Why Croatia Cannot Compete

In 1984, a group of us went on holiday to what we called Yugoslavia but to what was Croatia, except that no one made much reference to Croatia in 1984, as the Big Brother Socialist Federal Republic of Yugoslavia was still intact. Two years later, the SFR started to finally creak. Serbia's SANU Memorandum was issued and so began the unravelling of the SFR and the descent into war.

We really didn't know a great deal about where we were going, other than the fact that the place was called Umag, which didn't sound particularly delightful. The resort where we stayed had a distinctly Communist feel to it. There was one vast refectory-type restaurant which specialised in nothing in particular, a vast concrete "entertainment" complex with as little appeal and ambience as a 1960s John Poulson-designed English shopping centre, and a beach that wasn't a beach. It was like a car park. Concrete. The only redeeming feature was the accommodation - wooden chalets set amidst pine trees which fortunately had barbecues, meaning that the restaurant could be given a deservedly wide berth.

As Umag demonstrated, Yugoslavia was a tourism destination stuck in something of a time-warp, but though ostensibly Communist, Yugoslavia had long been open to tourism, and Croatia, as one could observe in Umag, was popular with German and Austrian visitors who could travel easily by road. It was the existence of a tourism infrastructure (albeit one in need of updating) and a previous tourism reputation that enabled Croatia to quickly establish itself on the European tourism map once hostilities came to an end.

Croatia as a competitor to Mallorca has long been spoken about, but it has recently been spoken about less. Turkey, Egypt, Tunisia have all assumed higher profiles and interest, even if this interest, where Egypt and Tunisia have been concerned, has been one of reaping the benefits of revolt. But Croatia's competitiveness has not been diminished. Quite the reverse. It also benefited from the Arab spring, and while Turkey and Egypt do tend to dominate much of the tourism discussion in Mallorca, Croatia is arguably the biggest single competitive threat to Mallorca.

The Banca March, in its recent report looking at tourism going forward to 2030, is one organisation which has identified Croatia as the island's main competitor. It isn't difficult to see why this might be. The advantage of easy transport links which existed before the Yugoslav Wars remains a key advantage, which is why German, Austrian and Italian tourism is so strong, while these links enable Croatia to benefit far more now than it did in 1984 from tourists from the one Communist country who were able to move relatively freely, the Hungarians. And Hungary as a market for Mallorca is virtually unknown.

Apart from the transport links, the tourism infrastructure in Croatia has been totally transformed. I have searched to see what remains of Umag in its 1984 style, and I think the car-park beach might still be there, but otherwise, the place looks largely unrecognisable, while I imagine that the town's shops, which in 1984 appeared not to actually have anything to sell, would also be unrecognisable. The growth of Croatian tourism is such that its level of overnight stays quadrupled in fifteen years from 1996, and there is no hint that this growth might level off. Hotel quality keeps getting better, there is scope for more development and prices are generally and for now quite low.

Mallorca makes a virtue of aspects of its tourism, as though these aspects were somehow unique to it, when they aren't. Croatia has folk traditions, it has fiestas, it has mountains, it has wetlands and wildlife, it has rivers (which Mallorca doesn't), it has mediaeval and Roman remains, it has sport (and Umag now boasts the staging of the Croatia Open tennis championship). It doesn't have a great gastronomical tradition (or if it did in 1984, it was keeping quiet about it), but gastronomy, despite what Mallorca's tourism bodies would believe and would have everyone else believe, is not considered to be that important by tourists (and surveys have shown that isn't).

What Mallorca does have and what Croatia doesn't are any number of fantastic beaches. They had to build car-park beaches because of the rocks. There is no beach in Croatia that can compare with, say, Es Trenc or Alcúdia's. Yet, in the face of competition from Croatia and elsewhere, there has been a perversely determined effort to promote anything which isn't beach tourism, so disregarding Mallorca's greatest asset. Sun and beach may be old hat, but it still sells. Indeed, for many tourists, it is all that sells. And where the beaches are concerned, Croatia can't compete.


Any comments to andrew@thealcudiaguide.com please.

Murder On The Dance Floor

"You better not steal the moves, DJ, gonna burn this God damn house right down." Well, let's not get carried away. There will be no murder and no burning of houses down, but stealing of moves, DJ? Sort of, yes.

Sophie Ellis Bextor would be rather passé now for the dance floors, streets or terraces of Magalluf, but Pitbull or Jessie J would not be. Indeed, they aren't. They are just two artists who could be on their way this coming summer to Magalluf, where dancing will be on terraces and streets as well as on floors.

There won't be stealing of moves so much as competitive moves, and these moves - dance and others - are going to come about largely as a result of Mallorca Rocks.

You may recall there having been a spot of bother surrounding Mallorca Rocks. The association representing tourist business, Acotur, was threatening various actions against the hotel and especially against Calvià town hall because of questions over whether the hotel was licensed to stage its music concerts. The threats went away when the regional government's tourism ministry discovered that it was able to grant the required licence when it had previously said that it was unable to.

Mallorca Rocks has been highly successful. The hotel itself has enjoyed pretty much full occupancy and the concerts have been well patronised. The success, due in no small part to a concert schedule replete with British dance acts, has not gone unnoticed. Other businesses were unhappy about this success, but they were ultimately unable to prevent it. So rather than try to beat it, they are going to join it, and then try and beat it.

Everyone knew which businesses were behind the opposition to Mallorca Rocks that was channelled through Acotur. If they didn't, they would now have a pretty good idea, as BCM plans staging up to nine concerts of its own in its "square", and Pitbull and Jessie J are a couple of the acts being talked about as possibles.

Objections to Mallorca Rocks were couched in technical terms, as with the correct licence and on health and safety grounds, but at the heart of the objections was the competition that the hotel brought. The director of Grupo Cursach, of which BCM is a part, has said that the concerts will be in response to hotels which have "changed the balance" in Magalluf.

Mallorca Rocks did change the balance, because it introduced new competition. There were certainly question marks over whether the hotel should have been staging what are "secondary activities", but these activities are going to be sanctioned once and for all in the government's new tourism law. There will be no more question marks, and their removal opens the way up to not just a more competitive market but also to the making of Magalluf as far, far more of a club and dance resort than it has been.

BCM isn't the only operation planning on or considering concerts or DJ events. Another hotel chain, Marina, has converted its Barracuda hotel into a themed party hotel, even going so far as to re-do its rooms in a "fun" style and with singles (young singles) in mind. DJ events are on the cards for this year. Meliá's rebranded Sol Wave House, which features two surf wave machines from Wave House, is also likely to stage concerts.

Mallorca Rocks may have upset some businesses, but by changing the balance it has created competition that is now fighting back, and in so doing the resort is going to catch a wave of a new explosion in popularity. It will be a popularity that doubtless some will scorn, as it is youthful popularity, but it is popularity nonetheless that other resorts would be only too delighted to share.

Magalluf, for all its at-times bad reputation, represents a changing face of Mallorca, one that is following more of an Ibiza line, which is ironic as Ibiza has sought to shed its party reputation. Murder on the dance floor there will not be. It's going to be altogether happier than this, but one thing is for sure, there is going to also be some intense competition. If this means more concerts and bigger names, it can only be positive. The God damn house is going to be burned down right enough.


Any comments to andrew@thealcudiaguide.com please.

Taxing The Tourist

Might the Balearics revive the eco-tax or create some similar tourist tax? The government has hitherto discounted the notion, but it may well be looking across the sea to the mainland and to Catalonia where a tax is to be introduced in 2012.

The Catalonian tax envisages payments for a maximum of ten nights of a stay, and it will apply to hotels, apartments, cruise ships, camping areas and rural properties - pretty much everything, in other words. Five-star hotels will attract a rate of three euros a night, four-stars two euros a night and the rest one euro. Children under 12 will be exempt. It is estimated that the tax will raise in the region of 100 million euros and the money will be used primarily for tourism promotion.

The Balearics eco-tax was introduced in 2003 by the then socialist government of President Antich and was abandoned a year later by the Partido Popular administration. The tax attracted significant amounts of bad publicity and warnings of the harm it would cause to the local tourism industry. It was unpopular because it was unilateral, i.e. other regions of Spain didn't have such a tax.

For all that the tax was not well thought-out (it was essentially discriminatory in that the hotels were the channel of collection), the principle behind it had merit. In purely moral terms, it is not unreasonable, for example, to expect tourists to contribute to the provision of resources and services, while the application of a tourism tax is a well-enough established practice in different parts of the world.

A counter argument against the tax was that tourists already contributed, albeit indirectly, through their spend that supported local businesses which in turn paid taxes. This was also reasonable and, especially among tourist "veterans" who had been coming to Mallorca for years, there was some resentment at being asked to pay when they had been contributing for so long.

Since 2003 though, one thing has changed and that is the increase in all-inclusives. It might seem unfair to penalise tourists who don't stay in an all-inclusive, but the level of spend in resorts with high concentrations of all-inclusive has unquestionably been affected, with the result that the contribution to the local economy has gone down.

Another thing that has changed is that competition from other destinations has become steadily more intense. A concern that a local tax in 2003 might have put the Balearics at a disadvantage with other parts of Spain would now be one of worries about boosting tourism to other countries. However, and as events have shown, this competition can come with a caveat, one of potential disruption.

The competition argument isn't the strongest, and it isn't one that seems to bother the Catalonian government. Instead, faced with a budget cut to tourism of one-third in 2012, it is looking to the tax to enable it to strengthen its marketing clout in beating off the competition.

A problem for Catalonia, however, is that a tax, were it widely known to be earmarked for promotion, would not necessarily play well with tourists. It would be reasonable for visitors to believe that this was something that they should not have to pay for. Though the Balearics eco-tax was mishandled, if the PR were done effectively, tourists would be more likely to accept paying for the environment or for good works. Promotion, a matter very much for a regional government and its tourism industry and it alone, is different.

More than all this though, there is an issue with the drip-drip effect of added costs to the tourist. To a local tax can be added charges such as those imposed by the British and German governments on air travel. The cumulative effect of the drip-drip would not mean tourists opting for a competitor destination (especially as air duties are universal and indeed higher for longer distances), but it would most likely eat more into the spend once at the destination. On the basis of what Catalonia intends to introduce, a family of four with two teenagers at a three-star hotel would pay 40 euros more. This might not seem a lot, but cumulatively, for the tourism population as a whole, it may well result in spend decreasing even more. What is gained through a direct contribution would be lost from an indirect contribution.

On balance, however, the Balearic Government might be advised to re-visit the concept of a tourism tax, if only on moral grounds.


Any comments to andrew@thealcudiaguide.com please.

When Blossom Falls: Mallorca's almonds

February. In parts of Mallorca there is a familiar and pretty sight. Almond trees in blossom. The tourism they attract may not rival, say, the tulip fields of the Netherlands, but it does attract some. But for how much longer?

In the past five years, the amount of land devoted to almond cultivation has shrunk dramatically. A loss of 33,000 hectares has left the island with less than half the area for almond-growing that it had in 2005; 25,000 hectares remain.

The decline can be attributed not to crisis but to a change in productive agricultural land use. Where once were almond trees are now olive groves. The decline can be attributed also to factors of competition, consumption, markets and to the Common Agricultural Policy.

Almonds are only one example of a shift in agricultural production. One of the more dramatic has been the move to rice and away from potatoes. Less prone to the capriciousness of nature, rice has altered the pattern of agriculture in the traditional potato-growing area in and around Sa Pobla. Yet, the rice is primarily for domestic consumption, whereas the potatoes of Sa Pobla have long had a significant export market.

Export, however, has been highly influential in driving greater olive production. Indeed, most of Mallorca's olive oil goes overseas. Prized for its quality, it has found new and large markets; China, for instance. Almonds, though also highly valued by these new markets, don't represent the same opportunity, and this is in no small part due to the competition and the market dominance that comes from California.

In the late 1970s, the US overtook Spain as the leading producer of almonds, or rather California did. Some 80% of the world's supply of almonds now comes from California. In a manner similar to that of the Californian wine region of the Napa Valley and its inroads into French supremacy in the global wine market, so agricultural technology, way in advance of Spanish methods, secured a position of dominance for the Californian almond from which Spain and Mallorca have never really recovered.

International competition is not confined to American almonds. Imports of other types of nut have altered Mallorcan and Spanish consumption, eroding the demand for the mainstays of Mallorcan nut production, hazelnuts as well as almonds.

Though Spanish production of almonds in 2011/2012 is due to rise by around 11% on a five-year average, this increase is largely down to natural factors; the harvest will have benefited from generally benign conditions. But the vagaries of nature have, as with the potato, occasionally taken their toll. In 2009, Mallorca's almond production was poor by comparison with other parts of Spain, the result of too much rain and wind inhibiting pollination during the flowering season. And the almond faces another natural threat, in Mallorca and elsewhere: that of worries about the honeybee.

But over and above these different factors, successive reforms of the Common Agricultural Policy (CAP) have probably been most influential.

CAP regulations have been both positive and negative. They brought about a general improvement in the quality of olive oil, but they also, thanks to subsidies and guaranteed minimum prices above world-market prices, brought about a boom in olive-tree plantation. Though the subsidy has changed since the 1980s, the growing of olives has continued to increase, and this despite the adoption of more environmentally sensitive policies in a 2005 reform.

The effects of this reform haven't necessarily been that environmentally sensitive, notwithstanding CAP criteria that are meant to place environmental issues to the fore. Intensive olive plantations have taken over from what were more traditional crops and, in the process, have reduced biodiversity, and not just in Mallorca.

Allied to this has been a calculation in subsidy known as the coupled payment suppression and its impact on nuts. The outcome of this has been a 13% reduction on margins for Spanish nut farmers and pretty much Spanish nut farmers alone.

Agriculture is only a tiny part of Mallorca's economy, just a bit over 1% of GDP, but it is being looked at anew for its potential growth. The appointment as environment and agriculture minister in the regional government of Gabriel Company, an independent from agriculture, highlights this renewed attention being given to agriculture. But which priorities are grabbing his attention?

While olive-oil production has clear economic advantages, the minister, in his combined role, will know that almonds, a faltering element in the agricultural mix, contribute also to the natural environment and landscape of Mallorca. And at the current rate of loss, by 2017 there will be no almond growing and no almond blossom.


Any comments to andrew@thealcudiaguide.com please.