True to its roots

From his sun-filled office in Palma de Mallorca, Gabriel Escarrer Jaume looks out towards the Serra de Tramuntana, a craggy mountain range that forms the northern backbone of his native island. Spanning 90km of Balearic coastline, Tramuntana drops to pure blue sea in Banyalbufa and rises up to the tranquil village of Galilea some 460m above sea level at its tip.

It’s a fitting view for a man overseeing a company that has risen from uniquely Spanish roots to become a global enterprise. As any local mountaineer will tell you, however, there is a cautionary message here: stare too long at the summit and you miss the windy paths and jagged slopes that can trip you up along the way.

Peaks and troughs, as Escarrer knows only too well, are inevitable in life and in business, especially when your company operates across 40 countries in four continents. Smart leadership in any capacity means anticipating these fluctuations before they arise. Sometimes, however, a crisis emerges that is completely unprecedented. After years of continual growth both domestically and abroad, Escarrer and Meliá – like so many other hotel groups – have had to weather something incomparable. With Covid-19 halting international travel and successive lockdowns plaguing Europe and parts of the US, in the first nine months of 2020 company revenue fell 69% compared to the same period in 2019. In the third quarter last year the group was losing around €34m a month. At the time of writing in mid-March, roughly half of its hotels are still closed.

“It’s been challenging to handle the crisis from a short-term management perspective, in order to minimise the impact of the pandemic on our people and our values,” Escarrer says.

Given the fact that almost two-thirds of Meliá’s business is outside of Spain, Escarrer has been steadfastly monitoring outbreaks in myriad countries since the pandemic began, communicating with stakeholders and hotel managers to cope with travel restrictions and national lockdowns. All the while he has been firmly keeping an eye on developments in Spain, where 140 of his hotels are located.

After a tumultuous year, it would be understandable for Escarrer to be downcast. Quite the contrary. In fact, the development and distribution of vaccines in his native land has been welcome news and he is “very confident” that Spain will experience some form of recovery this summer.

“We still need to remain cautious since the virus will be with us for a long time and there is still a great deal of uncertainty,” he says. “[But] I’m confident that the worst is over, and that, along with the vaccination process, we have learnt what we need to do to guarantee safe travel moving forward.”

Meliá’s international remit is altogether more complicated. It remains something of a blessing and a curse, the CEO says. The downturn in the US and Canada has been damaging, but it can offer a distinct advantage once citizens resume travel to hotels in the Caribbean. Meanwhile, with Chinese hospitality recovering at a remarkable pace, an influx of Chinese tourism in (and from) south-east Asia is a tantalising prospect.

“The impact, and the reaction and management of the pandemic, has varied from one country and continent to another,” Escarrer says. “Certainly, the impact to our business has been less severe in countries such as China, where our hotels recovered similar levels of occupancy and RevPAR to those seen in 2019 in a relatively short space of time. On the other hand, Europe as a whole has been strongly affected, as our reaction was not as quick nor as tightly coordinated as it could be in China.”

Escarrer is no stranger to a crisis. He took over as sole CEO of Meliá in 2009, just as the repercussions of the financial crash were being felt around the world. It was a time for calm, agile leadership, and the kind of worldly prescience that seems to run in the family.

Family business

It was Escarrer’s father, Gabriel Escarrer Juliá, who leased the initial Meliá property in 1956, aged just 21. The Altair Hotel in Palma de Majorca was the first of several local hotels that benefitted from the island’s developing reputation as an idyllic tourist destination. In the 1980s Juliá expanded his portfolio, Hoteles Mallorquines, across the Spanish mainland, transforming it into the largest hotel chain in the country through a series of bold hotel acquisitions.

During that time a young Escarrer had plenty of time to learn from his old man. At 14 he worked as a receptionist in one of Meliá’s properties and saw first-hand how his father dealt with his employees. Working from the ground up, he says, was formative experience. From then on, he has done his utmost to live up to his father’s abiding mantra: “Put the customer first.”

“My father has been my best teacher and I have always profoundly admired and followed him,” Escarrer says. “Even more so now that I am able to understand the enormity of his work, creating our company.

“He used to lead by example, and I must say that I truly enjoyed witnessing first-hand how he dealt with his employees, often on first-name terms, assessing their work and sharing his advice. He conducted himself in a kind but firm manner that earned him enormous respect. He was definitely a visionary and was right about many things.”

The company has since expanded far beyond the Balearic isles. Currently it owns and manages 370 hotels in 40 different countries.

The group remains firmly committed to international expansion, particularly in southern European countries such as Italy, Spain, Portugal and Greece, and Montenegro and Croatia in the Balkans. South-east Asia, particularly Vietnam, Thailand and Indonesia are also targets.

In total, 54 hotels are currently in the development pipeline, including the new Paradisus Playa Mujeres in Mexico, the Gran Meliá Chengdu in China and the ME Doha in the Middle East. Has it been hard, then, to maintain Meliá’s traditional values during periods of international expansion and modernisation? The question elicits something of a verbal slap on the wrist. “Just the opposite,” Escarrer says. “One of our long-term values is innovation and, thanks to that, in the 65 years of our history we have always been able to reinvent ourselves and be pioneers in service, people management, products and even destinations.”

A key source of this evolution has been Meliá’s digitalisation strategy. The group has invested €170m between 2015 to 2020, improving its data management systems, marketing campaigns and customer relations.

The future is green

Another factor in the company’s growth has been its focus on sustainability. Escarrer has publicly stated on several occasions that being a “good company” is about guaranteeing a balance between growth, environmental protection and social welfare. “Sustainability is part of our brand’s idiosyncrasy,” he says. Since 2016, Meliá has invested €15m into energy efficiency, establishing a more circular economy in the destinations in which it operates. At present, almost 60% of the electrical energy consumed by Meliá hotels worldwide is renewable, with the figure rising to 100% in Spain.

These efforts have not gone unnoticed. In 2019, the SAM Corporate Sustainability Assessment ranked Meliá as the world’s most sustainable hotel company. The following year the Wall Street Journal declared it the seventh best company in the world in sustainable management.

More recently, Meliá has announced an ambitious project to help combat climate change and bring it further towards decarbonisation. The initiative, submitted to the Spanish Ministry of Industry, Commerce and Tourism, proposes a €129m investment from EU recovery funds to help reduce the company’s environmental footprint to zero.

In addition, it plans to build a prototype for a sustainable hotel in Menorca’s Biosphere Reserve. According to Meliá, this will act as a model for the hotel industry of the future.

For Escarrer, the group’s strategy is a dualistic one. Not only is it good for the planet but it aligns Meliá with an emerging class of eco-conscious guests that prioritise long-term environmental stewardship over short-term convenience.

“We recognise that our future depends on us acting now to protect the beautiful world in which we live,” Escarrer says. “Fortunately, millions of our clients also recognise the importance of playing our part [in protecting the environment] when travelling; this factor increasingly influences booking trends, and rightly so.”

For Escarrer, the group’s sustainability model, in particular, is something that all companies should aim for. He cites a recent report from the World Economic Forum that cites “climate action failure” as the most impactful risk to communities, businesses and individuals worldwide.

“What’s apparent is that we are running out of time,” Escarrer says. “It’s essential that we resume dedicated and coordinated global action as soon as the world overcomes the paralysis caused by the pandemic.”

At the moment the group’s focus remains firmly fixed on the latter. “We need to consider vaccines, health protocols in the whole tourism value chain, digital health certificates and international coordination to create safe corridors for tourists to travel between source countries and destinations,” Escarrer declares.

While Meliá’s road back to full recovery will likely be a windy one, under Escarrer’s calm and considered leadership the group looks set to climb back up to the summit of the mountain.

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