The Lost Ten Per Cent: Tourism Quality

For the first four months of the year, German tourism sales to Mallorca for this year were down by up to ten per cent. The headline to this effect, used by a number of sources, would be designed to surprise or shock: a harbinger of doom for the island's tourism industry.

Figures for increase or decrease in tourism numbers are quoted over and over again. Only some should be taken as being worthy of attention. If a small tour operator makes an announcement, either way, it is of little consequence. If Tui speaks, then far more notice should be taken. But of greater significance still is what is said by organisations which provide aggregate evidence.

Spain's overseas tourism offices are examples of such organisations. They exist in various capital and other major cities. It is their job to provide accuracy and market intelligence. When they speak, they should be listened to.

Álvaro Blanco Volmer is the director of the Munich office. It was he who gave the up to ten per cent news. But was he particularly alarmed? Actually not. The decreasing number was in fact evidence of strategy working. This strategy is to wheedle out the low-spending tourist class in favour of the "quality" end. The disappearing ten per cent seemingly rank among the Cs of the ABC socioeconomic classification.

Who's strategy is this? Mostly everyone's. Tour operators want higher spenders (so long as they can continue to flog volume). Destinations want them. Governments want them. But not all. There are destinations and governments currently desperate for anyone they can attract. Holidays in some places are almost being given away. Tour operators won't like that, much though they might talk up recovering destinations.

You have to therefore be careful with headlines such as the German ten per cent. The wrong conclusions can be drawn if you don't look beyond their surprise value. But there is some surprise insofar as the decrease, assuming it is maintained for the year as a whole, is considered to be a positive because of a greater concentration on the "quality" end of the market. We've been here before, and it was the German market which was once up in arms because of it.

When tourism declined in 2002 to the tune of some half a million visitors, the blame was placed solely on the ecotax. This is one of the great myths about that tax. It might not have helped, but the downturn was predominantly a German one. It fell by 16% (the UK market went down by just over one per cent). The overall decline was 7.6%, which was all but reversed the following year. In addition to the German economy having been in a short recession, there had, just as importantly, been all the outrage over remarks made by Balearic politicians regarding the quality of German tourism - the low-spending end. As a consequence, there was something of a boycott.

Now, however, the situation is different, and as Blanco Volmer pointed out, it is more important to talk about millions of euros rather than millions of tourists. If a low-spending percentage of the German millions doesn't come, then so be it.

His observation was reinforced by the news from the UK. Tourism numbers are up by 3%. However, more doesn't mean better. The hoteliers federation explained that UK tourists spend less than most other nationalities. They aren't quite the poor men of Europe - the French, very much in the doldrums, can probably claim this title - but they are certainly not among the high-flying spenders of, say, the Netherlands. There is, therefore, an issue with the "quality" of part of the UK market.

The hoteliers' president, Inma Benito, gave a presentation towards the end of last month in which she said that Mallorca will never be able to compete on price with the likes of Turkey, once and if they recover. Turkey, it might be noted, doesn't look look as if it is recovering, certainly not where some markets are concerned. The Swedes, for instance, are shunning it. But assuming there is something like full recovery of these other destinations (still a pretty big assumption), the hoteliers won't be taking them on over price. The Benito thesis is multiply rather than add, by which she means that the value of the product has to go up through innovation and competitiveness. And with the value of the product going up, so does the price, thus squeezing out the low-spending end of the market.

The island's tourism industry is heading into uncharted territory. Some politicians would be only too happy to see tourist numbers decrease, but the hoteliers don't see it that way. The numbers can be retained. New markets will compensate for losses in others. Can they be completely confident? How much "quality" will be prepared to back their strategy?