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.