Henry The Seventh: Social media success

Do you “like”? Do you “tweet”? Do you tube? Does your business do any or all of these things and, if so, does it really know what it is doing with them?

Social media. Social networks. Once upon a time, social networks were just networks of people, doing what people do, i.e. being social, being friends, being business acquaintances. Whatever the type of network, the purpose is the same: to make contact and connections.

And that’s what it’s about. “Making connections.” The words of Seamus Cullen at No Frills Excursions when I told him I was going to be talking to his business partner, Toni Alenyar, about social media.

No Frills is a small business, but it is a successful one, and one reason why it is successful is that it goes about its business in a purposeful fashion. It plans. And among its plans is one for the use of social media. I have a copy: all fourteen pages of it.

Not every business can devote significant time and resources to social media, but most have come to appreciate that they are, as Toni says, “essential tools”. Many businesses have Facebook pages, Twitter accounts and the like, but do they really appreciate what they are doing with them?

No Frills is guided by a seven-step strategy. It is one that is partly specific to it as an excursions’ operator, but most of the steps can be applied to or adapted by any business. How the company uses social media is geared to meeting one or more of these seven steps. Crucially, they are not the company’s, they are the customer’s.

From the customer’s seeking of holiday inspiration and information to his planning and decision-making, to his taking action (making a booking and travelling) and to his sharing of his experiences, social media accompany each step along the way.

No Frills tests out any social media going. With some it is a case of learning what they offer and which may assume greater importance in the future. But with all its social media activity, there is a wish for the business to be visible, to enhance its reputation and to be seen as innovative.

Of the different networks, the most important to the company are Facebook, You Tube and Trip Advisor. The glowing reviews that No Frills attracts on Trip Advisor come quite obviously as a result of good experiences and good service, but the company actively encourages customers to review what it does, whether good or not so good, and spends time in responding to reviews which are posted.

The sharing of experiences by customers on Trip Advisor is the seventh step in the company’s strategic approach, but it can just as easily be seen as the first step. As Toni points out, Trip Advisor is that significant now that a majority of travellers consult it as part of their initial planning.

The attention given to the traveller’s information-gathering process is one that has led No Frills to be highly proactive and innovative. For example, it now makes short videos about hotels and posts them on You Tube. Why? Because someone interested in coming on holiday searches for information about specific hotels. No Frills videos give a short tour of the hotel and other relevant information about the resort, and relevance is a keyword in Toni’s vocabulary.

But how does this benefit the business? It’s not about selling as such. Of course, selling is the outcome that is sought, but it comes back to making connections. Someone sees a video about a hotel, it comes from No Frills, there will be some means of connecting to more No Frills information and the result … There may be a sale either online or in-resort. Critically though, trust and credibility are being created.

Actually quantifying the benefits of the company’s social media activity is nigh on impossible. Toni freely admits this. But then much promotional activity is hard or impossible to quantify. It is hard to place a value on the benefits derived from visibility, reputation and innovation, but social media, used well and planned well, will bring such benefits, and the importance attached to social media by No Frills is reflected by the fact that there is now a full-time member of staff who concentrates on the company’s internet presence.

There is way more to the No Frills internet story. I’ve not mentioned how Google search enquiries have helped to create a whole separate website, I’ve not mentioned that each of the four No Frills offices (three in Puerto Alcúdia and one in Puerto Pollensa) has its own You Tube channel, and I’ve not mentioned Henry the elephant. You might guess though that Henry has his own Facebook page.

Any comments to andrew@thealcudiaguide.com please.

The Weaver’s Tale: Diversification

What does Mauritius have in common with Mallorca? Apart from the fact that both are islands and begin with an “M”, their populations are not dissimilar in size and the economies of the two islands are roughly similar in size. Historically, both had an economic reliance on the land: Mallorca on crop farming, Mauritius on sugar.

Tourism came later to Mauritius than to Mallorca, and it was a different type of tourism. In the 1970s a predominantly luxury style of tourism, based on resort hotels, came into being. It was one that benefited the economy in general, but because it was aimed at a more exclusive end of the market and later became all-inclusive, a bar and restaurant sector did not complement the hotels. As a consequence, while the island’s macroeconomic status flourished, the local population saw very little evidence of this.

At the same time as Mauritius’s tourism was taking off, the government was setting in motion a process of economic development and diversification. Principally, this was a way of shifting the country’s emphasis away from the land, i.e. sugar, but the unevenness of the benefits derived from tourism gave the process an added momentum. Furthermore, the government recognised that tourism can be fickle and subject to economic shocks or competition.

Sugar is today far less important but still more important than agriculture is to Mallorca. Tourism and services account for some 70% of GDP. And while industry has fallen back, the process of diversification did reap rewards.

The Mauritian government, through a combination of trade agreements, tax incentives and advantageous investment conditions, created, virtually from scratch, a textile industry. Despite a downturn over recent years, it represents some 7% of GDP. It employs a skilled workforce, it turns out quality product and it supplies the likes of Next and, a Spanish connection, Zara. The industry, and it has contributed as much as 14% to GDP, was built without the island having the natural resources to supply it and so was totally dependent upon the importing of raw material. Nevertheless, it worked.

Where similarities between Mallorca and Mauritius fall down is that one possessed a political class with the foresight to understand the risks inherent to an over-reliance on certain industries. Mallorca, essentially still a single-product island, has never been blessed with governments with sufficient vision to appreciate the dangers posed by a virtual mono-economy. Rather, they have been blinded by the success of tourism and continue to consider it the principal means of economic growth.

Mallorca can boast some textile expertise. Martí Vicens created remarkable textile designs in Pollensa, and they are still evident today. The island doesn’t, however, have a great tradition of textiles. There again, neither did Mauritius. I am not advocating that the regional government suddenly weaves a strategy based on textiles, but whether it is skills which do exist in Mallorca or new skills that need to be acquired and new types of business formed, the time is long overdue for a genuine strategy of economic diversification to be put in place.

If there is one thing, and one thing alone, that the new government of President Bauzá should be addressing, it is the economic future of Mallorca and the Balearics, and one that isn’t so obsessed with tourism.

There has been some success in diversification, notably with new technologies, but it has been a very small step. A strategy for innovation going forward to 2020, dreamt up by the last administration, has achieved comparatively little, hampered by economic crisis but also by a lack of real energy.

Mauritius shows how with energy and vision a mixed economy can be developed. Textiles were not the only diversification. The island is also a financial centre and has a decent IT industry, one that Mallorca would bite its hand off to have. A small African nation of comparative size to Mallorca has demonstrated how it can be done and how economies do not have to be reliant on tourism and to accept the fate of the consequences of a primary industry, agriculture, in almost terminal decline.

Are the next four years likely to yield anything in respect of real strategic development in Mallorca? You wouldn’t bank on it. There may be more of the desperately slow crawl of technological evolution, but something akin to Mauritius’s textiles revolution is required. And it won’t happen.

(I would like to thank John in South Africa for pointing out the Mauritius experience.)

Any comments to andrew@thealcudiaguide.com please.

More Stars In Their Eyes: Hotels’ strategy

Mallorca’s hotel federation has pronounced once more. Ahead of the local elections, it has sent out a clear message to the to-be-newly elected that “bold and strategic” measures need to be adopted to tackle the island’s tourism.

Bold and strategic. Fine words. The question is whether there is anyone capable of being bold or acting strategically. Don’t bank on the political classes offering such a paragon of tourism virtue. They don’t have a great track record in doing so.

The federation has identified a fundamental problem with Mallorca’s tourism. Or perhaps they have borrowed it. The federation says that over the period 2000 to 2008 the number of tourists increased by nearly 22% yet the level of revenue generated went up by a mere 2.3%. Where have we heard something similar? Ah yes, the other day. Dr. Ivan Murray and his findings on the diminishing returns of tourism since 2003.

The solution, says the federation, is for there to be ever more tourists, the trouble with this being that at the current rates of growth it makes little sense. If revenue goes up only slightly, but the number of tourists increases dramatically, then how can there be a benefit? In order for there to be so, the federation believes in the replacement of obsolete accommodation by superior-grade hotels which would result in greater revenues. As an indication of what it is referring to, you need look no further than the situation in Calvia. Seven out of ten hotels in the municipality are 35 years or older, and three-quarters of the places in the hotels are between one and three-star.

Grand plans for the regeneration of Mallorca’s hotels and tourism are nothing new. If you go back to the 80s and then into the 90s, plans were popping up from drawing-boards on an almost annual basis. One of the first was the “decreto Cladera” of 1984 that determined the square meterage per one tourism bed. Later there was the “plan for tourism resort embellishment” (making resorts looks prettier in other words). Then there was Ecomost, which sought to establish the limit as to the number of tourists; the “D” Plan of 1997 to address seasonality; the hotel accommodation modernisation plan of the 90s under which hotels could have been closed down if they did not comply with upgrades (and many managed to somehow slip through the net); the modernisation of complementary supply (bars and restaurants) of 1996.

What all these had in common was that they were drawn up in a period before the onset of the new competition from the eastern Mediterranean. Then the new century began and brought in what we now discover, that, for all those plans, the number of tourists has increased but the money they bring in has barely increased at all.

And of these plans, notably the hotel modernisation plan and that for tackling seasonality, were particularly unsuccesful. Furthermore, they both prove that there is nothing new under the sun, as they are but two issues that plague Mallorca’s ability to operate in the far more competitive tourism market of today.

Nevertheless, the hotels seem determined to modernise, which is fine, but then what? If this results in higher-grade all-inclusives, then not a great deal. It may lead to an increase in revenue, but revenue for whom? As we know from the idiotic tourism spend statistics, the gearing is towards revenue generated by aspects of the tourism offer which filter only indirectly into the wider economy; it is that on accommodation, the holiday package itself and transport.

More fundamentally though, the desire, the need to increase the number of tourists raises enormous questions as to the capacity-carrying ability of the island (whether it has the resources to support increases), as to possible further building developments (for the most part restricted by planning laws) and as to where the tourists will come from. The new markets, Russia and so on, are going to have to be pursued with considerable vigour.

Getting more tourists cannot be just about adding more during the summer. There has to be a limit to the number of tourists which can be catered for during the summer months. Moreover, creating plusher hotels adds to the current absurdity of so many of them being unproductive for such lengthy periods. Which brings in the question of seasonality. And it is here, more than anything, that an ability to deliver on a strategy, let alone develop one, is exposed.

You can go back further than that “D” Plan of 1997. In the 1980s they were planning the development of “winter products”. Guess what they were. You’re right: cycling, golf, culture.

The point is that when it comes to being bold and strategic, we’ve been here before. Several times. And it amounted to very little, even in the days before Turkey, Croatia and Egypt became the threats they now are. You wouldn’t count on it being any better this time round.

Any comments to andrew@thealcudiaguide.com please.