Academic journal article European Journal of Tourism Research

The Experience of Meliá Hotels International in China: A Case of Internationalisation of a Spanish Hotel Group

Academic journal article European Journal of Tourism Research

The Experience of Meliá Hotels International in China: A Case of Internationalisation of a Spanish Hotel Group

Article excerpt

Introduction

China is currently the world's largest economy in terms of growth, which is the main reason why it is a sought-after investment destination for numerous companies across the world, seeking to take advantage of its market opportunities (Chen & Yeh, 2012). The tourism sector also wants to take advantage of this potential (Wu et al., 1998) since China is the fourth country of international tourists' arrivals (The WorldBank, 2013). There is a growing literature in hotel internationalization (García De Soto-Camacho & Vargas-Sánchez, 2014; Litteljohn et al., 2007; Rogerson, 2014) and this research note contributes to the previous literature by analysing the case of success of an internationalised Spanish hotel chain in an emerging country, as it is China, with huge market differences with respect to Spain.

Methodology

We used the case study methodology (Yin, 1981) to identify the key success factors for a hotel investment in China. The object of the study is Meliá Hotels International (MHI), because it is the leading Spanish hotel chain in terms of room numbers (Hosteltur, 2013) and the first company in the Spanish tourism sector to open in the Chinese market. In qualitative tourism research the most common case study methodology is with an unique case (Xiao & Smith, 2006), for example Chan & Hawkins (2010) and Valeri & Baiocco (2012). Case studies allow richer and greater depth data that would not normally be easily obtained by other research designs (Stake, 2005). On the other hand, one of the main criticisms is that the data collected cannot necessarily be generalised to the wider population (Tellis, 1997) and some authors argue that it is faulted of representativeness and rigor (Guba & Lincoln, 1991; Hamel, 1993).

Data was gathered from the company's website, its annual accounts, from articles about the company in the specialised hospitality media, in addition to two in-depth interviews held with the Group's Vice-President of Business Development (VPBD), as she has been ultimately responsible for the company's international expansion since 2011. The first interview was held in 2012, the first year of the company's most recent three-year strategic growth plan, which covered the period 20122014. At that time, MHI was starting to invest in the Chinese market and had only one hotel open, in Shanghai. We held the second interview in 2014, because the situation had changed considerably. The Gran Meliá Shanghai closed in 2013 and the company now has two new hotels open in Jinan and Xian, as well as various projects underway for 2015 and 2016.

Meliá Hotel International and the background to their Internationalisation Process in China

Since it was founded in 1956 by Gabriel Escarrer, Sol Meliá (which was re-branded in 2011 as Meliá Hotels International) has grown exponentially thanks to various mergers and acquisitions of other hotel chains and its welldefined international vision. Today, the group has a presence in four continents and more than thirty-five countries (MHI, 2014b). After Europe, where the company has developed a relevant expansion, the next continent where they have the greatest presence is America. During the interview, the VPBD stated that "the natural movement of all Spanish companies has always been towards America rather than towards Asia". The internationalisation model adopted by MHI can be explained by the Uppsala theory (Johanson & Vahlne, 1977), given that the company has embarked on a gradual expansion process focusing its internationalisation on "psychological" closer markets, penetrating later on in those with more cultural distance (Rodriguez, 2002). This distance also explains the entry choice in China: contract management, which is different to that used in South America, where they have more owned hotels (Quer et al., 2007).

MHI started operating in China in 2010 with the management contract format, the only one used in Asia because, according to the company, this format requires the fewest resources and enables to exploit their competitive advantages on management and organisation (Brown et al. …

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