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13 Mar 2018

Interview to Josep Adell: Grupo Julià objectives

Categories: Expansión Finance

In 1932, a group of friends founded a passenger transport business to take football fans to watch their matches. Eighty-six years later, and after many ups and downs, the business group is an international benchmark and the world’s second largest tour bus operator. Josep Adell, grandson of one of the founders, welcomes us today in his office.

You’re part of the family that owns the company. But you had to earn the right to be in it.

I wasn’t given anything for free. I staked out a career and had my own future outside the company. I decided to come here voluntarily because I thought I had something to offer. I didn’t start at the bottom, but at positions that were suited to my experience and training at the time. I came in as the Sales Director at one of the group’s companies. Then I moved to the Transport Office and there, in 2003, we went through some difficult times in the group. 

What happened?

Ours was a company that relied on tourism, where there was a lot of cross-billing between various companies in the group. But the market changed quickly and we weren’t able to adapt fast enough. We found ourselves competing with other Spanish tour operators that had weapons we couldn’t have. Some were hotel companies whose business was to fill rooms, others were airlines that were creating their own tour operator to fill their planes. Many others disappeared. And we weren’t able to find the right formula at the time. This happened in the early 2000s. Add to this the 9-11 attacks and the “Corralito” in Argentina, which affected one of our companies, with seven million dollars frozen in that country. That put the group at risk.

It was that serious?

In 2003 we suspended payments at three group companies: tourism, coaches and real estate. But we did it firmly intending to resume payments as quickly as possible. Some of our businesses were profitable and others weren’t, and the group needed a huge restructuring and time to do it. We agreed to return 100% of the amount outstanding from the suspended payments over a suitable time frame. We sold the building in L’Hospitalet de Llobregat where we had our headquarters, and an international passenger transport company that was profitable. With that capital, we restructured the company.
 

And the current business areas came out of that arduous process.

We learned a lot from that experience. It taught us that every company in the group has to be profitable on its own. And that any price paid for services between group companies has to be the market price. And if it’s not, the contracting company is free to buy from another company in the sector. For example, Julià Travel, one of our brands, operates coach tours and excursions in Andalusia. It has full authority to negotiate with Autocares Julià, another of our brands, and if it doesn’t get what it needs from it, it can renegotiate based on the prices offered by other companies, or go work with them if we can’t match the best prices offered.

And you’ve applied the same policy throughout the group. With new people.

We hire people with solid values and principles. People you would want to travel or have a coffee with. They create a good atmosphere in the company, and that counts more than their experience or training. For example, we hired telecommunications directors who went into the Administration Department and ended up as Managing Directors of the Tourism Department, here in Spain and in the United States. And economists... We have a lot of young Executive MBAs from IESE and ESADE who argue with you every day. It may seem costly, but it takes that kind of energy to transform the company. And we checked everything, absolutely.

An overhaul.

For example, we stopped printing in colour in 2004. So when the crisis hit in 2007, we already had the idea of cutting costs in our head. In the broadest sense, we split the company into three large divisions: Transport, Tourism and City Tour Worldwide.

The origins of Autocares Julià, which must have been the seed for the Transport Division, go back to before the Civil War.

It was in 1932. My grandfather and some friends started the business by transporting football fan clubs to matches. They hired the buses at first, and then bought them. In 1968 it stopped being just a transport company, because we started transporting tourists, and then the laws changed. Travel agencies were forced to sell certain products. It was around that time when we opened our first agencies. In the 1970s and 80s, we went abroad, gradually expanding to Argentina, Mexico, Puerto Rico, Miami and Brazil. Our offices there were tasked with bringing the Spanish-speaking public to the coach routes we had in Spain and Europe. Over time, these companies have transformed into large tour operators in those countries that are practically independent from headquarters. 

Tell me about the Tourism Division.

The division handles both inbound tourism (providing the services that a tourist coming here or to their country of destination needs, such as tours, excursions, visits, transport, ticket sales, etc.) and the tourism packages that are marketed through the network of travel agencies. And finally, we have our own travel agency, which is Julià Central de Viajes, which focuses a lot on the business travel segment.

And the third division?

In 1999 we started the tour bus service in Madrid. Which we quickly followed up with the Barcelona tour bus. We noticed that our end users, the tourists, had a growing need to move about on their own. For many, being in a group of people following someone around with a flag wasn’t as convenient as exploring by themselves. The classic tour with a group and guide had to be turned into a product where the client rode on his own and, using an audio guide, received the appropriate descriptions. We saw that work in London and we brought it here. At first you only needed a municipal licence to operate the route and get stops, but there were no public tenders at all. Then it became regulated both in Madrid and Barcelona. Now we’re operating under that same structure in these cities and we’ve taken the service to Mexico.

And the group’s transformation after the crisis was completed with these three divisions.

There was another one. We started thinking that we couldn’t depend on a single product or market. So we started a fairly sizeable expansion, taking our know-how to other places around the world. From there we went into the United States and other countries and started more activities: Miami, San Francisco, London, Rome, Marrakesh… They all have a tour bus thanks to us.

What’s the secret to the success of a good tour bus? The vehicle?

I think the product’s appeal lies in having an open-top vehicle that offers a view of the city that you can’t get by walking. You’re from here, and I would recommend that you take the Barcelona tour bus, because it’ll give you a very different view of the city you live in. In two hours you’ll have a new perspective of it. It’s a great alternative for tourists who have just arrived. They take the bus, settle in and plan what they’re going to visit over the next few days in more detail. The advantage of this is that we’ll be the first to transport the tourists who come here.

I read in the group’s corporate presentation that you have around 1,700 employees.

In Spain we have a little under half of that. For us it’s essential to keep talented and ambitious people who want to grow. We identify those people and what they want to be in a few years. We combine those desires with the group’s needs, and when we do it right, it’s a win-win. The Traffic Director who retired a year ago started out as a coach driver. That’s one example we’d like to offer all our employees. And if it’s not to be because the opportunity isn’t here, and it’s outside the company, we’ll be sorry to see them go but we’ll be happy for those who find it.

In addition to the places you’ve mentioned these last few minutes, there are no doubt other places you’re planning to take your expertise.

Our strategic plan doesn’t include a goal to be present in every continent, but to be in the world’s leading tourist destinations. Some are in Asia, like Hong Kong and Bangkok, and whenever we see a new business opportunity, we’ll seize it. But there are still many markets in Europe, the United States and Latin America that are easier for us to penetrate.

Bangkok isn’t profitable? 

There are problems with cables that make it impossible to have a tour bus there.

There are cables in San Francisco too.

There are, but they’re higher up or they’re underground, so they’re not a problem.

We’re in a time of technological change. You must have electric buses.

We do. This is something that we’re committed to, beyond what’s increasingly being required by law. Not too long ago we showcased the first double-decker hybrid tour bus in Spain. We’re working on electric technologies, and for example in Marrakesh we have a prototype electric bus that’s already operational. In Granada we put the first hybrid train in existence into operation and we have electric trains in Benidorm as well.

You work in one of the sectors that has been transformed the most by Internet.

That was a very significant change for us. Seven years ago we had about 25 points of sale, and now we only have four larger ones, located in Barcelona, Madrid, Andalusia and Valencia. They service larger, more concentrated geographic areas and they focus on business travel.

What’s your marketing like? What are your main challenges and goals?

The transport division accounts for 8% of the group’s turnover, and 57% of our total revenue comes from abroad. But we have 250 vehicles, which are like 250 billboards constantly driving around these large cities. The impact of that is very hard to assess, but we create a mental association with school transport, with SEAT employees, with cruisegoers... If a user only knows us because of that, it will be very difficult for them to associate us with the group’s other brands. So the investment we have to make to advertise the Tourism Division is enormous. That’s the situation in Spain. In the United States, however, we’re better known as a tour bus company. We’re the leading seller of tours of Alcatraz. And after 30 years in Argentina, we’re the leading tour operator there. Nobody there knows we have tour buses here.  The idea of creating a group to hold every brand under one umbrella came up two years ago.

With all the growth you’ve had in recent years (you’re the second largest tour bus operator in the world), is it still a family company?

The shareholders are still in the family. In 2005 our family bought the shares held by the other family. Now it’s 100% ours. Mr Julià, one of my grandfather’s original partners, got out in 1933, leaving only his name behind. The names of the remaining founders were “impossible to pronounce”. Duocastella on my grandfather’s side, and Huch on another partner’s side. They liked Julià more.

You’re part of the family’s third generation. Is the fourth waiting in the wings?

I have seven children and for now I want them to be very happy. If that means joining the family business, fantastic. I trust one will end up here. But, just in case, whenever I see one of our coaches in the street, I tell them “Look, look!” I want to get them involved and let them know what puts food on our table.