Riu expects a record year in its hotels despite raising its prices

The central offices of Riu Hotels & Resorts are located just a few meters from the establishment that the couple formed by Juan Riu and María Bertrán bought in 1953, a few meters from the sea, in the Playa de Palma area, the most touristy in the Balearic capital. . Years before they had migrated to Venezuela with their son Luis, where they rented a hotel and soaked up the tourist business. Upon their return to Catalonia, where the family originally came from, they were recommended to invest the savings they had accumulated on the other side of the Atlantic in Majorca, where mass tourism was beginning to take off. “They listened, they came here and bought that hotel there. That’s how it all started,” says the company’s managing director, Joan Trian Riu, pointing to a white building. This small establishment was the seed of what is currently the second hotel chain in Spain in revenue and the fourth in number of rooms, which manages 99,000 beds spread over four continents, according to the latest ranking of the magazine hosteltur.

Trian Riu is part of the fourth generation of the family in the business and exemplifies the case of the large hotel companies born on the islands, in which the discretion of their owners prevails and a business handover that always comes from within the lineage itself. Riu Hotels & Resorts is currently run by the brothers Carmen and Luis Riu, who have integrated their children into the business to ensure the continuity of the family business. “I always wanted to work here, I saw it at home since I was little and at a very young age I started working in hotels”. The managing director studied business and then spent a brief time in London working at a bank from which he left in 2008 in an ERE caused by the financial crisis. Upon his return, he set out to learn all the aspects of the family business and went through most of the jobs in the chain’s hotels, a process he remembers above all “the hardness” of working cleaning rooms and what you can end up finding in some of them. “I’m not an expert in anything, but I can speak properly,” he explains.

The group that he now co-directs with other members of the family is warming up for the start of the high season for tourism in a year in which it expects to reach 2,600 million euros in sales, compared to 2,530 million in 2022. If the projection, the company would continue with the positive inertia that allowed it to exceed the figures of 2019 last year. The covid was a blow to the sector, but in Riu they already consider the virus to be overcome and are adapting to the changes that these have brought recent years with tourism at half throttle. “The subject of reservations, distribution channels and the length of customer stays have changed. The pandemic has accelerated processes to which we are adapting, such as the improvement of the computer systems that we are trying to adapt to the new customer marketing, which involves less intermediation by tour operators and more direct sales”, explains Trian Riu.

The ghost of the coronavirus is receding, but uncertainty about the economic situation remains in the rear-view mirror of Riu Hotels, which has a debt of 1,400 million euros. So far, the financial consequences of the Russian invasion of the Ukraine, translated into interest rate hikes, have not affected them as much as they originally thought. However, events like those experienced a few weeks ago with the financial crisis in the US and Switzerland are a reminder for any leveraged company. “We are used to living with very bad news and all of us, who come from a very big stick, are afraid. But the lesson we can learn is that vacation tourism is very resilient,” says the manager, who does not rule out a general contraction in travel demand. If this lower influx of tourists occurs, destinations such as Greece, Italy or Spain may suffer less than others from the diversion of tourists who will rule out Turkey this season due to the bad situation the country is going through after the serious earthquake last February.

The escalation of inflation, on the other hand, has had a greater impact on the company, which raised rates by an average of 10% in the last two years. “Prices have risen in the sector, but everything that costs have risen cannot be passed on. 10% is a lot, but the tactic to raise prices goes in many ways and not launching offers is already raising prices”. Despite this increase in rates, the company expects to reach an average occupancy of 86% in its hotels, which already closed 2022 with a level of 84% and more than six million customers worldwide.

With 96 hotel establishments spread over 20 countries on four continents and more than 34,000 workers, Riu has ambitious reforms and openings in progress in its international division. The long-awaited opening of the Riu Plaza London Victoria is scheduled for this year, and next year there will be premieres in Toronto, Chicago, Jamaica and Mauritius. They also contemplate undertaking reforms in establishments in Mexico, Punta Cana and Gran Canaria. Despite the fact that a good number of urban hotels have been opened in recent years, the company’s plans do not necessarily involve city tourists. “We will continue to be a vacation chain, but we will enter cities. There is no objective, nor a percentage or a goal. We are opportunists and we will continue to be. The sun and beach model is more resilient and more profitable than the city model”.

the mexican engine

Their international expansion will continue in the Caribbean, where they still see room for improvement. Mexico is one of its fetish countries: they have 22 hotels open that have withstood the onslaught of the pandemic much better than other destinations thanks to more lax health regulations that have allowed them to maintain good levels of visitors from the US market. The company has also embarked on exploring Asia and the Middle East, but where they really believe there are many more opportunities is in Africa, where they intend to open the company’s third hotel in heavenly Zanzibar. “Everyone was talking about Asia and we talked about Africa because the opportunities that we see exist are many and they are working out very well for us. We have more cultural affinities than in Asia and there is very little time change.”

The plan to continue growing does not contemplate, in any case, the possibility of opening up to the entry of a partner or going public. Nor was it to change its headquarters and leave the Balearic Islands, where Trian Riu considers that “all the tourist know-how” is concentrated. “We are very proud to be Majorcans for the world, despite the voices of some who say that tourism is not valuable”, he says. However, he acknowledges the saturation situation that occurs on the islands in the summer months and that in recent years has aroused criticism from residents, social entities and political parties. “It is a limited territory and we do not all fit. There comes a point where the resident gets upset and it’s natural. It is necessary to see how it is solved, because if the resident gets upset it is not sustainable. And for the territory it is not sustainable either ”,

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