Of No Value: Tourism that doesn’t count

If you were a business chief executive and you sanctioned the payment of a “lagola” to an MBA-toting consultant, you might find yourself on gardening leave and to later be in receipt of your own lagola as compensation for your profligacy. A lagola, incidentally, is a pejorative term for eight hundred thousand euros or so (La Gola, the cost of converting a stagnant wetland and vandalised scrubland into a stagnant wetland and vandalised scrubland with a car park, OED).

You might remain in your post were it not for the fact that the consultant had cut and paste research from the internet dating back twenty years to comply with his commission – namely a cost-benefit analysis of your least valuable customers. The saving grace might be what he had discovered, assuming you had taken any notice.

I’ve made this up. There is no chief executive and there is no consultant. But there is a tourism minister (in fact there have been any number just recently) and any number of advisors and organisations. The tourism minister is probably only on a tenth-lagola, if that, but if she is worth the money then she might do her own bit of cutting and pasting.

In 1990 a researcher at Palma university published a paper on income from tourism. In it he showed, via cost-benefit analysis, that ten per cent of tourists spent very little, so little that they caused a “negative addition to the net social benefit of tourist activity”. In other words, it cost the Balearics more to have them on the islands than was taken as a benefit.

This was twenty years ago, in the days before all-inclusives. Ten years later, the same researcher published another document in which he and a colleague pointed out that “the average expenditure per tourist … diminished in the ’80s and the beginning of the ’90s”. The worries about tourism spend are nothing new; they’ve been around for a generation or more.

In 2006 other researchers at the university presented a paper which examined the impact of all-inclusives. They revealed that over a three-year period from 2002 to 2004, the percentage of tourists opting for all-inclusive had risen from 9.58% to 16.32%. They also showed the average spend of tourists in different types of accommodation in 2004, figures taken from the same research organisation which recently released numbers showing an increase in tourism spend in July this year. This, in terms of euros per day, was 23.20, over a third less than that of the next lowest-spending group (those on half board) and under a half of the highest-spending sectors – those purchasing transport only to the islands and those opting for bed and breakfast.

We’ve moved on since then. Given the increase in all-inclusives, especially those at the economy end of the market, and also given a highly conservative estimation of a 0.5 percentage point increase year on year, 20% of tourists are now of no value. It’s almost certainly higher. The increase in all-inclusive since 2004 has been marked. No one is exactly sure because of the numbers who upgrade to all-inclusive on arrival, but it is at least double.

You come back to that chief executive, for which read the tourism minister. It is her responsibility, as with a CEO, to form strategy. To be fair, there has been a lot of talk about tourism strategy over the years, which is part of the problem. Much of it has been talk only. We are no nearer a strategy than we have ever been. If that 10% is indeed now 20% or higher, then why bother with them? Design a strategy that excludes them.

There are reasons why not. One is a form of altruism. Just as higher education has been deemed a “right”, then so also is a holiday, a foreign holiday, a right, in the sense that a right equates to being a necessity, which is how the foreign holiday is now defined. Low income should not debar people from taking a holiday; of course it shouldn’t. But how far can any destination or country be expected to take this notion of social responsibility when the generosity is not being reciprocated? Come to our island, use our resources, and spend nothing. Ingrates.

The other reasons revolve around the same numbers game as that which gives rise to the tourism spend statistics – the volume of tourists and, in particular, the volume of tourists passing through the airport in Palma. Cut that 20% out and the total numbers would slip under the nine million mark (those coming to Mallorca on an annual basis). Psychologically and politically, it would be hard to accept. The airport needs as many passengers as possible: a) to justify the costs of its development and expansion and b) in order to meet traffic numbers that will guarantee that local politicians can get their hands on managing the airport. Then there are the strategies of others – airlines and tour operators, neither of which are unduly concerned so long as they stay profitable.

You can’t arrive at a sensible strategy when you have competing needs. But that research needs to be revisited and revised. If it means a slimmed-down tourism market, then so be it, so long as the rump market does make a positive rather than a negative contribution. The problem, as ever, is what the all-inclusives will bring. You can spend all the lagolas you like, but if no one bothers to even go take a look, then what’s the point.

Eugeni Aguiló Perez, “An Estimation Of the Social Income of Tourism”, Papers of the Spanish Economy, 1990.
Catalina Juaneda Sampol and Eugeni Aguiló Perez, “Tourist Expenditure Determinants in a Cross-Section Data Model”, Annals of Tourism Research, Vol 27, No 3, 2000.
Joaquín Alegre and Llorenç Pou, “The All-Inclusive Tourism Package: An analysis of its economic implications in the case of the Balearic Islands”, University of the Balearic Islands, March 2006.

Any comments to andrew@thealcudiaguide.com please.

We Can’t Go On This Way: Sustainable tourism in Mallorca

Any idea who Ivan Murray is? Probably not. So I shall tell you. His grandmother was Canadian of Scottish origin, he lives in Port Soller and is an academic at the university in Palma, whose specialism is the sustainability of tourism in the Balearics. What he has to say is important.

In yesterday’s “Diario” there was a report into findings of a study led by Dr. Murray into different facets of tourism in Mallorca (and the Balearics). Perhaps the most revealing was that in order to realise a million euros worth of tourist expenditure, the number of tourists necessary to meet this target increased by almost 500 over the period from 2003 to 2008. The 2008 figure is 1906 tourists to make the million mark, a percentage rise of 35%. Over a third more. In six years, six years before the crisis took hold.

Ok, so what, you might ask. Just another set of statistics. True. But unlike the figures which get bandied about by the regional government, and which many tend not to believe, Murray’s findings are, one would hope, independent. In an interview with the Diario’s Matías Vallés a couple of years ago, Vallés suggested that Murray might just be a bit of a moaning leftie. By implication, this suggests he may have an agenda. Possibly, but academic rigour, and the demands placed on academics to support their research, might negate any hint of political bias. One should take Murray’s findings for what they are, because they are significant.

While government figures always seem to indicate an increase in tourist spend, Murray refutes these. There has been a year-on-year decline if you take the annual growth in the numbers necessary to meet the target of a million euros (the figure did actually drop, however, from 2007 to 2008). Moreover, the findings beg some questions, most obviously why are that many more tourists needed to reach the spending level and what does this mean for pressure on resources. No answer is given in the paper’s article to the first of these, but one might begin to hazard a guess or two. Let me make one such – the rise of all-inclusives, possibly?

Murray points out that despite the reliance on tourism to sustain the Balearic economy, there is a loss in efficiency, by which he means that increasing numbers of tourists are needed just to stand still, while these increasing numbers place ever more stress on the ability to cope with them. Consider this. In 2008 the highest recorded total population of the islands (that’s everyone, tourists included) occurred between 10 and 12 August. The number was 1,930,000, or 1.8 times the actual normal population. And this is a figure spread out across the whole of the Balearics. Consider Alcúdia. If one takes its resident population to be 16,000 (and one does tend to get different figures), its population at the height of summer is – a guesstimate – about 45-50,000 (there are some 26,000 hotel places in Alcúdia to which one can add other types of accommodation and the temporary workforce). Around three times the normal population in other words.

In the earlier interview, Murray was asked what would be the ideal tourism population of the islands. He didn’t really answer this, but did say that twelve million tourists (roughly accurate in terms of total annual tourists) is “an aberration without comparison in the whole world”.

It is often in the nature of academia to raise questions and pose problems rather than necessarily answer the questions. While Murray clearly considers the tourism population to be excessive, he has also said that, strictly speaking, only six per cent of Mallorca is “constructed”. While he would not advocate more construction, his findings imply that this is what is needed in order to increase tourism numbers just so that economic growth can be – at best – in neutral. It is a deeply worrying conclusion. Where would these tourists come from anyway?

Murray has also referred to a highly polarised society. He is not wrong to do so, and by doing so he paints a picture of potential increased social division allied to an economic model – of tourism – that is not sustainable, unless there is more and more construction in order to grow the tourism population. And even then, were the trend towards all-inclusive and to a more cautiously-spending tourist to persist, the numbers would continue to rise ever more in order to keep parity with that one million benchmark. Ever more construction, ever more tourists, and for what? But one does perhaps have to ask again the question as to what this population could or should be. The problem is that no-one, not even Dr. Murray I would suggest, can give an accurate answer, because I suspect that no-one actually knows. He has said that the Balearics have been a “field of experimentation”, and in this he is correct. The experiment was in introducing mass tourism and in its growing like topsy, without any real regard to its ultimate sustainability or to the changing nature of markets and competition or to economic diversification.

Any comments to andrew@thealcudiaguide.com please.

Palmanova Bombing / Day By Day

And so ETA has brought its bombs to the tourist areas of Mallorca. It is not the first time that ETA has committed an outrage on the island; the bomb today in Palmanova coincided with the eighteenth anniversary of two car bombings in Palma. It is also fifty years since ETA was formed, a fact that was “celebrated” by the bomb in Burgos. 

 

Two Guardia Civil officers lost their lives in Palmanova; the bomb appears to have been placed under their Nissan Patrol vehicle. The incident occurred outside the offices that serve as post office, local police station and Guardia office – just like in Playa de Muro. The Guardia acted swifty; hotels were closed, residents told not to leave their homes, the airport and ports put on the highest levels of security, i.e. closed, and helicopter and coastal patrols put into full action. While the outrage was a direct attack on the forces of law – as was the case also in Burgos – it was also in a tourist area. That is not a normal modus operandi for ETA; or it had previously had not been. 

 

One supposes that this will all lead some to question whether it is safe to come on holiday. It might be understandable, but it would not make sense. There is no suggestion at all that tourists are targets; indeed the very notion is both extremely remote and extremely unlikely. ETA has a beef with the Spanish state, and the Guardia Civil is a personification of the state as well as being ETA’s “enemy”. The Guardia and the National Police are highly skilled anti-terrorist bodies. Alongside their British police counterparts, they rank as the most adept anti-terrorist forces in Europe; they, like the British security forces, have had a lot of practice.

 

 

Day by day

One of those what-are-we-supposed-to-make-of-these statistical moments, courtesy of the Balearics part of the “El Mundo” website. Tourism spend in the Balearics during June was down four per cent on last June; it equated to 993 euros per person. In the whole of Spain, the two most prominent tourism groups – the British and the Germans – spent on average 773 euros and 974 euros respectively; quite a difference. But as ever with these figures, the reaction is something of a so what. At least these figures do not inspire an incredulous reaction, as they were doing last summer when they seemed to be increasing. If those were genuine, then a 4% slump in the context of the current economic situation doesn’t sound too bad. The trouble with any of them, however, is making sense of what they mean, how they are compiled, what differences there may be between different resorts and so on. Recently, some friends staying in Puerto Alcúdia told me that a daily spend of 100 euros per person was about par for the course. Setting aside costs of accommodation and travel, which one assumes are never included in these spend calculations, 100 per day is probably about right if one spends fairly liberally. At a more basic level of subsistence for food and drink on a daily basis, assuming one meal out at an inexpensive restaurant and a fair amount of alcohol, I would offer you the following:

 

From a main supermarket: bread (freshly-baked) 50 cents, fruit and vegetables 1.50 euros, ham and cheese 1 euro, drinks (2 litres of water, 1 litre of cola, juice, 1 litre of beer, 1 bottle of wine) 10 euros, milk, cereals, margarine and eggs 1.50 euros. 

Meal out with a glass of wine and water – main course and sweet 15 euros, two coffees out 3 euros, four large beers out 12 euros. Total: 44.50 euros.  

 

There are many ways to skin the food and drink cat, but the above might not be unrepresentative. 

 

Elsewhere, i.e. “The Diario”, there is a feature that points to the “alarm” among some hoteliers as to the lack of spend within the hotels themselves. It does support much of what is being said, and makes one rather question the official spend figures. These hoteliers talk of guests buying from supermarkets and making up their lunch snacks in their rooms (and why, pray, shouldn’t they?) or of helping themselves to excessive amounts from the morning buffets for later consumption (hardly a new phenomenon, one would have said). Perhaps more scandalous are those tourists staying all-inclusive who get drinks and then go and sell them on the beach. Nothing like a bit of entrepreneurship, but it is decidedly naughty. Then there is what the tourists have actually spent on their accommodation, very low in some instances with rooms packed with four or five people. And it hacks some hoteliers off that some guests forget that they have paid very little and yet demand a level of quality way beyond that for which they have forked out. 

 

All this and August yet to come, a month of high season but one traditionally that results in a lower relative spend because of the generally higher costs of the original holiday. Overall, it doesn’t sound very clever, does it. And finally, from the Holiday Truths site, one contributor – all-inclusive – says that he spent, get this, 20 euros during his week’s stay. Twenty of your whole euros, everybody. Or 2.01% of that tourism spend figure. Go figure. 

 

 

Without contracts?

And here we go again … The Alternative in Pollensa is to press for the creation of a commission to study what he believes to be a state of chaos at the town hall. This stems, says “The Diario”, from the fact that some half a million euros worth of services provided to the town hall is not actually contracted, or so says Pepe Garcia, who is having this all checked out by his lawyer apparently. He argues that those firms without contracts have not submitted the correct documentation or bona fides; they include, for example, the company that maintains lighting in the port. The mayor naturally begs to differ, saying that there may be some instances of not all work being covered by contracts, but that all is overseen and supervised by council technical staff.

Souvenir

Never accuse “The Bulletin” of a lack of hyperbole. It headlines a letter “the demise of the tourist industry”. And this is? Oh no, spare me. Someone change the record. Or rather, don’t, as to do so would deprive me of some blog inches. Yep, you’ve probably guessed it; everything’s so expensive, tourists being ripped off, locals having a laugh, blah, blah. 

 

Let’s put the euro-pound thing to one side, shall we. The crisis has created a mindset that has made tourists – and not just tourists – pay far greater attention to prices than was the case. Therefore, things seem more expensive because people are more conscious of what they’re spending. In real terms, prices for many items are generally no higher than they were say five years ago, but costs have contributed to increases, inevitably so. Certain things are undeniably more expensive. Car hire for one. And the letter refers to this being “extortionate”. Unfortunately, the writer is probably unaware of the supply and demand in the car hire business this season; the agencies could not get hold of the bank finance so had to reduce their fleets. It’s not having a laugh, it’s very basic economics and very basic doing business. 

 

And doing business is what some tourists seem to resent. There is an enduring belief that Mallorca and Spain should still be some tin-pot economy on the edges of the civilised economic world. It once was, and it was once also very cheap. Not now though. Not cheap to buy products or services, and not cheap to run businesses either. But when the letter-writer refers to eating out for a “reasonable sum”, what is reasonable? Are the two large pieces of cod with chips and a salad at the Pins i Mates tourist restaurant in Alcúdia Pins unreasonably priced at 5.75 euros? I don’t think so. It all depends where you go and what you have. 

 

Elsewhere we learn that souvenir shops are having a particularly thin time. Well, nothing new there. Last year it was being reported that sales were down by around 60% in some cases. That didn’t stop the souvenir shops opening up again. If there was going to be one sector that suffered particularly spectacularly this year, it was going to be the souvenir shops and other stores, such as perfumeries. All that buying gifts for friends and family has been kicked into touch. I never quite understood it anyway. But it’s all part of the same greater awareness of what is being spent and therefore what it all costs. A hideous piece of kitchen ceramic may have seemed a reasonable thing to have bought before, but now the price tag, and the fact that it is hideous, has made the tourist think twice before pulling out some folding euros. 

 

But to come back to that letter, the writer was saying all this based on a holiday in Puerto Pollensa. Poor old PP. If it’s not the wicked uncles of Dakota or the leg-overing, sweet-dispensing José, it’s the fact that the resort is too expensive. As a conclusion, the letter says that officials “need to act now and cap prices”. Cap which prices, which products or services? And at what level? The suggestion is nuts, but it probably won’t prevent an editorial in the paper reiterating a previous call for price controls.