Foreign Tourism Revenues Reached Record Highs in 2012

January 30th, 2013

Spending by foreign tourists in Spain reached nearly 56,000 million euros in 2012, representing a 5.7% increase, according to data released yesterday by the Ministry of Industry. This is a new peak in the historical series, which has been measured since 2004, and has served largely to compensate for the downturn experienced in domestic tourism.

Compared to the weakness in the construction and industry sectors, the services sector, which accounts for two thirds of the country’s GDP, is the only sector that is performing well in the midst of the second recession in Spain in the last five years, and particularly tourism which last year recorded 57.7 million foreign travellers entering the country (an increase of 2.7%) with associated expenditure of 55,594 million euros (up 5.7%). In the case of spending, these figures represent a new record, although the six major destination regions (Catalonia, the Balearic Islands, the Canary Islands, Andalusia, Madrid and Valencia) did not benefit equally.

The region which benefited most from the tourism boom of the last two years (when they gained five million visitors, largely due to the transfer of tourists from Egypt and Tunisia) has been Catalonia, which closed 2012 with nearly 15 million visitors (25% of the total Spanish visitors) and an expenditure of 12,608 million euros (22.7% of the total). According to business sources, achieving these results have played a major role in the good performance of urban tourism in Barcelona and of the sun and beach destinations on the coast thanks to good positioning in the emerging markets, particularly Russia, and the policy of maintaining prices despite the drop in occupation.

Madrid, on the other hand, ended the year with 4.49 million tourists, just 0.4% more than in the previous year, and with expenditure down by 3.4% annually. This is the only one of the six main tourist regions to experience the significant decline of 181 million euros in a year, and a half million euros per day. The reason for this decline is due to the sharp decline in Japanese and American visitors, who spend most on their accommodation and which account for 20% of Madrid’s total revenue.

Cinco Dias reported that the analysis from the business perspective is radically different. Carlos Diaz, President of the Hoteliers Association of Madrid (AEHM), says that the decline in spending is due to the lowering of prices. “Japanese or American tourists come to Madrid via tour operators and these prices are now lower than ever,” he stresses. In his opinion, this lowering of prices is not happening in the other major tourist destinations because they have not entered into the dynamic of gaining a market share at all costs. Diaz said: “Madrid is in danger of becoming a low cost destination for international tourism”, and he believes that the real problem for hotel accommodations for this year is not in foreign tourism, but in the collapse of domestic visitors. “In fact, there may be another year like 2012 where occupation may grow and spending may fall as a result of new price cuts.”

The activity generated by tourism not only has an impact on regional public coffers, but also on the labour market. According to the last Labour Force Survey, for the fourth quarter of 2012, the Balearic Islands is the only region that is creating jobs. In fact, the region registered 14,100 new jobs, which represented an annual increase of 3.2%.

Andalusia, on the other hand, saw employment fall by 6.1% (nearly 170,000 fewer jobs), making it the region with the highest unemployment rate in Spain (35.86% of the workforce).

The balance of payments for the tourism sector, which measures the difference between what foreigners spend during their time in Spain and what Spanish nationals spend while travelling in other countries, could end the year with a positive balance of around 32,000 million euros, which would be the highest balance recorded since 2008. The data released by the Bank of Spain to October confirms the upward trend in revenues due to the surge in arrivals and the drop in spending as a result of the reduction in trips taken by the Spanish.

Based on how spending has evolved in the first ten months, tourism revenue will range between 43,000 and 44,000 million euros at the close of 2012. The difference between the data from the Ministry of Industry and the Bank of Spain is that the latter only accounts for foreigners’ spending from the time they land on Spanish soil.

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