OPEN LETTER

Dear Sra. Barcelo,

YOUR intention to “wipe out illegal tourism” on Majorca (Daily Bulletin 13th April) is no doubt genuine and well-meaning but, if achieved in the way you envisage, it will inflict further destruction, not to be under-estimated, upon the local economy of the island. Yes, the standard of accommodation supplied to incoming tourists needs to be controlled and improved upon, of that there is no doubt. I respectfully suggest that for you to bow to the outrageous (and unique) demands of the island's hoteliers who seek your support for their own private ends would be a severe error - and here's why.

Currently there are several thousand privately-owned fincas and apartments on Majorca which have for years been rented out by their owners (the exact number is not known because there is no register - but there must be at least 10'000 - 15'000) to visitors on a weekly basis between May and October.

A conservative estimate would be that there are at least 750'000 people who fly into Majorca and use these, for the most part, unlicensed properties every year. According to official figures, the daily spend of tourists is nearly 100 euros per person per day, so that the combined spend of three quarters of a million tourists is not far off 75 million euros. Do you see where I am going with this? The island depends on tourism, we all know that, and the best public relations officers you have spreading the word around about the delights of a holiday on Majorca are the owners of second homes on the island.

Please don't believe the hotels who, with no experience of the desires and requirements of this section of the market, probably tell you that all these visitors, if unable to secure private accommodation, would then reserve a hotel room! They would not ... a recent survey of our clients concluded that 73% of them would rather seek out private accommodation elsewhere, for example in Corfu and the Greek Islands, in Turkey, Cyprus, Portugal, Italy, France -in fact they have the choice of any country in Europe (let alone the rest of the World), for nowhere else is this an issue, only on Majorca it seems! Those countries will be more than happy to take the business, thank you very much I hear them saying. Furthermore, this particular section of the tourist market supports the island's local bars, restaurants supermarkets and shops far more than those guests who are lured to the all-in packages now so widely offered by the large hotels - something which itself, is causing such untold hardship to those small, independent businesses which in the past have lived off income from those guests who now, for the most part, only very occasionally venture further than their own hotel front door.

Sra. Barcelo, there would be serious negative consequences for Majorca if you indeed plan to enforce and change the law - and it would be a change to the existing law, according to your own people at the Conselleria de Turismo in Palma, for it was in that office that I was recently clearly told in a face to face, witnessed interview that it is indeed fully legal for owners of apartments on Majorca (but not local, Majorcan, agencies) to rent out their properties to whomever they wish for whatever duration, be it for one year, one month, one week or one night. I was told that apartment owners require no licence whatsoever (unless they own 8 or more apartments in one block) - indeed there is no such licence available to them I was told, nor necessary. For owners of fincas, it is different, for there is a license for them - and apparently over a thousand owners do have one - except since 2008 all new licence applications have been denied, so the legal letting of many more fincas has been impossible except for those persons who applied for a licence prior to 2008. The consequences of strict enforcement of such a law would start with the deterioration of many, many properties whose owners depend on rental income in order to first pay the mortgage and then with the rest pay for the maintenance, modernisation and general upkeep not only of their individual properties but of the communities in which they are located. This would soon be followed by a glut of properties entering an already depressed real estate market, reducing property values still further.

What should be done on Majorca is not to outlaw residential rental accommodation (except when a majority within a community votes against it for their particular location), for that would cause untold misery for visitors and owners alike, let alone put further downward pressure on the Majorcan tourist numbers and associated revenue, but to have a more positive and entirely new outlook on the whole situation.

The licensing of fincas should be re-instated and for apartments a completely new licence should be introduced. This is very easy to organise - I, for one, would be more than happy to sit down and set it up for you. Government licensing for short-term rentals, using the model that has proved so successful in Florida (and the co-ordination of which I assisted during the last decade) should be made available without delay. There, in Osceola County, home of Disney World, Orlando - the World's Number 1 tourist destination - the income from the residential licensing of some 35'000 homes and apartments produces around 50% of the entire revenue received each year by the Department of Tourism! The same system on Majorca would ensure that properties are then properly registered and inspected, forcing owners to provide higher standards of comfort, cleanliness and safety, including the mandatory installation of smoke detectors, fire extinguishers, secondary locks, safety notices, pool alarms etc prior to the issue of a licence. An annual licence would cost maybe 250 - 300 euros and co-ordination between licensing and tax office data would ensure that all owners pay the applicable taxes on their rental income in the exact same way that hotels and overseas travel agencies do. Failure to do so would result in heavy penalties and/or withdrawal of the licence.

You will find that 95% of owners genuinely do not want to break any laws and would agree to paying for their licence and submitting taxes. The resulting applications would provide several million euros of extra annual funds which the Conselleria de Turismo could then use to further promote tourism to Majorca. Additionally, there would be many, many millions of euros more taken in taxes and I am sure that the government would have no problem accepting that either. In addition, as far as the hotels' current criticisms are concerned, there would then be a more level playing field.

But not totally level, for there are also scores of real estate agencies who offer short-term rental accommodation. By licensing them too you would be putting an end to the anomaly of a UK legal entity such as my company, paying taxes in the UK on the rental of property on Majorca, whereas the Majorcan agencies providing the same service do not, because they feel that they have to do it discretely. Now, that's one area in which I find myself on common ground with the hoteliers, for because my company pays 21% corporation tax and the Majorcan companies pay nothing and this situation is clearly absurd.

So, basically, you have two options - EITHER give in to the hoteliers, make criminals of thousands of property owners who have invested good money in Majorcan real estate, turn away thousands upon thousands of high-spending people wanting to visit but who do not particularly want to stay in a hotel, cause a whole load of bad publicity for the island, add pressure to the property market and forego millions of euros in licensing fees and taxes
OR Grab this opportunity now, as a new and dynamic Tourism Minister, and set up official licensing for this large and important sector of the tourism market - property owners and Majorcan agencies wishing to rent short-term residential accommodation to tourists - and by doing so considerably improve within a few short months the quality and safety of accommodation, relieve the real estate market of further downward pressure, provide employment and additional business for those associated with inspection and compliance of the properties, gain substantial tax revenue for the island and add several million euros annually to the budget of the Office of Tourism, allowing it to promote to the World the wonderful beauty, weather, food, culture and everything else that Majorca has to offer, far more vigorously even than is being done now.

Sra. Barcelo, which option is really in the best interests of Majorca?

Respectfully, Yours Sincerely
John Lance
Managing Director
Holiday Homes International Ltd
London - England