READY TO SERVE

Mexico 2012 | ECONOMY | VIP INTERVIEW

TBY talks to Olegario Vázquez Aldir, Director General of Grupo Empresarial Ángeles, on the group's diverse sectors of operation, and expansion plans in the hospitality and healthcare industry.

Grupo Empresarial Ángeles (GEA) is focused on four sectors: tourism, health, finance, and media. Which of these sectors has the most potential for growth?

Every sector has huge potential. In 1996, we redefined our business portfolio in order to participate in the sectors registering strong growth. Mexico has impressive statistics: 50% of the population is under 25 years old, and this demographic bonus foreshadows large expansion in the coming years. Our internal market has very considerable strength. Moreover, the world experienced the birth of a new civilization based on knowledge and education at the beginning of the 1980s, and we compete under these parameters. All the segments of GEA have one common denominator: they all belong to the service sector. We believe that in today's world, the service sector competes through value-added rather than price. Mexico's demography is changing, which will result in the large expansion of the health sector. In terms of finance, Mexico is one of the lowest penetration rates in the world, in terms of the credit portfolio to GDP ratio. Credit penetration in Mexico is approximately 23% of GDP, while other countries in the region such as Chile, Brazil, and Argentina enjoy 50%-70%. We believe that the finance sector in Mexico will continue to grow significantly in the coming years, which puts GEA in a great position. Regarding tourism, Mexico has a very large market. We are next door to one of the largest consumer countries in the world, the US. We have a vast border with the US and a privileged geographical location with natural resources that provide a competitive advantage against other countries in the region. Our fourth area of operation is media—the nervous system of today's society.

What are GEA's plans for expansion in the tourism sector?

We are building a tourist hotel business with several brands, which gives us a lot of flexibility. Currently, we are operating three brands: Quinta Real, Camino Real, and Real Inn. Quinta Real is a high-class hotel chain that offers service to the most financially elevated sector of the nation. Camino Real has been an emblematic Mexican chain for the past 40 years, and is focused on five-star services. Most executives of other hotel chains in Mexico have operated through Camino Real, a brand that has shaped many people and aspects of the business. Recently, we have decided to enter the four-star segment based on the premise that the business volume is larger. As a result, Real Inn will become the most important Mexican hotel chain owing to its diverse products and concepts. The possibilities of growth are widening; we are motivated to build a strong hotel industry in Mexico.

“We believe that in today's world, the service sector competes through value-added rather than price."

How many Real Inn hotels do you intend to open?

Currently, we have 39 hotels and our plan is to build another 39 over the next three years, around 13 hotels per year. The 39 hotels in operation are five-star quality, and are larger in size, scale and investment. For example, Camino Real Polanco México has 720 rooms. However, Real Inn hotels are rated four-stars, and have 120 rooms. With the mid-size hotel concept, it's easier to increase the number of units.

What is your opinion of Mexico's potential to be in the top five countries for tourism?

I am fully convinced that Mexico will be in the top five, and I believe that the country has every element necessary to be at the top. The geographical position of the country is a huge advantage. The US plays a very important role in the market, as does Asia. Mexico has a natural disposition toward the services industry, and there is a great variety of tourism options. There are colonial destinations, like Puebla and Oaxaca, where tourists are acquainted with our ancient traditions. Mexico also boasts locations with fantastic weather, such as Acapulco and Cuernavaca, with year-round temperatures that range between 17 °C and 27 °C. We are also seeing increased interest in health tourism. Furthermore, Latin American people are warm, an appealing quality for visitors. In the coming years, we are aiming toward revamping Mexico's image.

What are the advantages of incorporating technology into the finance sector?

There is a growing world tendency to merge mobile devices such as electronic agendas and cell phones into one device. Technology is allowing finance services to be operated through these devices and is opening up very important opportunities that are transforming the sector. Mobile technology does not require the same infrastructure to make transactions as ATMs, branches, and credit cards. Finance services are reaching remote populations faster and extending the products and services. As participants in the sector, GEA has low costs in infrastructure and thus we can offer lower prices. In late 2011, we released a product called Multiva Touch, an electronic platform. Once the application is installed and synchronized with your device, you can manage a variety of transactions such as monthly utilities and cable television payments, among many others. Our system generates a personal archive to administer personal finances, and we were the first to launch this service. It is also possible to invest by buying and selling foreign currencies. We are aiming to establish our competitive advantage as an innovative bank that can fulfill the needs of the new generation.

In what ways have you transformed Mexico's private health practice?

It is with great pride that we have been involved in healthcare developments. When we started in 1986, we acquired our first hospital from the Humana chain. At the time, the market penetration of private insurance in Mexico was very low. Private health services had little penetration because few people were insured, and no hospitals provided private service. As our presence in the sector grew, we began to contribute to the culture of health insurance. In the 1980s, people with more limited resources would seek treatment in Mexico, whereas people from higher income groups sought treatment in the US. We worked to transform this trend and nurture trust in Mexico's health services. Currently, more people are seeking services in the country in terms of cost and quality; many now prefer the warmth of Mexico's medical attention.

What is the role of health tourism in your hospitals?

The interest in health tourism is growing. We are building hospitals near the border, in locations such as Tijuana, Ciudad Juárez, Texas, Tampico, and Torreón. Hence, we provide a belt of services close to both markets. As the market grows, so does our confidence; we see demand for elective operations such as plastic surgery and bariatric surgery. Obesity is a significant problem in the US—the treatment is very expensive and it is not covered by health insurance. The cost in the US for a number of operations could be $25,000. In Tijuana, the same procedure could be carried out for $7,000. Mexico represents a strong alternative for elective operations that are not naturally covered by health insurance.

How has Excélsior evolved since GEA acquired it?

Excélsior is a historical newspaper established 95 years ago. It is our social responsibility to preserve, improve, and direct the paper. In the communications sector, changes are happening at a rapid pace. We have tactically decided to transform GEA into a content factory to increase our competitive advantage. We are the only business that is producing fiction, apart from Televisa and TV Azteca. We have already produced several relatively successful series in order to produce television that enlightens people and contributes to the development of an intelligent, open-minded society. We publish material related to drug use, sex, and gender, and are unafraid to tackle taboo topics.

Do you have agreements with foreign channels?

We have been co-producing with Televen (Venezuela) and Caracol (Colombia), and we are also looking into to form partnerships with other Latin American companies. We need to produce programming designed to fill Mexican screens and export to other nations. Building alliances with foreign TV channels that share our vision feeds into our goals for growth.

What is GEA's vision for the future?

In the next decade, we intend to consolidate the sectors in which we participate. In the next five years, we will gain new access to the domestic market and develop routes for international expansion. There are a number of mature sectors that are ready for expansion, such as tourism and health. We are working toward gaining local acquisitions from Spain and Latin America.

© The Business Year - October 2012