Indonesia Expat
Business Profile

One Hotelier’s Take on Indonesia as an Emerging Market

One of the world’s largest resort companies and the third-biggest hotel chain in Europe, Meliá Hotels International says it is committed to the development of international hospitality standards. It has gained strong footholds in traditional markets across the Caribbean, Latin America and Europe, while its presence in major international markets like the United States, the Persian Gulf and China has helped it earn a great deal of recognition.

Named the best hotel chain in Europe at the 2015 European Hospitality Awards, Meliá began its operation in Indonesia in 1986 when it opened Meliá Bali, the brand’s first hotel outside Spain.

The success of Meliá Bali became synonymous with the man behind it: Gonzalo Maceda. Indonesia Expat caught up with Gonzalo in recent weeks to understand more about Southeast Asia’s largest emerging market, through the eyes of a seasoned hotelier.

With a background in business administration, Gonzalo Maceda joined Meliá Hotels (one of the brand’s 180 outlets in Spain) as the director of finance back in 2001. After a brief assignment with the Embassy of Spain’s Commercial Office in Bangkok, Maceda was then moved to Bangkok where he made a working stint before ultimately arriving in Indonesia. At that time, Meliá was operating seven hotels in the archipelago.

Maceda crunched numbers in Meliá’s Jakarta regional office for two years, where he focused primarily on finance and operations. In 2006, the company decided to move part of its business structure to Shanghai in an effort to support new projects in mainland China.

In 2015, after the successful opening of branches in China, Maceda moved back to Indonesia to jump-start another expansion, not just in the archipelago, but throughout all of Southeast Asia.

“While I have worked in several positions with Meliá – from hotel operations, finance and HR – the logical step for my career after the move back to Indonesia was the development department. That is where we focus on deciding the specific locations where we want to establish Meliá’s presence and find the necessary partners and investors to make it happen,” Gonzalo explained.

Maceda explained that while Meliá Bali may not be the biggest, it is the oldest player in the Indonesian market. This has proven advantageous for the hotel chain. It is well-known as one of the early players in the market, which has made it easier for Meliá to spread brand awareness in the island nation.

According to Maceda, operating hotels in Asia is different than in Europe.

“From a service point of view, we are lucky to have experienced great attitudes towards hospitality and enough resources to make sure that our guests have a great ‘Asian luxury’ experience,” he said.

Despite being a global company with almost 100,000 rooms in 400 hotels across 42 countries, the Meliá brand operates as an Asian company. The majority of daily decisions affecting the business and the strategic plans are brainstormed and decided in the company’s Asia offices. Maceda says the business always aims to “think globally but act locally.”

In line with this, Meliá’s now vice president for development revealed how despite the great differences between city hotels and resorts, both customer bases have turned towards an “Asian customer” profile.

“This can be attributed to the fact that both intra-Asian business and leisure travel have grown exponentially over the last 13 years since I arrived in Asia, and that has significantly affected the reality of our hotels. As for business hotels, Asian customers are now demanding a higher level of luxury than their western counterparts, as they are used to receiving that kind of treatment. Thus, our SOPs have been evolving to continuously answer that need.”

In 2015, Meliá Hotels International launched its Asian-friendly programme “Peng You by Melia.” Initially introduced across 80 hotels – all Asian hotels and properties in London, Barcelona, Miami, Mexico, Paris and others – the worldwide programme aims to adapt to the needs and expectations of the growing Asian customer base. The programme includes extensive training and new regulations on proficiency in Mandarin and other Asian languages for the staff. It also incorporates Asian food on menus and in buffets, includes Asian TV channels and translates of all of Meliá’s materials into numerous eastern languages.

Maceda disclosed that in the case of leisure hotels in Bali, “the change of our market base from European to domestic, as well as the rest of ASEAN and China, means more visitors follow the travel patterns of Asian customers. They are more inclined to spend their time visiting local attractions and enjoying local culinary delights outside the resort area.”

For the hotels, Maceda observed how revenue generated in food and beverage outlets, spas and more has in fact declined. “We have made adjustments to compensate for the issue. We now encourage consumption in the resort such as all-inclusive formulas, adult-only hotels, family-oriented hotels focused on in-house activities for children and so on.”

When asked about Indonesia as a developing nation, the hotelier was quick to point out how both the final customer and investors are excited about the hospitality market. “This is evident with how we continue to work on many mixed-use projects where you can find a hotel attached to a shopping mall, office towers, and the like.”

Maceda revealed how there has been a bit of a slowdown in hotel investment in 2016: “Many investors have adopted a wait-and-see attitude that can probably be blamed on the uncertainty generated by the tax amnesty. Once the tax amnesty programme is completed and some investors have benefited from it, we expect the number of new projects in many different parts of Indonesia to increase rapidly. We are very optimistic for the second [half] of 2017 and most of 2018.”

Maceda applauded the Indonesian government for the work it has done to promote the new ten priority destinations including Flores, Toba, Mandalika Lombok, Labuan Bajo, Belitung, Wakatobi, Pulau Seribu and Morotai. This has encouraged investors to look into these less developed locations and examine how to make use of the government’s push to improve infrastructure, airline access, and other industries that can be profitable.

Maceda believes more effort is needed to attract foreign investment to the archipelago. “Other countries in the ASEAN region, especially Vietnam and Thailand, have been very proactive in attracting foreign investment in hospitality projects. Indonesia has to learn from them and adapt to the rules of the game accordingly to eliminate the obstacles to foreign investment and foreign ownership of commercial real estate in the country.”

 

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