Melia International Hotel by cjnavarta

Marion Cazenave Laurence Catherine Cristina Jimenez Navarta Bart Wilts Maxime de vries

13-05-2014 Hanze University of Applied Science Institution of Marketing Management 20132014 Teacher: Mr Olthof

ILV2C group 3: Marion Cazenave Laurence Catherine Cristina Jimenez Navarta Bart Wilts Maxime de vries

Preface The aim of this final report was to choose a strategy Melia Hotels International could lead to sustain. It has been possible to draw the guideline of this strategic option after making customers, competitors and distribution analyses. Furthermore, the SWOT analysis that we completed from the final report of last block was really helpful in deciding of a starting point for the strategy. We are a group of five students of the Hanzehogeschool of Groningen. We are in the second year of our studies in the Institute of Marketing and Management. We led this project group about the company Meliรก Hotels International in a good agreement between us. Analysing the environment and organization of such an international and various company as Meliรก Hotels International, allows us to apply the theoretical knowledge we learned in class and also to develop our organization and teamwork senses. We would like to thank our coach Mr Olthof for the feedback he gave us which allowed us to improve each assignment to do this final report

Management summary The customers of Meliá Hotels International are families, young and old people, couples and businessmen and women. All those people need a leisure hotel to spend their holidays; a functional hotel for short stays in town or a luxurious hotel with personalized services… They offer Premium services through three brands: Gran Meliá, Me and Paradisus resorts, upscale hotels with Meliá and Innside, midscale ones with Tryp and the Sol’s hotels and the Club Meliá offers lifetime vacation. When reviews are analysed on TripAdvisor, it can be concluded that a main competitor NH Hotels got less value for the customer’s money then Meliá hotels. NH hotels are scoring approximately 8/10 and Meliá 9/10. Meliá does not have the cheapest hotels, but delivers highest value. Meliá continues to improve and to make efforts to ensure the excellence of its service through its website Melia.com. With 40 million visits per year, the site has become a reference and online sales generated over €126 million for individual bookings. Tradyso is a distribution platform that was created with the goal of becoming the best service in multi-channel distribution for hotels around the world. The development of applications that allow constant innovation competition in the distribution systems of the hotel provide additional value to customers. Customer Relationship Management (CRM) department of Meliá is responsible for a database of over 11 million customers classified according to their affinity for the brand, destination, purpose of travel,… which provides the basis for the development of communication strategies designed for customers. Meliá Hotels International is a major hotel chain and is present on Facebook and other social media’s, including Twitter, YouTube, LinkedIn, etc. The company has managed to generate a high level of participation among its fans and a strong emotional bond with its brands. Meliá is committed to its distributors with all horizontal and vertical networks to use their size and professionalism to build lasting relationships based on trust, respect and mutual interest. Out of a SWOT analysis and the confrontation matrix, we sorted the most important strengths of the company: the presence on the Internet; the main weaknesses: the business segment and the adaptation to young customers; the most realizable opportunities: increasing tourism in Spain and the e-commerce; and the most dangerous threats: the economic crisis and the geographic concentration in Spain. We defined three issues and had to draw a possible strategic option for each of them and as a result of everything we ended at the conclusion that the best strategic option to lead is the development of Andalusia.

Table of Contents

Introduction

Holydays, honeymoons and of course traveling. For this you need a place to sleep. This is what Melia Hotel International offers. Rooms for all kinds of moments and during the whole year. This report is written, because of the strategic options for Melia. The economy is declining, so what strategic options does Melia have to climb in this crisis. Furthermore what are the strengths, weaknesses, opportunities and threats of Melia and how are these factors related with each other? What information can be found over the customer analysis, the competitor analysis and the distribution analysis of Meliá. The goal of this report is to figure out what the strategic choices of Melia Hotel International are. The results of this report will be presented for Hotel Melia International. The central question of this report is: What are the strategic choices, by means of the SWOT analysis, of Hotel Melia International? The sub questions of this report are: •

Who are the customers of Melia Hotel International?  This will be figured out by means of the customer analysis.

•

Who are the competitor of Melia Hotel International?  This will be figured out by means of the competitor analysis.

•

What is the distribution analysis of Melia Hotel International?  This will be done my means of the distribution analysis.

•

What are the strengths, weaknesses, opportunities and threats of Melia Hotel International?  This will be figured out by means of the confrontation matrix.

•

What are the strategic issues of Melia Hotel International  This will be done by means of the Ansoff model, the Tracy and Wiersema model and the BCG model.

1. Research Design & Work Plan CUSTOMER ANALYSIS 1. -

Use 6W Model Customer Analysis for ask all the questions. Who are the customers? What does the customer do with the service? Where do they find / look for our service? When do they but the product? Why do they use it? Why don´t use it?

2. Obtain: Identify who are the current customers and potential customers for our company. Identify why they use our services. Identify if customer are willing to return to our hotel. Identify the attractiveness of the identified segments: “Key Factors” - Segment size & growth potentials. - Attractiveness & potential profitability - Resources & skills of the organization - Compatibility with the company objectives - Cost of reaching the market 3. Which kind of research model? Making a qualitative research by using the official webpage, Meliá’s sustainability report, we can also make interviews because we have two contacts inside the company, or making qualitative survey on Meliá’s customers.

COMPETITOR ANALYSIS 1. Identify the competitors and substitute: Make the conclusion table which compare small direct competitors with big established competitors on a determined number of important factors. 2. Bench marketing 3. Final Conclusions - Formulate opportunities and threats 4. Which kind of research model : Collecting information through internet, the official websites and other internet and books sources

DISTRIBUTION ANALYSIS 1. Which distribution channel is using our company? Are there another options more profitable or useful for their customers? 2. Analysis relationship between company and customers 3. How do Meliá get customers? 7

4. Analysis of the different way of booking, in a Meliá hotel in Spain. - Direct Booking through the official website of Meliá or the website of a specific Meliá hotel. - Indirect booking by using Tour Operators… Which of them have weaknesses? How can they be improved? Which of them are strong points? 5. Which kind of research model : Collecting information through internet, the official websites and other internet and books sources

SWOT 1. Make a SWOT analysis in concordance with the previous analysis by using the most important and relevant factors. 2. How these aspects affect to the company? 3. How these aspects agree with the values and objectives of the company? 4. Combine the results with the confrontation matrix analysis. 5. Connect both analyses.

STRATEGIC CHOICE 1. The Strengths, weaknesses and goal identify in the SWOT analysis will allow us to decide strategic choices 2. Which kind of research model: Porter 5 forces model.

WORK PLAN WORK PLAN - Method of approach of the assignments

Distribution of roles and responsibilities within the group

During this Block, we have to hand our assignments every Tuesday (10:00) and we have the coach meeting on Thursday (13:00). We decided on divided the task after each coach meeting, the deadline will be on Friday. So work can be improved during the week end. We are all responsible of correcting part of each assignment every week. We can meet on Monday if work has to be improved again before handing the report on Tuesday. Before every coach meeting we decided to meet with all group at least 30 minutes before the appointment.

Rotation of roles of chair and minute-takes for the Coach meeting

WEEKS

CHAIR

MINUTE-TAKE

Week 1 (21-25/04)

Cristina

Marion

Week 2 (28-02/05) 8

Week 3 (05-09/05)

Bart

Laurence

Week 4 (12-16/05)

Maxime

Bart

Week 5 (19-23/05)

Laurence

Maxime

Week 6 (26-30/05)

Cristina

Marion

Week 7 (02-06/06)

Marion

Cristina

Week 8 (09-13/06)

Bart

Laurence

- Division of tasks with regards to the assignments Work will be divided each week after coach meeting. We are all in charge of the correction of the assignments every week. - Times when group meetings take place during the project period Coach meeting: Every week on Tuesday at 13:00 to 14:00 Group meeting: Before every coach meeting and on Monday if work have to be improved. - Necessary literature and other sources For each assignment we will have to use the official website of the company. We can use our contacts inside the company, or use the strategic marketing theory books (Digital Marketing, Fundamental, and Hollensen)

Central & Sub question The central question of this report is: What are the strategic choices, by means of the SWOT analysis, of Hotel Melia International? The sub questions of this report are: Who are the customers of Meliรก Hotel International? Who are the competitor of Meliรก Hotel International? What is the distribution analysis of Meliรก Hotel International? What are the strengths, weaknesses, opportunities and threats of Meliรก Hotel International? What are the strategic issues of Meliรก Hotel International?

CALENDAR Deadlines: Every week the deadline is on Tuesday 17:00, except for the first. The deadline of the first week is on Thursday 17:00. Week (Date) Week 1 (24-04)

Assignment 1: Research design

Week 3 (06-05)

Assignment 2: Customer analysis

Week 4 (15-05)

Assignment 3: Competitor analysis

Week 5 (22-05)

Assignment 4: Distribution analysis

Week 6 (29-05)

Assignment 5: SWOT analysis

Week 7 (06-06)

Assignment 6: Strategic choice

Week 8 (13-06)

Final Report

Customer Analysis

For now we are able to say that the customers of Meliá Hotels International are Families, young and old people, couple, business man. All those people who need a hotel to have fun, to spend holiday in paradises’ hotels or functional hotel for a short stay in a town, luxurious hotel with their personalized services… We had started our research from the product that Meliá offer to know who the company can attract. But the fact is that the company maybe wants to attract those people but other people that were not targeted at the beginning come to Melia hotels for different reason. The aim of this part is to know really who is going to the different hotels of Meliá. To have this answer we need to have direct contact with the company, and we wait for their answer to our interview.

Who are the targeted customers? Meliá hotels are designed to satisfy every guest, on every occasion. They offer everything from the most exclusive luxury hotels to lifetime vacation with family or friend in the most sophisticated convention hotels. Their seven brands guarantee quality through their personalized customer services. They offer Premium services through 3 brands: Gran Meliá, Me and Paradisus resorts, upscale hotels with Meliá and Innside, midscale ones with Tryp and the Sol’s hotels and the Club Meliá offer lifetime vacation. PREMIUM Gran Meliá 1: Traditional luxury with avant-garde style. Gran Meliá Hotels & Resorts are the finest hotels within the Meliá Hotels International portfolio. Offering luxury services they are located in the heart of the most important cities and exclusive tourist destinations in the world. Target : People who want luxurious stay as well in cities as in tourists destination. Like managers, or rich families. Me by Meliá 2. It Becomes You These hotels are meticulously designed to meet the demands of the most contemporary guests, people who enjoy life, travel, work and business as part of the same journey.  Target : Young and fashion environment for managers, short stay in cities Paradisus resort 3 The Pure Freedom to Just Be Come and share the most luxurious all-inclusive resort experience in the world, which includes Target : Wedding and honeymoon packages

1 http://www.gran-melia.com/en/ 2 http://www.me-by-melia.com/ 3 http://www.paradisus.com/

LIFETIME Club Meliá 4- A home away from home, anywhere in the world. Club Meliá is a vacation club designed by Meliá Hotels International to provide its members a wide selection of holidays in the most exotic and stunning destinations in the world. Members have access to first class service and accommodation designed to cater for families. Target luxurious client honeymoon… UPSCALE Meliá hotels resorts5 - You are the Journey In the Meliá hotels guests can find a perfect combination of design and functionality and privileged location in the top tourist and business destinations.  Business customers for example during conventions… or for people who want to visit a city

Innside 6 - Urban lifestyle hotels for business and leisure. Innside Hotels are four and five-star hotels located in major cities in Spain and Germany.  Target: Short stay in town for business MIDSCALE Tryp 7 - at tryp, you own the city TRYP hotels to explore some of the most dynamic and cultural cities in the world. Whatever your reason for travelling, be it on business or with the family, TRYP hotels have a perfect, central location and are designed to let you to make the most of your stay in the city. Sol 8- Viva la vida! Resort hotels where you can enjoy fun holidays in top tourist destinations like the Mediterranean, the Caribbean and the Canary Islands.  Target : Sol Hotels are resort hotels for everyone, including couples, families, friends and children.

4 http://clubmelia.com/ 5 http://www.melia-hotels.com/en/ 6 http://www.innside.com/de/index.html 7 http://www.tryphotels.com/en/index.html 8 http://www.sol-hotels.com/en/index.php

PREMIUM Brands Guest criteria Luxury Modern Business Family Honeymoon In the city In exotics destinations All inclusive Additional services (spa, fitness room…) Standard hotel room Luxury hotel room

Gran Meliá

UPSCALE

MIDSCAL E

Paradisus

Meliá

Innside

Tryp

xx x x x

xx x x

xx x

x x x

x x

x x x x x x

xx x

x x

LIFETI ME

Sol s

Club Meliá

xx x

x x

x xx

xxx x

x xx

So guest have the choice they can choose those hotel regarding the services that Meliá offer and their price: they have the choice between premium and midscale services or regarding the type of stay they want to have: is it a short stay in a town or an family and friend holiday or holiday with a boyfriend.

Mapping of customer value To map customer value the perceived cost need to be to the perceived benefit. The mapping can be used to see how much benefit Meliá creates compared to the costs per customer.

When the product of the company is below the fair value line it creates more value for the customer then the cost, compared with the rest of the market. This means the company got an advantage compared with their competitors.

Analysis of the customer value When reviews are analysed on TripAdvisor 9, it can be concluded that NH Hotels got less value for the customer’s money then Meliá hotels. NH hotels are scoring approximately 8/10 and Meliá 9/10. Also Rui hotels & Resorts in Spain scores around 7.5/10. These hotels are all on the right side of the fair value line, but not as far as Meliá hotels. Meliá delivers more value, but is also the most expensive of the three chains. NH delivers more value than Ruí, but it is focused on B2B. The map looks like this:

Conclusions From this analysis it can be concluded that Meliá does not have the cheapest hotels, but delivers the highest value. Also it can be concluded that the market shares of these three big competitors will probably stay the same, because they focus on different price classes.

9 www.tripadvisor.co.uk

4. Competitors & Distribution Levels competitors The mission of Meliá Hotels International is identifying competitors. The company should not focus only in the principal’s competitors; also they should identify them broadly. The number of competitors grows as you go outwards from the center.

- 1 st Level: Brand Competition The most direct competitors are NH Hotels and Rui Hotels & Resorts, both brands have a similar offer and they provide their services in the Spanish Market. After Meliá, NH and Rui are the strongest companies in the Spanish hotel sector. That means that in short term both brands are the most serious Meliá competitors. Meliá should control their movements day-to-day. -

2 st Level: Brand Competition

The closest competitors for Meliá are Barceló Hotels, Ibero Hotels, Grupo Hotesa, Pallaadium Hotel Group and H10, all of them situated in the 10 top rankings of the best chain of hotels in the Spanish Market. All of them provide the same basic function and similar characteristics that Meliá. Their sales volume and prestige is lower than Meliá. In spite of, Meliá should be alert to these competitors and maintain his leadership. - 3 st Level: Product Competition Private Hotels and Small Chain Hotels offers similar products, but all of them focus to another type of customers. This company cannot afford big advertising campaigns, they still don’t have enough prestige or recognize in the hotel sector, and they are unawareness for the most of clients. But, they supposed a new threat for Meliá. 4 st Level: General Competitors These types of competitors have increased in the last years, and actually are much bigger. One of the principals reasons are that the customers have changed her travel way and the economic crisis. Every day there are more substitutes that we find in this sector, most of them focus in young target with fewer incomes and with a different concept to travel. - 5 st Level: Budget Competition The most general level, clients can spend their money and enjoy experience in so many different services, that somehow are indirect competition for Meliá.

Potential competitors 10 Meliá Hotels international and NH hotels are leaders in the Spain and Worldwide hotel sector. Meliá Hotels International: Meliá Hotels International is leader in the Spanish Market, due to number of rooms more than 77,894 in 302 different hotels. These figures have decreased by the last year 2012, but the forecast for the next year 2014 is adding 14,663 new rooms for the company. Their business profile is main focus on B2C market, leisure or vocational travel. The most hotels are located in coastal cities.

Meliá Hotels is the best company on social reputation. Meliá add sustainability and social responsibility strategic to their corporative strategy. They collaborate with different NGO, like UNICEF and ONCE foundation. In spite of, Meliá is not the best value for customers. Meliá uphold internationalization to emerging markets and potential markets, due to the Spanish economic crisis. They intended promote “Marca España” abroad and expand their business. Meliá is the hotel company with major international presence in the international market, 13´9%. The company has financial solvency, and their business are strategic for the Spanish economic. The strategy of Meliá is diversification; they diversify their business with different brands. Each one is focus to different target. In financial, Meliá ranks second with € 1362,4 million of turnover in 2012. 10 http://www.hosteltur.com/

On the other hand, Meliá Hotels have been valued: The best hotel company for work. The company has 38,000 employees around the world, of which 8,000 work in Spain. Meliá promote internal recruitment, equality among employees, training, coaching techniques and offer different advantages for the company personnel. Finally, Meliá has adapted their business to new technologies. They have increased their presence on Internet and social media. The principal strengths and weakness of the company in this area are: - Strengths: The official web page has an excellence image gallery. It also has Client Area, offer pick-up service for the clients, contact by phone and fax. Meliá has developed Phone App. Meliá has increased their presence and online booking in browsers like: Tripadvisor, Booking or Hoteles.com - Weakness: The web site is not interactive; customers cannot post their experiences or online call options. It don’t have options like: print, “share with a friend” or direct access to social media, only on Facebook. NH Hotels 11 NH Hotels is positioned in the second position on the Spanish Market; they have 58,168 rooms, this number has decreased in 700 rooms over the previous year, 2012. They are leader in the number of hotels with 386 in Spain. Their business profile is focus on B2B market, principally in skyline. The company is situated in the city center or near to business center. NH is the best-valued company by customers. They have the higher score on client support and quality services. Although, NH Hotels have more hotels that the other companies, their strategic are not the most appropriate, they have € 1,288,0mill of turnover on 2012. It means 9.8% less over the previous year. The company has more hotels in Europe and less presence abroad. Also, NH has adapted their business to new technologies. They have increased their presence on Internet and social media. The principal strengths and weakness of the company in this area are: - Strengths: The official web site has an image gallery. They develop a phone App and their website is adapted to smartphones. They have a high presence on social media: Facebook, Twitter and LinkedIn. Information and news. - Weakness: The website has low visual content. It has not option for: Click to call and e-chat.

11 http://www.nh-hoteles.es/

RIU Hotels & Resorts1213 RIU is positioned in third position on the Spanish market; they have 55,885 rooms in 106 different hotels. Their hotels are exclusively focused on holiday-leisure tourism.

RIU is in the first position about turnover; RIO increased them 23.86% over the last years. The company has € 1,412,0mill. The internationalization process has been carried out with the partnership of TUI A.G (Touristik Union International). The partnership was carried out on the 50´s, and it´s 51% RUI and 49% TUI. RIU has presence in 17 different countries and they have 56 hotels abroad. Their market is concentrated in Europe, Central America and the North of Africa. In Mexico, have the biggest number of hotels. The company focuses their strategic in Central America, where they find out different opportunities in amazing scenarios and low overcrowded areas. RIU Hotels & Resorts has adapted their business to new technologies. They have increased their presence on Internet and social media. The principal strengths and weakness of the company in this area are: - Strengths: In their official webpage the offer Offers options like Bookmarks and “share”, audiovisual content, “new openings”, world map where appear the hotels. And, they have access to Social Media: Facebook, Twitter, Flicker and YouTube. - Weakness: The quality of images is really low. The webpage is not interactive, so clients don’t post opinions or suggestions.

12 http://www.riu.com/es/Paises/macro_destino.jsp 13 http://revistas.um.es/turismo/article/viewFile/109581/104171

Benchmarketing Principal competitors

Number of hotels Number of rooms B2B: Business Market B2C: Leisure Market Urban Hotels Internationalization Strategy Emerging Market: Asia African Market Latin America Market Presence in Europe Organizational Strategy Social Reputation Employees Satisfaction Experience Sector Quality Service Client Support Turnover Official Website: Online Customers Interactions Images Gallery Interactive Webpage E-chat Click to call Direct Access to Social Media Mobile Phone App Online Booking Social Media TOTAL

Meliá International ++ +++ ++ -++ ++ ++ +++ ++ ++ ++ + ++ ++ + +

34+

Hotels NH Hotels +++ ++ ++ + + + -++ -+ +++ +++ +

Matrix:

RIU Hotels Resorts + + -++ -+ -++ + + + ++ + + ++ +

+ + ++ +

+ + + + ++ 25+ 13-

++ + + +

22+

13-

New Competitors The market shares of the biggest companies have decreased with respect last years, due to the entrance of new competitors. These competitors increase their room offers and the increase of offers. Meliá shouldn´t accommodated to their leadership position, because the market is changing continuously and the offers of substitutes have increased in the last years. The new concepts of hotels focus on the price and not in the luxury, these hotels are: B&B, Hostels and Couch Surfing. The most of them are focusing to young target. These target is not really attractive for Meliá Hotels, due to any brand of the company does not focus their strategy on them.

Meliá and their main competitors look for delight the clients, retain and loyalty of them, and also offer extra service. They desire “to be unique” and that the clients want to repeat the experience. Instead, the new hotels don’t look for retain the clients. They want satisfy the principal needs: sleep. They cover the basic service: beds without any extras, no luxury but with a low-price. But the big companies have to take into account other new concepts of hotels, they are private hotels. The most of them situated in really privilege place, and they offer luxury, exclusivity and reduce number of people. A new concept focuses on people with high income, couples or clients that wants or look for unique experience or exclusive.

5. Distribution analysis 14 Distribution channels MELIA.COM Meliá continues to improve and to make efforts to ensure the excellence of its service through its website Melia.com, which is the first corporate image perceived by the consumer. To do this the hotel chain uses the latest design trends and technology and incorporating more accurate, better organized and adapted to user needs. Online sales, rentals and stays in hotels has become one of the major strengths of the hotel industry, Meliá was founded in 2008, 25 new sites containing information about the hotel and its services and improved presence of its hotels on the web. All these changes and improvements, permits Meliá better know its customers better meet their needs and get excellent results. On all these sites Meliá also promotes good services the brand sponsorship of events and important activities that have contributed to raising the company internationally. These efforts and improvements have been reflected in sales. With 40 million visits per year, the site has become a reference point for the European tourism industry. In 2008 the site sales increased for the seventh consecutive year, 10% of sales and 4.5% in overnight stays compared to the previous year. Online sales generated revenues of over € 126 million of individual bookings (reservations or corporate bookings made through intermediaries not included).

Operation TOUR (TTOO) Meliá includes, in a centralized function, planning, negotiation, execution and monitoring of contracts between the company and international tour operators.

14 http://www.melia.com/html/dsostenible/en/comercializacion.html

A program of ambitious marketing and promotion that includes meetings and presentations private, road shows supports this action and major trade fairs tourisms. In 2008, for example Meliá organized traveling exhibitions in 32 countries including Spain, Germany and Russia, the United States and Canada. In the same year 26,000 contracts were signed, generating revenues of € 431 million.

TRADE FAIRS In 2008, Sol Meliá has participated in 19 tourism fairs in 12 countries worldwide. The lounges are the ideal places to communicate with regular customers and attract new ones in various markets, which probably become more attractive in future years. These shows are Meliá effective marketing tools to understand the market and the latest trends in the industry. In a short time a large amount of information can be obtained and the market share gained.

MEETING SOL MELIA (MSM) To cover all the activities related to products, services and teams, Meliá created in 2003, Meeting Sol Meliá (MSM), and it has integrated its best hotels from around the world to host events, seminars and incentives under the name "hotels MSM." They are all listed in an exclusive directory and are also accessible via the web melia.com page. MSM is present in over 13 countries with key account managers to manage key accounts and capture new business in conventions, congresses and incentives segment (CCI). This is reinforced by sales management in the headquarters of the management of business relationships and transactions act as a link between the hotels and small and medium enterprises that demand accountability groups and events.

TRADYSO Tradyso was created with the goal of becoming the best service in multi-channel distribution for hotels around the world, the development of applications that allow constant innovation competition in the distribution systems of the hotel and provide additional value to customers. The new platform distribution hotel in place since 2007 is 50% owned by Meliá and 50% by Talonotel. It operates two brands iDISO, which includes reservation of technology through several different distribution channels for hotels and Dobleroom a central reservations system for travel agents. Tradyso distribution services offer hotels include the ability to: service private label call-center, a website booking engine and full integration into the reservation systems used by the largest branch network of travel and portals online travel. The main services are Tradyso: - Access to global distribution services to the hotel. - Check prices, availability and sales channels - Flexible services "à la carte"

- The reservation system Tradyso is based on a centralized inventory management, availability and room allocation, all under the rules and strict sales policies

Graph: Melia channel

distribution

MELIA DIRECT - Online Booking: Melia.com the official website but also the brand websites like Tryp.com, me-by-meli.com, paradisus.com… - Call center: Clients can book by calling Melia’s Call center Office or the brands one but also the hotels directly. - Trade fair: Melia is present in a lot of Trade fair where they offer to new or current customer to buy stay in their hotels all over the world.

INDIREC T - Online Booking: Melia’s guest can book through a lot of booking site like Hotel.com and other - Call center: They can also call those companies to book by phone call. - Travelling companies: Customers can also go to travelling companies offices to organize and buy their stay or otherwise call them

CUSTOMER S

Distribution channels relationship of Meliá with its customers 360º CUSTOMER Customer Relationship Management (CRM) department Meliá Hotels International is responsible for the collection of relevant information to consumers in accordance with the law on data protection and dissemination of advanced knowledge on the behaviour of customers from different sectors the organization. Meliá currently has a database of over 11 million customers classified according to their affinity for the brand, destination, purpose of travel, booking channel, psychographic segmentation, buying time, the potential value, life cycle, etc. This information provides the basis for the development of communication strategies designed to customers in the various points of contact in order to increase loyalty, profitability and customer satisfaction. They allow Meliá has to develop a model of optimal relationship with its customers and anticipate what they want. BOOKING TECHNOLOGY WITH MELIA.COM WORLDWIDE Internet has radically changed the distribution sector of the hotel industry. The ability of mobile devices, for example, shopping online is increasing, in a few minutes, customers are able to organize a weekend or even a longer stay. Since 1996, these transactions and their value increased dramatically. This year, Meliá Hotels International was the first hotel chain in Europe to offer its customers the opportunity to book their rooms online. Today melia.com own distribution channel of Meliá, offers 24-hour service to more intermediate (direct clients, agencies and businesses) across multiple platforms (web, mobile and call center) in 7 languages and 11 different language versions. New technologies which we have already access will be increasingly willing to adapt to new opportunities that are offered to Melia. For example, geolocation, social commerce, and, above buying audience - everything from new technologies such as NFC (Near Field Communication) and Mobile Wallet technology has Meliá will stay close to its customers potential, creating stronger links with them and safer transactions while seeking potential new consumers. The main objective of Meliá thanks to all these tools is to sell up through channels most rentable possible and those, which could potentially generate the greatest amount of reserves. And more importantly avoid price erosion. As the most profitable with the greatest potential distribution channel reservations, Melia.com represents over 56 % of revenues generated through its own channels and its contribution to

the income statement of the company will have spent only 0.4 million euros in 1999 to 240 million Euros in 2014.

Online marketing To enjoy as much as possible of the benefits of new developments such as digital platforms, the Internet, mobile telephony, etc. a company like Meliá which is entirely focused on the objectives and exerts a strong influence on the sale of beds of hotels, must develop a viewpoint on digital marketing, near its new technologies. In addition, a special door Meliá has these new social opportunities that enable customers to share their experiences in all hotels of the company using them as channels as sources of knowledge and relationships in real time attention.

Social media Meliá Hotels International is one of the major hotels and is present on Facebook and other social media, including Twitter, YouTube, LinkedIn, etc. The company has managed to generate a high level of participation among its fans and a strong emotional bond with its brands. In order to manage its relationships with users of social networks, Meliá has a specific social media service with a network of community managers who provide information, maintain and manage conversations on all the activity profiles of hotel.

Relationship suppliers

Melia

with

its

Meliá is committed to its distributors as with all horizontal as vertical networks to use their size and professionalism to build lasting relationships based on trust, respect and mutual interest. The purchasing policy Sol Meliá general aims "to meet the operational needs of hotels and corporate offices that can be covered by acquisition or able to generate increased revenue or cost savings at levels acceptable quality». The mission of the Purchasing Department is to apply criteria of supplier management to meet the needs of hotels and offices in a balanced and sustainable manner. However, some criteria such as the geographical limits of the supplier, quality certification, environmental certification, certification of health and safety, economic conditions are also taken into account.To achieve a satisfying and lasting relationship with suppliers Purchasing Department aims.

6. Opportunities and threats of the customer analysis Opportunities

Threats

Growing market Social Media and e-commerce

Customers power Social media with bad information

Opportunities Tourism increases a lot generally speaking, as people travel more and more, either for leisure or business, and on their own or with their family. Social media can be an opportunity. MeliĂĄ can make contact with their customers through this. Make good advertisements through this and can respond at comment of their customers. The use of the Internet and e-Commerce is an important opportunity on the market, as it facilitates the online booking for customers and provides them all the information they need. Then, it reduces costs, as intermediaries like travel agencies are not needed anymore, and it allows direct marketing, which permits to directly target the right group of customers.

Threats The customers can also be a threat, because they have a lot of power. If there are no customers, you will have no income. Social Media can be a threat, because if there is bad information spread on the Internet, customers will read it and in the worst case they donâ&#x20AC;&#x2122;t come back.

7. Opportunities and threats of the competitor analysis Opportunities Hotel market in Asia Social reputation

Threats NH Hotels and Rui Hotels and resorts Substitutes High competition in the tourism market

Opportunities Concerning the threats, the opening of Asia can be noticed, as it is becoming more and more attractive for occidental populations.

Meliá has a good social reputation, because they add sustainability and social responsibility strategic to their corporative strategy. If they maintain this, it will create big competitors advantages.

Threats The NH Hotels and Rui Hotel and resorts are the biggest competitors of Meliá. They both offer the same services and provide in the same needs of the customers, like Meliá does. Meliá is still the leader at the Spanish market, but NH Hotels and Rui hotel and resorts are right behind Meliá.The substitutes are a really big threat. Because of the economic crises, people have less money to spend and will look for cheaper options than Meliá. So the huge choice of different hotels and substitutes forms the main threat on the market. This consequently involves two more threats.

8. Opportunities and threats of the distribution analysis Opportunities Large amount of suppliers

Threats Geographical limits of the supplier

Opportunities The large number of suppliers for this market makes their power pretty low, and allows the hotel chains to choose the ones they want.

Threats Because of the geographical limits of the supplier, Meliá has some problems in the distribution network that creates threats. To solve these problems, Meliá should make contact with more different suppliers. This is also good, because you divide the power of the suppliers.

SWOT Analysis

Introduction The purpose of the SWOT-analysis is to gain insights into the strengths and weaknesses of Melia Hotel International. It also provides a list of the current opportunities and threats from a macro, meso and micro perspective. The results of the internal and external analysis are used as input for the SWOT matrix. This has been made in block 7. You will find the needed information in the appendix. In total there 6 strengths, 3 weaknesses, 4 opportunities and 3 threats identified. First all the strengths, weaknesses, opportunities and threats will be fully defined. A number from 1-10 ranks them all. A 1 is not important for Melia, but a 10 is very important for Melia. After that it will be determined according to the weight factors: degree of impact + time of impact = weight factor. Finally every element will be confronted in the confrontation matrix.

STREGHTS

WEAKNESSES

Experience Sector

Brand Image (Social)

B2B

Presence on Internet

Youth people customers

B2C

Financial situation

Management Employees Satisfaction

CRM Customers

Leader on the Spanish market

OPPORTUNITI ES

THREATS

Growing market: Andalusia

Economic Crisis

New distribution channels

New trends on the market

(E-commerce) -

Increasing International demand in Spain: Growing Spanish market with foreign visitors

Substitute products: Hostels, B&B -

Geographic Concentration in Spanish market.

10. SWOT Description Strengths

Description

S 1

Manage ment employe es Satisfac tion

Melia bases its strategy of sustainability on two main points: the level of satisfaction of the employees and the personalisation of services for customers based on collected CRM data.

S 2

CRM customer s

Melia Hotel International has a lot of information gathered about their customers. Because of this they know how to handle with different situations. The presence on social networks and the possibility of booking rooms directly online bring the group higher outcomes. The 60 years of experience insure Melia a high performance in the sector.

S 3 S 4

Presence on the Internet Experien ce in the hotel sector

S 5

Brand image (Social)

S 6

Leisure segment

S 7

Leader on the Spanish market

Weaknesses

The good brand image is insured by the several sponsor contracts the group has with sports and events companies, and also by the reputation it acquired since its foundation. The leisure segment is very well developed because most of the hotels are made for families or couples with many adapted services (entertaining activities, sports facilitiesâ&#x20AC;Ś). The group is leader in Spain in terms of number of customers in its hotels.

Description

Finan cial situati on

Busin ess segme nt

Cheap rooms

Melia can afford their obligations and pay on time. Their entire ration is better than the competence in the sector. But even if their situation seems to be good, the losses have increased exponentially in the last few years and they have a high debt ratio. Moreover Melia plans their strategy in short term instead doing it for long term which can be risky.

As the company is related to that leisure stays they donâ&#x20AC;&#x2122;t enjoy fully of the business image. When company needs rooms for employees they donâ&#x20AC;&#x2122;t think first about Melia but of their competitors as NH hotels.

Since we are in a period where the Europe economy is in crisis, competitors are decreasing their prices to reach new clients as people of the middle and young classes. Melia could do the same, but it would damage their luxury image. So in an economy, which is in a bad position, Melia is keeping prices higher than competitors.

Opportunities O1 Growing Market: Andalusia

O2 New distributio n channels (Ecommerce ) O3 Increasing Internatio nal demand in Spain (Growing Spanish market with foreign visitors)

Description Andalusia is a potential market for the weather, gastronomy, cultural and popular parties and the attractive tourism attractions. Andalusia is the most popular destination for holidays in Spain. Melia is here already, but they can be more present in this growing market. New technologies are good tools for promote and sell their service. They should take advantage of these; they can save costs if the offers their services by internet and the clients can buy it and have a direct contact with the company.

Due to the economic crisis, the prices have decreased and customers can find special offers for their holidays. This is an attractive situation for foreign people who find Spain like a cheap country where holiday and enjoy the weather, beaches, gastronomy, culture and tourism

Threats

T 1

Econo mic Crisis

Description The economic crisis forces the smaller competition to lower its prices. This is bad for Meliá because the customer will choose easier for the competition then for Meliá.

T 2

Geogra phic Conce ntratio n in Spanis h marke t

The competition in the Spanish market is growing, so the power of the customers is improving. This is a threat to Meliá because customers can choose between more places to stay. To fight this threat Meliá have to add more value or lower its prices, so Meliá will make less profit.

T 3

Substi tute produc ts: Hostel s, B&B, Camp sites

Hostels, Bed & Breakfasts and campsites are much cheaper than the hotels of Meliá. This is a threat on competition level.

Weight Factor In this chapter of the SWOT-analysis the strengths, weaknesses, opportunities and threats (SWOT) are weighted by their importance for the company. By doing this the SWOT can be put into a confrontation-matrix so it can easier be seen which parts of the company are weak and need to be improved. Also it can help by making strategic choices for the company. The SWOT is rated by numbers out of ten. For example, the strong management is highly rated because it is a difficult business to get organised so well. The opportunities and threats are highly rated if they are big chances or big dangers for Meliá.

When confronted to each other the matrix shows results on the right side of the matrix. The top of the table shows where the company is strong (the higher the result, the better the company can handle the opportunities and threats) and the down side of the table shows which weakness is can be handled good or bad (the higher the result, the worse the company can handle its weakness). Strengths 32

S1  Management employees satisfaction: 9 S2  CRM customers: 9 S3 Presence on the Internet: 9 S4 Brand image (Social): 8 S5 Experience in the hotel sector: 7 S6  Leisure segment: 7 S7  Leader on the Spanish market: 6 Weakness W1 Financial situation: 8 W2 Business segment: 6 W3 Cheap rooms: 4 Opportunities O1 Increasing International demand in Spain (Growing Spanish market with foreign visitors): 9 O2 New distribution channels (e-commerce): 8 O3 Expanding actual market operations Spain, Andalusia: 7 Threats T1 Geographic Concentration in Spanish market - Competitors: 9 T2  Substitute products: Hostels, B&B, Camp sites: 9 T3 Economic Crisis: 8

Confrontation Matrix

Weight Factor O&T

S1 S2 S3 S4 S5 S6 S7

O 1

O 2

O 3

T1 T2 T3

∑

+ + ++ +

++ ++ ++ ++ +

+ + + + ++

+ + ++ + ++

+ + + ++ ++

(+8) (+8) (+12) (+10) (+10) (+5) (+8)

++ -

++ ++ ++ ++ ++ + ++

9 2

8 6

++ ++

W1 W2

∑+ ∑-

9 2

9 5

∑

(-5) 13 3

7 3

(-10) (-8)

85 85 103 84 83 45 68 41 83 68

55 21 33

Weight factor Opportunities Opportunities 1 and 2, Increasing demand in Spain and use new emerging market as Asia, have a high positive result because they can be well achieve by the company by using their most important strengths since the weaknesses of Melia don’t affect that much those opportunities. Regarding the opportunities 4 and 5 new distribution channel and expanding actual market operation in Spain for the company, they have a lower result than the 2 first one because of the dilemma of the company for decreasing their prices or their non-performance regarding businesses stays. Weight factor Threats The second threat, which is substitute hotels, is a threat, which can be really good, avoid by the company with their strength, as they know the Spanish market where they are leader. The first one the geographical location of the competitors is an important threats for the company but it is still possible for Meliá to stay the leader because even if for example their financial situation is bad they are better in many point than competitors. The last one Economic crisis has a lower result because it touch all product or business in all sectors and Meliá can only try to be strong, reduce their weaknesses and be better in all their strength points. ∑ Strengths Strength 2, the presence on the Internet of Meliá is the most important one to exploit the opportunities and counter the threats (12+). Taking into account the weighting factors of the external developments, it reaches 103+. Then, strengths 1 (management), 3 (brand image) and 4 (experience in hotel sector) are very close to be as important as each other with a total of 10+ each that worth respectively 85+, 84+ and 83+. ∑ Weaknesses Weaknesses 2 (Business segment) and 3 (Young customers) are the most important ones, which hinder the opportunities to be exploited and make sure threats cannot be countered (10- and 8-). Taking into account the weighing factors of the external developments, they respectively reach 83- and 68-. ∑ Opportunities Opportunities 1 (Increasing international demand in Spain), 2 (Asian emerging market) and 3 (new distribution channel: e-commerce) are very realisable with respectively 8+/2-, 8+/3- and 7+/2-. The opportunity 4 which is “expanding the actual market in Spain (Andalusia)” will be harder to exploit with 7+/6-. ∑ Threats Threat 2 (substitute products) is quite easy to be repelled with 11+/3-. Threats 1 (geographic concentration in Spanish market) and 3 (economic crisis) will be much harder to avoid with respectively 8+/5- and 6+/3-.

11.

Strategic Issues

Based on the Meliá confrontation matrix, a list with a certain number of opportunities and threats which are related with the strengths and weaknesses of the company was made. There are three strategic issues coming out of this:

Issue 1 (Focus on client – Business segment) = S1 + S2 + S3 + S4 + S5 + S7 + W1+ W2+ T1 + T2 + T3 This strategic issue came out to overcome the weak of the company regarding the business segment (W2) and it can be strengthened by the fact that Meliá is the leader in Spain (S7). Even if they are not better than competitors, Meliá already have an experience (S5) with the business segment as they already have a business brand: INNSIDE. So they can use their management (S1) and CRM departments (S2) information about business clients to strengthen this issue. The presence of Meliá on internet (S3) and the brand image (S4) are strong point which can help the company to reach this big opportunity. The weak that counteract this opportunity is the financial situation (W1). In addition Meliá will have to face big threats as the economic crisis (T1) or as competitors (T2) like NH hotels which is the brand we think of for business stays in Spain, or substitutes (T3) and new emerging companies. Issue 2 (Focus on market – Andalucía) = S1 + S2 + S3 + S4 + S5 + S6 + S7 + W1 + T1 + T2 + T3 This strategic issue is about developing and expanding the actual activities of Meliá in Andalucía growing market. This issue can be strengthened all Meliá actual strength (S1 to S7) from employees to their brand image since the company is already present in this market. But the company will have to face an important weak their financial situation which can be a problem when it talk about open new hotels and threats as competitors (T2) substitute (T2) and the economic crisis (T3).

12.

Strategies

Starting points To get the starting points of the strategy, the following models are applied: - The Ansoff Matrix, to see in what area Meliá is going to develop

http://www.smartinsights.com/marketing-planning/create-a-marketing-plan/ansoff-model/

The Treacy & Wiersema , to see in what way Meliá is going to master this area

http://www.verduin.nl/crmkennisbank/wiki/bid/150685/Waardendiscipline - The BCG model, to see in what stage this

strategy is.

http://en.wikipedia.org/wiki/File:Growthsharematrix.png Strategy 0 – Keep Going The company should keep going as it was doing so far. This doesn’t mean a change is not needed but maybe that it is not the right moment (due to financial difficulties for instance) and that the company should continue without making changes in the strategy for a certain period of time.

This strategy is actually called “market penetration”, based on the Ansoff Matrix that follows, as the objective is to continue with already known markets and products to try to gain market share. They use their strengths well, Meliá can choose for Operational Excellence in this area. To master this area Meliá can improve their strengths. Also in time this will take away their biggest weakness, the bad financial situation. This area is in the stage of the “cash cow”. This means this area is still making money, but it is not really growing anymore. The hotel sector is one of the oldest branches in the world, so it probably will not move on to the “dogs” stage. The BCG model will look like this:

Strategy 1 – Business Segment Concerning the first issue: How could Meliá focus more on the client and particularly on the lack in the business segment? In the Ansoff matrix this is a penetration strategy, this basically means that the actual case concerns a market that already exists and directing to an existing segment. But the presence is so slow in this market, which only 3 hotels in Spain. To master this area Meliá can focus on customer intimacy. For this Meliá can use its strengths, especially strength 3: their presence on the internet. The company can intensify marketing campaigns focus on businessmen or try to make some deals or sales procedure with business companies and become a greater presence in this sector. Meliá also has to overcome it weakness of the bad financial situation, because it will take great investments to master this area. In the BCG model this area is in the “question mark” stage. This area can become a “star”, but it will take time and the right investments. The BCG model looks like this:

Strategy 3- Andalusía This issue is about developing the Andalucía region. In the Ansoff Matrix this is a market penetration strategy, because it is about gaining market share with an existing product on an existing market. They already have 43 hotels in Andalusia, the most of them situated in coast cities. To overcome the threats, Meliá must focus on customer intimacy for this strategy, because Meliá already has the strengths on product leadership and operational excellence. Meliá can use their strong internet presence to have closer contacts with the customers and find the problems and complaints. By using the response Meliá can create a better product and a better value for the customers. In the BCG model this means Meliá will try to maintain his position like a star. Due to the Andalusia market is growing, and the company should take advantage of this, and intensifies his presence in this market attracting new foreign clients, intensifying marketing campaigns and autonomous development.

11.

Conclusion To conclude, Melia International Hotel has three different strategic options. All of these strategies are consistent with the mission, vision and market description. Then, we rated from 1 (least appropriate) to 10 (most appropriate) other key points such as the company’s goals,

the SWOT elements, the advantage against competitors that a strategy could bring, and how much the company would value the customers by following a strategy.

In the External Situation, the best grade is the Option 2: Business segment, because it is a powerful market where we can obtain high turnover. Spain has important point the geographic like: Madrid, Barcelona or Andalucía where Melia could be present there and intensify the presence of INNSIDE hotels. Also, Melia could make important deals with Business Companies for the organization of events or sponsorship of them in exclusive. In the Internal Situation, the best grade is the Option3: Andalusia, due to the highest weakness of the company: The financial situation. Melia has already 43 hotels in Andalucía where they should intensify the marketing campaign and promote the international tourism. IMoreover, in the option 3: Business segment, they should do a high investment for reinforce his business brand and obtain or build new hotels. Option Option 2 – Option 3 1 – Business Keep segment Andalusi - Market penetration doing a -Customer intimacy -Market Penetration -Active -Autonomous -Customer intimacy consolidation Development -Autonomous strategy -Partnership Development Mission

Consistent

Vision

Consistent

Market description

Consistent

Goals External Situation(O&T) Internal Situation(S&W) Competitors Advantage Customer Value Total

12. Final Conclusion As a result of this research project on Melia Hotels International, we can say that this company is well established in Spain, since they are leader in this market. Most of their hotels are implanted there, this is actually 40% of Melia’s business worldwide. They took advantage of the fact that Spanish tourism market is one of the most attractive in the world, with the fact that Andalusia is becoming the most popular destination for holiday in Spain. Their high demand had been affected in the last years by the economic crisis. The high technological way of booking developed by the company allows customers to book anywhere they are easily, through a multitude of websites, the one of the company, of the brand, of an hotel in particular, the ones of tour operators, trade fair and a lot more. Furthermore, competition becomes more intense for Melia with their closest concurrent, new ones and substitutes products who want also to take advantage of this growing market. But, the company faced this big threats by staying better than competitors. In fact the company enjoyed of a good brand image. They became a reference for the luxurious leisure segment in Spain. But, they privileged the development of their leisure segment at the expense of the business segment, which dispose only of 3 hotels in Spain, through one of their seven brands : INNSIDE. Even if Melia has a high experience curve in this sector they always rise their competence regarding their relationship with employees, suppliers and especially customers, thanks to the high quality of their Customer Relationship Management department. However, even if the financial situation of the company is better than all of their competitors, is not an advantage. In fact they can afford to pay their obligation but investment like build new hotels or buy new chains are not rationally possible. Thereby, the two most important issues which are available for Melia is the development of their business segment which is one of the weaknesses of the company, or use the 43 Melia hotels in Andalucía to enjoy of the growth of this market which is becoming the first destination of Spain. As their financial situation is not that good the company can choose to wait for take strategic choices for the moment, but developing the business segment is for the company the way to stay the best in the leisure segment while winning point and surpassing competitors as NH hotels who are better in this segment. To reach this goal the company have to launch a huge marketing campaign to businesses which will not damage their luxury leisure image. In fact it could confused the position of the company in the customer mind who see Melia’s hotel as leisure hotel but not necessary as business hotels. Moreover, with their 3 hotels, the company should invest to face competitors as NH hotels or other, and it is not possible with their actual financial situation. With their actual 43 hotels in Andalucía and their excellence in the Spanish luxurious leisure segment Melia has a real opportunity to take advantage of the growth of the Andalucía market. In fact they will have to launch a marketing campaign all over the world to attract foreign demand, improve more and more their image and it won’t damage their financial situation. Finally, we would recommend this last option to Melia because it’s a real opportunity for the company without sending them to the bankrupt, but in giving them the chance to keep their advance on competitors by staying leader in a growing market as Andalucia.

13. Appen dix

Marion Cazenave Laurence Catherine Cristina Jimenez Navarta Bart Wilts Maxime de vries

ILV2C group 3: Marion Cazenave Laurence Catherine Cristina Jimenez Navarta Bart Wilts Maxime de vries 01-04-2014 Hanze University of Applied Science Institution of Marketing Management 20132014 Teacher: Mr. Johan de Jong

Preface This final report has been made in the aim of finding out what are the strengths, weaknesses, opportunities and threats of the company Meliรก Hotels International. We found the information mostly on the Internet, but also by conducting interviews directly to people within the company. We are a group of five students of the Hanzehogeschool of Groningen. We are in the second year of our studies in the Institute of Marketing and Management. We led this project group about the company Meliรก Hotels International in a good agreement between us. Analysing the whole environment and organization of such an international and various company as Meliรก Hotels International, allows us to apply the theoretical knowledge we learned in class and also to develop our organization and teamwork senses. We would like to thank our coaches Mr de Jong and Mr Olthof for the feedback they gave us which allowed us to improve each assignment to do this final report. Also we would like to thank Mrs Rengers-Pleiter for helping us correcting English mistakes and setting up the right layout for the assignments.

Management summary Meliá Hotels International fundamental values include commitment to the environment, sharing local culture, and contributing to cultural integration and society. They act towards all the actors of this market such as customers, society, suppliers, investors and partners to optimize their sustainability business model. Due to the increasing use of the Internet, the company has acted on different online platforms via online campaigns, such as Facebook and Trip Advisor, which allowed Meliá to improve its popularity and promote the brand, and finally generate revenue. After conducting analyses of the macro and meso environment and using the Porter’s five forces model, we ended at the conclusion that the Spanish tourism market is not a very attractive one, due to the very intense competitiveness among the many different hotels chains. However, main opportunities can still be exploited, such as the fact that the tourism is growing in the country, thanks to the high number of foreign tourists coming each year to enjoy the low prices that the crisis involved. We can also point the attractiveness of the country and its weather, and also the new online booking platforms, which made way easier to plan and book stays in one of the Meliá hotels. Concerning the strategy of the company, the opening to Asia is a good opportunity for the brand to expand its market and sources of revenue, and Meliá is always reinforcing its international growth plan. It is also developing its customer loyalty by offering new proposals and fidelity program. With the help of the Seven “S” model, we could draw conclusions about the internal organization of the company. For instance, Meliá Hotels International is focused on building hotels across the world, but at the same time on the regionalisation of each new hotel or resort. Furthermore, the group is promoting recruitment and select its staff based on certain specific skills. Finally, Meliá is strongly developing CRM programs, online marketing and Social Media participations to respond to customer’s needs, which is one of its main values. After conducting the organizational audit, we have been able to point the strengths of the company, which is mainly its position as a leader on the market in Spain, but also its capacity to offer personalized services to customers, the facilities it offers (such as the restaurants), its presence of the Internet and its experience in the sector. On the other hand, we can find weaknesses in this organization, such as finding the perfect staff to answer to customers’ wants at any time, the geographic concentration of the hotels in Spain, the offer of leisure and business travels which should be more segmented, and the ability to adapt itself to the Spanish economic situation. Concerning the financial side, the company is wealth enough to afford its obligations on time, and can adapt the prices to the market. However, the losses have a

lot increased in the last years and Meliรก has a high debt ratio. The company is adapting its strategy for the coming years but this could be risky.

Table of contents

Introduction As part of the group project of block 7 at the marketing and management institute of the Hanzehogeschool, we needed to choose a company for which we would have to conduct internal and external analyses. The second part of this project will take place in block 8, for which we will have to draw the companyâ&#x20AC;&#x2122;s strategic choices based on our previous researches. We elected MeliĂĄ Hotels International as our subject, which is the name of a huge hotels network spread in the whole world, but especially in Spain and Latin America. It is an old Spanish company, which has been founded in 1956 in Palma de Mallorca by Gabriel Escarrer. Our work brought three main axes. The first one concerns the policy framework that allowed us to determine the outline of the strategic starting points for the company. Then, the analysis of the MeliĂĄ group, and especially of its external environment to find out the position of the company, how it is competing on the market, and by this way determining the main opportunities and threats of this market. The final step is the internal analysis of the hotels chain, including its marketing organization and its financial situation. This project was conducted over eight weeks, during which the work has been each week equally divided among the five members of this group.

Strategic framework 3.1 Mission and vision ‘’Mission To provide value to all our stakeholders through hotel brands and tourism residences which are considered points of reference for responsible tourism in the different market segments, satisfying the needs for experiences of our guests and developing our human capital. Vision To be a leader and point of reference in responsible tourism, as an employer and in profitability, increasing the value of the brands and form the hotel business promoting growth in associated businesses such as residential tourism and the vacation club.’’ 15 Explanation ‘’MHI's (Meliá Hotel International) fundamental values have always included commitment to the environment, sharing local culture, and contributing to cultural integration and society. As part of the 2008-2010 Strategic Plan these values were included as a strategic line of work to help us make progress towards them. The first challenge was to define the Sustainability Policy of MHI.16 In the new Strategic Plan for 2012-2014, sustainability has become a force, which underpins all strategic lines of work17 across the board. As a fundamental part of our positioning as a company, both at present and in the future, it has become the main pillar of our business, ensuring the sustainable creation of economic value for the company. This is how we are planning to optimize a sustainable business model, ensuring that our stakeholders opt to be a responsible hotel company. In this way, we at MHI have forged a connection between sustainability and our relationships and dialogue with our stakeholders. Getting to know these stakeholders, listening to them and maintaining dialogue with them is a key process for us.’’ 18

3.2 Core values Meliá has seven core values on their website. 19 15 http://www.melia.com/html/dsostenible/en/mision.html 16 http://www.meliahotelsinternational.com/en/sustainability/positioning/sustainability-policy 17 http://www.meliahotelsinternational.com/en/sustainability/value-chain-integration 18 http://www.meliahotelsinternational.com/en/corporate-responsibility/positioning/mision-vision

1 Towards the customers Towards the guests, Meliá offers the best-personalized accommodation experience. Meliá wants to exceed the expectations of the guests with the excellence of the best service. 2 Towards society Towards society, Meliá actively seeks to generate prosperity and sustainable development in the communities where they are present, respecting and promoting their culture, traditions and values. And Meliá is paying particular attention to children and the most vulnerable groups. 3 Towards the environment Towards environment, Meliá contributes to preserving the environment and landscape, monitoring the impact of their business and promoting awareness about sustainability among the stakeholders. 4 Towards the suppliers Towards the suppliers, Meliá uses size and professionalism to build lasting relationships based on trust, respect and mutual benefit. 5 Towards the employees Towards the employees, Meliá offers the best opportunities for professional development, based on stability of a family company and strength of a leading international player, which knows how to recognize commitment, talent and achievements fairly. 6 Towards the shareholders and investors Towards the shareholders and investors, Meliá manages the company according to criteria for transparency, and ensures strict and proper governance to achieve profitability and increase value in the medium and long term. 7 Towards the owners and partners Towards the owners and partners, Meliá offers the best comprehensive services to capitalize on its investment, managing with the professionalism, integrity and confidence of a large internationally-renowned brand.

19 http://www.meliahotelsinternational.com/en/corporate-responsibility/csr

3.3 ABELL Scheme

This is the abell scheme of MeliĂĄ. There are three parts; the customer functions, the customer groups and the customer technologies. There are three different groups. You have the people that are staying in the hotel because of the business that they have in that country, the people that visit the country because of the holyday. And the people that are in that country for a honeymoon. For these three groups you have three different approaches. Than you have the customer functions. These are four examples. You have the different prices for the different customers. The types of breakfast are for every group different. The WIFI and the sleeping that is for everybody the same. Finally you have the customer technologies. Every group needs a different type of bedroom, but the services are for everybody the same. Everybody needs a good service.

3.4 Influence of the use of the internet/e-business Internet and e-business had and still have a lot of influences on the tourism sector. There are a lot of influences but there will be spoken of a few here: - People with higher income travel more20 Because itâ&#x20AC;&#x2122;s easier to spend money on trips and travelling by using the Internet, the wealthier of the world started to travel a lot more. Since the Internet they could arrange their own flight and places to stay for the night. - More information available21 Since the Internet there is way more information. Also there are sites which compare hotels in other countries etc. this gives a lot more options. Also when the quality of a 20 http://jht.sagepub.com/content/22/3/303.short 21 http://www.sciencedirect.com/science/article/pii/S0261517708000162

place is good, people will mention this on the comparing sites, so it’s more worth to have a high quality place. - Less intermediaries12 Because of the Internet there are less intermediaries who take a bit of price. This means that hotels can ask around the same price, but the customer is paying less and is more willing to travel. - E-commerce departments12 Travel organisations, hotels, camping places etc. all need to have e-commerce departments to show their place or company to the world. This brings more costs to the companies. - Direct marketing12 For all those organisations mentioned above, it is way easier to communicate with the consumer itself.

Macro-environment 4.1 Core objectives First Objective of Meliá hotels International is to generate revenue for all Meliá hotels. To reach this point they implemented different strategies: - Drive incremental revenue to key feeder markets The Paradisus Resorts in Playa del Carmen, the Gran Meliá Palacio de Isora, Gran Meliá Rome and London ME, have all major revenue generators. Innside by Meliá became today an effective successful export to cities. - Increase share of direct online bookings by improving the websites of the company and make some innovation by making the use of the online booking easier and more attractive - The launch of Meliá Rewards program for the brand. It’s a fidelity program, which allows customers to have exclusive benefits during their stay. The benefits increase over four different levels: MeliáRewards, Silver, Gold and Platinum. - Incorporate new hotels into the Meliá marketing program. Last year the company signed for 28 news hotels and have planned to open 30 new ones this year. The company took different initiatives, to increase its popularity, such as online campaigns with display banners, Facebook, Trip advisor, but also promoting the brand and its fidelity program. Partnership promotions with companies is one of the initiatives of the company for this year, as well as rolling out the Meliá marketing program to all new openings in 2015. The second objective of Meliá is to build a brand image and awareness by building brand equity. So initiatives have been taken: - Continue to enhance content and functionality of melia.com - Social media: building of the master database of Meliá customers - Strategic product partnership such as Samsung, Google… - Innovation: launch of the mobile website

4.2 PESTEL-analysis 51

Politic: The Spanish government is aware of the importance of tourism in the country. It wants to promote it through the Secretary of State for Tourism comprehensive national tourism plan (PNIT: Plan nacional e integral de turismo) as a set of measures for the period 2012 â&#x20AC;&#x201C; 2015. The government wants to boost the competitiveness of companies, renew global leadership of the country for the coming decades and contribute to a generation of wealth, employment and welfare of citizens. Under these circumstances, the PNIT is conceived as a response to the main needs expressed by the tourism sector, highlighting the following key issues: - Government leadership of the nation, to align the wills of actors and resources in a common project - Public-Private-Partnership ensuring alignment both in policy design, as in the field of decision and financing of investment in tourist promotion - Cross-design policies for decision-making and strategy setting, affecting all agencies of the general administration of the state, and the different levels of administration - Establishment of an institutional framework and structured to encourage improvement in the competitive companies, with special emphasis on and promotion of a single market, facilitating the approximation of the laws around the country - The Spanish tourist destination must operate in alignment with an innovative vision in the design of policies. MARCA ESPANA is a good example of one of the initiatives of the Spanish government. This project is a state policy, one long-term promotion of the external image of Spain in the economic, cultural, social, scientific and technological fields. The project is based on three points: - The image of a country is subject to constant change. - This change can be influenced - Public authorities are in charge of designing policies to improve this image Economic: Spain22 is leader on tourism. It is the first leisure destination, the second one in tourism expenses and the fourth one in numbers of visitors. The tourism activity means 10% of the GDP; it creates 11% of employment and contributes to the national commercial development. The OHE rate is divided in two different rates: - OHE Hotel Rate is the result of surveys sent to 64 different associations, which belong to the CEHAT (Spanish Confederation of Hotels and Tourist Accommodation), based on the entrepreneur expectation and the main factors that influence the tourism. - Macro OHE Rate represents the influencing macro-factors on the tourism sector. It is calculated based on macro-economic factors considered significant: GDP, unemployment rate, exchange rate with the U.S. dollar and the British pound. The following factors have an influence on the tourism sector: 22 National Plan: http://www.minetur.gob.es/turismo/es-ES/PNIT/Documents/Plan%20Nacional%20e %20Integral%20de%20Turismo%20(PNIT)%202012-2015.pdf

General Statistics OHE: During the 2013 winter season, the OHE indicator is expected to grow, and the growth percentage estimated at 49.7% in contrast with the same period the year before. Figure : OHE Percentage, National Plan8

GDP: In 2013 the Spanish GDP showed a slight trend of improvement over 2012, achieving positive assessments from 2014.

+23,4% Figure : GDP Growth rate, National Plan

Exchange and interest fluctuation: In 2013 a slight appreciation of the euro was estimated against the pound sterling against the U.S. dollar. The estimated interest rates will decrease to 0.7% for the euro area. The exchange value in 2013 was EUR 1.31 with the U.S. dollar and 0.87 EUR with the pound sterling. This implies an appreciation of the euro against both currencies.

Figure : Exchange rate, National Plan8

Unemployment rate: In 2013, the growth unemployment rate was of 26.3% in Spain, which is expected to begin to decline from 2014. Unemployment in Spain continued to trend growth over the rest of Europe countries and has pessimistic expectations.

Figure : Unemployment Rate, http://www.ine.es/en/prensa/np740_en.pdf

Social The INE (National Statistics Institution) reveals that the average annual income of Spanish households reaches 24.609 â&#x201A;Ź in 2011. This is a 1.9% decrease compared to the previous year. 21.1% of the population resident in Spain is below the risk of poverty threshold in 2012, indicating a 0.7% decrease compared to the previous year. Average income per person reached 9.321â&#x201A;Ź, which is 1.3% lower than registered in 2010.

Figure : Household income, http://www.ine.es/en/prensa/np740_en.pdf

In the year 2012, 12.7% of Spanish households stated that they had difficulties to make ends meet. This percentage was 2.9% higher the previous year. Furthermore, 44.5% of Spanish households cannot afford to pay at least one week of holidays away from home per year. This percentage was 5.6% higher than that recorded in 2012. The following graph represents the families that cannot afford at least one week of holidays per year. Figure : Performance of households http://www.ine.es/en/prensa/np740_en.pdf ,

Technologic: The ITH23 (Technological Institute Hotel) is the hotel sectorâ&#x20AC;&#x2122;s response to the challenges that the technological advances pose to entrepreneurs in the tourism sector. This innovation centre attached to the Spanish Confederation of Hotels and Tourist Accommodation (CEHAT) aims to promote the use of new technologies and management systems to help improving competitiveness, profitability, quality, efficiency and sustainability of companies in tourism industry.

The ITH works in 4 different areas: - Technologic: new market, distribution channels, CRM and customer retention and global and social media. - Operate hotel: management tools, security, hardware and software. - Sustainability - Innovation: o WIFI Freemium o Travel distribution o Collaboration with Google Business Photos, to improve the web market position. o WIFI 4G o New channels distribution Nowadays, they are developing 50 macro projects and 51 specific projects in Spain. These projects are focused on innovation, new technologies, sustainability and environment and how adapting hotels to these perspectives.

Environmental: The number of hotels that are strongly interested in sustainability-related issues in Spain increases, the hotel industry is still seeking consensus on how sustainability can be measured and managed. One standard that provides both measurement and policies for sustainability management is ISO 14001 and it is being adopted by an ever-growing number of hotels, especially in Europe. Using a sample of over 2,000 independent hotels in Spain, a report analyses the differences between those hotels that have implemented the ISO 14001 standard and those that havenâ&#x20AC;&#x2122;t. Certified hotels in Spain tended to be larger than uncertified properties, and certified hotels in city and beach locations enjoyed considerably stronger performance than those without the certification. The report challenges the often-heard contention that adopting sustainability programs will diminish hotelsâ&#x20AC;&#x2122; performance. Instead, these data shows the reverse to be the case.

23 http://www.ithotelero.com/

Meso-environment 5.1 Size and growth of the market The market of tourism in Spain has a total turnover of €57.1 billion in 2012, which is 5.4% of Spain’s total GDP. The picture below shows the growth of the market of tourism in the last few years, which increased since the economic crisis.

Figure : Tourism in Spain1

The total contribution of the tourism in Spain is way higher, namely €160 billion. This is predicted to rise with 1% the next 10 years to €176 billion. 24 The difference between these numbers is the investment of tourist in other things beside their hotel and flight. This is shown in the pictures below.

Figure : Total GDP of Spain1

24 http://www.wttc.org/site_media/uploads/downloads/spain2013.pdf

Factors that influence the growth of the market -

Individual trips in Europe are growing. (3% in 2013) 25 Tourism in Spain is growing8 Andalucia is the 6th place in the top 10 of places to go in the world. 9 Tourism in Asia is growing very hard since more countries becoming more open. 8 Campsites are more and more popular in Spain 26

Influence of the use of the internet/ebusiness Internet and e-business had and still have a lot of influence on the tourism sector. Here are few changes Internet and the e-business came with: - People with higher income travel more 27 Because it is easier to spend money by using the Internet, the wealthier people of the world started to travel a lot more. Since the Internet, people can arrange their own flight and places to stay for the night. - More information available28 Since the Internet there is way more information. Also there are sites, which compare hotels in other countries etc. giving a lot more options to customers. Furthermore, people can give their opinion about hotels on comparing sites, which means that hotel chains will prefer to make sure these are favourable comments. - Less intermediaries11 Because of the Internet there are less intermediaries, and by this way, less costs. This means that hotels can ask around the same price, but the customer is pays less and is more willing to travel. - E-commerce departments Travel organisations, hotels, camping places etc. all need to have e-commerce departments to show their place or company to the world. This brings more costs to the companies. 11 - Direct marketing For all those organisations mentioned above, it is way easier to communicate with the consumer itself.29

25 http://mkt.unwto.org/publication/unwto-tourism-highlights-2013-edition 26 http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Tourism_statistics_at_regional_level#Recent_trends_in_hotel_touris m

27 http://jht.sagepub.com/content/22/3/303.short 28 http://www.sciencedirect.com/science/article/pii/S0261517708000162 29 jtr.sagepub.com/content/35/1/72.short

5.2 Market developments

Figure : Product Life Cycle7

Out the analysis of chapter one, it can be concluded that the market of Meliรก is still growing, but slowly. This is because the hotel sector is a very old market. Out of the steady growth and the history of the market can be concluded that the hotel sector is in the Maturity phase.

5.3 Market attractiveness The market attractiveness will be described by the five forces model of Porter: Bargaining power of the suppliers There are lots of suppliers in the hotel industry. are necessary to deliver the beds, the food, the drinks and the tables for example. There are no suppliers delivering everything a hotel needs. it has to work with different suppliers. The costs to suppliers are quite low because these are stuff available almost everywhere but at the same the hotel industry is dependent of suppliers, because they can produce food and furniture themselves.

They Thus, allied time,

Bargaining power of the buyers The buyers are in this case the people who are staying in the hotels, and their power is high, as the choice is very large. They can stay, depending on their wants, in a cheap hostel or in an expensive resort. For every wish, there is a hotel available. The threat of substitute products There is a pretty big threat for substitute products in the hotel industry. Camping, bed & breakfast, couch surfing are some examples and people can also stay in a familiar accommodation. Because of these many options cheaper than a hotel, the threat in this sector is considered high. The threats of new entrants The threat of new entrants is small. Opening a hotel means lots of costs. Then, certificates are needed, as well as a lot of time, first to build the hotel in itself, and then to build a reputation and a loyal clientele, which take many years. Rivalry among competing firms in the industry There is much competition between the hotels themselves. There are a lot of hotels in Spain, which increase the competition between them 30. For example, hotels are sometimes forced to lower their prices and offer better services to sustain.

30 http://www.horwathhtl.nl/nederlands/nederlandsHTL/Publications/Press/Persberichtmaart2013.cfm

5.4 Opportunities & Threats As a conclusion, we can draw the opportunities and threats of this market. -First of all, tourism increases a lot generally speaking, as people travel more and more, either for leisure or business, and on their own or with their family. - Then, due to the economic crisis, prices are a lot lower in Spain in what concerns the hotels to stay and foreign people are more willing to come for holidays. Thus, MeliĂĄ Hotels International can benefit from this market growth, but lower prices for their rooms seem to be necessary. - Spain is considered as the leader of tourism, as it is a very attractive country to spend holidays in, and it has many very nice places, such as AndalucĂa, which is the 6 th on the top 10 of destinations to go to on holidays. - The use of the Internet and e-Commerce is an important opportunity on the market, as it facilitates the online booking for customers and provides them all the information they need. Then, it reduces costs, as intermediaries like travel agencies are not needed anymore, and it allows direct marketing, which permits to directly target the right group of customers. - The large number of suppliers for this market makes their power pretty low, and allows the hotel chains to choose the ones they want. - Concerning the threats, the opening of Asia can be noticed, as it is becoming more and more attractive for occidental populations. - The huge choice of different hotels and substitutes forms the main threat on the market. This consequently involves two more threats: - The power of buyers, which is very high, due to lots of alternatives. - The hard rivalry between all the companies competing in the tourism market. Finally, the tourism market in Spain is not a very attractive market to start to compete in, due to many threats and especially to the rude and intense competition, even if lots of opportunities and profitable changes, for example brought by the Internet, can be taken into account.

Internal analysis 6.1 Strategy Meliรก International Hotel based its strategy upon four main guidelines, which have taken into consideration glocalization, maximising efficiency and return and boosting competitive advantage.

Strategic Focus, http://www.meliahotelsinternational.com/sites/default/files/informesfinancieros/mhi_informe_sostenibilidad_2012_en.pdf Expansion and emerging markets 31 32 The hotel sector has known a decreasing supply in Spain since 2008 but the worldwide expansion of Meliรก Hotels International allowed the chain to endure this recession. The goal of the group, which is already one of the main leaders in the hotel sector in Spain, is to become a worldwide leader in terms of excellence, responsibility, and sustainability. Since 2011, Meliรก Hotels International has different loyalty programs with international airlines; these deals allow to customers take advantages of different offers. The purposes of these deals are developing its International activity, contribute to the improvement of the international implementation strategic and get the loyalty of customers. In 2012 the company continued with its internationalisation plan, 90% of these hotels are situated outside Spain and 58% in emerging markets. At present, the company has penetrated in an emerging Asian market that is a good opportunity for Meliรก Hotels International and expands his market and new source of incomes. 31 http://www.onparou.com/Sejours-en-Hotels-Melia-Hotels-International/infos-chaine-hoteliere_32.php (Webpage in French) 32 http://www.meliahotelsinternational.com/sites/default/files/informesfinancieros/mhi_informe_sostenibilidad_2012_en.pdf

Meliá Hotels International will continue to reinforce its international growth plan, supported by the strength of its brands and a management model based on variable lease and management agreements. Within this context, emerging markets and Latin America and the Caribbean will remain the Group’s priorities.

Culture of Revenue and Client 360 33 34 In addition of its internationalisation strategy, the company has also reinforced its regionalisation strategy in the group’s principal national and international destinations. The reason is to give the regions the necessary management resources and sales forces, and improve its distribution strategy via direct channels and the proximity to the customers and businesses. The company wants to promote customer loyalty by enhancing awareness and offering new proposals to add value at melia.com, to boost and optimise its own commercialisation channels and to turn the social networks into a channel for communication and specific services. In 2012, by optimising the e-commerce strategy, the company knew an important evolution of sales made through direct channels, which increased of 15.7% comparing to the previous year, and a rise of 23.2% of the sales made through melia.com. Management model35 The principal management objectives include actions in various areas to cover the services and added value Meliá Hotels International. These actions require major efforts in terms of adapting its corporate culture. The company’s future business model will be centred on growth through low capital intensity formulas or joint ventures and strategic partners. The aims are to position corporate services closer to the hotels by decentralising operational functions and centralising strategic functions; and to expand the company’s process, systems and human resources to its international operations, and at the same time secure a global vision and control of the business.

33 http://www.onparou.com/Sejours-en-Hotels-Melia-Hotels-International/infos-chaine-hoteliere_32.php (Webpage in French) 34 http://www.meliahotelsinternational.com/sites/default/files/informesfinancieros/mhi_informe_sostenibilidad_2012_en.pdf 35 http://www.meliahotelsinternational.com/sites/default/files/informesfinancieros/mhi_informe_sostenibilidad_2012_en.pdf

6.2 Structure 36

The company has developed a new Organisational and Business Model to facilitate the alignment with the company strategy. This new model is based on: Hotels, Asia Pacific, Real Estate and Club Meliá. These three areas actively cooperate and are also highly complementary in their activities to achieve the company’s strategic challenges: to become a more global company, with growth in the most relevant brands and markets, with a special focus on Asia and to maximise the profitability of its assets. The coordination of their activities and development allows the chain to offer a wide range of products to clients and get their principal proposes: customer loyalty. The following includes a brief description of the activities in each of the different areas:

- Hotels This area is basically responsible for the operations in the Meliá Hotels International hotels, including all of the hotel brands and the wide range of experiences they offer to guests, from the most avant-garde to the most family-oriented, under the different brands. Meliá Hotels International has also developed four different systems for operating hotels as follows:

• Ownership: both the ownership and the management of the property are in the hands of Meliá Hotels International. • Management: the management of the hotel is the responsibility of Meliá Hotels International, but a partner owns the hotel with which the company has agreed conditions for its management services. • Lease: Meliá Hotels International leases facilities to operate a hotel under one of its hotel brand names. • Franchise: Meliá Hotels International cedes the use of one of its brand names for a certain period to a partner so that the partner may operate a hotel under the brand name.

Asia-Pacific The new Asia-Pacific area was created with the aim of increasing the presence of Meliá Hotels International in the continent. To achieve this, Meliá Hotels International has strengthened its sales, distribution and hotel development teams with the creation of a corporate office in Shanghai from which the company's Asia-Pacific strategy will be managed. Real Estate Real Estate is another basic foundation for the new Meliá Hotels International organisational structure with the dual objective of maximising the profitability of the 36 http://www.meliahotelsinternational.com/en/about-us/discover-mhi 37 http://www.meliahotelsinternational.com/sites/default/files/informesfinancieros/mhi_informe_sostenibilidad_2012_en.pdf

company’s real estate assets and also using those assets to expand the range of services available to clients. - Club Meliá Club Meliá is Meliá Hotels International’s holiday club, the only one of its kind in the Spanish hotel industry. It was formed in 2004 with the objective of completing the company’s range of holiday products.

6.3 Systems The following systems are used within the Meliá Hotels International: - Recruitment and selection The importance for Meliá Hotel International is looking for a qualified team of people working in an environment where flexibility, motivation, commitment, involvement and enthusiasm prevail. The recruitment of Meliá is based in two principles factor: • External Recruitment: Meliá carry out the external talent and look for the diversity in their teams. To source this talent they are present on employment forums, at universities, on employment portals and on social networks. • Internal Recruitment: Meliá considers that internal promotion is a fundamental premise. Every employee in any part of the world has the opportunities to apply for a job inside of the chain, in another hotel or country. Meliá Hotels emphasize local recruitment to encourage sustainable development, but always under a global brand.

- Customer relation management The CRM department of Meliá Hotels International collects relevant information and distributes advanced knowledge about customers´ behaviour. For the company is essential developing an optimal relationship model with customers and to anticipate what they want and improving the personalized communication. The company offered at the different points of contact with the aim of increasing loyalty, profitability and satisfaction. CRM system organizes customers according to their brand affinity, destination, reason for travelling, booking channel, psychographic segmentation, times of purchase, potential value, lifecycle, etc. These provide the basis for developing customer communication strategies using technologies in Multi-Channel Campaign Management. - Online marketing system The Meliá Hotels Company has a digital marketing perspective. Meliá has strong influence on the sale of hotel services via digital platforms including Internet, mobile etc. These tools improve the digital marketing action and supply the right offer and the right time for the company. - Social media system The Social Media departments involved to its presence on social media. This department tries to promote the high level of participation among customers and a strong emotional link with its brands, which is known as engagement. Meliá Hotels is one of the principal hotels on Facebook and is present on other social media including Twitter, YouTube, LinkedIn, etc. - Meetings & Events This sales team specializes in the Groups, Conventions, Congresses, Incentives and Events segment. The key account management system ensures to customers receives an exclusive

contact. Customers can organize any type of event at any hotels across the world and normally thy have optimum knowledge of the specialized hotels in this business segment.

- Business Travel This department is focused on the B2B sector, this sector require highly professionalism and technology that are the key to gaining access to the top global companies. The most of the companies demand exclusive negotiation and contract for the procurement of their corporate rates. This department provides the entire information require for the international companies. Also, Meliá Hotels Company has specific services for the corporate segment that includes SMEs, Official Organizations and Associations. - Leisure The Europe Leisure Sales department manages yearly contracts with almost 100 tour operators in different markets, managing everything from hotel procurement, tour operator after-sales and hotel bookings, to the sale, implementation and monitoring of promotion/marketing plans with tour operators. The company works with main travels agencies on the country.

6.4 Style of management The style of Meliá is formal and hierarchical. Due to Meliá is a professional company. The Company have a high experience curve in the sector, and his main way to work is through professionalism and seriousness. The functioning of the employees is affective. The formal structure stimulates the employees to work harder instead of, for example, talk with each other. They also respect the customers. If there are any problems they find a solution and solve the problem.

6.5 Staff As in most of the Spanish companies, the working atmosphere in Meliá is often rosy and usability is erected in social etiquette. There is a very strong emotional dimension in relations within Meliá. But not only Spanish are employed in the Meliá hotels in Spain, and Meliá is an international company so there are rules and a code of ethics that everyone in high or less important position have to respect.

6.6 Skills - Education & Experience Meliá wants every employee to speak at least Spanish (in other countries than Spain, it is the mother tongue) & English.38 In the ‘Job Opportunities’ section, Meliá only ask for personnel with experience. For management functions Meliá ask for university degrees and experience of two years or more. Meliá selects their employees carefully for the type of hotel in case. The higher priced hotels got the most experienced employees. 38 http://www.meliahotelsinternational.com/en/employment/opportunities

- Market oriented The definition of market oriented is39: ‘A company philosophy focused on discovering and meeting the needs and desires of its customers through its product mix.’ Meliá is market oriented because they differ with their hotels over different price segments.

6.7 Shared values Values are affecting everyone in the Meliá Company. - Main values Main rule: ‘At Meliá Hotels International we have the firm goal of promoting a culture of recognition, which ensures pride and commitment among our employees and enables us to move forward together as a company.’ 40

Values41 • Service vocation: Guests are the most important for the Company. • Excellence: Employees work with professionalism, efficiency and agility. • Innovation: Adapt to new technologies, emerging markets, develop new strategies. The principal anticipate to needs and wants of customers. In other words, “Be unique”. • Proximity: Loyalty programs. • Consistency: Experience and develop.

7.8 Conclusions: After the 7-s model made for Meliá Hotel international, the conclusions are: - The Spanish hotel market has decrease in the last years, due to the Economic Crisis suffered by the country. While, the foreign tourism has increase in the country. - The worldwide market has increased; Meliá has expanded their business to emerging markets. - Meliá is leadership in the Spanish market, and they should maintain this position through loyalty customers programs and continuing their internalisation in the hotel sector. - Meliá is expanding a new market: Asia, looking for new opportunities and a new source of incomes. - Meliá wants to reinforce his presence in Latin America and Caribbean, both expanding markets and big opportunities in the leisure market. The main propose is achieving the leadership. - Meliá is focus on the regionalisation of the company. - Meliá get his expansion with joint ventures and strategic partners, this allows save invest of capital, decentralising operational functions and centralising

39 http://www.investopedia.com/terms/m/market-orientation.asp 40 http://www.meliahotelsinternational.com/en/employment/talent-management/commitment 41 http://www.meliahotelsinternational.com/en/about-us

strategic function, and a better knowledge of new markets. It can become a threat for the company, they can lose control. - One of the main objectives is: Customers, they focus on loyalty programs and retain of clients. For that, they develop CRM programme, online marketing, Social Media participations where they have a strong position. - Inside of Meliá, the company promote recruitment and selection of personnel trough external and internal recruitment, promotion, motivation and participation. Principally, Meliá wants to obtain higher benefits and become a more global company.

Organizational audit 7.1 Resources and competences of Meliá

- Human resources Employees are the most valuable resources of the company. The hotel chain had in November 2013, 36,662 employees43 all over the world within more than 11,000 in Spain.44 10% of them work in the corporate offices of the company and the rest in hotels. That’s mean that the general staff of all the Meliá hotels in Spain represent almost 9,900 people. Managers represent 16% and directors 2% of the hotel staff. CORPORATE OFFICES 1 100 10% HOTELS 9 900 90% General staff of Hotels 7 320 72% Managers of Hotels 1 760 16% Directors of Hotels 220 2% MELIA EMPLOYEES IN 11 000 100% SPAIN Meliá employees repartition in Spain

The adaptability of workers to the company philosophy to obtain a higher service performance has pushed the company to improve their ability to motivate their employees. • Analysis of the employee’s 45 satisfaction Satisfaction customer survey is an important basic factor for the company but employee’s survey is that much important? Every year Meliá carries out a Workplace Climate survey in the different business areas but also in the corporate offices. Those surveys allow the company, by studying their opinions on their work and how they feel in the company, to evaluate employee’s satisfaction. - Physical resources The principal physical resources of the company are the hotels and their facilities around the world. The company employs various commercial brands to offer their

42 http://www.surfeco21.com/?p=1587 43 http://prezi.com/5izk8swssfyu/value-chain-analysis-melia-hotels-international/ 44 http://www.melia.com/html/dsostenible/en/diversidad.html 45 http://www.melia.com/html/dsostenible/en/satisfaccionEmpleado.html

services: Gran Meliá, Meliá Hotels & Resorts, ME by Meliá, Innside, Sol Hotels, Paradisus Resorts, Club Meliá and Tryp. Currently, Meliá has more than 350 hotels around the world, and they have presence in 35 different countries, four continents. Of the total, 156 hotels are situated in Spain. The objective for 2014 is to sign 30 hotels. In fact, Meliá has planned open more than 58 hotels from 2014 to 2015, and remains focused on destinations in the Caribbean, the Americas, the Middle East and Asia. - Financial resources 46 47 The hotel company generally improved business in all areas except Spanish cities, largely due to economic crisis. The international tourism had an excellent outlook, since it has increased by 5% in 2013. At the same time Meliá presented an increasing of 5.2% in revenue per available room. Their strategic focus on improving revenue, diversifying segments and source markets, and earning customer loyalty, the hotel company achieved through an increase in sales of 26% and melia.com record of sales in all the live channels in the last year, 2013. Intangibles resources: Research and development The principal intangible resource of the Meliá is his experience in the Hotel Sector. The company started in Spain around 50´s in Mallorca (Spain). In the 70`s the company started to extend their company to other tourist cities in Spain and in the 90`s started their international expansion. In 2011, Meliá renewed their strategic and became to Meliá Hotels International. Since then, Meliá Hotels International has adapted his strategy to the market and new technology and the company has struggled to maintain its leadership position in the Spanish market. -

Nowadays, the 25 % 48of visits to melia.com come from smartphones and tablets, a trend that requires the company to adjust to new information and communication technologies to consumer demands. Meliá Hotels International continued to innovate in the development of distribution channels. Evaluation of the capacities of the company The Company offers a hotel service as well for families as for couples or executives, and in equally diverse ranging from the most heavenly place in the metropolis. The success of Meliá is primarily due to innovation and a range of services and skills corresponding to the real resources they have mobilized. Key competences are those that enable Meliá have to offer its customers a unique advantage.

46 http://www.melia.com/html/dsostenible/en/evolucionHotelera.html 47 http://www.meliahotelsinternational.com/en/press-room/02282014/melia-earns-393-million-ongoingoperations-after-rigorous-debt-restructuring-and 48 http://www.meliahotelsinternational.com/en/press-room/07192013/melia-hotels-internationallaunches-innovative-mobile-website-improved-user

- The ability to access multiple markets customers, due to its wide range of brand, they can use the services for professional and personal needs. Meliá operates on the B2B and B2C market. - The advantages of Appeal Meliá are many: first is experience with 58 years of it and the growing increase the loyalty of its customers through the loyalty card system Meliá Reward. - Being really difficult to imitate by competitors.

7.2 VRIN scheme VALUABLE Employees value Real estate INIMITABLE Acceleration of the international growth

RARE New tools to their website Online customer surveys (market matrix, brand survey, monitor 2.0) NONSUBSTITUTAB LE Financial resources International growth

7.3 The company’s value network 49 •

The external value network

• Customer Spain market represents more than 40% of Meliá’s business worldwide. The customer’s percentage from Spain is 34.3%. The fundamental factors in achieving commercial success are delight customers and knowledge about them. The company has the dual function of managing customer loyalty (Meliá Reward the program of fidelity of the hotel company which represent more than 2 200 000 people) and increasing their value to the group, focusing service on customer needs. The main objectives of this programme are: • Maximize their knowledge of customers. • Offer the customer better service. • Increasingly competitive market. • Intermediaries Meliá has a Europe Leisure Sales department; it works for the six regions into which Meliá is divided: America, Asia, Europe, EMEA, Premium and Mediterranean, contributing more than 60% of the total revenue. The department: • Contracts with almost 100 tour operators in different markets. • Managing everything from hotel procurement, • After-sales and hotel bookings. • Implementation and monitoring of promotion/marketing plans. 49 http://en.wikipedia.org/wiki/Value_network

• Suppliers Meliá has 8,589 suppliers, Meliá care to manage its own value chain, but also takes into account the rest of the links in the chain in the industry, from the guest to the suppliers of raw materials. The mission of the Purchasing Department is thus to apply supplier management criteria that meet the needs of hotels and corporate offices in a balanced and sustainable way. Meliá aims to achieve a satisfactory and long-lasting relationship with suppliers

7.4 Value chain The main function is offer rooms to their clients and adapts them to customer’s preferences.

Primary activities: The principal activity of Meliá Hotel is provided room services to their clients. For that, they have to adapt them to the needs and wants of clients. Meliá offers different types of rooms focus on families, couples, singles or business travel. Each of one has different services, like cleaning, security, good localization, extras room services, restaurants, spa, cocktail bars, and the possibility of contract external services of transport, tourism or activities. Also, Meliá has a long-term relationship with supplier and providers for guarantee the best services. The company count with a huge number of suppliers for materials, groceries, furniture, and extra services... Inside of operations, Meliá transform producer goods in services for customers, for instance foods in meals. Marketing and sales activity priority is retain and attract customers to their hotels and renting the rooms. Meliá provide their services through different distribution channels: direct channels, when clients contact directly with the hotel or official web site and indirect channels, when clients book the service by means of trip advisor, booking.com and different browser. The last data of the company said that intermediaries do only 25% of the sales themselves and the other 75%. Also, Meliá use another other actions of marketing: online ads, TV campaigns, social media, promotions, and they deal with different travel agencies and airlines. Secondary activities: These activities support primary activities. Meliá hotel is leadership in the Spanish Hotel Market, and they operate under de firm infrastructure, like global prestige brand around the world. They work with formal systems. All formal systems are part of this: 70

Planning, finance control, quality control, information management and structures and routines that are part of the organization’s culture. The procurement refers to the process of acquiring the various resource inputs, technology, and activities. How the hotel obtains everything that they need for develops and provides their service. Also, the technology department helps to develop the different procedures for carry out the main activities.

7.5 Internet value chain The Internet value chain of Meliá Hotels International allows understanding how does the company proceed to create value for the customers. In other words, it lists primary online activities such as content rights, online services, enabling technology and services, connectivity and user interface which link the customers to the company. 50 51 52 53

Enabling technolo gy/servi ces • Text (offers, • Official website • Surveys information) (gathering data) • Facebook • Pictures • Online • Twitter reservations (on • Video • YouTube the website) • Wikipedia • User• Internet search Advertising (pop-up, flash, gener channels ated (Google, Yahoo! ad block) • Online payments …) contents • Text • Pictures Conten t rights

Online service s

Connec tivity • Core network • Interchange • Retail Internet access

User interfac e Appli catio ns • Internet browsers • ITunes • Software applications

Device s • PC’s • Smartphones • Operating systems

50 http://www.melia.com/fr/ 51 https://www.facebook.com/MeliaHotelsInternational 52 https://twitter.com/MeliaHotelsInt 53 http://prezi.com/5izk8swssfyu/value-chain-analysis-melia-hotels-international/

7.7 Business canvas model of Meliá 54

- Customer segments Meliá have a wide ranges of brands through which wants to serve are all kinds of customers. Meliá operates on B2B and B2C markets, for business or leisure travels. Meliá must adapt to each of the needs required by their customers, because both sectors need to meet different needs. For example, businessmen need work and rest in his room and probably a family prefers enjoy the different services that Meliá offers: pools, restaurants, gym, playground for children, etc. Anyway, both of them must be satisfied with the Meliá service and repeat the experience. - Value proposition The main question that company have to consider is: Why should people stay at the hotels of Meliá and not another hotel? The main answer to this question is that Meliá has a good quality and price relation. They are able to resolve any problems or claims in an appropriate way. Their principal objective is delighting customers and they repeat his experience, it´s mean his strategy is focus on retain and loyalty of clients. - Customer relationships Meliá has specific and update database about preferences, profile, and nationalities of their clients. They want to offer individualized offers and achieve the loyalty of them. For Meliá, the details are the keys for satisfy clients and success with them. They offer little details like bath stuff (soap, shampoo, towels, hairdryer etc.), mini-bar inside of the room, room service, common rooms, different restaurant and services. These little details get that the clients wants to choose this company instead of another one. - Channels Meliá use different channels for provide their service: Direct Channel: They offer their service through their principal website or calling centre where the client can book the room directly, without intermediaries. This channel is the most used for business people or companies. 54 http://essentialbi.nl/business-model-canvas/

Indirect Channel: They offer their service through the different online browser: Trip Advisor, Booking.com. The social media: Facebook, twitter or others where they published their offers and clients can book it or post their opinions about the service. Also, clients can book in travel agencies or travel packages. In the last years, these types of reservations have increase thanks to the new technologies and smartphones. Principally is used by leisure travels, families or young people who look for the offers. Revenue streams The principal source of income for Meliá, are the revenues of booking rooms by clients. In spite of, Meliá has another source of income like the restaurant that can be used for outside people, organizing event, hire common rooms: meetings, congress, and celebrations. Meliá Hotels offers extra services for which clients have to paid more money. Finally, Meliá have a gift shop in each hotel where they sell his merchandising or souvenirs. - Key resources The physical resource is the facilities of Meliá, their rooms and the services that clients receive in their hotels. The human resource: employees. Meliá promotes among employees teamwork, communication between departments, motivation, identification with the company, training and personal development, all of them focus on work like a global brand and not like independents hotels. Also, they work with employee’s surveys by measure the satisfaction. If the Meliá staffs are satisfied with the job, they can offer a better service for clients. - Key activities How the company increase their value proposition. For example, If Meliá increase on number of clients, they need to advertise more and create more brand awareness. For this, Meliá should increase his presence in different channels and publish information, offers, travel package for potential clients, improve marketing actions and develops different campaigns, which must be adapt to each season or country. Inside hotels, they must promote different activities, new experiences, restaurants or services, and if it could be possible some of them exclusive for Meliá clients. All these actions create more value proposition. - Partners This contains the partners that Meliá needs to make. Meliá take advantage of its good position on the market for make deals with the international companies. Meliá works with international travel companies and airlines, these companies offers Meliá services for their clients. In addition, Meliá has deals with different international company, who organizes different events and congress on the facilities of Meliá. Normally, these companies want a lot of information and exclusiveness.

7.8 Conclusions: Strengths and Weaknesses Strengths The main strengths of Meliá are: - Meliá Hotel is leader on the Spanish Hotel Market. Meliá is the national reference in the B2B and B2C market and for this take advantage to the competence. His position allows make deal with important airlines, travel 73

agencies or multinational companies and in these way offer his customers the best service. Meliá Hotel delights his customers. Meliá expects to the needs and wants of his clients and treat to resolve this in an exclusive and individualizes way. They have a CRM, huge update base where all his clients are recorded. Meliá Restaurants have a really big importance and they are income resources. Restaurants are not only for guests; also it can be used for outside people, who can enjoy the meals. Meliá has an important presence on Internet55: on the principal browsers and social media, and it is the best appreciated for Spanish clients. His experience on the sector, it is really important strength.

Weakness The main weaknesses of Meliá are: - Spanish market is a weakness, due to the company improve business all area except on this market. While foreign clients have increased in Spain. - The competence rise in the last years, and they are in a really competitive market. A new concept hotel has appeared most of them focus on young people. They have to be attentive to the substitutable services like: couchsurfings, hostel, familiar houses, etc. and try to anticipate to changes on the markets. - A big weakness is the geographic concentration; customers can find hundred hotels in the same city. They must considering offer and demand and the relation between quality and price. - They should differentiate his strategy on B2B and B2C market, because business and leisure customers look for different needs or wants. - They have to care his presence and reputation on Internet and Social Media, because these are strength for customers. Customers can express whatever they want and his comments are visible for everybody. - They should adjust information, it require increase presence to new technology for respond demand of clients. - They have to take in account the economic crisis on Spain, and they should adapt his prices or offers, for attract customers. - Normally, Meliá Hotel is related like a luxury and business brand, and if they want to focus on the young target. The hotel chain should change some aspects or strategy market and try to focus this in this segment.

55 http://meliahotelsinternational.com/es/sala-de-prensa/19032014/hoteles-melia-mas-mencionadosmejor-valoracion-internet

Marketing audit 8.1 Meliá marketing The keys of Meliá are their customers. Meliá put effort into delight customers and that they repeat his experience with them. Meliá use different programme of loyalty for customers thought uses the CRM software to collect important and relevant information about customers. Also, Meliá has increased their presence on Internet and social media, which are a powerful tool for the company and also for clients, because they can maintain direct contact. Today, the official website offer 24-hours service to multiple intermediaries, direct customers, agencies and businesses, through multiple platforms: web, call centre and mobile information in 7 different languages. It has a good presence and it´s useful because clients can get information about the company, book rooms, read another post of clients or contact directly with the hotels. The web page offers different promotion and offers. Also, this allow to the clients log in individualized section with personalized offers. On the other hand, clients can finds information about the company in different travel agencies, airlines, specialized magazines in the tourism sector or brochures. In different occasions, Meliá have sponsored sports events. In the social point of view, Meliá Hotels International56 works with many NGO and foundations in which the group is actively involved though different projects. Last but not least, we must not forget the importance of the word of mouth for the company.

8.2 Competences For Meliá Hotels International, it is crucial to understand the behaviour of each segment and to be precisely informed about the potential demand generated in the future. Accordingly, Meliá Hotels International has a global revenue management team, which is dedicated to develop tools, processes and procedures, to control the progress of each of our hotels and compare them with market trends. At Meliá Hotels International, sustainability 57 is a main pillar of the business, which is naturally reflected in the hotels through the different brands they operate. So, as well as their commitment to socially, environmentally and culturally responsible management, each of the brands contains the specific features that distinguish them. Meliá operates a different levels and market 58:

Meetings & Events: This sales team specialises in the groups, conventions, congresses, incentives and events segment. Business Travel: The business travel segment is highly professionalised and technology is the key to access to the top companies, which demand exclusive negotiation. Leisure: The Europe leisure sales department works for six regions: America, Asia, Europe, EMEA, Premium and Mediterranean.

56 http://www.meliahotelsinternational.com/en/corporate-responsibility/alliances-acknowledgementscommitments/strategic-alliances 57 http://www.meliahotelsinternational.com/en/corporate-responsibility/our-brands 58 http://www.meliahotelsinternational.com/en/development/sales/sales

8.3 Strength and weaknesses Strengths: Customers are the main objective for the company. Meliรก look for clients repeat the experience and delight them. The marketing in the company is channel in different ways: Official website, multiple platforms: call-centre, mobile information. Also, indirect channel: different browser, travel agencies and magazines. Presence in different social events and participation in NGO. The word of mouth among clients. Weaknesses: Understand behaviour on each segment, and answer demand of clients in the most appropriate way. Carry out the correct proposes in each market. Differentiate among the company brands. Meliรก has to improve the way in keeping contact with the customers after the visit of the customers.

Financial audit 9.1 Liability and asset structure Liability Debt ratio =

Total Liabilities Total Assets

1.302,4+898,0 3.367, 6

= 0.653 * 100 = 65.3%

The average market debt ratio of the hotel industry is 61.74% 59, so Meliá is just above the average. When a company got a high debt ratio creditors will take more assets of the company.

9.2 Short term liabilities 60 Current ratio (net working capital) = current assets / current liabilities 2013: Meliá’s current assets = €929,3 million (+3,0%) Meliá’s current liabilities = €898,0 million (-13,8%) So in 2013, Meliá’s current ratio was 1,0348 The current ratio shows the Meliá’s ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. Meliá’s ratio is higher than 1, which suggests that the company would be able to pay off its obligations if they came due at that point. Meliá is in good financial health. A result above 1 shows also the efficiency of a Meliá’s operating cycle or its ability to turn its product into cash. Quick ratio = (current assets – inventories) / current liabilities 2013: Meliá’s inventory = €62,9 millions So in 2013, Meliá’s quick ratio was 0,96 The quick ratio measures Meliá’s short-term liquidity and its ability to meet its short-term obligations with its most liquid assets. Thus, a quick ratio of 0,96 means that Meliá has €0,96 of liquid assets available to cover each €1 of current liabilities. This low ratio can be due to the delay that Meliá gives to their customers, which can be too long, or the credit term that Meliá negotiated from its suppliers.

9.3 Company’s profitability 61 -

The return on total assets = EBIT / total net assets

59 http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/dbtfund.htm 60 http://www.meliahotelsinternational.com/sites/default/files/informes-financieros/End%20Year %20Results%202013_1.pdf 61 http://www.meliahotelsinternational.com/sites/default/files/informes-financieros/End%20Year %20Results%202013_1.pdf

2013: Meliá’s EBIT = €164,4 million (+7,9%) Meliá’s Total Net Assets:

Total Assets €3.367,6 million (-2,9%) - Depreciation and amortization for bad debts €91,1 millions =

Total Net Assets €3.276,5 millions

So in 2013 Meliá’s return on total assets was: 0,050 so 5% This low ROTA of 5% indicates that the company is not making enough income from the use of its assets. Meliá recently added 28 new hotels to his current pipeline, so the ROTA can be affected by those operations, it does not mean that the company should sell the business. Hotel industry can quickly generate enough revenue to cover those big spending. To cover them the company should continue the business. But if its remains low a few years later it may indicate an unwise investment on the part of management. The new added hotels may not be increasing production efficiency or lowering overall production costs enough to positively impact the company's profit margin.

9.4 Conclusion The international growing presence, combined with exposure to alternative feeder markets, offset the drop in demand in Spain. Even if Meliá’s debt ratio is high it’s still under the one of the industry sector, the current ratio of the company is under 1 that means that they will be able to pay off their obligations. The low quick ratio means that the company doesn’t have enough cash to meet its short-term obligations with its most liquid assets. And to finish the low return of assets of the company is due to the sector industry. So the company have enough capabilities to generate funds and creditworthy to set up new investment projects as the opening of 58 new hotels between 2014 and 2015. Meliá is able to profit from opportunities in the market and to respond adequately to threats from the market.

9.5 Cost structure - Cost structure: The company has clear insight in their cash flow and balance, but there is not enough information about the cost structure to distinguish between variable and fixed costs. The reason for this is that is a chain of hotels and not just one. Meliá probably got good insight in the costs for themselves, but Meliá doesn´t publish it into details. - Management knowledge: Meliá knows their turnover and gross profit, because they have to publish it to their shareholders and the government. In 2013, the company increases their losses by 299.4% due to inside operations, like sale properties, taxes and investments on new projects. - Accounting method: It is not possible to have access to this information, because Meliá does not share it. The company published that they changed the accounting method in 2013 in consolidated accounts regarding the consideration of the conversion option linked to the convertible bond issued in 2009 as an equity instrument, despite the cash settlement option. That is the only information that is available. - Cost and sell price: Meliá has not offer the same price for their services, it depend on where is situated the hotel, what brand are the hotels, the type of rooms, the services that are included and the local competitors. Each brand´s Meliá decided the price for their hotels, for example: Sol Meliá put the price for every hotel in the country. On the marketing point of view, this is a good strategy because Meliá Hotels adapt their price according to the market, needs and wants of customers and the offer and demand. For Meliá is crucial understand the behaviour of each segment and to have precisely information about the potential demand generated for all dates. The company puts the price services to the needs of hotels, destinations and markets. They work with centralized teams, which directly manage strategic sales decisions in the short, medium and long term, in addition to local teams with revenue managers in hotels, which independently manage the systems under the global company

9.6 Planning, budgeting and key figures Planning & budgeting Meliá plans by short-term periods (2-4 years) in Strategic Plan reports. In these plans they plan major investments like in the Strategic Plan 2012-2014.62 In this plan Meliá uses normative budgets. The company deals with deviation by their reserves and short time loans.63 The company planned for 2014 to repay most of the short-term loans and build up even more reserves to carry investments. Profit contribution

62 Sustainability report page 92 63 http://meliahotelsinternational.com/sites/default/files/informes-financieros/mhi_inversores_mar_14_en %20v2_0.pdf page 4

Figure : profit contribution1

9.8

Conclusion: Strength & Weaknesses Strengths Growth Spread profit around the world

Weaknesses High debt ratio Low quick ratio

Strengths: - Meliá can afford their obligations and pay on time. - The company has an efficiency Meliá’s cycle. - Their ratios are better that the competence in the sector. - The Company works with centralized teams, which directly manage strategic sales decisions in the short, medium and long term, in addition to local teams with revenue managers in hotels, which independently manage the systems under the global company. - The company adapt their price to the market, it means that they adjust price for country and brands. Weakness - The losses have increased exponentially in the last years - The company has a high debt ratio - Meliá plans their strategy in short term, and it´s could be risky.

Conclusions As a result of Meliá Hotel project presented, the conclusions are: The Spanish Tourism Market is one of the most attractive around the world, and their demand is really high although in the last years had been affected for the economic crisis. The competence has risen in the last years, and they are in a really competitive market. A new concept hotel has appeared; the most of them focus on young people. They have to be attentive to the substitutable services like: couch surfing, hostel, familiar houses, etc. and try to anticipate to changes on the markets. Meliá has a high experience curve in this sector. Also, there are new opportunities in emerging market: Asia and expanding markets: Latin America and Caribbean. The Meliá Company is situated around the world, but the most of their hotels are in Spain. Meliá Hotel is leader on the Spanish Hotel Market. Meliá is the national reference in the B2B and B2C market and for this take advantage to the competence. His position allows make deal with important airlines, travel agencies or multinational companies and in these way offer his customers the best service. Meliá have to take care about the geographic concentration; customers can find hundred hotels in the same city. They must considering offer and demand and the relation between quality and price. Every management areas within the company are in close relation to each other. They all work in interdependence to reach the main objective of Meliá Hotels Internationals: sustainability. Thus, one of their principal strengths is delight his customers. The customer’s knowledge is very important for the company’s strategy, which involves having always more and more data in the CRM department. Meliá should differentiate his strategy on B2B and B2C market, because business and leisure customers look for different needs or wants. Meliá expects to the needs and wants of his clients and treats to resolve this in an exclusive and individualizes way. Their services have recognition around the world. Meliá Restaurants have a really big importance and they are income resources. Restaurants are not only for guests; also it can be used for outside people, who can enjoy the meals. Meliá has an important presence on Internet, on the principal browsers and social media, and it is the best appreciated for Spanish clients. They have to care his presence and reputation on Internet and Social Media, because these are strength for customers. Customers can express whatever they want and his comments are visible for everybody. Finally, in the internal analysis of the Meliá Company every management areas within the company are in close relation to each other. They all work in interdependence to reach the main objective of Meliá Hotels Internationals: sustainability.

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