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Abstract
This article examines the long-term development of two strategic alliances between major Spanish (RUI and Iberostar) and German (TUI and Neckermann) tourist firms. Our research builds on the literature on foreign direct investment and institutionalism applied to cross-border cooperation, yet using business history research methods. The study aims to understand how the local Spanish context shaped the interaction between foreign and domestic firms and how this interaction influenced the development of the Spanish companies. Our cases suggest that the Spanish institutional framework affected the nature and strength of alliances. Foreign partners were crucial in providing financial and commercial support, brand consolidation, market knowledge and reputation. However, local actors also played an important role as proactive partners eager to develop their domestic business and upgrade their existing capabilities. Ultimately this strategy would contribute to the internationalisation of Spanish firms after 1990.
Acknowledgements
We thank Iberostar Group and RIU for allowing access and use of the information contained in this paper. We especially thank Carmen Riu (Co-President of RIU) and Sabina Fluxá (CEO of Iberostar Group) for all their support. We also thank funding from Spanish Ministerio de Ciencia, Innovación y Universidades (MCIU), Agencia Estatal de Investigación (AEI), and Fondo Europeo de Desarrollo Regional (FEDER), through project PGC2018-093971-B-I00.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 In terms of tourist arrivals, in 2018 the global ranking was headed by France, and Spain ranked second, with 83.7 Million arrivals. In terms of international tourism receipts, Spain also ranked second with 74 Billion USD, after that came the US with 214 Billion USD (World Tourism Organization (UNWTO), Citation2019).
2 Spanish National Institute of Statistics (Citation2019).
3 Meliá Hotel International is the third largest in Europe and the 18th in the world. RIU ranks 35th in the world. Iberostar holds the 44th position and Barceló the 29th (Hosteltur, Citation2019).
4 ‘TUI Group Annual Report’, Citation2018.
5 Thomas Cook Annual Report & Accounts’, Citation2018.
6 Thomas Cook recorded a net loss of £1.5 billion (€1.9 billion) in the first half of year 2019. In June 2019 the company experienced a severe drop in the stock market. The travel company has announced a reduction of 12 per cent of its capacity for the summer season and said that it would close 21 shops, affecting more than 300 jobs. See Hancock (Citation2019).
7 There is abundant literature on the German tour operators. See for instance Brendon (Citation1991), Smith (Citation1998), Hamilton (Citation2005), Sezgin and Yolal (Citation2012), Kopper (Citation2009),and Gratton and Richards (Citation1997). These literature agree on pointing out the power and influence of German tour operators in the 1960, highlighting their financial strength and their knowledge and control of the German market, which for most of the period under study was the target of their Spanish partners. Undoubtedly the German approach constitutes a fascinating topic to be further explore in future research.
8 Even if the Francoist Administration was highly nationalistic, it did never influence the business of the two family firms studied in this paper. Mallorca was far away from where the economic power resided and neither the Fluxá not the Riu families belonged to the entrepreneurial dynasties that thrived around the Franco regime. (San Román, Citation2017).
9 After interviewing Carmen Riu within the Iberostar project, we shared with her the purpose of this paper and she kindly gave us access to the documents that could help us.
10 The internationalization of the Spanish hotel companies was the result of a long process that began in the 1980s, fueled by the devaluation of the Spanish currency, the descending prices of holiday packages, and the economic recovery of the Spanish touristic products. These factors increased the number of visitors to Spain and turned the Balearic Islands into a mature market with a decreasing profitability. Therefore, the situation moved the main Balearic hotel chains, Barceló, Meliá, Riu and Iberostar, to go international. Barceló and Meliá moved first, in 1985, and Riu and Iberostar followed them by the early 1990s. They looked for markets as the Caribbean where they could develop a sun & beach tourism model similar to the Spanish and in countries with an undoubtedly cultural proximity (Manera, Citation2014).
11 Data compiled from Iberostar’s and RIU’s web pages.
12 Interview with Carmen Riu (February 26, 2016).
13 A sample of the terms of the association are shown in Riu Archive, 20–25, ‘Several contracts between TUI and RIU (Bonaire City Holiday)’ 1963–1965.
14 A sample of contracts and commercial terms are shown in Riu Archive, 26–30, ‘Contracts and clearing documents between RIU and TUI’ 1963-1966.
15 See Riu Archive, 19, Terms of payments and contract condition (Bonaire City of Holiday), 13.7.1966.
16 See Riu Archive, 1, ‘Letter from Luis Riu to Dr. Jürgen Fischer (Touristik Union International)’ 24.03.1971; 2, ‘Letter from Luis Riu to Dr. Jürgen Fischer (Touristik Union International)’, 19.04.1971.
17 Riu Archive, 3, ‘Join Venture Project describing the plan and next steps’, 1971.
18 Decree Law 16/1959, of July 27, 1959, on investment of foreign capital in Spanish companies.
19 The agreement was well received by TUI and they even started working on a by-law draft as stated in the correspondence between Luis Riu and Dr. F. Fischer. Riu Archive, 1 ‘Letter from Luis Riu to Dr. Jürgen Fischer (Touristik Union International)’ 24.3.1971; 2, ‘Letter from Luis Riu to Dr. Jürgen Fischer (Touristik Union International)’, 19.04.1971.
20 Riu Archive, 4, ‘TUI participation. Negative to Riu project’, 24.6.1971.
21 36 Million pesetas in 1971 is equivalent to about 4 Million euros in 2019.
22 Interview with Carmen Riu (February 26, 2016).
23 ‘RIU Hotels & Resorts; About RIU’ n.d.
24 Iberostar Historical Archive, 34, ‘Timeline of Viajes Iberia Group’, 1930-1996).
25 Iberostar Historical Archive, 3, 4 ‘Manuscript on the history of the company written by the Vice-president’ (1930-1990).
26 Iberostar Historical Archive, 2, ‘Chronological summary of Viajes Iberia history’ (1930-1990): 35, ‘Descriptive memorandum of Viajes Iberia Group’, 1930-1994).
27 The Iberostar Archive holds some of the first contracts signed with Neckermann for Viajes Iberia inbound business. See Iberostar Historical Archive, 993, ‘Contract Cervantes Hotel’ 11.11.1971; 1012, ‘Several contracts between agencies’, (1968-1972); 1006, ‘Agency contract between Neckermann and Viajes Iberia’ 31.10.1974.
28 Interview with Miguel Fluxá (March 20, 2013).
29 Interview with Wolfgang Beeser (November 21, 2013).
30 At that time Neckermann bought 45 per cent of the share capital of Iberostar’s tour operator. Iberostar Historical Archive, 2512, ‘Agreement appointing Viajes Iberia as the exclusive representative of Neckermann in Spain’, 21.09.1979.
31 Interview with Wolfgang Beeser (November 21, 2013).
32 Ibid.
33 Ibid.
34 Website of Iberostar Group (retrieved June 6, 2019)
35 Interview with Miguel Fluxá (March 20, 2013).
36 Interview with Carmen Riu (February 26, 2016).
37 Ibid.
38 Interview with Miguel Fluxá (March 20, 2013).
39 Written Interview with Peter Fankhauser (May 24, 2017).
40 Interview with Wolfgang Beeser (November 21, 2013).
41 Interview with Carmen Riu (February 26, 2016).
42 Interview with Wolfgang Beeser (November 21, 2013).
43 Interview with Carmen Riu (February 26, 2016).
44 Although Neckermann never took a stake in Iberostar hotels, it was a minor and temporary stakeholder in Fluxá’s tour operator Iberojet and in Iberostar’s management Hotel Company.
45 Interview with Carmen Riu (February 26, 2016).
46 Written Interview with Peter Fankhauser (May 24, 2017).
47 In 1991 Miguel Fluxá set up the first Spanish-owned tour operator in the United Kingdom, Sunworld and later sold it in 1996 in a transaction which, as we shall see, turned out to be one of the most important in his life (Interview with Miguel Fluxá (March 20, 2013).
Additional information
Notes on contributors
Elena San Román
Elena San Román is Associate Professor of Economic History at Complutense University of Madrid (Spain) and Associate Member of the Spanish Royal Academy of History. Her research interests are focused on business history, family business, entrepreneurship and international business in the twentieth century. She is currently the co-principal researcher of a competitive research project funded by the Spanish Ministry of Education, focused on the study of collective entrepreneurship and innovation in the Spanish service industry.
Nuria Puig
Nuria Puig is Professor of Economic History and Institutions at the Universidad Complutense de Madrid, Spain. Her research interests include the long term effects of foreign investment and the growth and organizational strategies of family capitalism in late developing economies. She serves on the editorial board of Business History Review and Revista de Historia Industrial. She is also a member of the Spanish Economic History Association council and the executive board of the PhD Program in Economics at the Universidad Complutense.
Águeda Gil-López
Águeda Gil-López is an Assistant Professor of Economics at Universidad Francisco de Vitoria (Madrid, Spain). She obtained her PhD degree in Economics from Universidad Complutense de Madrid, with an European mention, and was awarded with the Complutense Extraordinary PhD Prize of Economics in 2018. Her research interests include business history, family business and entrepreneurship. She currently belongs to the research team of a competitive project funded by the Spanish Ministry of Education.