MALLORCA, Spain—Aiming to create a business based on the principle of familial loyalty, Juan Riu and his son Luis Riu Bertrán founded a hotel company in the 1950s that still honors those values today. With that philosophy set, the Riu patriarchy knew they would be successful no matter how many hotels were in their portfolio.
“No matter how many hotels we have opened, a great part of our success is due to our loyalty to our family philosophy,” said Luis Riu Güell, who shares the CEO role with his sister Carmen Riu Güell.
|
|
Luis Riu Güell Riu Hotels & Resorts |
Building the first Riu in Mallorca in 1953, Riu Güell’s grandfather and father “set the basis of what our company still is today,” he said. Today, the company has 108 hotels in 16 countries, he said, mastering its family-focused formula and looking to entrench it globally.
Expanding beyond the Caribbean
Riu Hotels & Resorts are prominent in the Caribbean and Mexico, with a strong hold on leisure travelers looking to relax at their all-inclusive resorts. Though they’ve cornered one market, Riu Güell said the company is looking to expand and diversify its offerings.
Currently, the Riu Florida Beach in Miami is the company’s only hotel in the U.S., but the Riu brand will expand to New York with the opening of the Riu Plaza New York Times Square in 2015.
“For me, this project in the heart of Manhattan is a dream come true. New York is the most famous and visited city in the world and the location by Times Square is exceptional,” Riu Güell said. “I guess everyone wants to visit New York at least once in a lifetime, and that makes us want to be in the heart of it all to offer our clients the opportunity to explore New York from a prime location.”
The property will be equipped for business travelers but will mostly cater toward the leisure market as a vacation destination hotel.
“This will be—by far—the greatest investment and challenge the company has ever faced, and we have all of our efforts and enthusiasm put in this future hotel,” he said.
The stakes certainly are high. The investment for the land purchase alone in New York corresponds to the cost of construction for a high-end hotel with more than 600 rooms in a Caribbean destination, Riu Güell explained. “It gives you an idea about the magnitude of this project,” he said.
The Riu Plaza brand is an alternative to Riu’s resort-heavy portfolio, providing a more urban feel. The New York property will be the company’s fourth Plaza hotel. Riu opened its first Riu Plaza in Panama in 2010, followed by the Riu Plaza Guadalajara in Mexico, which opened in 2011. Berlin will get its own Plaza hotel in 2013.
“We chose Panama for our first city hotel because of its great potential and its impressive and fast growth in recent years,” Riu Güell said. Panama is a business hub with connections between North and Latin America, offering a historic heritage and shopping, which attracts leisure and business travelers. “That’s what we are looking for to develop our Riu Plaza line. We are searching for prime locations in main capital cities in the world with great growth potential.”
The goal for Riu is to have steady annual growth. “We don’t set a goal in numbers. We always follow the market and our clients’ trends to seek the best business opportunities,” Riu Güell said.
On average, the company constructs and opens two or three new hotels per year.
Seventy percent of the portfolio is owned and mainly constructed by Riu. All the hotels in America are owned, and in destinations like Tunisia and Morocco, the company established joint ventures with local partners.
Emphasizing new construction, Riu supervises every new hotel. “Every new construction is the sum of our 60 years of experience and a new opportunity to improve our product even more,” Riu Güell said.
Strong market performance
Riu Güell said he is just as interested in retaining and revitalizing old products—such as the Palace Macao in Punta Cana, Dominican Republic, which recently underwent a $14 million renovation—as he is excited about breaking ground on new projects.
“Growing is important but maintaining our well-defined quality standards by investing in the update of existing properties is also key,” he said.
Although a tumultuous economy caused many hotel markets to suffer, Riu’s hotels continue to maintain strong performance results. The company closed 2011 with an average worldwide occupancy of 86% and a revenue of approximately $1.6 billion.
“We have one of the healthiest balance sheets in the hotel industry so we rarely encounter obstacles when procuring loans with favorable terms and for the amounts requested,” Riu Güell said. “We are not publicly traded and that allows us to manage the company with great independence.”
This independence puts Riu in an industry bubble, enabling the company’s executives “to make decisions considering our long-term goals as we are not pressured by the market’s immediate request for results,” Riu Güell said.