Q & A with Juan Jose Hidalgo, President of the Globalia Corporation

This is a man who built on himself by forging one of Europe’s most competitive travel companies with each passing day –the only vertical-integrated company left in Spain- and who shattered the old saying that says that “no man is a prophet in his own land. With an overwhelming personality, rock-solid character and –as his aides put it- tremendous humaneness, he’s a heck of a good friend and an implacable tiger for his foes. Smart, brisk, bold, accessible, knowledgeable of what the market has to offer, a lover of soccer and above all a hardworking man who’s always open to suggestions and new ideas, this man has built an empire from the ground up.

Many years have gone by since Pepe –as he’s always wanted to be called- started out his path as just another immigrant who, while looking for new horizons from a cash-strapped postwar Spain, saw in developing Switzerland an opportunity to hold on to.

Armed with a toilsome spirit and stripped of all fears and economic resources –yet with great vision when it comes to opportunities around him- he set up the underpinnings of what Globalia is today: a company with a payroll of 25,000 employees and over 4 billion euros worth of revenues.

However, this brief introduction doesn’t let us into the originality of a group that –to the best of my knowledge- has no match around the world. Globalia is made up of a number of standalone companies that fortunately vie in their own sectors and have a story of their own, from Air Europa –that opened Spain’s skies at a time when there was just one monopoly- all the way to Halcon Viajes who offered the Caribbean to Spanish travelers.

How much money did you start your first business with?
With 220 Swiss francs. Oh no, pesetas. I had no money, so I had to work to come up with my own small startup.

How did you pay for your first operations? Did you ask for a bank loan?
No, I hadn’t been to any bank. Ten years went by before I went to one of them. With the cash I had in my right pocket I used to meet the needs of the left pocket.

There’s a must-ask question now: what can you suggest to those youngsters in this time of crisis? How can they work to build an empire like yours?
I believe that building companies, being an entrepreneur takes some ingrained talent. You have to have sacrifice spirit and work real heard. I was born at a more difficult time than today’s. Businesspeople like me, born during the postwar period, were willing to get by in everything. Today, there are many young analysts out there who, in my opinion, have created these circumstances and the reality we’re living now, not only in Spain but also all around the world. They are college, well-trained men and women who sell too much smoke and paper, yet they don’t know what hard work is actually all about.

Then, I think that being an impresario takes a concept of saving and management. And I think that’s quite what we’re missing right now. There’s no sacrifice for work with a mindset to get something done, and we must bear in mind the old concept that you can’t spend more than what you earn. I think businesspeople have to be out there because they are the ones who keep the countries going. I believe that under the current circumstances and when the dust finally settles, when everything goes back to normal, there’ll be plenty of opportunities out there.

One curious thing about your life is that you haven’t let foreign capital into your business. You grew with your own capital and now at the end of the road you’re letting some in. How did you manage to do that?
No, I have no foreign capital at all. I only made a real estate operation and I gave a percentage to the banks, but this is a genuine mom-and-pop business with as much as 83 percent of the capital in the hands of the family and the remaining percentage shared by Popular and Unicaja. The majority of the capital is owned by my family, my children, my brother and me. There’s no foreign capital in this group.

How have you distributed your children within the company’s front office?
My daughter is the group’s high-ranking consultant and stockholder in charge of the air company. My son juggles several businesses –in addition to his own- and he’s pretty much aware of the group’s globalization; he’s also a consultant in the company. I think I’m very pleased with everything he’s pulled off. Little Cristina is cutting her business teeth now, she’s the youngest and holds some responsibilities of her own as well. She’s a consulting shareholder now.

In a way, you’ve come up with working guidelines that other Spanish companies have ignored. That is, you’ve doled out responsibilities among your closest relatives, while in other Spanish group the boy has always been the father’s right hand in the business. Do you believe women are as good leaders as men?
There are more women than men in my group. Perhaps there’re not so many of them in the front office, but there are several office directors, hotel managers. But as I said, there’re more women than men in a payroll of over 25,000 employees.

Back in the 1990s when you discovered the Caribbean and brought it closer to Spain, you made a significant sea change by pushing prices down and making the Caribbean far more accessible to Spain’s middle class. Has the company gotten its payback now?
We were the first to open up the Caribbean skies with a Hispania aircraft. That was back in 1987 or 1988. Then I bought out Air Europa. I used to charter my jetliners for them but when the crisis hit the group hard I had to keep Air Europa to myself. Then a couple of things occurred to me: the liberalization of the skies with a regular airliner and that’s how the Curro se va al Caribe (Curro goes to the Caribbean) campaign kicked off. We rolled out that new blitz back in 1987 with a flight to Puerto Plata and today we have nearly daily flight to Punta Cana, daily flights to Santo Domingo and also to Puerto Plata. That means we have increased that frequency by as many as twenty times. We also fly to Cuba, to Cancun… everywhere.

In the past people used to spend their vacations in apartments along the Costa del Sol and Benidorm, but that frame of mind has changed. Now we want to travel around the world, see new things. The whole world has changed. Only a handful of people in Spain used to travel in the past, but now only a handful of people stays home. They travel everywhere under the sun. Perhaps the Caribbean is by far the top travel choice for us, but now you can find Spaniards all around the world.

There are efforts going on to open two new destinations –China and Russia. Those two were steppingstones for Air Europa.
We have codeshare agreements with Aeroflot and we’re taking plenty of people to Russia. Yet China was a tough adventure that eventually backfired. We lost a lot of money due to certain circumstances. But there are always bad experiences in life and China was a pretty negative experience for out group.

Does the opening of the U.S. market have a lot to do with tourism management?
No, the opening of the U.S. market is owed to our growing need. We were flying to New York and we stopped the operation after the 9/11 terrorist attacks. We used to fly to Miami through Cancun and making stopovers in Gander. We have now decided to put new aircraft for our flights to New York and Miami, and we’re working hard to beef up those two lines. The New York line is pretty strong right now, so we actually need to strengthen the Miami route, so we’re working toward that end.

You have opened the U.S. market while having flights to Cuba, let alone the major interest you have in that country. You own hotels in Cuba, you have regular flights to Cuba. However, you’ve opened the route to Miami which is quite a complex destination when it comes to Cuba. How are you being treated in the U.S., I mean legally, in terms of these changes and this double job with both Cuba and the U.S.?
We do business with a tour operator in Miami which is entirely devoted to Caribbean travel, but also to the Canary Islands. Our objective now is to give props to Miami and bring people from Miami to Spain as well. In addition, we’re about to get a license and see whether things become more open for us to start Miami-Havana flights. I don’t know whether it’s going to take six, eight or ten months to get cracking. But if things actually change, we’ll be keenly interested in doing business and have better relationships with both America and Cuba. I’m not into politics and we just want to get things done within our own circles. We’re just asking for a new opportunity, though we’re anyhow doing our own. We have a lot of work to get done in Miami and a lot of people to move around.

What about the Helms-Burton Act? Doesn’t it make a dent in you?
No, there’ve been a few problems in the past as far as other issues are concerned, but we mended the fences. However, that had nothing to do with that particular legislation. I believe the ties are getting stronger little by little and there’ll come a time when they’ll open altogether. I can’t tell you when that’s going to be, but reality says that could actually happen anytime.

And as to hotel development, have you considered the possibility of entering the U.S. market or opening a new destination with hotels?
We’ve only thought of doing that in Miami. We need to move sunbathers to Miami because in this country (Spain) people only think of what we always have in store: Cuba, Dominican Republic, Cancun, and the our own destinations of the Balearic and Canary islands. I think Miami has so much coastline and infrastructure that we actually need to think of it and try to move tourists there.

Have you ruled out a comeback to the Russian market?
For the time being, yes we have. We already have a couple of codeshares with Aeroflot.

Any plans to enhance that presence?
Not for the time being.

What does Globalia make of the emergence of other groups, like Orizonia? Does that mean a very tough competition for your company?
There’s competition everywhere, in aviation, handling and tour operation, as well as in hotels. There’s competition everywhere and in everything. I believe there are way too many travel agencies out there since people got crazy and started opening offices and more offices in a number of modalities. To me, the downfall of the Marsans group, for instance, has meant to be quite a lot in terms of cleaning the market. There’s no so much market prostitution as we had in the past. There were too many discounts and other things going on. Now this year there are fewer direct discounts because they were all misleading.

The Marsans offices have been distributed among a number of organizations. We picked up some of them, but some groups have picked up a much bigger share. We didn’t want to enter into a partnership system, but rather a franchising system in which we can manage pretty well everything these offices have to offer. But when it comes to selling, we want that money to be in the coffers rather than scattered around out there, in the hands of others, because when it comes to paying we are the ones who take the blame. All these things have been going on. It’s not some kind of relief for the sector we’re talking about, but there’s no doubt that things are a little bit calmer now.

In the realm of cruises, can we say that this is perhaps a sector you didn’t pry wide open due to the competition or the access of such heavyweights as Royal Caribbean or Carnival to the Spanish market?
We are big-ticker cruise operators; we even had a vessel sailing around for a few years and right now we own a large number of shares in a cruise partnership. As a matter of fact we’re that partnership’s biggest stockholders and we sell those cruise trips all around the world. One thing is to sail a couple of routes down the Mediterranean Sea and then travel around Greece, but taking those ships to the Caribbean is a completely different thing, believe me. There are many possibilities out there. We’re one of the largest sellers of cruise trips with direct exploitation of those vessels and sales all around the globe.

Word has it you were interested in buying travel agencies or wholesalers in Latin America. Is that true?
No, it’s not so much true. We’re trying to set up things, like the ones we’re doing in Italy, in France, in Buenos Aires. But trying to buy agencies or companies there, that’s something I really don’t like that much. I like to go mounting my own organization.

Do you have a team that looks for ideas, watches market trends and assesses what your competitors do?
Each and every one has his own way of doing things, of doing what others did first, though I’m not much of a copycat. I prefer to take the lead and that’s just what I’ve always done all of my life. I don’t pay heed to what my competitors do but rather what we do and how we are faring in our field.

There’s a Decalogue I’d like you to pass on to us, a Decalogue as a founder, a researcher and an experienced worker and investor. What does a man like Pepe Hidalgo has to say to young entrepreneurs, even from Latin America, who are trying their hand at the travel and tourism market? What could they learn from a man like you?
To me there are five key points. First of all, we live in a world of confidence and we need to pass on that confidence to our customers. We ought to pass on confidence to those who give us the resources to meet the demands of tourists. Customers pay for trips, they give us their money and we just give them slips of paper. So, those paper slips have to be good enough for them to get their trip done and come out pleased with the offer.

Secondly, you need to program –because that’s what we are, programmers of tourist products we sell through our wholesaler. As much as 50 percent of what our retailers sell comes from our wholesalers. So, that gives us an edge from the word go in any destination we are going to launch or we believe in. That gives us consistency and security.

Thirdly, you need to go easy, do things little by little, without wanting to eat the whole world out. You have to do what you do right, you have to strengthen the product and once you’ve buttressed your own course of action, then you can move on to other stuff. That can only be achieved with each passing day and with each passing year.

Fourthly, I always try not to look around to see what others do. We need to see what we do in order to come up with new ideas, launch those new ideas and make them count in the country.

And last but not least, we need to do things carefully, without going at fits and starts. That prevents you from getting into the kind of fix you can’t get out of later on.