All Quiet On The Tourist Tax Front

Something rather curious has happened. It's gone quiet on a tourism front. Can it be that the island is serenely basking in the glow of an apparently record season? (I use the word apparently for those who would take issue with the "record".) Or might it be the calm before the storm?

If it is possible to gauge holidaymaker opinion - British holidaymaker opinion - in as wide a way as possible, there are few more likely options for doing so than Trip Advisor. But what does one find? Over the past fortnight or so, there has been barely any mention of the tourist tax on its Mallorca forum. How much will it cost for such and such a hotel? That's about the size of it.

When the news about the tax broke - just before Easter, though it took a bit of time to really filter through - there was a fair outburst of indignation. The legality was questioned. Tour operators were being held responsible (when they were not). People weren't going to pay.

Now, however, there is very little being said. It's not as if the tax is as much of an unknown as it was. Tour operators have been advising clients. It has had a good airing in the British media. There will, one would have to assume, still be holidaymakers arriving on 1 July who will be blissfully ignorant until being given the bill. But is it the case that the news has mostly sunk in and people are accepting the situation?

Your guess on that will be as good as mine. It could yet be that all hell is let loose on 1 July, but if one refers again to Trip Advisor, what commenting there has been more recently is not as negative as it was. The greater concern seems to be with the overall cost of holidays to Mallorca. The tax will add to this, but holidaymakers aren't stupid. In fact they are amongst the canniest of consumers, and they know their prices, all of which can be checked very rapidly for various destinations. And it is perhaps interesting to note that it isn't always the obvious competitor destinations which are considered - Greece, Costa del Sol, Benidorm, Croatia, for example. The Caribbean and Mexico come under the spotlight as well.

What they know is that prices of holidays have been going up, given a boost by all the demand for Mallorca and the Balearics, the reasons for which we are very familiar with. The tax may just prove to be the moderately thin end of an increasingly large wedge - the money paid out for the holiday in the first place. Wherever the tax will be placed in the holidaymaker's price calculations and budgeting, the potentially bigger issue is ever-increasing pressure on that budgeting from the initial cost.

It has often been argued that holidays are an example of price inelasticity, i.e. changing the price (upwards) has comparatively little or no impact. Perhaps so, but if the cost were to consistently rise well above inflation, cost-of-living rates and salary percentage increases, the inelastic theory may well be open to question.

The 2016 season we know is secure, but what about 2017, 2018 ... ? A clue, however, lies with investment. This isn't undertaken with a one or two-year horizon in mind; not when it stretches into the millions. And the investment coming into Mallorca for hotels only shows signs of abating if politicians get in the way. Otherwise, the likes of Starwood are lining up their own vast wedges for investment, and what is interesting with this is that it isn't for the top end of the market.

Of the few to have been having a say about the tourist tax in recent days, one has been Gabriel Barceló. Not to be confused with the tourism minister, Biel Barceló, he is the co-founder of the Barceló hotel group. In a television interview the other day he said that tourism, the driver of the economy in the Balearics, was being "abused" and that the tax was "unjust" in being directed against the tourism sector.

He also had a pop at the regional government and the town hall for Palma for attitudes towards tourism: wanting to control numbers and so on. He could not understand why they would do this when "100% of the Balearic population benefits from the tourism sector".