In 1978, Meliá Hotels International was “only” 22 years old. Back then, we were already the leading resort hotel company in Spain, a country that was already one of the most important travel destinations for Europeans. At that time, China was still largely unknown in Europe, and at Meliá we could never have dreamed that 40 years later we would be involved in such intense hotel growth in China and that we would be leaders in other Asian destinations such as Indonesia or Vietnam.

At the same time that the Deng Xiaoping was encouraging reform and opening-up in China, in Meliá Hotels International’s home country Spain, a profound political, institutional and economic transformation was also under way, with the approval of the Spanish Constitution of 1978 ending the transition to democracy.

Whereas 1978 was the beginning of major reform push in China after almost a century away from the international stage, the Spanish Constitution allowed Spain to abandon its international isolation and lay the foundations for major economic and social development, leading to it joining the European Union eight years later. Ever since then, our two countries have seen constant improvements in our well-being and standards of living. China saw the return of foreign investment at the same time as it also successfully boosted its exports, achieving a spectacular average annual increase of 9.5% in GDP. Spain, too, began its economic boom in 1978 and has multiplied GDP 7.5 times over the last 40 years with a 2.6 percent annual average increase.

Today, 40 years on, both Chinese reform and the Spanish transition have succeeded in inspiring and consolidating transcendental changes in Chinese and Spanish society which continue to be admired by the rest of the world and which have also encouraged the development of the tourism industry that now generates 11.5 percent of Spanish GDP and 11 percent of Chinese GDP.

As the leading hotel company in Spain and No 3 in Europe, Meliá began to look toward Asia in the 1980s, andAsia-Pacific is now seeing the largest growth, with the company setting up headquarters for the region in Shanghai, and a 21% of Chinesecustomers in all hotels.

Social change and the tourism boom

As a travel company, we can say that since the beginning of the great reform four decades ago, China has experienced a number of changes that have prepared it for the current boom in both inbound and outbound tourism.

In the first place, while the progressive privatization of the economy has allowed the development of major fortunes, it has also more importantly led to the creation of a growing middle class that, after getting their own homes and buying cars, have also begun to travel more often, first within China and then gradually overseas. This trend will only continue to increase as China already has the second largest economy in the world and is expected to equal to that of the United States by 2027.

The second factor of intense urbanization stems from the growth in the economy and an economic model in which most of the activity and jobs are concentratedin the cities. From having 26 percent of its population in cities in 1990, China is expected to have 60 percent living in cities by 2020. With 20 million people migrating every year from the countryside to the city, this trend is unstoppable and, according to the BBC, nine of the 10 largest cities in the world will be in China by 2025.

Regarding the third factor, growing well-being among the Chinese generates aspirations to travel and enjoy new experiences. Economists considers travel to be a "superior good" that flourishes only after the consolidation of an important degree of socio-economic development. Travel has become widespread in China, where the tourism and travel industry generated revenues of $1,350 billion in 2017, almost 11 percent of the country's total GDP, and created 10.3 percent of all jobs (almost 80 million). According to the World Travel & Tourism Council, 87 percent of this was generated by domestic tourism within China, and 80.5 percent of that was leisure rather than business travel. Every year more and more Chinese are also travelling abroad (129 million in 2017), in spite of the fact that only 10 percent of the population has a passport, meaning that the potential for growth is extraordinary.

A market full of opportunities

For Meliá Hotels International, the extraordinary development of inbound and outbound tourism in China generates immense opportunities for cooperation and growth. That is the reason that we have long been aware of the importance of creating close ties with this country. Ten years ago, we decided to locate our Asia-Pacific headquarters in Shanghai to help us better increase our awareness and understanding of Chinese travelers and thus improve our services and grow with China. The company currently operates four hotels in Shanghai, Xian and Zhengzhou, and has another six hotels in the pipeline under three of its most prestigious brands: Gran Meliá, Meliá and Innside by Melia. The company expects to operate 15 hotels in China by 2020.

I must say that our ambition is not to grow quickly in the number of hotels but rather to take a more quality-based approach to growth that generates value within China and helps us build solid alliances and brand recognition in the Chinese market.

Meliá Hotels International is prioritizing growth in major cities such as Shanghai, where we already have two hotels in the portfolio and pipeline, and also in second-tier cities and destinations which offer an optimum combination of business and leisure. The close bonds we have formed with local developers such as Greenland has helped us bring Spanish hospitality to hotels in China, while our leadership and origins in the resort industry have helped position ourselves perfectly to bring leisure experiences to urban destinations to cater to the growing leisure industry in China. Our efficient digital transformation of the business is also a perfect match for the new and emerging segments of modern Chinese travellers.

The Chinese market also has great potential for our hotels in countries in Southeast Asia, where China has become the biggest source of guests. Meliá is able to take advantage of this growing stream of outbound travelers thanks to its operating excellence and know-how in resort hotels (where it is an international leader). The company operates some of the best hotels in resorts in Thailand (six), Indonesia (16) and Vietnam (12), countries in which Meliá already has a presence which is comparable to the biggest international hotel operators.

Challenges ahead

As a publicly traded and family-based company, Melia has unquestionable competitive advantages in China, transmitting a message of professionalism and transparency while at the same time defending values such as trust and proximity, characteristics which are highly valued by Chinese investors. Chinese and Spanish society share many basic principles, values and social habits that are a differential advantage when offering hotel services.

And we have also made major effort to integrate both cultures, requiring our local team to study Spanish and our Spanish expatriates to study Chinese. Although Meliá is a market leader with regard to technology and digitalization in Spain, we are also very much aware that China is a very advanced country in this respect. That is why our offices in Shanghai have become pioneers in understanding and implementing technologies such as innovative payment systems used in China or Chinese social networks. As our team always say, if you are not on social networks, you don’t exist in China. Our WeChat account is now ranked among the top five international hotel chains on the network.

When we look back over the last four decades, alongside the rapid economic and social development of China and the consolidation of the European Union, our company has grown in parallel to become a leading, multinational hotel company. Within that process we have paid the greatest attention to ensuring we do not lose sight of our values and our focus on sustainability and corporate responsibility. Tourism promotes greater mutual understanding between nations and their people, overcoming borders and uniting countries and, above all, creating social well-being, and we are firm believers that our industry is one of the most powerful means of bringing people together and enriching the cultures of different countries.

Therefore, as both a European citizen and CEO of Meliá Hotels International, I am delighted tosee thatSino-Spanish relationshipand long-term links between China and the European Unionhave been strengthening.

The author is Vice-Chairman & CEO of Meliá Hotels International

This article is selected from a book, The Sleeping Giant Awakes, jointly published by China Daily’s communication-led think tank China Watch and Guangdong People's Publishing House.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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