which is at record low levels, in addition to improvements in its financial results.

The Meliá CEO also especially highlighted the important commitment to Spain, reaffirming the company’s commitment to the transformation and improvement of the tourism industry. Meliá continued to invest in the renovation and repositioning of its resort hotels in mature destinations such as Magaluf in Mallorca, where it has already invested more than 200 million euros, or Torremolinos in Malaga, where the company has invested about 40 million euros. Escarrer was sure that both destinations will once again become market leaders thanks to their natural potential and the fruits that public-private partnership projects led in large part by Meliá have already begun to generate.

With regard to city destinations, Escarrer highlighted the company’s two major projects last year in Spain: the opening of the Gran Meliá Palacio de los Duques, a splendid luxury hotel in the capital of Spain, and the new Congress Centre and hotel in Palma de Mallorca, a long-awaited infrastructure in the Balearic Islands with which the company aims to help reduce tourism seasonality and place Palma on the map of international congress circuits.

2017: strategic response to challenges and new trends

The Vice Chairman of Meliá Hotels International explained the geopolitical factors, such as Brexit, instability and terrorism, and the new presidency in the United States, and macroeconomic developments which will affect the performance of the industry in 2017, explaining how company strategy aims to respond to the challenges:

  • On the one hand, enhancing the Meliá leadership in resort hotels, the most stable and strongest performing segment in recent years, and further developing the international diversification of its hotels, especially in safe destinations such as Asia, the Mediterranean and the Caribbean. Escarrer announced at least 23 new hotel openings in 15 countries for 2017.
  • Secondly, the risks caused by instability and a variable economic performance are minimized by consolidating the hotel management and asset-light business model, much better adapted to resist economic cycles and grow strategically, as well as maximizing the favourable situation in Spain through the renovation and repositioning of resort products. With regard to city products, the company will continue to diversify thanks to its expertise in so-called “bleisure” hotels (business + leisure), which complement business travel with leisure and lifestyle experiences.
  • Regarding the latest market trends, the Meliá CEO emphasized the ability of his company, which celebrated its 60th anniversary last year, to innovate and stay ahead of the fast-changing environment. Thus:
  • Faced with the current hyper-segmentation of tourist demand, Meliá proposes “more brands”. In 2017 the company will complete the renewal of its brand architecture, and the updating and “refreshment”, in his words, of brands in the resort segment such as Sol Hotels and its new sub-brands Sol House, Sol Beach House and Sol Katmandu, and in the urban-bleisure segment, Meliá and Innside by Meliá.
  • In response to the growing global interest in experiences, and especially in gastronomy, Escarrer outlined the new Meliá Food and Beverage strategy, introducing new concepts in all of its brands and Michelin-star and signature restaurants for premium-brand hotels, as well as roof terraces which become meeting points for leisure time in city centres.
  • With regard to the impact of disruptive models based on the so-called “collaborative economy“, Meliá will enhance its brands, offering a better and more personalized service, and also enhance the superior and luxury hotel segments, while also remaining committed to maintaining its leadership in resort hotels, an area in which vacation rental is not as competitive.
  • Regarding the digital challenge, the Vice President and CEO of Meliá was especially proud of the digital transformation of the business, involving new sales, personalization and revenue management tools as well as a new more functional website accessible from any type of device. As part of its “Meliá Digital” programme, Meliá has developed new sales and communication capabilities and channels both in the B2C market with consumers and the B2B market with travel agents and tour operators. This has enabled the company to increase online sales by 30% in 2016.
  • Regarding the trend towards growing consolidation in the industry through mergers and acquisitions, Escarrer explained that Meliá does not aim to be bigger, but rather to specialize in the resort segment in which it is already an international leader. Meliá is also committed to forging strategic alliances for growth and the repositioning of products, a strategy that allows it to strengthen itself at a corporate level and grow strategically, together with some of the most important international investment funds.
  • Finally, Escarrer explained the clear commitment of the company to improving the quality and repositioning of the Spanish tourism model, both in resort hotels where Meliá has spent years investing in repositioning large emblematic hotels in mature destinations, and in city hotels, where Meliá aims to bring great products that transform city tourism. Meliá has recently opened the Gran Meliá Palacio de los Duques hotel in Madrid, a new icon in the luxury hotel segment and flagship property for the Gran Meliá brand, the Spanish luxury brand par excellence, along with the recently inaugurated Gran Meliá Rio de Janeiro. The company is also preparing the opening of the future Congress Centre and hotel in Palma de Mallorca, an infrastructure that will revolutionize tourism in the Balearic Islands, relaunching urban tourism, enhancing cultural and natural assets, and extending the season.

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