Analysis

International presence of spanish tourism companies

ANTONIO LÓPEZ DE ÁVILA - Chairman of Segittur 28 February, 2013

The Spanish tourism brand is one of our greatest assets as a country. Spain is one of the global leaders in this sector, showcased by the fact that it is one of the top recipients of international tourism (4th in 2011) and leader in terms of income in the world (2nd in 2011). By managing 100 million visitors last year (of which 57 million were tourists), there is no dispute of the international nature of the industry. Moreover, our tourism companies and those that service the industry are already present in the major regions of the world.

However, in recent years, the internationalisation of Spanish tourism companies has been more necessary than ever. The economic situation in the country called for the diversification of risk by opening new markets and this has contributed to an increased presence of the Spanish tourism brand on the international scene.

Even if we go back a little in history, we can see that this phenomenon is not so recent. Iberia is a major Spanish tourism brand since its founding in 1927 and Amadeus, one of the leading technology companies related to tourism in the world, has been conquering international markets since 1987. In addition, Spanish tourism companies, especially consultancies and hotel chains, have a broad curriculum in internationalisation that dates back to the eighties. In these years, major chains like Sol Meliá and Barceló and benchmark consultancies such as THR, chias Marketing and consultur became pioneers in opening new markets. Subsequently, others joined, such as Riu, Iberostar, Fiesta, Globalia, Grupo Piñero, NH and Grupo Hotusa in hotels and DIT Global, ALS Advanced Leisure Services and Tourism&Leisure, among others, in tourism consultancy and advisory services.

Alongside, airlines, travel agencies, tour operators, technology companies associated with the sector, etc. have entered the international tourism panorama.

As for the geographic areas in which this expansion takes place, past experience leads them to develop sun, sea and sand based products. This makes them choose markets with similar characteristics. The caribbean ranks first, with special presence in countries like the Dominican Republic, cuba, Jamaica and the Mexican caribbean. central America is also prominent with Panama and costa Rica. And, for this same reason, the Mediterranean is a natural next destination, mainly: Tunisia, Turkey, Egypt, Morocco, and Croatia.

However, the Spanish hotel company is innovating and enriching its traditional business model by crossing our borders; it is focusing on the major resorts and developing the all-inclusive package, capturing the US and canadian public. Moreover, its commitment to the urban hotel sector segment has allowed it to enter new markets throughout europe (mainly Germany, Holland, france, UK, Italy and Portugal) and the US.

Right now, the goal of the major hotel chains focuses on emerging markets, which include countries such as china, Russia and Brazil, which occupy top positions. The Asian market is the one that generates most expectations, but the barriers to entry are more complex than those in markets such as Latin America (language, culture, legislation, etc.).

The goal of major Spanish hotel chains focuses on emerging markets

If we analyse the way in which hotel chains approach the internationalisation of their product, we can see that there are basically two ways: foreign Direct Investment with different formulas (full control with acquisition or creation or partial control through subsidiaries or joint ventures) or contractual agreements (rent, franchise or management contracts).

In the first stage of internationalisation, the chains focused more on foreign direct investment, as some of the countries in which they carried out their projects paved the way for them (facilities for investment, favourable tax treatment, repatriation of capitals, etc.). However, in recent years the trend has reversed and, given the lower risk, companies are favouring management formulas, relying on real estate companies (Spanish or otherwise) that undertake property investment.

Presencia internacional de las empresas turísticas españolas

But not only hotel chains are featured in the internationalisation of Spanish tourism companies, we must also highlight the work carried out by airlines such as Iberia, a pioneer in its segment, which others have followed such as Air europa or Vueling.

In the case of the airlines, internationalisation is key in the development of its business and has been traditionally linked to the european Union, Latin America and the US. The aviation industry also undertook its expansion through different formulas: direct management of its routes based on different markets, mergers with other companies and the establishment of alliances, where other companies offer the service on their behalf.

The tourism industry chain is very broad and, apart from transportation and lodging, other agents are involved that we could call mediators, such as agencies and tour operators. In this field, major Spanish tourism groups have also opted for internationalisation: Globalia, Orizonia, Viajes El Corte Inglés and many more. They are companies that have seen a new business opportunity in internationalisation and, in many cases, a way to overcome adverse economic conditions in the domestic market.

The internationalisation of Spanish tourism companies has been dominated by the large companies, but the important role of SMEs should not be overlooked. consultancies, architecture firms, urbanism and design specialising in hotels and resorts, infrastructure engineering and renewable energy companies and technology based companies… they all contribute to the success of the Spanish tourism brand in the world.

The Spanish Tourism Administration is aware of companies’ interest to go abroad, to be present in new markets and to experience new opportunities.for this reason, and within the comprehensive National Tourism Plan (PNIT) 2012-15 prepared by the Spanish Ministry of Industry, energy and Tourism and promoted by Spanish Ministry of Tourism, measures designed to support the internationalisation of Spanish tourism companies have been included , as well as those that in one way or another are related to the sector. The Spanish State Agency for the Management of Innovation and Tourism Technologies (SEGITTUR), under mandate from the Spanish Ministry of Tourism, is responsible for assisting Spanish companies in opening up new markets promoting the exportation of their products and tourist services. To do this, it has the cooperation of IceX Spain export and Investments and the network of Spanish embassies.

It will also cooperate with other countries -in accordance with international agreements signed with them- in identifying their needs related to tourism development and it will coordinate specific actions offering these countries the best know-how of Spanish tourism companies.

In this regard, in 2012 the first steps have already been taken with trade missions, such as that recently organised with colombia, specifically in Bogotá and cartagena de Indias, where Spanish tourism entrepreneurs and others linked to the sector have had the opportunity to learn about everything that a country like colombia offers the Spanish tourism industry.

Spain is a world reference in tourism

This will be the first of several missions, paying special attention to Latin America owing to the traditional link between us. And, as we said at the beginning, it has been the geographic area in which the Spanish tourism companies have developed their international expansion. However, the opportunities of other emerging markets such as Asia will also be analysed.

However we have gone a step further, as we are all aware that Spain is world reference in tourism. In this context, in 2013 we will have a new space called FITUR KNOW-HOW & EXPORT, where companies can showcase their potential, knowledge, services and tourism products to buyers in other international markets To do this, once again we received the cooperation of ICEX and FITUR, one of the most important international tourism fairs in the world, a meeting point for over 170 countries and which constitutes another of the internationally recognised major Spanish tourism brands.

In FITUR KNOW-HOW & EXPORT, companies will not only present their products and services but also participate in a unique event, which is organised with the support of the World Tourism Organisation (UNWTO) and with the participation of tourism authorities from around the world, and is the gateway to internationalisation. In this event, companies and participating countries will present their projects, share their strategies and informing of tourism tenders in their countries, as well as other business opportunities for Spanish tourism companies.

In short, the internationalisation of Spanish tourism companies, which already has a long history, is now, more than ever, a firm commitment in the sector. However, from a Management level, initiatives have been launched to revitalise it and its real driving force lies in the company itself and its directors.

ANTONIO LÓPEZ DE ÁVILA. Chairman of Segittur.

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