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International Herald Tribune, July 2, 2005

#1
Pioneering hotelier retraces his steps

By Dale Fuchs
July 2, 2005

MADRID
He prefers a summer home to a luxury hotel when vacationing with his six children, but no matter where he plants his weary feet at night, Antonio Catalán, founder of two Spanish hotel chains, certainly likes to travel.

Every summer for 15 years, the president of the AC Hotels chain takes his road bike on a five-day journey of 750 kilometers, or 470 miles, along a Christian pilgrimage route in northern Spain, the Way of Saint James.

It began as a promise he made when praying for his daughter to survive a car accident. She did and his promise became a tradition, one that friends and even hotel staff join; the entourage of 40 usually includes several managers and executives, a reluctant but faithful design director and an athletic bellhop from the emblematic Santo Mauro in Madrid.

The trip begins with a Mass in his hometown in Corella, Navarra, and it ends with a sweet cloud of incense inside the Romanesque cathedral of Santiago de Compostela.

Each night, the riders rest their legs at one of the 62 upscale lodgings in Catalán's chain.

"In both the route and the business, you must have perseverance," said Catalán, 57, in an interview at his uncluttered office, where abstract sculptures and sleek furnishings match the style of the hotels.

Catalán built up his endurance at his father's hotel in Corella, the only lodging in the town of 7,000. He waited tables, served drinks and handed out room keys to truck drivers, conventioneers and wedding parties.

In 1978 Catalán, demonstrating both pilgrim's pluck and vision, opened his first hotel in Pamplona with the equivalent of €18,000, or $21,750, that he pooled from friends. In two decades, that lone hotel slowly grew into NH Hoteles, a modern chain of 70 no-surprise business hotels.

It became one of the few publicly traded companies in Spain's family-dominated hotel industry. Catalán credits "mediocrity well exploited."

"You open one hotel, then a second and a third and you look in the mirror and say, 'Damn, I understand this business,"' he quipped.

Industry experts, however, recognized Catalán as a pioneer of standardized urban hotels in Spain when others were building beach resorts.

"In 1970s Spain, there were either old luxury hotels or cheap pensions in the cities, but nothing like what he was doing," said Antonio López de Ávila, a marketing professor at IE business school in Madrid.

Catalán, known for his dynamic personality and go-it-alone attitude, relinquished his stake in NH in 1997 to his financial partner, Corporacion Financiera Reunida, in a deal that the financial daily Cinco Dias valued at the time at €84 million. NH is now reported to be worth nearly €1.2 billion, with 240 hotels in 16 countries.

Catalán cited strategic differences for getting out, but he also wasn't having fun any longer. "I was getting deeper into business affairs - the bottom line - and what I enjoyed were hotels, the steak, the breakfasts."

But Catalán did not ride off into the sunset with his bon-voyage package of pet properties, including the luxurious Santo Mauro. Like thousands of weary pilgrims on the Way of Saint James, Catalán rested, regrouped and started off again.

In 1998, he embarked on another chain, AC Hotels, which stands for his initials. (NH stands for Navarra Hoteles, a nod to his home region.)

Today the chain employs 1,622 people in Spain, Italy and Portugal, and is recognized for juxtaposing vanguard interior décor with historic buildings, including a restored convent in Santiago de Compostela.

It took only five years for Catalán to turn a profit, roughly €22 million in 2003, according to a corporate statement. Last year, AC had €136 million in sales, up 38 percent from 2003, and made a €27 million profit.

"It's true that he grew in record time, but he did have the wind at his back," said Antonio Castell, a hotel industry analyst at Ibersecurities in Madrid. "It was easy for him to attract investors because everyone was betting he could replicate the success of NH."

The construction boom in Spain also helped, he said, as real estate investors sought out the man they considered an ideal manager for their holdings. "It wasn't just Antonio Catalán looking for properties," Castel said. "The properties came looking for him."

Catalán said he expected to open 30 more hotels by 2007.

But the building boom is also starting to weigh on Spain's hotel industry, driving down room prices. Added to that is increasing competition from emerging Mediterranean destinations like Morocco, Turkey and Tunisia.

Pinched by the global economic downturn, foreign visitors are spending less and shortening their stays, cutting hotels' profits. Foreign multinationals are flexing their muscles in Spain, buying up independent properties. The largest Spanish chains, like Sol Meliá, are branching out in Latin America and the Caribbean.

Catalán's answer is to target a lucrative niche: young, upscale travelers willing to pay a little more for good service, the right pillow, a plasma TV, a chic lobby, an inviting bathtub.

Rumors to the contrary, he vows that he will not go public again. But he will go hotel hopping, catching a plane to London, where he often stays at four or five hotels in as many days. In his downtime, he leafs through Architectural Digest or browses through boutiques in Milan.

"I fixate on everything," he said. "In this business, you have to enjoy the details
 

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