Majorca tourism

Weakness of the pound a warning for Spain's tourism in 2023

Cala Galiota, Colonia Sant Jordi, Mallorca

Mallorca and the Balearics outperformed all other regions during the summer. | M. Cladera

Andrew EdePalma27/01/2023 08:48

A Bank of Spain report into the recovery of international tourism in Spain following the pandemic is less upbeat about performance in 2022 and prospects for 2023 than many politicians and tourism industry representatives.

The report notes that the speed of recovery slowed down during the summer, largely because of UK and German demand. This is attributed to inflation. While some markets, e.g. the Netherlands, were above pre-pandemic levels, the two main markets - the UK and Germany - were down 14% and eight per cent respectively. The recovery of the Scandinavian market was also slower.

As to spending, the report considers the "real" spending, when adjusted for inflation, and concludes that a moderate overall increase was largely due to bookings for higher-quality accommodation. Overnight stays in five-star hotels exceeded the pre-pandemic 2019 figure, while for four-star they were much the same. With the lower categories, there was a decrease - almost 13% down in the third quarter.

For 2023, the Bank suggests that a loss of spending power could make Spain less attractive by comparison with other Mediterranean destinations where there are lower prices. It notes, for instance, that Turkey has shown a very vigorous recovery. Overnight stays in the third quarter of 2022 "far exceeded" those in 2019. There is vulnerability for Spain's tourism because of the weakness of the pound; the UK is the largest market for the country as a whole.

* The report deals with tourism at a national level, but in 2022 there were clear differences at regional level. The Balearics outperformed all other regions for most of the summer season (May to October). While there were fewer foreign tourists than in 2019, the deficit was around four to five per cent. In certain other regions, it was up to 20%.

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Morgan Williams | over 2 years ago

So, ok... According to various, statistics, tourists who use sterling represent roughly 25% of Spain's tourism. And they're seasonal. The British resorts are largely shut from November through March. Let's assume that the pound tanks, and a large number of British tourists choose elsewhere for their [summer] hols ...or decide to staycation. Let's say there's a 10% decline in British tourism to Spain (that would be huge). In that case, we're looking at an overall tourism decline of 2.5%. And it's worth considering that the one country that uses that currency, is also one of the few forecast to stagnate or decline economically in the next few years. That suggests that 2.5% loss of British tourism could very well be made up by all others who have growing economies and enjoying more disposable income. So, the "weakness of the pound" isn't likely to be of much concern. It's the condition of everybody else that matters.

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