Saturday, January 11, 2014

BCM Meets Mallorca Rocks: Magalluf youth tourism

Update of 13 January: Since writing this article, which was based to an extent on press information from Cursach, I have received further information from the Ibiza Rocks (Mallorca Rocks) group which seeks to clarify inaccuracies, which I am more than happy to do. The agreement between Ibiza Rocks and Palladium in respect of Mallorca Rocks expires after this year's season, so a new agreement will be in place as from 2015. This is the one which involves Cursach taking on the management of the four hotels. Mallorca Rocks, the brand, will not be a part of this new arrangement. My understanding is that options are being considered for maintaining the Mallorca Rocks brand in Magalluf at a different location to the current one. So, the implication in this article that there will be a coming-together of Mallorca Rocks and Cursach (BCM) is inaccurate, and I am pleased to set the record straight.

The hotel business is not a straightforward matter when it comes to who does what. We may see the name of a hotel chain shining into a night sky, but behind the neon, the logo and the brand there are invariably other businesses involved, while the appearance of a hotel chain's name isn't always an indication of ownership.

The move towards hotel theming and branding makes the who-does-what equation rather more complicated than it used to be. Brands, if they aren't specifically hotel ones, don't necessarily want to be involved in hotel day-to-day. Indeed, they may not want to be involved at all, other than to be informed as to how much they are getting by way of royalties and commissions. Brands can have "hotel operations", but these are not managerial operations; they are purely strategic and financial.

A brand which does have day-to-day involvement is Mallorca Rocks (or Ibiza Rocks). It has to. Its holiday offer isn't conventional, given that it is predicated on live music and all that goes with it. Be it customer service, marketing or pandering to the needs of a chart-topping pop or rock act, it is essential that the organisation has control and involvement. But Mallorca Rocks doesn't own the Mallorca Rocks hotel. Ultimately, the ownership lies, through the Palladium Hotel Group, with GEM, Grupo Empresas Matutes. Palladium was, until the end of 2012, known as the Fiesta Hotel Group. Name change notwithstanding, its principal owner is Abel Matutes, a one-time minister for foreign affairs with the Spanish Government.

Palladium, an Ibiza-based operation and not a Mallorcan one, had announced towards the end of last year that it intended to rent out Mallorca Rocks. It was said at the time that the company which would be doing the renting, the Dutch investment firm Evertaas, would take on the management. In fact, there will be another company which will be doing the managing. It is Cursach. Yes, that Cursach, which, among other things, owns the BCM club in Magalluf.

A year before Palladium made the announcement about Evertaas' involvement, Cursach had gone public about its interest in having the BCM brand name used for a theme hotel in Magalluf. It said that this wouldn't just be a branding exercise; it would want management involvement. In considering this, I suggested that the move would make a great deal of sense for BCM and for Magalluf and that it was an understandable move in light of the tourism law which permitted secondary activities, such as concerts and clubs open to the general public, in hotel grounds. It appears that I was pretty much spot-on; Cursach is citing the tourism law as a reason for it now realising its interest in hotel management.

There is an irony in all this, though. It is no secret that Cursach opposed the concerts at Mallorca Rocks. But there is a further irony in that it was the support for the concerts offered by the then Calvia mayor Carlos Delgado, something which brought forth all manner of complaints channelled via the tourist businesses association Acotur, which acted as a template for the provisions for hotel secondary activities in the tourism law that Delgado was to draw up once he became tourism minister. Mallorca Rocks, revolutionary in many ways, was, without necessarily knowing that it was, the secondary-activities pilot scheme in Mallorca, the Ibiza Rocks hotel having trialled the secondary-activities scheme some time before.

It is remarkable, given the fuss about Mallorca Rocks, that Cursach should now end up managing it. But in so doing, it will create a mega youth brand that combines Mallorca Rocks and BCM, while at the same time keeping them distinct. It sounds like very good business, and there is more to it. There won't be just one hotel. There will be four. Mallorca Rocks, Tropical, Sahara and Magamar, and they will form one complex with over 1,000 rooms, one for which an upgrade to four-star is envisaged and which will have all manner of attractions for the much-hyped "Millennials" age group.

But where, you might be wondering, does this leave Evertaas? Very much in the thick of things. It is an investment company, one that invests in real estate. It, one has to conclude, is going to be the prime mover behind the financing of the changes that Cursach plans. And it has form in this regard in Magalluf. Though it has been reported that there is a fair amount of British money sloshing around in Magalluf (rightly so, as there is), Evertaas is the front organisation for a good deal of the investment that Meliá Hotels has been pumping into Magalluf.

So, as you can see, things aren't straightforward when it comes to who does what. But then, the hotel business isn't straightforward. Not nowadays anyway. It is the melding of brands, hotel chains, investors, management companies to meet the demands of new market segments and enhancements to the overall holiday experience. And Magalluf demonstrates this as well as anywhere. The Cursach move is intriguing and potentially a very good one.

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