Meliá CEO: Experience, resorts remain priorities
 
Meliá CEO: Experience, resorts remain priorities
27 NOVEMBER 2018 9:09 AM

Meliá Hotels International regards itself as the pioneer among resort hotel companies and plans on drawing on its heritage, experience and family origins to expand, innovate and partner.

LONDON—Meliá Hotels International is 62 years old but just as pioneering as when it was founded on the Spanish island of Mallorca, according to its executive vice chairman and CEO Gabriel Escarrer Jaume.

Leading the charge for the last decade, Escarrer oversees 380 properties in more than 40 countries on four continents.

The company has no desire at the moment to add its six brands, Escarrer said in a recent interview with Hotel News Now at the World Travel Market in London.

“There is an absolute need for brands, but you have to segment. Our brands only range from midscale to luxury, and our focus is on critical mass and synergies,” he said.

“There is no budget brand, no commodity product. For us, it’s easier to sell experience, and to keep guests (at one of our resorts) all the week, I need to innovate.”

Escarrer said Meliá enjoys a 42% repeat-guest rate, which he believes is impossible to achieve at an urban property, but that is not to say Meliá is not interested in bricks and mortar amid other bricks and mortar.

“The other 20% of what we do has to have a bleisure component, so London, Manchester, soon Liverpool and Newcastle. We are not after the corporate traveler. Our brand ME by Meliá is one approach to this bleisure approach, with 58% of its revenue coming from non-rooms sources,” he said.

“Innside by Meliá is perfect for secondary cities,” he added.

Recourse to resorts
Resorts make up 80% of Meliá’s portfolio, which will continue to be the company’s primary focus, especially in new markets—notably Vietnam and the Cape Verde Islands—but also into existing markets such as Cuba, Escarrer said.

“We are the 16th-largest hotel company, but the only one that started with resorts, and that remains our main competitive advantage. We are number one in the Mediterranean rim, although we are not in North Africa, and the clear leader in Latin America,” he said.

“In five to six years, we plan on being the leader in Southeast Asia, and for me, Vietnam has the most potential. In that region, in operation and development, we have 52 properties, and 17 of those are in Vietnam.”

Currently, Meliá has five assets in Vietnam.

“We will extrapolate what we have been doing for 60 years. We are pioneers. The first international hotel in Bali was a Meliá, 34 years ago, and spirit comes from 60 years of developing relationships with local partners, wholesalers and travel agencies,” Escarrer said.

As hospitality ranks above almost everything else in Asia, operators have to be aware and respectful of its cultures, values and religions and adapt to that at the local level, he said.

“Architecture and design partners are local, and we have three offices in the area—in Hanoi, Jakarta and Shanghai,” Escarrer said.

“We are pioneers in the Cape Verde Islands. We arrived there only six years ago. In Cuba, the first joint venture with the government 33 years ago was a Meliá, and today we have 32 properties there, with eight more in the pipeline,” he said.

This geographic push from Meliá runs in parallel with its continued move to being asset light, Escarrer said.

“We try and open one Meliá-owned property per year,” he said, adding that in December 2018, that will be the 288-key Grand Reserve at Paradisus Palma Real in Punta Cana, Dominican Republic.

“At the moment, 21% of the portfolio is owned. Most now is under management agreements; 52% of the portfolio in Asia is managed,” Escarrer said.

“We think our biggest advantage is in Asia, you work with families, and we are a family business, too. I still stay at the home of the owners in Bali, which has been the same owner throughout the hotel’s history.”

Projected openings in 2019 include five in Cuba, four in Vietnam, three in China, two in Morocco, two in Qatar and two in the United Kingdom; as well as single properties in Indonesia, Thailand, Dominican Republic, Mexico, Dubai, Spain, France, Cape Verde Islands, Albania, The Maldives and Italy. In 2020, there are 23 assets in the pipeline, including three in Cuba and four in the Cape Verde Islands.

Regeneration
Meliá’s largest project, which it began in 2012, continues to be the regeneration of the Spanish destination of Magaluf, which has suffered from a reputation of being a party market for young people.

“This is the second opportunity for this resort-urban destination. The model for it is the way Miami changed 15 years ago, and we have brought in the consultants who worked on that transformation,” Escarrer said. He added that Meliá has worked with a number of partners on the scheme, including city government.

“We have brought in 28 F&B outlets, a Nikki Beach (beach club) we own and franchise, a pedestrian street, 6,000 square meters (65,000 square feet) of shopping, a theme park, 11 resorts with 3,800 rooms, and all within walking distances of everything else. There also are seven golf courses, two marinas and quality real estate. We’ve invested €248 million ($279 million) over six years,” he said.

Escarrer said the company learned a great deal from the last recession.

“We suffered in the recession like everyone else. It is the reason we have gone asset light and invested in distribution. Thirty-eight percent of bookings now are direct, and we have invested in brand standards and initiatives. If a new crisis came along, we’d be ready for it,” he said.

He added that consolidation remains a challenge to all but a few hotel companies.

Two technological initiatives are the firm’s recent adoption of WhatsApp for business and the development of a bracelet used to enter rooms and communicate with and pay for F&B, reservations and concierge amenities and services.

So far, Escarrer added, the bracelet has been installed in three properties, with the new Punta Cana asset to be the fourth.

Results
According to third-quarter 2018 results released on 8 November, the company has a global pipeline of 56 hotels and approximately 15,000 rooms, representing 17% of the total portfolio. More than 85% of that number will be management agreements.

The results also showed revenue per available room at its owned and leased assets rising 2.9%, although revenue for the period fell 2.7% due to, the firm said, closures and refurbishments reducing the room pool.

Earnings before interest, tax, depreciation and amortization, excluding capital gains taxes, rose 5% year over year, and margins grew by 143 basis points, according to a company earnings release.

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