Spanish hotel groups eye expansion into new regions
Spanish hotel groups eye expansion into new regions
24 JANUARY 2018 9:18 AM

With international arrivals breaking records and new destinations in their sights, Spanish hotel chains expect 2018 to be a banner year, sources said at the recent FITUR tourism and travel trade fair in Madrid.

MADRID—Spain’s major hotel groups are riding a wave of booming visitor numbers at home and new openings abroad, and that has executives buoyant on prospects for the new year.

Speaking during last week’s Feria Internacional de Turismo (International Tourism Fair, or FITUR) conference in the Spanish capital, executives praised the sector’s performance in 2017, thanks in large part to Spain’s record 82 million tourist arrivals, and said their companies are eager to venture into new territories.

“We had an excellent year in terms of growth with 10 new hotels, and half of those were right here in our home market,” said Jaime Buxó, business development manager at Barceló Hotel Group. “At the same time, Barceló is diversifying geographically, and we’ve opened our first hotel in Mexico City. But we’re most excited about our two new properties totaling almost 500 rooms in the United Arab Emirates, our first in the Middle East.”

Barceló will open a third hotel in the United Arab Emirates this spring, and plans call for a total of seven in the Emirates by the end of the year, he said.

New Barceló properties are also expected to open in 2018 in Spain, Morocco, Hungary, Germany and China. The company is looking to expand into Cairo and Istanbul, despite political unrest that has triggered a fall in visitors to those countries.

“We believe Egypt and Turkey are going to improve,” Buxó said. “Sure, there’s a certain risk, but it’s a risk you have to take.”

Spain’s third-largest chain with 236 hotels in 22 countries totaling more than 52,000 rooms, the family-owned group operates four brands: Barceló, Royal Hideaway, Occidental and Allegro.

Raul Gonzalez, Barceló’s CEO for Europe, Middle East and Africa, said the company closed 2017 with a 10% rise in income.

Speaking about his company’s failed effort to merge with domestic rival NH Hotel Group—which rejected Barceló’s €2.4 billion ($2.95 billion) proposal earlier this month—Gonzalez said he believed that the offer was fair.

“But it was turned down so what can we do? There is no Plan B regarding NH so now we’ll invest elsewhere,” he said. “We’re going to close the spring debt-free with (earnings before interest, taxes, depreciation and amortization) close to €300 million, so it doesn’t take a financial wizard to know that we have to invest.”

NH Hotel Group
In his comments to the press, NH Hotel Group CEO Ramón Aragonés explained that the Barceló bid “just didn’t fit with our plans.” But he kept open the possibility of collaboration with other hotel companies, saying the company was ready to study such arrangements “to keep growing.”

“2017 was a good time for the group, and we certainly believe that this year will be the same,” he added. “Although final data for last year is not yet in, so far our results went beyond our expectations.”

Citing data from STR, parent company of Hotel News Now, Aragonés said the group’s average daily rate rose from €77 ($95) in 2013 to around €96 ($118) in September 2017.

“Our 2017-18 strategic plan is on track, and we have repositioned our hotel portfolio, increased our number of premium properties, improved our income management and operating margins, and upgraded our technology infrastructure in which we’re going to invest €30 million ($37 million) over the next three years,” he said. “We’re on the way to reaching our goal of posting a recurring net income of €100 million ($123 million) in 2019” from the group’s four brands—NH Hotels, NH Collection, Nhow and Hesperia Resorts.

Across its brands, the group has 380 mostly urban hotels with almost 59,000 rooms in 31 countries. It has 10 NH Collection properties in the pipeline for Germany, Spain, France, Chile and Mexico, along with six new Nhow properties.

“Our goal for this year is to reinforce our premium brands, NH Collection and Nhow, improve guest experience and boost our loyalty programs with a new image and a more attractive rewards program,” Aragonés said.

Meliá Hotels International
Expansion is the byword at Spain’s biggest hotel group, Meliá Hotels International, with 71 new hotels in the pipeline over the next two to three years and primarily focused on development in the Asia/Pacific.

“We’re opening 22 new properties in the Asia/Pacific region, and we’re entering the new destinations of Mongolia and Iran,” CEO Gabriel Escarrer said at a news conference, adding that the chain has never before opened hotels at such a rapid pace.

“Of the 30 hotels debuting this year, eight will open this month alone, and three of those are in Spain,” he added.

Also in the pipeline are 19 new hotels in Europe, the Middle East and Africa; a dozen in the Americas; 11 in Cuba and seven in the Mediterranean region to add to the group’s 385 hotels with 97,000 rooms in 43 countries in Europe, Asia, Africa and the Americas.

Meliá brands include Gran Meliá and Meliá Hotels and Resorts, Me by Meliá, Paradisus, Innside, Tryp, Sol and Circle.

“We want to have 100,000 rooms by 2020 … (and) we’re going to continue our focus on our home market in Spain,” Escarrer said. “Over the past seven years, we’ve spent €600 million ($737 million) in rebranding, repositioning and refurbishing our Spanish properties. And we’ll invest a further €75 million ($92.1 million) this year in Spain in cooperation with our partners.”

Along with expansion, the CEO said the company’s strategic plan aims to better serve the increasing tendency by guests to blend business and leisure travel, meet the rising demand for wellness services in its hotels and enrich guest experience through art and culture and better food and beverage offerings.

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