Wednesday, November 22, 2017

What Is The Other Barceló Up To?

According to those who study such things, the surname Barceló first surfaced in Mallorca in 1232, three years after the Catalan conquest. The original Barceló was a Pedro. He came from Montpellier, which wouldn't have done him any harm at all. King Jaume I was from the same city. Such ties counted for much when it came to the acquisition of power in the newly occupied land.

The surname is common in Mallorca and elsewhere in the Balearics. Amusingly enough, it is believed that the current tourism minister has a close family relationship with the hotel chain of the same name. This belief stems solely from the fact the name is the same. There is no such relationship and nor is there one involving one of Biel Barceló's predecessors at the tourism ministry: Joana isn't even Mallorcan, she's from Menorca.

Biel Barceló and Simón Pedro Barceló occupy very different worlds. Their common link is tourism. The former is not, as it is laughingly claimed by those captivated by the coincidence of the surname, in the pocket of the latter or indeed any other hotelier. Biel is a dyed-in-the-wool, left-wing eco-nationalist. Simón Pedro isn't. Common link notwithstanding, the two otherwise have so little in common that they may as well be from competing planets as opposed to competing sides of tourism policies.

While Biel tries his best to avoid being ejected from the government and tries his best (and succeeds) in antagonising holidaymakers and hoteliers by doubling the rate of tourist tax, Simón Pedro enjoys greater job security and harbours far loftier ambitions than lengthening the tourism season by a day or two. Simón Pedro wishes to rule the world of Spain's hotel chains.

Given the prominence of Mallorca's leading hotel groups (and not just in Mallorca by any stretch of the imagination), we are familiar with their leading lights. None of them, however, conforms with an American style of the business leader as celebrity. They are known, but they all give the impression of being low-key. There isn't any great sense of business machismo, bluster or a craving for the limelight. They just get on with running their businesses and being very successful (and rich), to boot.

It perhaps comes as something of a surprise, therefore, that someone with a meek and mild appearance like Simón Pedro is embarking on what - if it comes off - will be the mother of all hotel chain mergers. And when one says merger, it will of course be a takeover. There rarely is any such thing as a merger of equals.

Simón Pedro is eyeing up NH Hotels. In terms of the number of rooms in Spain, NH is the second largest hotel chain. Meliá has twice as many rooms as NH. Barceló, third on the list, is bested by NH to the tune of some 1,500 rooms, but it has well under half the number of hotels. Internationally, it is the same one, two, three. But they are closer when it comes to rooms. Meliá has getting on 47,000. NH has nearly 42,000 and Barceló over 35,000. NH, however, has 246 hotels. Barceló has 171 and Meliá 170. (These figures all come from the Hosteltur rankings.)

There are a great number of hotel groups in the Balearics and Spain. The history of tourism development has decreed that this should be the case. But this has meant that the industry is highly fragmented, which in turn means that there any number of takeover targets ripe for the picking. These aren't, however, of the size of NH. Hotel chains in Spain don't come any bigger, with the exception of Meliá.

Far more important than the fragmentation of the domestic hotel industry are the opportunities presented by scale and by scope in the overseas markets. A combined Barceló-NH would become not just the largest hotel group in Spain but the third largest in Europe. Critically, its size would give Simón Pedro something that he doesn't have enough of: presence in Asia and North America. Moreover, or so it is said, behind the meek and mild appearance is a determination to be Spain's number one and to become, together with NH, a "national champion" for Spain that can compete anywhere in the world.

Fundamentally, for Simón Pedro there is the need to look overseas. The Barceló Group could swallow up smaller domestic chains, but why bother when the scope for growth in Mallorca (especially Mallorca) and the rest of the country is limited. There is a whole world to grow in, and this is what Simón Pedro needs to do and intends doing.

So, while Simón Pedro makes his overtures to NH (and can apparently bank on the backing of Mariano Rajoy), Biel can only look on from the sidelines. What if Biel really had a close family relationship? Now, there's a question.

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