Transcript Presentación de PowerPoint

THE INTERNATIONALIZATION OF HOTEL
CHAINS: THE CASE OF THE BALEARICS
Carles Manera
Prof. Carles Manera
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A micro-economic view
• The analysis of the evolution of Balearic hotel
companies, on the most recent timeline, deals
exclusively with recent studies from the fields of
economic geography, economic history, applied
economics and business economics. There are
also more hagiographical profiles, which provide
some interesting data, but should consequently
be viewed more critically, although they cannot
be entirely ignored.
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Hotel capital
• The most powerful island hotel capital is comprised of seventeen
hotel chains which are registered on the archipelago: this is where
their headquarters are located, the base from which their
expansion to other regions of Spain took shape, followed by their
incursion into other emerging geographical spaces in terms of mass
tourism. The origins of these companies are diverse and in some
cases the relevance of their solid position extends back no further
than two generations. The capital formation and accumulation
process was able to take place on the basis of solvent industrial
experience (Iberostar), purely agrarian and despotic origins (Fiesta),
modest transport services (Barceló), the actual economy of diverse
services (Riu) and the pioneering attitude that sprang from modest
administrative activities (Sol-Meliá).
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Non-improvised activity
• Capitals of manufacturing, of agriculture, and of other
tertiary areas feed off of two crucial phenomena: a Europe
in a decisive transformation process, and the effective
connection with the effervescent market comprised of
clients with a capacity for consumption in need of leisure,
rest and entertainment. The sectorial change propitiated by
the opening-up of the economy during Franco’s era has a
history in the Balearics. Tourism activity was not an unusual
occurrence on Mallorca, given the creation of Fomento de
Turismo (Tourism Promotion of Mallorca) and the interest
of economic institutions such as the Chambers of
Commerce for anything that represented the connection of
the islands with the outside world.
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The beginnings
• Tourism capital underwent vigorous development in
Mallorca and Ibiza from 1960 on, to the extent that the
investments made in the islands paid off quickly. This, along
with the increase in competence in the Mediterranean
region, was one of the main causes for transferring the
economic activity of Balearic hoteliers to other parts of the
world. In the mid-eighties, only Sol Meliá and Barceló had
hotels outside of Spain. Sol attained an international
dimension with the inauguration of the hotel Bali-Sol, in
Indonesia; at the same time, it acquired the Meliá group
which already had establishments abroad. Meanwhile
Barceló invested in the Dominican Republic, where it was
given all kids of facilities to construct its tourism
infrastructure in Bávaro.
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Investments in poor countries
• These Balearic investments in impoverished countries, which did
however have evident potential in terms of tourism development,
were shaped on the basis of promises to acquire foreign debt and
direct and indirect pressure to influence public policies which
simultaneously eased the path for achieving capital flows. Facts like
currency devaluations, the privatisation of state-owned companies,
the enactment of relaxed laws in labour and environmental areas
and the expropriation of ecosystems are examples of the
connection between the worlds of politics and the economy in
nations in need of investment flows and Mallorcan entrepreneurs
who transfer production in search of greater profitability; all of
which is confirmed by recent research, endorsed by diverse, solvent
documentation.
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Characteristics…
• 1. The concentration of capital and its
diversification. This calls for the elimination of
small productive centres and the coordination
of the hotel chains, seen as companies that
jointly manage different establishments.
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…that shape the family business…
• 2. The family origins and continuance of their
headquarters in the Balearics, in spite of the
internationalization process. Balearic hotel chains have
gone from humble bases to have an enormous capacity
on external markets, to the point of becoming
transnational consortia. There are no local companies
that can be compared to those of the Balearics on
other Mediterranean islands such as Malta, Cyprus or
Crete, economies where the tourism sector carries
great weight. Corsica, Sicily and Sardinia continue to be
more geared towards agriculture, although a certain
advancement of tourism can be discerned in their
economic structures.
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…extending…
• 3. Balearic control in hotel chains and their
relevance on the international markets. Three
specific indicators endorse these assertions.
Firstly, the table below shows determining,
concise data on the top ten Spanish hotel chains.
The position of the islands is solvent: six
companies appear on this important list (Meliá,
Riu, Barceló, Iberostar, Fiesta and Piñero), and in
places near the top.
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…and coming to lead the markets.
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Balearic capacity…
• By number of rooms managed, Meliá, Iberostar,
Barceló, Riu and Fiesta are situated amongst the top
one hundred chains in the world, in the following
respective positions: 15, 20, 26, 30 and 85.
• Finally, the data available on turnover corresponding to
2011 confirm this reign, as Balearic companies are
amongst the top ten in Spain: Meliá, 1,335.3 million €
(6.8 percent more than in 2010), Riu, 1,140 million €
(2.8 percent more than in 2010), Barceló, 711 € (–0.42
percent compared to 2010) and Iberostar 950 million €
(–2.76 percent over 2010).
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…with a strong presence abroad…
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…in different fields of investment
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The investment vision
• In this regard, the following can be distinguished:
• The volumes invested fluctuate. In relative terms, the period 1993-2002
registers a dominant, regular share of participation, which is disrupted
from 2003 on, with highly unstable percentages. The largest investment
effort was made during this decade – a little over a billion Euros, whilst in
the following decade it reached 840 million.
• Between 1993 and 2012 nearly 31% of Balearic investment abroad was in
tourism. With the exception of the period 1993-2002, we should point out
that the bulk of the investments made between 2003 and 2012 were
channelled towards other sectors, essentially insurance and pension
funds.
• Thus the entries that contribute to distorting the possible regularity of the
series between 2007 and 2012 are few, but significant: specifically the
figures for 2007, 2008 and 2010 make up the lion’s share of the flow of
capital away from the islands. And its destination is not mass tourism, but
other assets that appear to provide greater security at the beginning of
the Great Recession.
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A specific geography
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7 essential factors in hotel investment
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As from 1993 seven essential factors can be identified that catalyse Balearic hotel
investment:
The maturity of the island model of tourism (an aspect we have already
commented on, alongside the search for new ways to increase the profitability of
companies).
Outside investment in a sector known for its professionalism: thus, the existence
of a fundamental know-how, without which it would have been extremely difficult
to successfully support the expansion of the Balearic hotel trade.
The formation of a second generation of hoteliers – the children of the founders of
the sagas -, educated in important business schools, who hire and adopt
professionalized human resources and methodologies which go beyond intuitive,
pioneering processes.
The unfurling of horizontal and vertical growth strategies: acquisitions of hotels,
travel agencies and even airline companies (the most eloquent example of which is
that of Globalia, which established its headquarters in Mallorca).
A managerial style that adapts to each country and context: flexibility in hotel
administration.
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7 essential factors… (cont.)
• Most investments abroad do not target the hotel business, as can
be seen from table 6 and its corresponding graph. Indeed, the flow
of capital transfers towards financial platforms that transnational
companies appear to use, presumably, to benefit from fiscal
privileges. In 2007 and 2008, the first years of the Great Recession,
movement of Balearic capital intensifies in financial investments –
in Italy and Mexico – causing a retraction of those that define the
purely tourism-based activity.
• However, we should point out that whilst Spanish investments in
the foreign hotel trade were below 2%, in the case of the Balearics
they amounted to average percentages of above 30%, as we have
seen. In this regard, the islands’ hotel chains have often acted as a
vanguard in investment abroad for Spain, adopting a central role in
the area of Latin America.
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The hotel chain
• Its economic significance is irrefutable; its organisational strength,
obvious; its political influence, indisputable. These new consortia
reassert their power, and at the same time:
• They act as a spearhead for Spanish investment abroad in emerging
markets. The bulk of their business is abroad (with Latin America
and the Caribbean as the most explored regions), although they
keep their headquarters in the Balearics.
• In their new investment spaces they generate socio-environmental
contradictions (job insecurity, privatisation of lands and access to
water, disorderly exploitation of places of high ecological value), to
the point that one may speak of the transfer of “Balearicization”
(understood as a disorderly growth of tourism infrastructure with
irreversible attacks on the natural surroundings) to these lessdeveloped countries.
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Conclusions (1)
• They export the ‘sun and beach’ model, which holds clear competitive
advantages for them based on their historical experience. Their
commitment is to the “all-inclusive” modality, which has also ended up
being applied in the original hotel businesses (both in the Balearic Islands
and in other parts of Spain. Moreover, the hotel chains stimulate resorts
and the operation of urban hotels.
• They tend to separate ownership and management in the hotel business;
and at the same time, the participation of these chains in establishments
that are already consolidated increases, rather than in the activation of
new investments.
• They influence the tourism policy of the regional institutions in such a way
that the main captains of the Balearic – and Spanish - tourism industry,
who have the core of their investments outside of the islands, continue to
exercise a notorious capacity for influence on the islands’ political class.
The most illustrative case: the all-out opposition of the leaders of tourism
to the tax on overnight stays by tourists introduced in 2002 by a
progressive government, which was revoked in 2003 by another,
conservative government.
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Conclusions (2)
• In the case of the Balearic Islands, we are not
faced with improvisations in economic growth
moved along by more or less random
phenomena. Quite the contrary – there are
decisive symbioses between investments and
the complex picture of decisions of all kinds
made in the different historical periods. In this
context, the function of the entrepreneur has
been decisive, as we have shown.
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