The Changing Face of the Spanish Tourist Industry

September 25th, 2009

The rate of decline in stays at Spain’s hotels eased in August as Spaniards opted to vacation closer to home, but a declining number of foreign holidaymakers continued to weigh on the country’s key industry.

Tourism, which accounts for around 11 percent of Spain’s gross domestic product, has taken a battering this year as the global economic downturn led foreigners to seek cheaper beach destinations.

Overnight stays fell 5 percent in August year-on-year compared to a 5.5 percent decline in July, the National Statistics Institute (INE) said on Wednesday, due to a 10.6 percent fall among non-residents.

Hotel stays among residents rose 2.2 percent in August as Spaniards, struggling in a deep domestic recession, gave up travel to exotic foreign destinations in exchange for more economic options along their own coasts.

Stays by Britons, who have been hit by a fall in sterling’s value against the euro, fell 10.4 percent and by Germans 14.2 percent.

“The problem is that the beach, sun and party package is no longer enough to attract tourists to Spain. There are other destinations that have the same on offer, and are cheaper,” said BPI analyst Joaquin Romanillos.

Spain recently lost its ranking as the world’s second most popular tourist destination to the United States, which has benefitted from more favourable exchange rates for Europeans given the weak dollar, but has also lost out to closer rivals including cheap and developing economies in eastern Europe.

The number of foreign tourists arriving in Spain in August fell 8.1 percent from a year earlier, the tourism ministry said on Monday, while Croatia had an unexpectedly large increase in foreign visitors over the summer.

As hotels registered falling stays due to the declining number of foreign tourists, they also lost out to apartment rentals, an option favoured by an increasing number of cash-strapped Spaniards.

Mercasa holiday rental agency in Calpe on the east coast of Spain completely filled their two-bedroom, front-line beach apartments in August at a price of about 1,800 euros ($2,665) a fortnight, owner Jose Luis Campillo said.

“The problem (for hotels) isn’t fewer people, it’s overcapacity from over-building during the long Spanish property boom,” Campillo said.

The trend has made for tough trading conditions for Spain’s leading listed hoteliers NH Hoteles and Sol Melia.

Story from ETN

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