Why has 2018 been a record year for tourism in Spain?

2018 closed its fiscal year with a new tourism record in Spain. The minister announced in mid-January a positive balance of 82.6 million international tourists, which is 0.9 percent more than the previous year. The volume of income amounts to 90,000 million euros, which increases by 3.1 percent of tourism spending. Everything specifically concerns 2,560,000 workers, which reaffirms a 2.89 percent increase in tourism employment. In a summary published almost at the same time by the Tourist Board, Professor Manuel Figuerola estimates Spanish tourism production at 271,699 million euros, which places this sector as the most dynamic of the Spanish economy, which affects 11.8 percent of total activity.

These data, which today satisfy everyone, are for many something as unexpected as inexplicable. At the beginning of summer 2018, the great leaders of Hispanic tourism warned of progressive collapse in tourist arrivals and, therefore, the production linked to these flows. «The recent behaviour of tourist demand from our main emitting markets (United Kingdom, Germany and France) to Turkey and Egypt in the first five months of 2018 suggests that the recovery of the market share lost in these destinations due to geopolitical instability in recent years will continue to reduce the dynamism of tourist flows to Spain in the summer months», said the Exceltur lobby in its July 2018 tourism forecasts.

This has been the muzzak of Spanish tourism since 2013. The successive records were not explained by the low prices resulting from the financial crisis, nor by a growing competitiveness as a consequence of those, not even by the unbeatable quality of the Spanish reception infrastructures, the level of development of the country, its climatic benefits, the hospitable nature of its population, the cultural gravidity of its historical and monumental vestiges, legal certainty, its high international public health quotation, its high index in life expectancy, no, none of that. The successive records were due to the ‘borrowed tourism’ of the sending countries due to the political instability of the Mediterranean.

At the same time, we defended in forums and social networks just the opposite of what Exceltur and other tourism scholars proclaimed. In our opinion, neither the competing destinations in the Mediterranean area had solved their geopolitical instability, nor had Spain lost its glamour in the eyes of the main European emitters. Even Brexit did not diminish an apex of the charm and efficiency that Spain accredits to British tourists. The hidden reason behind these first warning signs referred to the sudden loss of price competitiveness since in the last four seasons the prices of medium-high range accommodation had shot up to 30 percent on average. Some hotels recorded annual increases of 15 percent, which ended with an increase of 60 percent from the sharpest peak of the crisis, in 2012–2013. And the average for all tourist accommodations was 19.31 percent [graph below], representing an annual rate of 4.83 percent, well above the 1.18 percent revealed in the Consumer Price Index (CPI) for the last month of December. The RevPar data produce roughly the same growth curve.

The alarming fall in overnight stays put all tour operators on their feet in the middle of the year. From the headquarters, the commercial departments were shaken so that the bloodletting of foreign tourists ceased and that 2018 could close at a similar level or, at least, not so inferior to that of 2017. And soon we began to see thunderous rebates in major vacation destinations, which in many cases contemplated a discount of up to 30 percent for last-minute hires. According to the graphs we publish here, taken from the latest records of the INE (National Statistics Institute), the effect of these offers began to be felt in the August bookings. The overnight stays of this summer month fell from the red numbers of July (946,729 less than in the same period last year) to some more orange less 326,348 nights. And since September we have begun to see successive increases of 0.65 percent in October, 4.25 percent in November and 2.76 percent in December. This 2018 closes with a minimally negative balance of 0.13 percent, which, in these shifting times, the half-full vision of the bottle allows us to say that it has been a good exercise for Spanish tourism.

No, terrorism has not returned with force to Turkey, Egypt, and Tunisia. The geopolitical context of the Middle East has not been much altered in recent years. It is true that these countries have seen their tourism grow above the expansive wave of world tourism. Turkey already receives 38 million international tourists but has not yet reached a peak of 40 million registered in 2010. Not even the 24.8 percent devaluation of the Turkish lira has been able to work the miracle in 2018. And if Turkish tourism has grown considerably in the last three years, it has done so thanks to its proximity markets, such as the Middle East, Russia, the Persian Gulf, and certain Asian destinations.

So what needs to happen for Spain to continue on the path of tourism growth without being overly affected by the recovery of its Mediterranean competitors?

Another underestimated factor is Spain’s potential as a low-cost tourist economy. Much higher, of course, than any competitor country whose margin for a discount on prices is adjusted. A currency devaluation offers initial advantages to the country that provokes it, but it immediately turns against it because the whole of its economy suffers a sometimes unbearable cut in its external competitiveness. However, when you operate with such optimized costs, as in the case of the tourism industry in Spain, there is enough margin to stretch or adjust prices according to the vagaries of the market. That is why correctly managing the pricing of tourist services has placed Spain at the forefront of world tourism and is a factor of competitiveness as valuable or more than the climate, the beach or national sympathy.

Tour operators have finally done their homework on time and that Spain does not have tourists on loan, but unconditional tourists at their good prices and the seriousness of their reception infrastructures. From now on, it is time to maintain this fare competitiveness with more technology and common sense, at the same time as developing the new artificial intelligence infrastructures that will mark the tourism of the next decade.

Fernando Gallardo |

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