January 22, 2021

Meliá focuses its growth on the management of third-party hotels | Economy

Meliá focuses its growth on the management of third-party hotels | Economy

Meliá, the largest Spanish hotel group, is firmly committed to growing its business by managing hotels, instead of opening its own hotels. So said today its CEO, Gabriel Escarrer, in the review of the company that makes each year at the International Tourism Fair (Fitur), opened this Wednesday by the King and Queen of Spain in an environment rarefied by the strike of taxi drivers, that have cut accesses at times. "We want to be a manager," Escarrer said, stating that 98% of the 63 openings that the chain has planned in the next two years will be under management, meaning that someone builds them and Meliá only operates them. Therefore, investment in the immediate future will be reduced.

Escarrer has taken stock of the last three years, in which the previous strategic plan 2015-2018 was in force. Of them, he highlighted that there has been "a strong boost to the incorporations" of establishments to the portfolio of the chain, which has added 10,000 rooms. As a result, during this period, the group's hotel park has reached 380 establishments, 65% of which are already outside of Spain. Escarrer stressed that in this period, the group has invested 400 million euros in opening hotels and reforming the park, until 64% of their seats are already in the higher category segments, "upscale Y premium"

However, he announced that the group is going to lift its foot on the accelerator of the investment, especially because, with the park already "reformed", especially in Spain, the company is committed to management, that is, operating hotels owned by others. In this sense, the company plans to open 63 new hotels until 2021, 51 of which will arrive between this year (28) and the next, with the focus on Southeast Asia, Latin America and the Mediterranean. 98% of them, said Escarrer, will be in management regime. "The company is moving towards a model of management formulas and in that model, investment is very limited," he explained, without quantifying the figures for this year.

"We want to be a more management company" said the manager. Currently, 32% of the operating result of the group comes from managing hotels that are not their own. The goal, he said, is that this figure reaches 50% in the coming years. In any case, as of September 2018, almost 40% of the hotels that the group subscribes to in its portfolio were owned by others, with just 13% of own hotels. "It is a model that faces uncertainties, to make the company more robust, less cyclical and less dependent on whether there are real estate, financial or interest rate crises."

Sorry for the strike

The CEO of Meliá has regretted the incidents arising from the taxi drivers' strike and its influence on the development of Fitur. "I think it's a shame, I do not get into the debate about whether the protest is fair or not," he said. In any case, he noted that the image of roadblocks and protests will make "the impression that many international visitors will take is not the best," he said, "and that does not help the sector at all." He underlined the "similarity" of the situation experienced by taxi drivers with hoteliers facing the "uncontrolled" irruption of tourist rental houses of digital platforms such as AirBnb or Booking, the result of the lack of "planning" of what it is wanted at a tourist or mobility level.

Asked about the progress of the company in Catalonia, where it has a dozen establishments, Escarrer has said that "thank God, after the instability of last year, we have returned to a relative normality". He affirmed that in 2018 the reserves have improved, but "we will be far from the levels prior to October 1, 2017", when the illegal independence referendum took place. He has summarized that 2018 was "nefarious", "especially for the category of five stars [de todo el sector], with a fall of 20% of the revPar (income per available room) ".

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