State Of Independence: Tourism strategy (21 November)

There was one revealing quote from the interview with Esteve Bardolet* (“The Bulletin”, 20 November). Well, two, but I’ll come to the second later. Bardolet, one of the rare people it is worth listening to regarding Mallorca’s tourism, said, in the context of working with the Mallorcan Tourist Board: “I was totally independent. Neither I nor anyone in my family had any business interests in the world of tourism, so I was able to be totally impartial”.

Totally independent, totally impartial. This is not how you would normally describe different players in Mallorca’s tourism industry. The Mallorcan Tourist Board would claim to be independent, but it isn’t, given that it comprises representatives with their own specific interests, and this, pretty much, was what Bardolet was implying.

An independent and impartial perspective on the tourism industry is almost impossible to achieve. In theory, the government should have such a perspective, but it is beholden to powerful voices from within the industry. Think for a moment about how, before the regional elections in May, the hotels were saying that they didn’t want Carlos Delgado as tourism minister. He might just have proven to be a bit too independent of mind. Now, however, all is sweetness and light, and the hotels are having the industry served up to them on a plate. “A word in your shell-­like, Carlos,” might well have been words whispered in a quiet corner of the tourism ministry, along with “side”, “knowing”, “bread” and “buttered”.

The government, perhaps recognising the impossibility of being immune to influences from the industry, is trying instead to involve all sectors of the industry, bringing the various associations as well as airlines and tour operators into the tourism agency. It’s a bold move and one that makes a lot of sense, as a collective is formed of those who understand the tourism industry. The trouble is that they understand it in their terms. Whatever good words airlines or tour operators may utter, they do not consider Mallorca in isolation. They ultimately do what is good for them. If that includes Mallorca, then fine. If not, well, that’s business.

Bringing together the great and good of the tourism business world does not automatically mean that everyone sings from the same hymn sheet or that noses aren’t put out of joint. Palma town hall, in doing something similar to the tourism agency, has managed to dislocate restaurant snouts, but what the restaurants are really upset about by being excluded is the fact that they can’t voice their own interests.

Meanwhile, there is the government’s inter­departmental tourism committee. I have long advocated that, in the government’s organisational structure, tourism should be at the top of the pyramid, if only notionally, and that other departments function in a support capacity. This committee goes some way to achieving this. While it may not result in independence or impartiality, it may just prevent the sort of governmental turf wars breaking out that have been detrimental to the interests of the tourism industry.

There was no better example of this than during the last administration. Faced with his government collapsing, Antich handed out key posts to the Mallorcan socialists. One of them, environment, resulted straightaway and with total predictability in the paralysing of the Muro golf course. It wasn’t the government as such which stopped the development, it was one department. But Antich was in no position to argue.

Not having coalition partners that require pandering to does help, but government departments have a tendency to work to their own agendas, neglecting the common good. The government’s committee will not eradicate this and nor will it remove the influences that specific departments are subject to from outside government, but it’s a start.

What would really make a difference would be were tourism given a true dose of independent thought, a meeting of minds with the sort of impartiality that Bardolet has displayed. A tourism technocracy, if you like. And more than just impartiality, there might also be some realism, which is where that second quote comes in. Though Bardolet suggested that the north European market needed to be looked to in the winter (though isn’t it already?), he said: “the winters, I fear, will never work”.

Is this just defeatism? Possibly, but possibly it is an understanding, which is what Bardolet has in abundance. Facile prescriptions for Mallorca’s winter tourism that emanate from all quarters, issued through a myopic insularity and parochialism and through constant reinforcement of a groupthink style, often fail to take realism into account. It’s a painful truth, but Bardolet may just be right. We could do with more such independent thought.

* Bardolet is a former vice-president of the Mallorcan Tourist Board and was awarded a gold medal last week in recognition of his contribution to tourism.

Any comments to andrew@thealcudiaguide.com please.

Cutting Down To Size: Tourism strategy

The rarity with which anyone in the tourism industry utters some common sense demands that, when it is uttered, attention should be paid. The president of the Mallorcan Hoteliers Federation, as reported in “The Bulletin” (15 December), has called for the elimination of obsolete tourism accommodation and for the avoidance of duplication in tourism promotion. The federation is drawing up a strategic plan in which both these aspects feature. Praise be that someone, anyone, might apply some strategic thinking to Mallorca’s tourism.

Without spelling it out in so many words, the logic of the federation’s wish to eliminate outdated hotels and to regenerate tourism areas is that there would be a reduction in the number of hotels. This might sound like turkeys proposing and then voting firmly in favour of Christmas, but the hotels are suffering from a lack of stuffing and from what there is, which is all onion and no sage. The wisdom of chasing numbers at the expense of profitability has been exposed as being as pointless as filling the Christmas plate with Brussels sprouts no one wants; the trimmings need to be cut and made more edible.

The words of the federation’s president deserve to be slowly chewed over and digested. “The problem with the approach to the tourist industry … is that hoteliers, backed by the regional government, (have) been too keen on getting large numbers to the islands without creating a proper pricing structure”. There are too many hotels, there is too much supply and there are relatively too high a number of tourists that generate insufficient revenue.

It’s a drum that I seem to have been banging for an age. Perhaps the penny is dropping along with the profitability that goes with a percentage of tourism which is worth very little or nothing at all. The case for a strategy based on lower numbers, on improved quality of hotel and on a higher-worth tourist seems overwhelming.

What this doesn’t mean is an end to mass tourism. It would be folly were it to. What it does mean is an altogether sharper focus on tourism which is less like a social service and more one of excellent service for a more demanding tourist.

It is a strategy that is not without its problems. Eliminating obsolete hotel stock and not replacing it requires a means of compensation, which is why the hoteliers have previously called for legal means by which hotels can be pulled. Upgrading stock means more than just the limited provisions of the “decreto Nadal”; it means fewer bureaucratic hoops through which hotels have to jump in order to re-develop and also means integrated approaches to resort development of the sort that has collapsed in Playa de Palma.

It is a strategy that also requires the government to rid itself of its obsession with numbers. Who cares if Mallorca slips down the tourism numbers league table. The goal difference in terms of tourism value is far more important than what’s shown in the points column, that of tourism volume. Inevitably though, fewer tourists mean fewer employees; that is a political obstacle.

Another is fewer passengers passing through the airport. Central government may have inadvertently hit upon a solution. By proposing the privatisation of airports, the central government has shifted the goalposts of co-management of Palma airport by the regional government which is now up in arms at the suggestion, so long has it sought its share of the management and of the revenue that would go with it. One of the determinants of this co-management was that defined levels of passenger traffic should be achieved. Privatisation would put an end to this need, as co-management would be kicked into touch. What it wouldn’t do necessarily is put an end to the need for numbers passing through the airport; landing, handling charges and so on would remain paramount for private operators.

Despite the obstacles, the hoteliers federation is right, but whether its strategy can resolve the apparent incompatibility between the numbers and the right sort of tourism (which is the incompatibility as things stand), who can tell.

The federation is also right when it comes to duplication of tourism promotion. Why are both the government and the Council of Mallorca involved in this? The Council now has more responsibilities for administering tourism, so why not just hand it the whole tourism responsibility? There again, why was this administration responsibility transferred from regional government? What really is the point of the Council of Mallorca when it comes to tourism promotion or indeed anything?

That it takes the private sector in the form of the hoteliers to try and drive strategy is telling. The government has failed to do so. A succession of tourism ministers have failed. One of them, Ferrer, did at least speak of the need for “boldness” when he assumed office, but he had no opportunity to demonstrate what this meant, as he was out of office in under two months. Otherwise, the words of the tourism ministry have too often trotted out the mantra of “alternative” tourism (gastronomy, culture, blah, blah) to the point at which you despair of it ever getting to grips with the fundamentals of summer tourism. A strategy? Yep, it would be nice.

Any comments to andrew@thealcudiaguide.com please.

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.

On The Banks Of The River Nile

The Balearics may still be the leader when it comes to Mediterranean holidays, but this position is under threat. Tell us something we didn’t know, and “The Diario” did just that yesterday, but it set out quite why this threat exists.

Turkey, Egypt, Croatia – these are the three countries that most exercise the minds of Balearics tourism authorities, or they should be. The competition they represent is now well-understood, but it is still a relatively recent phenomenon. Yet, this very recency has been one of the things that have caught the Balearics on the hop. The catch-up that has been played in these countries has been swift. In the case of Croatia, it has occurred in a short period since the turmoil that was the former Yugoslavia. I went on holiday to Croatia in 1984. I say “Croatia”. You didn’t refer to it as such back then; it was still Yugoslavia, and it was crap. We stayed on a holiday complex which had some what could only be described as “communist” elements: a vast refectory that served inedible food and a so-called entertainment building which didn’t have any – entertainment that is, except for morose local youths looking to pick fights. The beach did not exist. One stretched out on what was like a car park, a series of huge concrete slabs from which one walked down steps into the sea. It was popular with Germans who could drive there, and there were even holidaymakers from the old communist bloc – Hungarians most obviously. The complex was soulless, what there was by way of bars, restaurants and shops was of a poor standard. The best thing about it was that you could buy reasonably good fresh food and have your own barbecues, because you certainly didn’t want to be dining out. Oh, and it was incredibly cheap.

But that was 25 years ago. The war intervened, and then Croatia undertook its tourism birth, while Turkey and Egypt began to plan more aggressively for the future. 

Though both Turkey and Egypt have experienced slight falls in the number of tourists this year, the decline has not been as great as that in the Balearics. The islands still hold their dominant position, but they are in retreat, faced with the competition of the eastern Med. This competition is founded on new and often superior hotel stock and cheapness. There is also a bit of unfair competitive advantage. Governments can subsidise an industry in a way that the Spanish cannot, unless they wish to bring down the wrath of Brussels on their heads. These governments can also influence exchange rates – to their benefit – in ways that Euroland Spain cannot. 

“The Diario” itemises the pros and cons of the Balearics and of its competitors. The paper admits that the so-called “complementary offer” (i.e. bars and restaurants etc.) is costly, but it is also vastly superior to that available in the competitor destinations. However, it is the hotel element that speaks volumes. The current-day holidaymaker seems less interested in that complementary offer. Egypt and Turkey may suffer from inferior infrastructures, but what do these matter when the holidaymaker can stay in relative luxury on an all-inclusive basis? Outside bars and restaurants hold less appeal for a growing number of tourists, and so it also is in Mallorca where the all-inclusive offer has had to increase in response to what is happening elsewhere but where the hotels are not always as good.

There are cons in Egypt and Turkey in terms of, for example, terrorism, but this is a more questionable card to play following the summer bombs in Mallorca. There are cons in terms of low-quality bars and restaurants, but this is a questionable card to play if the holidaymaker isn’t interested. There are cons in terms of limited travel possibilities, which constitute one definite pro for Mallorca which is better served by air and sea and which is also closer for northern Europeans. There are pros in terms of government intervention; the Turkish government supported financially an 18% shareholding in Air Berlin by the Turkish airline Pegasus, thus, at a stroke, opening up a wider German market to the Turkish Riviera. There are pros in terms of governmental priority; tourism is the industry in the eastern Med and responsibilities of those at the heads of government reflect this. I suggested a while ago that the Balearics president should also be the tourism minister. Maybe I was right to have done so.   

In Mallorca and the Balearics, they continue to bang on about the strength of the brand (Balearics, erroneously), about professionalism, about sustainable environments, blah, blah, but much of it is whistling in the dark. It will continue to be so not only because of the growing competition but also – a point “The Diario” neglects to make – because there are too many competing self-interests in Mallorca, be these in government, within associations or in the tourism sector. The eastern Med countries are far more single-minded, far more focused on an overarching strategy led by government. They, the Turks, the Egyptians, the Croats, have adopted coherent and intelligent strategies of competition, and it is these, more than anything, that they have used to challenge Mallorca and the Balearics, because similar strategies, if they really exist, are obscured from view.