Parliament won’t control the tourist tax

On Tuesday, there was debate regarding the European funds for economic regeneration. There was a series of amendments to motions related to these funds. These amendments and motions, in essence, had to do with who determines how these funds are allocated. It was a classic case of executive (the government) versus legislature (parliament) and separation of powers, with the opposition parties seeking legislature decision-making.

Normally, opposition motions fail because the opposition is the opposition and doesn’t have sufficient votes. Going into Tuesday’s debate, however, the government risked defeat because two small parties that it can rely on for support had indicated that they would side with the opposition. These were Més in Minorca, who are not part of the government (only Més in Mallorca are), and Gent per Formentera.

In the end, agreements were struck and the government won the day. But buried among all the amendment and motion technicality had been the following: “as well as the rest of the funds which should or could be derived in respect of the crisis generated by Covid”. This wasn’t, therefore, just about the EU’s funds. It concerned Covid funds, a somewhat arbitrary concept to which the government has been making reference and which includes - as we have become aware - tourist tax revenue. This awareness resulted from the row over the Los 40 Music Awards, to which 580,000 euros of tax revenue were dedicated. The opposition was angered and so has sought to establish greater control of the tourist tax funds, which next year, according to the Balearic government’s budget, will generate 140 million euros. If so, this will be the highest ever annual amount. In principle, this revenue will form part of the Covid funds pot.

One might doubt the estimate, given that tourist numbers are unlikely to hit 2019 levels in 2022. However, it includes settlement for this year, delayed as a special arrangement because of Covid. The government, by October, had only taken in 24.5 million euros of tourist tax revenue for 2021.

Tourism specialisation or change of model - what's the difference?

The Mallorca Hoteliers Federation said that the way that tourist tax revenue was being allocated "distorted" the purpose(s) for which it was intended. The federation would prefer that there were no possibility of distortion by eliminating the tax. But its feelings on this subject, if they were made on Wednesday, were done so privately.

The federation's general assembly was an occasion for President Armengol to offer words of praise for the federation, as might have been expected, while the federation's re-elected president, Maria Frontera, opted to look to the future. In so doing, the only shot across the bows of the Balearic government (and the Spanish government) came in the form of criticism of talk of changing the model of tourism.

Frontera made it clear that the federation wholeheartedly backs "transition of tourism", the problem with the "model change" talk being that it often comes from "partial actors" who wish to go down this route without full understanding of what it entails.

In this regard, she was surely right. The partial actors, certain politicians, go on about changing the model (of tourism and the wider economy) without ever presenting a thought-through plan of how genuine diversification away from a reliance on tourism will actually be achieved, meaning, and most importantly, employment.

To come to Frontera's vision of tourism transition, she referred to a need for specialisation as well as innovation, quality and the current 'Big Thing' in terms of sustainability - circularity. Specialisation can imply different things, but one of them presupposes an alteration to the nature of the tourism offer and away from a sort of one-size-fits-all approach as it is at present.

Over the next fifteen to twenty years, I expect that this is what will happen, the question being how it will affect employment. Frontera mentioned the "unplanned response" of the partial actors, as planning for the labour market is as important as anything, whether one wishes to call it specialisation, transition or model change.

The bad experience in Benidorm

I've said it before and I'm saying it again, there is something to be said, because of Covid, that Majorca doesn't have much of a winter season. As there isn't, a fall in tourism has only a comparatively mild impact compared with destinations where there is a winter season.

One of these destinations is Benidorm. The resort experienced a pretty lousy Constitution holiday break - average hotel occupancy of just 40% - but the fear is that the worst is yet to come. Right now, the occupancy is down to 25 to 30%. Christmas will hopefully bring better tidings, but the omens aren't good.

The Hosbec hoteliers association says that the current situation is far worse than it was when the general rate of infections was higher, when hospitalisations were higher and when the rate of vaccination was far lower.

This isn't solely a British thing, as Benidorm has a strong national tourist market, which will now, and finally, be boosted by the Imserso holidays for senior citizens. But the double vaccination requirement for Britons (12 and over) to enter Spain is a factor, as is being said of the Canaries as well.

Omicron may just be a factor as well, although not really within Spain (for the moment anyway). The jury, it's reasonable to say, is still out on Omicron, but there is evidence that it plus increasing infection rates are deterring plans not just for the short term but also into the 2022 season.

With the level of traveller confidence having dropped, the experience in Benidorm has to raise a question about what might happen in February. The Spanish government has really hoped that the extension of the ERTE furlough scheme to the end of February 2022 will be the last. Just at the moment, this is looking as if it may be wishful thinking. And not only for Benidorm.