Cuba And Mallorca's Globalisation

Towards the end of June 2016, it was announced that Starwood Hotels & Resorts Worldwide had finalised an agreement to manage the Gaviota 5th Avenue Hotel in Havana. The announcement was an historic one. The hotel was to be the first one to operate under a US company since Fidel Castro's revolution in 1959.

More than a quarter of a century ago, Meliá Hotels International (as now is) opened the Sol Palmeras Hotel in Cuba. It was the group's first hotel on the island. At the time of celebrating the twenty-fifth anniversary, father and son Escarrer restated their "unwavering commitment to the present and the future of the Cuban tourism industry".

Meliá is the largest foreign hotel operator in Cuba. Such is the company's status that it has a "position of honour" in the history of the development of the island's tourism. This position had brought with it 29 hotels under its management in Cuba at the time of the anniversary: 29 more than any US hotel concern. A history of joint venture investments with the Cuban government had stood Meliá in good stead, and it continues to. From the start of this year, four more hotels came under its management. Two others are to be added between now and 2019.

A few days ago, it was reported that four leading Mallorcan hotel groups are to invest some 1,000 million euros in Cuba this year. Meliá was one; Barceló, Be Live (Globalia) and Iberostar were the others. The report made, and cue the howls of criticism, including those of Més. Joana Campomar, for some reason hauled up in front of the press, insisted that rather than all this money going on Cuban investment it should be dedicated to improving working conditions and new technologies in the Balearics. She was hardly about to say, good on you, hoteliers, and why stop at just 1,000 million for Cuba?

The hoteliers, especially the major ones, are most people's Aunt Sallys. By most people I don't just mean islanders who dislike the massive amounts of money they make and the low wages they pay. There are also the non-islanders, for whom the hoteliers are the devil's work in depriving the Balearics of apartment rentals. It is curious of course, where the critical islanders are concerned, that they are probably exactly the same people who want highly restrictive rentals regulations because they can't find anywhere to live. In the same camp therefore, but with different perspectives, even if they can be hypocritical in not acknowledging that the hoteliers are basically batting on their behalf: more so now because of the wage agreement.

Admittedly, it can appear somewhat unfortunate that you have Fluxà, Hidalgo and Escarrer the Father being photographed sipping mojitos (or whatever) with the Cuban tourism minister and explaining their investment largesse. The fat cats just get fatter. Two of that threesome are on the Forbes Billionaires List. One who wasn't photographed - or rather two who weren't - were Carmen and Luis Riu. They are jointly listed by Forbes. Riu quit Cuba three years ago, citing the lack of quality of hotels under their management and a certain exasperation with Cuban red tape. Meliá, it would seem, have never had a problem with this, or have at least learned how to deal with it.

Investment in Cuba, or indeed in the various other destinations in which Mallorca hotels are active, grates with the lobby that has its issues with tourism. Those who want limits or de-growth in Mallorca's tourism tend to also be those who are anti-globalisation. The hoteliers, especially the leading companies, are the only real example of Mallorca engaging in globalisation.

But what do people expect? I personally endorse the notion of tourism limits on the island, but I have no problem with overseas investment. Why should I? These are businesses, after all, and very good ones. They invest abroad in order to grow. And one reason is that they have little scope to grow in the Balearics. They can't just stick up loads of new hotels because they're not allowed to. New hotel developments in the recent past are ones for land that had been allocated for tourism accommodation purposes. Future developments will require a quid pro quo. New hotel places will mean eliminating existing ones, and this policy would be unlikely to change even if a right-wing government comes into power.

With Cuba there is also the historical context. It was Cuba (and Puerto Rico) that once provided entrepreneurial opportunities for Mallorca, and the ties with Mallorca and with Spain remained strong despite the loss of both to the Americans. So, Cuba has always been a place to do business. And because the Americans banned all business contact, the island was wide open to the Spanish. It still is, despite Obama and because of Trump.

Mallorca has global businesses, whether some people like it or not.

Something Over 100 Million: The Palacio

So, what do you reckon to the Palacio? Not do you like the look of it - subjectivity is a great thing but not terribly objective - but is it proving to be worth all the palaver after all? To answer this, you'll have to take Meliá's word. No losses for the first year (only nine months), and a decent profit expected to be turned in next year, presumably after handing over the annual couple of million or so to the town hall and government - the Palacio company.

Things do seem to have gone quite well, surprisingly well, some of us may conclude. Volkswagen was a nice way to cap off the year, what with all those attendees being bused hither and thither by German coach operators. Single Market, what Single Market? There are such matters as Balearic regulations on transport operators. Hence the coaches were parked up with nothing to do other than be passed by contented local coach operators, who had apparently failed to secure the original contract because they were too expensive (and whose federation raised the German question with the transport ministry). Hey ho.

Many were the sceptics, many a sceptic may remain, but once the edifice flung its doors open for the first time, it was an occasion to cast aside scepticism. The Palacio was a reality. Let's all back it. Long live the Palacio. Long live Meliá, who weren't presumably all that concerned about how much the place had cost. It wasn't their money after all. It was, erm, well, the taxpayers.

The doors open, however, and the bottomless well of taxpayer generosity was sealed over. How much had it really cost? The figures were somewhat movable. The general consensus was something over 100 million. Something over can mean anything. One report ventured 40 million over 100 million. We might never know.

It was of course explained to our old friend Jaume Matas in the days before the courts took an interest in him that the whole project was not viable in cost terms. Such cautions were not typically heeded by the former Balearic president. Have project, will fork out. Anyone for a metro and a velodrome while we're at it?

One could therefore understand why there were sceptical voices, yet the real rub as to how possibly good the Palacio could in fact turn out to be lay with Meliá's rivals for the management - the Barceló group. They had originally been awarded the contract. They went to court over the matter, sensing - one had to conclude - that there really was profit to be had overlooking the sea.

It was once suggested that the sea views were something of a drawback. Not just because the location upped the cost but also because of running costs, such as those for cleaning the windows and the exterior, having received a good buffeting from Cyclone Ana (or just regular weather and general seaside air). But these costs are clearly no longer a concern. The Palacio has risen and its stock will rise ever higher. And I have to say good if it does. It genuinely could make a very valuable contribution, which is just as well given the 100 million or something over.

Right now, the Palacio is hosting those for whom its angular formations can only be wonders to behold. The Palacio - of men, Meliá and mice. The MICE sector - MICE as in meetings, incentives, conferences and exhibitions - has been gathering within it. The Balearic Tourism Agency has even deigned to provide its patronage. Well, it would. The Palacio is better in winter, and for once the agency may well be right.

The MICE sector has gone to worship at the shrine to its future wealth. And why not? Its wealth and the wealth of others. I was once among the sceptics, oh most certainly, but not now. One senses that the Palacio is going to prove to be a roaring success, and if this were to rub off in general terms, then it can surely only be good. You never know, it might prove to be the means of unlocking the keys to low-season flights from those parts of Europe cut off from Mallorca for months on end.

There are reasons, however, to quieten the euphoria. One in particular is the nature of competition. A short-term again for Palma may be had from the little local difficulty in Catalonia and therefore the main MICE centre in Spain - Barcelona. But there are other cities. Valencia, for one. And what are they up to in Valencia? They're only going and positioning themselves as a 365-day-a-year city destination, and, moreover, the Valencia Convention Bureau is on the prowl.

The point is that everyone does the same and chases the same sort of markets. For Palma and the Palacio, therefore, the current fashionability needs to be maintained. If it is, then we should be grateful for the 100 million or something over.

* Image from https://pcongressosdepalma.palma.cat

Followers Of Resort Fashion

Meliá Hotels International has seven hotels in Torremolinos. They are all more or less dotted along the resort's fairly lengthy front line. The number isn't, therefore, so different to those in Magalluf. The mayor of the Costa del Sol resort has been in Magalluf. He has met with Calvia's mayor, Alfonso Rodríguez, and with the CEO of Meliá, Gabriel Escarrer.

Torremolinos is undergoing a process of renovation and repositioning. Sounds familiar, doesn't it. A closing-off of traffic, pedestrianisation of its old part are designed to make it a space for the citizens. Goodness, how familiar it does all sound.

One hesitates to call it a transformation (a word seemingly reserved for Magalluf, aka Calvia Beach, aka Meliá New Town), but the resort's improvement, says the mayor, has brought about a 30% increase in the number of licences for new business openings this year: even McDonald's has returned to a resort that had fallen into decline.

Torremolinos and Magalluf are like resort blood brothers. Go back in time and they were icons of touristic naffness: Torremolinos more so than Magalluf. It was Torremolinos that Monty Python chose when sending up the package holiday of the early 1970s rather than Magalluf. It seems wholly appropriate that its mayor should now have come and seen for himself what transformation entails.

It is not, one imagines, that Melía is about to embark upon something as grand as Calvia Beach. It is, however, upgrading its hotels. There is a Sol House (the Aloha, Costa del Sol) just as there is in Magalluf, though it appears not, as yet, to be "mixed" by Ibiza Rocks. Oh well.

Calvia Beach has been and is something of an experiment. It is not experimental, as that would imply that the results had not been carefully thought out: they obviously have been. No, it is an experiment in the creation of a different type of resort. It is a model that Meliá has itself suggested others may wish to follow. But that begs a question. Who are these others?

Even were Meliá of a mind to get heavily involved in a Torremolinos makeover, there wouldn't be the same inherent advantages as existed in Magalluf. The number of hotels was one of these. Their comparative proximity was another. An integrated transformation, one involving the town hall-owned immediate environment was facilitated as much as anything by this proximity. Torremolinos is different in this regard.

It has been an experiment in another way: to determine the degree to which one hotel chain can effect change and fairly fundamental change at that. Sure, there have been others - BH, Fergus - but they are followers, catching the wave (or is it Wave House) and in the slipstream of a hotel chain that has engineered the remodelling of a resort.

For Torremolinos, Calvia Beach will certainly offer an intriguing example to try and imitate, though how all-embracing this might be would be debatable. The Magalluf experiment, if nothing else, suggests that resort transformations require a sugar daddy hotel chain, one certainly with vision but one also with strong investment backing and that inherent real-estate advantage of hotel locations.

And for Torremolinos, read also other Mallorcan resorts. The point has been made previously. If Calvia Beach is a model to be taken up by others, then who is it that would drive this? Meliás don't grow on resort trees. The model would need its own remodelling. It would demand a consortium approach and shedloads of investment.

But would everywhere want to be like Calvia Beach? Meliá has spoken of how the traditional resort bar is being supplanted by the beach club (clearly not completely, it has to be said). This is all part of the complementary offer upgrading itself in line with a resort branding determined by the sophistication and aspirations inherent to the Millennial Generation (the young market which doesn't get totally blotto or down its pants on Punta Ballena). It's all in the marketing, of course it is.

Magalluf's family tourism market would seem to also demand beach clubs. Or is it that they are to be weaned off alternatives and made to want them? This is nothing against beach clubs, rather a fear that resorts, looking at the Calvia Beach experiment, will somehow contrive to lay their hands on investment and copy it. One would end up, therefore, with a sort of standardised resort model.

And in marketing terms, that would make little sense. Rather than standardisation, the marketing mantra has to be differentiation. But in order for that to apply, someone has to have the vision as to what a resort should be. Meliá has done this. It has re-thought the vision. But for Magalluf and only Magalluf. It doesn't mean, it shouldn't mean that others slavishly follow. Torremolinos should look, see what might make sense for it, and go its own way.

Keep Helping Yourselves

So, to what should have been the surprise of no one, it has been discovered that the tourism ministry has no legal means by which it can ban self-service alcohol in the all-inclusive dens of iniquity in Magalluf. Why did anyone believe that it could be banned? What goes on inside hotels is a matter for hotels, unless there are specific proscriptions or regulations. Allowing the punters to help themselves to bottles of free vodka is one of them.

Still, you have to hand it to the town hall in Calvia for wishing to apply pressure in the movement towards tighter regulation of all-inclusives, something which is all but non-existent. Apropos the self-service alcohol, the ministry said that law regarding all-inclusives is "generic". It is generic to the extent that there is barely any mention of it in the tourism law.

What will Biel Barceló, the tourism minister, write into law regarding all-inclusive? Anything? Or is he too busy flying the flag of the eco-tax and encountering all those who wish to tear the flag down? To whom can now be added Thomas Cook. CEO Peter Frankhauser has gone further than Jet2's Steve Heapy in attacking the tax. He has left no room for doubt. "Tourists will stop coming to the Balearics if they have to pay one or two euros more a day."

Frankhauser and chairman of the Thomas Cook board, Frank Meysman, have been in Palma, explaining how the tour operator has invested 25 million euros into its "star destination" of Mallorca and praising the island for the qualities that make it the leading destination it is: safety, quality, taxation, variety of offer, sun and beach, and a positive price-to-quality ratio. Note the reference to taxation.

Tour operators lining up against the tax is nothing new. The minister who was responsible for the original eco-tax, Celesti Alomar, pointed out recently that there had been a concerted and co-ordinated effort that involved tour operators and hoteliers to undermine the old tax. It was as though he was surprised that there would have been anything other than an effort to stop it.

Someone else who has been speaking recently is the vice-president for real estate at Meliá Hotels International, Mark Hoddinott. In an extensive interview for "Hosteltur", a variety of topics were discussed, including all-inclusive and the nature of the non-hotel complementary offer in Magalluf. Hoddinott spoke of the urgent need to break a "vicious circle" by which bars don't invest in changing themselves or improving themselves because they don't believe there is the demand to do so, by which he was referring to the continuation of a customer profile that Hoddinott notes is changing, largely because Meliá is changing it.

It's chicken and egg of course. There has to be more of the up-market clientele, many of them not in all-inclusive, in order to convince bars to change. Or is that the bars have to first change in order to attract the clientele? Whichever way round it is, the Meliá vision does not include tables of all-inclusive self-service Rushkinoff. Or at least, you would imagine that it wouldn't.

That Video - Some Good From The Carnage?

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Still The Palace Of Follies?: Palma's Palacio de Congresos

Palma town hall last week approved a loan of 42 million euros to go towards work on the Palacio de Congresos and its adjoining hotel. What initially might have sounded like positive news regarding the Palacio for once turned out to be less than positive; the 42 million is not for further work which might complete the damn thing, it is to pay the constructors Acciona for what they have already done. The payment to Acciona and schedules of payments to other suppliers which are now envisaged, thanks to the central government in Madrid having given the green light to Palma to take out the loan, do though raise hopes that work on the Palacio might restart in the not too distant future and actually be completed some time in 2015, work having been suspended in July last year because of lack of funds.

Despite renewed optimism for the future of the convention centre, there remain doubts as to the whole project's viability. Funding is one issue, another is who might end up managing either or both the Palacio and the hotel. It was because the viability was brought into question that Palma town hall looked into what it might cost to demolish the structure - 28.6 million euros, so it was reported in February.

Demolition would be an extreme measure, and it can almost certainly be dismissed. But assuming funds can be raised to allow completion, the town hall is still no nearer finding a company to operate the site. Yet another tender process is underway, with Hilton, which has expressed an interest, likely to make a further offer, but the tendering has thus far been shambolic. Either no interest has been shown or interest that has been shown comes with a price tag below what the town hall has been putting on the Palacio.

One Mallorcan company which has bid is Meliá, but when its offer in July last year was turned down (it had been the only bidder), work on the Palacio promptly stopped. Meliá's submission was declared void, primarily, it would seem, because a bond of eight million euros wasn't paid which would have secured the contract. The town hall, via the company it has to oversee the Palacio, determined that tender conditions had not been met, but it was revealing that Meliá might have been reluctant to have parted with a sizable amount and also that it was the only bidder, and this despite there having been a reduction in the bond.

Though Meliá had looked as though it might have stepped in and given the boost to allow work to continue, the company was presumably playing hardball, and this might not have been altogether surprising. The reluctance on behalf of Mallorcan companies to get involved before the Palacio and hotel are actually finished was stated by the president of the Mallorcan hoteliers federation at the end of last month. He said that the Palacio was in a "bad location". In other words, its siting makes it too expensive and does not guarantee sufficient profitability. The president, Aurelio Vázquez, explained that "hotel chains know which projects are profitable and those which are not". Now that Hilton, not a Mallorcan company, knows what the Mallorcan hoteliers think of the project, might it now think again?

Vázquez's statement came a couple of weeks after the spokesperson for the Més grouping at the town hall, Antoni Verger, had declared that the Palacio was a "ruin". He made the same point as Vázquez - that no local business was willing to commit itself - and pointed also to the fact that the value placed on the sale of the hotel alone was below the investment that will ultimately have been put into it.

Against this background, there has at least been some good news for Palma town hall. Representatives of TUI and its subsidiary operation, Hotelbeds, have been talking up the part that the Palacio can play in eating away at tourism seasonality. TUI is in for some 100 grand as a sponsor of Palma's 365 Foundation, so it has an interest in seeing that a project which might actually realise tourism 365 days a year (or close to 365) goes ahead. It has said that it will promote Palma via Hotelbeds and other websites and at travel fairs.

But even if the Palacio is seen as being key to the success of Palma 365, then TUI's people have made it clear that it has no intention of becoming involved in the actual business of the convention centre. Indeed, why should it? As such, it is making a similar point to that made by Aurelio Vázquez, which is that once (if) the Palacio and hotel are finished, then, and only then, will businesses get involved. And it is going to take some 40 million euros more to ensure that the project is finished; 40 million euros that will have to be found from a public purse.

* Photo: the semi-built Palacio de Congresos from "Ultima Hora".

Junk Bonds For Tourist Resort Modernisation?

Bankia is Spain's fourth largest bank. The name will mean a great deal to a great number of people, especially those who are customers in Mallorca of Bancaja. They will recall some of the slight inconveniences which occurred when Bancaja, along with six other banks, were rolled into the formation of Bankia. In its three years of existence Bankia has enjoyed anything but a smooth journey. The bank required a bailout last year, trading in its shares were suspended, it made a loss of 4.3 billion euros, its chairman Rodrigo Rato, at one time a leading figure in the Partido Popular and a former managing director of the IMF, stepped down, having been named the worst chief executive of 2012 by "Business Week" and then being charged with accounting irregularities, and its creditworthiness was reduced by Standard & Poor to junk bond status.

By March of this year, the bank's losses were put at 19.06 billion euros. Had the Spanish Government not partially nationalised Bankia and taken a 45% ownership, Bankia would almost certainly have collapsed. The toxic debt it had assumed through the merger of the different banks would have killed it.

The story of Spain's economic crisis and the role of badly managed banks (mainly the "cajas", the local savings banks) is well known. Bancaja and the Caja Madrid were the two largest banks and the two biggest offenders that went into the formation of Bankia. It was the mad, uncontrolled lending of these savings banks which helped to bring Spain to its knees. The consequence of the banking crisis was that credit all but dried up. Yet, it is beginning to be released again and, astonishingly enough, Bankia is one of the banks providing the credit.

The regional government in the Canary Islands has arrived at an agreement with Bankia whereby up to one hundred million euros will be made available as credit. The money is intended to modernise and diversify the islands' tourist sector and will be targeted principally at projects to improve tourist accommodation and areas and the "complementary offer" (more or less anything which isn't hotels); there will be an emphasis in innovation as well as on renovation. The credit isn't therefore being thrown straight at the Canaries government but will be used once Bankia has studied proposals and financing requirements.

In principle, the scheme has merits. The main drawback with it might be that the very name Bankia, with its lousy creditworthiness, is being associated with it. But then, as the Spanish Government has such an interest in the bank and as tourism is supposedly a driver of overall economic recovery, then the assets that the bank is sitting on might as well be put to some good effect. (It may be heavily in debt but it has vastly greater assets than debt.)

Revitalising the tourism sector cannot be something which the government funds or funds alone. The investment budgets for the regions, such as that for the Balearics, show how little money there is for general infrastructure. The money has to come from somewhere else, and typically it has come from the banks. But if the Balearics were to look at a similar arrangement to the one that the Canaries have concluded with Bankia, what could one hundred million euros achieve?

To put this into perspective, the transformation of Magalluf that is being driven by Meliá Hotels has a budget (that of Meliá and its partners) of 45 million euros. It is expected that the amount will increase to 150 million once other businesses and investors join in. The Bankia credit in the Canaries is for the whole of the Canaries. If it will cost 150 million to renew one resort, then 100 million, spread across various resorts, doesn't therefore necessarily get you a great deal.

The Balearic Government has set its stall out to modernise the "mature" resorts in Mallorca and the Balearics. But which resorts aren't mature? Magalluf might appear to be a special case deserving of special investment, but it isn't a special case. It has been made special for the wrong reasons and also for the fact that Meliá has such a strong presence in the resort. One can name any number of other resorts which need similar investment and similar projects.

The government's desire for modernisation has one big problem - its financing. The Spanish economy may be showing signs of life returning and the stock market may be performing well, but it is difficult to see the banks unlocking the coffers and chucking huge amounts of euros at the resorts for what are essentially construction projects. There is still too much baggage and there are too many weather eyes being cast on the Spanish banking sector for this to happen. But at some point the funding has to be released. And how much might this be? Don't forget some of the extraordinary sums that were spoken about for renewing Playa de Palma alone. 4,000 million up to 2020 was one.

Bank finance is going to be needed for Mallorca's resorts, but which bank's? Bankia's? The name would be enough to make you shudder.

MALLORCA TODAY - Sol Katmandu Park launched

The joint venture between Meliá Hotels and the Katmandu group that had been publicised earlier this year has now officially been launched. It will involve the bringing together of the Sol Magalluf Park hotel and the Katmandu theme park in Magalluf to create the Sol Katmandu Park & Resort, a further initiative by Meliá in Magalluf therefore.

See more: El Mundo

Mallorca's Greatest Business?

Palma's Palacio de Congresos, which had been a white elephant in the making for all manner of reasons, does seem to be on track to be opened some time in summer next year. One of the reasons for its potential elephantine status was that no one could be found to manage it. The first tender process earlier this year was so successful that it produced not a single applicant. There was interest from four companies, but the interest was not sufficient to overcome the conditions attached.

The new tender process requires a payment of eight million euros, down by three and a half million from the first tender. This, together with changes to the fixed income from the site, has produced one interested party and one only - Meliá Hotels International.

The fact that a revised and less onerous tender has still only managed to produce one bidder does make one wonder about the attractiveness of the convention centre to a contractor. Meliá, though, has been prepared to submit a bid, and the administrative board must be extraordinarily grateful. Without a company to run the Palacio, it might well indeed have turned into the white elephant it had looked like being. It isn't an exaggeration to suggest that Meliá has come to the rescue.

The past few months have been very good for Meliá, and the company has been able to bask in some positive publicity. Its Magalluf project, already bearing fruit, has produced the opening of the Sol Wave House hotel at precisely the same time as the announcement of its bid to manage the Palacio. Timing, one guesses, is everything in business.

The Magalluf project, though it attracts support from only under half the population (as reported in the Gadeso opinion survey the other day), does nevertheless attract greater support than other hotel-based developments on the island. In broader terms, i.e. those not confined to local public opinion, the project has received widespread backing.

Meliá is riding a wave of good news. Though I questioned the importance of determinants of social responsibility to the end-consumer, there was Meliá at the top of the list of socially responsible hotel chains, according to the recent report from Nebrija University. This served as just one further indication of how good a company Meliá is, and one can perhaps detect a sense of responsibility in it being willing to bid to run the Palacio.

There again, companies don't operate along purely philanthropic lines. Management of the convention centre has to come with a strong business motive, so one presumes that Meliá sees one. I remain to be convinced by the Palacio, but then I am not a Meliá senior executive.

Mallorca has some very fine companies and to single one out for particular praise isn't necessarily fair to these other companies, but were we at the end of 2012 and were I to nominate my Mallorcan business of the year, then it would be difficult to make a case for it not being Meliá.

This is a company which isn't only successful in Mallorca. It is a global business and one of the world's most important hotel chains. However, despite the promise of riches in overseas markets, Meliá remains committed to its home island and is demonstrating that commitment several times over.

With this success do, though, come the negatives, and a most obvious one is that public opinion. The Magalluf project aside, this opinion is less than positive when it comes to hotel chains such as Meliá being so apparently the beneficiaries of the new Balearic tourism law. From this, one can conclude that there is some disquiet in so much power residing with the hotels.

For all the misgivings, a Mallorca without Meliá and other world-class hotel chains would be a different place. No bad thing, some might say, but they would be wrong. In addition to the contribution to Mallorca, the island can glow in the light of the international prestige that comes from hotel chains which have been as prominent as they have been in tourism and other developments overseas. The world's tourism has been and is to no small extent "made in Mallorca".

The tender for the Palacio envisages the management lasting for 40 years, which is an awfully long time when you consider that 40 years ago Mallorca was still very much coming to terms with its new tourism industry. 40 years hence, who knows what Mallorca will be like? Despite the uncertainties, Meliá would seem to planning on still being around, remaining committed and being a company of which Mallorca should be proud.


Any comments to andrew@thealcudiaguide.com please.

Preferential Treatment: Magalluf

"These project innovators are going to distinguish us as a preferential tourist destination." Thus spake Manuel Onieva, mayor of Calviá, and with his words, he probably put a considerable number of noses out of joint, those belonging to mayors of other resort towns. These other mayors will already know that they are second-class tourist-resort citizens, but they don't need their noses being rubbed in it as well as being put out of joint.

Onieva was speaking in the context of the announcement of the venture between Meliá Hotels International and Katmandu Park whereby the Sol Magalluf Park hotel will become the Sol Katmandu Resort. Themed hotels have become the vogue and when you have a theme virtually on your doorstep, i.e. the House of Katmandu, why not integrate it as a theme?

Innovative it is and Meliá are going further in introducing a so-called "Sol Fun Pass", an entertainment card that will apparently guarantee the best prices for entrance to Katmandu and to Golf Fantasia to clients of its Sol brand of hotels in Magalluf and Palmanova. In essence, this is a dose of added value to guests as well an added incentive for tourists to choose Meliá, and is part also of Meliá's vision of the Sol Calviá Resort and its transformation of Magalluf.

It is a further example as well of the extent to which Meliá seems to be taking Magalluf over. I suggested from the outset, when Meliá's plans were first announced for its major upgrade, that Magalluf may as well be renamed Sol Calviá Resort. Little did I know that the town hall were thinking along similar lines, though the Nova Calviá suggestion that's been doing the rounds misses the point. It is Meliá which is providing the wherewithal for the new Magalluf, so why not indeed just rename the place Sol Calviá Resort?

To come back to Onieva's preferential tourist destination; how mayors in other resort towns must be looking on at what is happening in Magalluf with envy and probably no small amount of anxiety. The revamp, which now includes the new Katmandu theme, is going to make other resorts look tired by comparison, and some of them are tired enough without the bright, shiny new beast of Magalluf beaming lights of innovation.

The anxiety would stem from the fact that Magalluf is not only becoming a preferential tourist destination in the sense that tourists will prefer to go there than elsewhere it has also been granted preferential status in terms of the attention being lavished on it. But this is not preferential treatment as a consequence of governmental favouritism, it owes everything to Meliá.

Another old resort, Alcúdia (just to take an example), would bite the hands off a hotel chain that came up with similar plans. Meliá would be most unlikely to be that chain, as it operates only one hotel in Alcúdia. Magalluf and Meliá go together like the horse and carriage.

It is the concentration of hotels under the same ownership that has facilitated Meliá's plans. Such concentration of ownership doesn't necessarily occur elsewhere. In Alcúdia, it certainly doesn't. In its main tourist centre, that part of the resort some three kilometres away from its port centre, ownership is fragmented, but there is always the Bellevue question.

This vast complex, saddled with debt and all manner of horrors for years, would, were a visionary organisation with massively deep pockets to contemplate such a thing, make an ideal location for some transformational theming. If not on the same scale as that in Magalluf, there is nevertheless tremendous scope, which includes the fact that currently the site can accommodate around 5,000 people.

There again, perhaps simply seeking to ape what is occurring in Magalluf is not the right approach. Magalluf will end up, even if it doesn't have its name changed, as a re-branded resort with an emphasis on holiday fun of a less unsophisticated type than it is currently known for. Fun should always be uppermost in delivering the goods to hoildaymakers, but there are different types of fun, so perhaps Alcúdia really should go all out to make itself what it has wanted to, which is a centre of sports tourism, rather than do it in the half-baked fashion it has been doing until now.

Whatever other resorts might dream up, there is one aspect in which they find it hard to be competitive, and this is the level of attraction that exists both within Magalluf and close by it. These attractions are an additional means by which Magalluf has preferential status bestowed on it. And with the onset of themed hotels as attractions, it enhances this status. Mayor Onieva is not wrong.


Any comments to andrew@thealcudiaguide.com please.

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.

MALLORCA TODAY - Meliá plans a revolution for Magalluf

Meliá Hotels International have announced that their plans for redeveloping three hotels in Magalluf will go very much further. Seven hotels are included in a scheme that will see two or three converted for residential, condohotel use (one of them, the Sol Jamaica, will be demolished and rebuilt) as well as a new boulevard, a beach club and installations for cycling tourism. The company envisages an initial investment of 135 million euros in what is a highly ambitious scheme to regenerate one of Mallorca's main resorts.