MELIA’S EVOLVING OPERATING MODES
As we have seen, Melia has made and continues to make use of various operating modes. (figure 15.2 shows the evolution of its international entry modes.) However, it has not always had discretion in choosing a mode. When Gabriel Escarre established his first hotels, he had no track recode that could entice other hotel owners to pay him to manage their facilities or use his brand name and reservations system. He developed a positive reputation through his successful greenfield and acquisition expansion over nearly 30 years in Spain before moving internationally. During its history, the company has had four names, finally setting on one that includes “Melia” because the name has long been associated with luxury hotels and thus brings a certain cachet to the company.
Nevertheless, most of Melia’s early international growth resulted from acquisitions, such as its purchase of the Spanish chain TRYP that already had foreign operations and of Inside Inns in Germany. The success of these ventures has built Melia’s reputation as a quality hotel operator, allowing it to keep expanding its hotel portfolio with shared or no capital investment. This expansion has also occurred in China and Cuba, which place restrictions on foreign ownership.
Why grow? There are economies in handling larger hotel portfolios because of the clout and logistics in dealing with suppliers and the spreading of reservation and training system costs over more properties. There are also sales advantages because potential customers are more familiar with the larger chains.