The Russians Aren't Coming, They've Arrived

Do you know who Alexei Mordashov is? No? Well, you should do, and so I shall tell you. His name gives a bit of the game away. Yes, he's Russian. He doesn't like being referred to as an oligarch, but that is what he is. He is the main shareholder in Severstal, Russia's largest steel company, and the 29th richest man in the world, according to the "Forbes" billionaires list. His personal wealth is said to exceed, twelve-fold, that of one of Spain's richest men, Gabriel Escarrer of Meliá Hotels International.

Mr. Mordashov, like Sr. Escarrer, has a keen interest in tourism. Mr. Mordashov owns 25.06% of TUI AG; that's TUI, the German tour operator and the most important player in tourism in Mallorca and Europe. His shareholding makes him the largest single owner of TUI shares. He intends to increase further this shareholding, though probably not beyond 30% at which point he would be obliged to make an offer for all the company's shares. He has been described as the most powerful man in Mallorca, which, for those of you who had, until now, never heard of him, might come as a surprise.

A couple of weeks ago, Mr. Mordashov did a helicopter tour of Mallorca. He dined at the Robinson Club Cala Serena in Cala d'Or, winner incidentally of first prize in TUI's "Umwelt" championship 2011 (environment to you and me). There he was joined by the man who has done more than anyone to make TUI what it now is, the company president, Michael Frenzel, and various associates of TUI, such as the head of RIU hotels which own 5.1% of TUI shares.

This other-worldliness of extreme wealth and luxury might be deemed relevant only for the celebrity or VIP pages of certain publications, but there is far greater relevance.

To describe Mr. Mordashov as Mallorca's most powerful man is not to overstate his importance. His personal power is derived from that of TUI. And TUI is the power in the land.

The past few days have been good ones for the mega rich. The Meliá plans for Magalluf could not have been conceived without very deep pockets. The money that has been directed towards Sóller and that will be sunk into Capdepera is courtesy of Dubai and Qatar. Put into the equation the vast wealth of Mr. Mordashov and a picture may be emerging; one that will have the cash-strapped regional government, minded to give the private sector its tourism industry head, salivating.

Mr. Mordashov has said that his interest in TUI is strategic, which it undoubtedly is. A shrewd businessman, a trait he shares with Herr Frenzel, he is well aware of what this strategy will involve. Russian and Ukrainian tourism, only at present in its infancy, will go massive. Last year, as an indication of Mr. Mordashov and TUI's interests, a joint venture between TUI and Severstal was launched.

The Russian overseas tourism market is only starting to realise its potential. In 2008, a mere 11.3 million Russians travelled abroad on holiday, less than a tenth of the country's population. To put this into some perspective, in 2006, 69.5 million trips abroad were made by Britons, two-thirds at least of these trips being on holiday.

Russian tourists may not be everyone's cup of tea or shot of vodka, but they tend not to be short of readies, to the point of flaunting their money. The BBC "Fast Track" show recently ran a feature on how new money (much of it Russian) was affecting an old resort in Tuscany (Forte dei Marmi). It wasn't to everyone's glass of vino. The resort had undergone a change, with luxury brand name fashion stores evident and, yes, some uncouth flaunting of wealth.

The brand names are not unsurprising, however, as Russians are said to be heavily influenced by them. In my local pharmacy the other day, a Russian man was holding a bag with a Prada label, while his wife engaged the chemist in an uncomprehending exchange. And the exchange was itself relevant. The chemist, she can speak English and German more than adequately, said that these new languages were making life very difficult.

She, though, as with many people in Mallorca, is going to have get used to the new languages. And quickly. The Russians aren't just coming, they've arrived and they are going to be arriving in far greater numbers. Mallorca will be very different in ten years time. That's what Mr. Mordashov calls strategy.


Any comments to andrew@thealcudiaguide.com please.