The Hotels’ Beachhead

Change of government is still a month away, but the tourism industry has gone into overdrive in anticipation of all sorts of liberalisation that may be ushered forth by a Partido Popular victory.

As far as the hoteliers are concerned, Mariano Rajoy may as well already be prime minister. The Meliá plans for Magalluf are partly dependent on legislative relaxation, and the specific plans Meliá has for the beach would almost certainly require some changes to the Coasts Law.

When it was announced that Meliá wished to “exploit” the beach, a thought which occurred had to do with what the Costas Authority would make of it. This is a body which, while it does, quite rightly, seek to protect the coastal environment, is also the source of obstruction and of much that runs counter to the wishes of the tourism industry.

If a likely change of government were not in the offing, the chances are that Meliá’s wishes would have been stamped on from the great height that the Costas has come to assume; or probably, the wishes would never have been made public. Without knowing for sure, one gets the sense that the Costas might find its seemingly all-embracing powers being cut back.

Meliá wants, among other things, to be able to provide temporary moorings next to its hotels. The Mallorca hoteliers federation, very much to the fore in driving a national agenda, wants a change to the Coasts Law which would not only remove any obstacle to Meliá providing its moorings but would also permit other hotels to exploit other beaches for leisure purposes.

The proposal, much as it may make good business sense for the hotels and for the tourism industry, does run up against a difficulty. Essentially, the beaches would be privatised and there has to be a risk, somewhere along the line, that the principle of free public space on the beaches might be endangered.

Where the Costas has been doing a good job is in ensuring this free space. Together with town halls, it has also kept the sea itself free. And by free, one means open and accessible. It is the open to access principle that comes into question if the hotels have their way. With Meliá’s moorings, where would they go exactly? Would they in some way impede public use of the sea?

A further factor in the hotels’ ambitions for beach exploitation is the Costas’ bureaucracy. An aspect of this does badly need to be changed, and it is that which relates to the annual rigmarole that is gone through to establish provisions for beach management and for licensing operations.

The annual bureaucratic procedures have the effect of inhibiting investment. If a beach operator cannot be sure of running a beach from year to year then it is understandably reluctant to commit itself too heavily. Meliá wouldn’t, one would imagine, put up with such uncertainty.

If there were to be a relaxation of this bureaucratic burden, it could only be a good thing. It would prevent, one would hope, the kind of delays that have bedevilled beach management operations in Puerto Pollensa, and it might also be hoped that further relaxations would get rid of the nonsensical situation whereby an operator such as Sail and Surf in Puerto Pollensa cannot put out buoys for larger craft out of high season, so restricting its ability to extend the resort’s tourism season.

This constraint is another of the Costas’ domains, just one that has consistently placed it at loggerheads with business and especially the hotels. In Mallorca, there is an added dimension. The local head of the Costas is Celesti Alomar, the former (socialist) tourism minister who was responsible for the despised eco-tax that the hotels were charged with collecting and which, in some cases, they never handed over.

The Costas locally has brushed up against some heavy hitters, not least in Muro where its interpretation of coastal demarcation and the almost unworkable notion of land that is “influenced by the sea” have threatened hotels’ interests. To put it mildly, there is no love lost when it comes to the hotels’ attitude towards the Costas.

So now the hotels can sense the opportunity to get the law changed and also bring the Costas down a peg or two. As a protecter, it does a valuable job, but its role as enforcer has created too many enemies. If the law does change and if the Costas finds itself with a diminished role, this may be no bad thing. But would things go too far in the other direction? The privatisation of the beaches and of the water.

Any comments to andrew@thealcudiaguide.com please.

The Power Of The Hotels

If you have wondered just how powerful and how important Mallorca’s hoteliers are, then a glance at the rankings of hotel chains produced by the magazine “Hosteltur” will tell you more or less all you need to know.

From a base of over 100 Spanish hotel chains, four Mallorcan groups are in the top five in terms of their turnover, and the same four feature in the top five of Spanish hotels internationally (by number of rooms). The four are, and you could probably guess at them anyway, Meliá Hotels International, Barceló, Riu and Iberostar. Only one non-Mallorcan group, NH, breaks the island’s stranglehold at the top of the Spanish hotel industry, though another, Husa, does edge Iberostar into sixth place in terms of rooms in Spain alone.

Scan down the list of hotel companies in the Spanish room ranking and further familiar names appear, such as Grupotel, Viva, Garden. Mallorca’s economy is founded on tourism and is founded, furthermore, on a hotel industry which also regularly has its members high on the lists of best-performing Mallorcan companies of any sort, which is hardly surprising, given the dominance of tourism and hotels.

Mallorca’s hotel groups are not just important to the island’s economy, they are important to Spain’s as well. This concentration of economic power, which brings with it political influence, should leave you in little doubt as to how much the Balearic Government is inclined to listen to the hotel industry. If it seeks to limit holiday lets, then who is there to say no? If it accedes to demands for all-inclusive offers from tour operators, who is there to say it shouldn’t, especially if a tour operator owns a piece of the action? Riu, as an example, is 50% owned by TUI.

The hoteliers get a bad press, partly because of issues such as holiday lets, yet Mallorca’s economy would be nowhere without them, while the island would not have come to have acquired a status, a kudos, that its hotel industry has given it both within Spain and internationally.

It may be hard for some to accept, but we should really be praising the hotels.

A curiosity is how it has come to be that Mallorca could have four of the five leading hotel groups in Spain and four which feature among the top 30 of all the world’s hotel groups.

Of the four companies, Barceló is by far the oldest, dating back to the start of the 1930s. Riu and Meliá were created in the 1950s, while Iberostar is the new kid on the block; it was founded in the 1980s. A simple explanation for the strength of these leading hotel chains is that they were in the right place at the right time to cash in on the tourism explosion from the sixties onwards, but this doesn’t explain Iberostar, which came along that much later, and nor does it explain why Mallorca rather than other major centres of mass tourism in Spain.

There may, though, be a different simple explanation – business nous, entrepreneurialism and innovation. Does Mallorca have these in greater supply than elsewhere in Spain? It would be a facile conclusion to make, but consider how just one set of brothers has done so much for Mallorca. Miguel Fluxá is the president and founder of Iberostar: one brother is president of Lottusse, the original Fluxá family leather business; the other brother founded the footwear firm Camper.

Right place and right time did count for something, but it also demanded the right thing. For Riu, this meant tapping into the German market from a very early stage, creating an alliance in the ’60s with the tour operator Dr. Tigges, then reinforcing the German link through its association with TUI, which was forged in the seventies, and afterwards embarking on expansion to the Canaries and, in 1991, the Dominican Republic.

The internationalisation of Riu and the other major Mallorcan hotel chains has been key to the positions they now enjoy. Mallorca exports its hotel know-how and technology, yet there is an irony in that this has helped to develop destinations which are competitors to Mallorca.

The big four may eclipse other hotel chains in Mallorca, but all of the chains combine to make one massive force of business, economics and political nature. Complaints against the hotels, such as those regarding all-inclusives, are, I’m afraid, unlikely to cut much ice. Just think of Riu. Half-owned by TUI which is quarter-owned by a Russian. And the Chinese are on the prowl as well; the HNA group is a shareholder in NH. What chance does the little guy have against all this lot?

Any comments to andrew@thealcudiaguide.com please.

Making Waves: Resort re-imagination

The excitement down Magalluf way has, as you might have expected, been exciting the media. For once, Maga isn’t finding a dubious place in the media sun because of drunkenness, violence, balcony-diving, PR “tiqueteros” and prostitution (choose as applicable).

More is emerging of Meliá Hotels International’s grand vision for Magalluf. There is, for instance, going to be a “wave house”, artificial surf created by submersible pumps. “Flowing water is a symbol for wealth and prosperity in Feng Shui”. So says the waveloch.com website; Wave Loch has, since 1991, “been on a mission to wave the world”. There is a wave house in San Diego, in Durban, in Santiago (Chile) and in Singapore. Just as Magalluf coming at the end of a list of locations for a fashion house – London, Paris, New York, Rome – would sound daft, so it sounds out of place with the current Wave Houses. Still, think of all that wealth and prosperity, and how long will it be before Magalluf ceases to be Magalluf and is completely renamed after the Meliá concept – the Sol Calvià Resort? It sounds altogether more impressive.

The idea that Magalluf might be renamed isn’t as ridiculous as it might seem. By going along with Meliá’s plan, the regional government and Calvià town hall have all but ceded responsibility for the resort. Or at least this is the impression one gets. Some years ago, I suggested that sponsorship deals for individual resorts, and renaming them with the sponsor’s name, might not be a bad idea. It was a suggestion made in jest. Little did I know.

The government, bending over backwards to take the private-sector shilling – as well it might, as the private sector is the only sector that has a shilling – is now making it clear what President Bauzá meant by his version of “small government”. It isn’t small so much as non-existent, where tourism is concerned at any rate. Tourism minister Carlos Delgado has done the talking for Bauzá. There won’t be more public money for the Playa de Palma redevelopment, he appears to have decided; enough has already been spent on fat salaries for members of the consortium who have succeeded in achieving pretty much nothing.

Another of the plans for Magalluf involves the beach. Meliá will in effect end up running it. There is the slight matter, however, of the Costas authority, that wing of national government which issues decrees on matters of a beach nature. Does the regional government know something we don’t? Almost certainly it does. The Costas may well get its wings clipped. It might even be stripped of its wings completely along with its feathers and beak. Delgado has had less than good words for the Costas. Incompetent and slothful was how he described the authority back in July. Whatever the Costas’ thoughts regarding the Magalluf plan might currently be, you can be reasonably sure that they will change once Delgado’s friends in the Partido Popular return to power in November.

Calviá town hall, another party with an interest in the beach, presumably poses little problem. Delgado, former Calvià mayor, will surely have had words with his PP successor. There seems, therefore, little to prevent Meliá operating the beach and doing all the rest that it has in mind, except for the minor irritation of a need to change laws. We can safely assume, however, that this irritation will be dealt with in due course.

The Magalluf project, for all that is hugely praiseworthy, does raise questions as to how interventionist (or not) the government is likely to be in other matters to do with tourism. It is no bad thing if it takes a back seat and lets the private sector take the lead, but how realistic might it be for similar projects to be rolled out in other resorts? As I pointed out previously, Magalluf is ideal for Meliá because of the number of hotels it has and their convenient concentration near to each other. Not all resorts are like Magalluf though; far from it.

There is more to tourism, however, than just the resorts and the hotels. And more to what falls under the tourism ministry’s remit. Take, for example, its responsibilities for arts festivals. Delgado has stated that grants will be limited in the future, if available at all. The ministry left Pollensa town hall high and dry by not providing all the emergency assistance for this year’s music festival, as it seemed to have promised. Pollensa’s festival is not the only one to feel the cold blast of cuts. If the private sector doesn’t come to its aid and to the aid of other festivals, their future has to be in doubt.

The Magalluf plan represents way more than just the re-imagination of a resort. It represents a total shift away from public provision, and it is a shift that will become apparent in other spheres of Mallorca’s tourism. Magalluf is a re-imagination and also a re-invention, one in which it is the hoteliers and the private sector which rule the roost and not the regional government. The whole picture of the island’s tourism is about to be redrawn. There is excitement certainly, but there is going to also be uncertainty.

Any comments to andrew@thealcudiaguide.com please.

The Coincidental Revolution: Magalluf

The sudden burst of good news coming out of the tourism sector seems a bit fishy. You wait for months, years even, for news of grand, new hotel projects and then three of them come along at once.

The convoy of hotel buses that has emerged in the media isn’t an entirely new fleet. The five-star Port Sóller Hotel & Spa has been under construction for some time; the news surrounding it has to do with the announcement of its opening in March next year. The Hyatt International hotel-as-Mallorcan-village project in Capdepera was given an initial airing back in April 2009. The Meliá Hotels International scheme for Magalluf, already well flagged, has now suddenly expanded from three to seven hotels.

New or not so new, it is the timing of the various announcements that is important. There is surely no coincidence. Rather like a country occasionally requires a royal wedding or a war, the regional government has urgently needed the shiny new services to Sóller, Capdepera and Magalluf to simultaneously pull up at the bus stop for Burying Bad News, while the ABTA convention hitting town is presumably totally incidental to any of this.

Of the three schemes, the Magalluf one is the most important. Arab money sending Sóller and Capdepera into inter-five-stellar overdrive is not unimportant, but neither project represents a resort re-think. Meliá’s does.

It helps if you happen to have a number of hotels in close proximity, which is the case with Meliá in Magalluf, because the scheme doesn’t simply envisage hotel redevelopment; it will involve a remodelling of the resort. It is massively ambitious and massively important. If it comes off, and there’s no reason to believe it won’t, it, rather than the stuttering attempts in Playa de Palma, will be the first of the resort revolutions.

The planned changes to the tourism law are fundamental to what Meliá have in mind. The condohotel conversion will apply not only to the Royal Beach but also to the Sol Trinidad. The Sol Jamaica will be completely rebuilt as a hotel that will also be for residential use. In addition to what happens to the seven hotels, there will be a beach club, a new boulevard, a conference centre and facilities for cycling.

More than just redevelopment, the plan cannot be underestimated in terms of its vote of confidence in Mallorca. For one of Mallorca’s major (international) hotel chains to be willing to pump an initial 100 million plus euros worth of investment into Magalluf proves that a mature holiday destination and resort can still be attractive.

And what it will mean for Magalluf? One would guess that its current tourism profile would not be unaffected. It would all rather depend. The Mallorca Beach and Antillas Barbados hotels, for example, will be joined together to create a gardened complex for a “client of greater quality”. It doesn’t sound as though Meliá have the Shagalluf image uppermost in their thoughts.

A further reason for the government to be happy to have the good news seep out is that it is only too aware of the naysayers who would wish a plague on its new tourism law house and on the houses of the hotel industry. The unions don’t like the new law because condohotels will mean fewer jobs; the restaurants and club owners don’t like it because it smacks of creating unfair competition, or so they claim.

The restaurant and club owners are, like the unions, staking out the battleground. They are suggesting that the new law will result in a price war and in the attraction of a tourism client of “low quality”, without actually explaining why this would be the case. The club owners we know all about. It’s not client quality they’re worried about; it’s the potential for other Mallorca Rocks to spring up, thanks to the law permitting concerts in hotels. They don’t like the competition full stop.

But what they are really driving at is the fact that the government is putting its weight behind the hotels and only the hotels. They have a point, but then the government knows, as should the restaurant owners, that there is only one game in town when it comes to redevelopment. It isn’t the government, and it certainly isn’t the restaurants. The hotels are the only hope. If it means, as in Sóller and Capdepera, the attraction of foreign investment, then so much the better.

The good news might seem convenient, but as we have waited so long for any, the fact that it all comes along in one fortuitous news-massaging go should not make it any less welcome.

Any comments to andrew@thealcudiaguide.com please.