Friday, October 27, 2017

Ten Per Cent Swings In The Season

One does have to be careful with anecdotal evidence. There's plenty of it around. It is of the things-are-so-quiet variety; the never-known-it-like-this sort (in a negative way).

The season is drawing towards its official close. Over the past few weeks, from September onwards there has been this evidence. But it can depend. Let me supply my own contrary evidence. In Alcudia on Tuesday last week I observed how busy things were. It was hard to remember there having been so many coaches this late in the season. There was agreement, one response having to do with the ongoing problem of parking: there were just so many cars around.

A day or so later there was a post on Facebook. It came from a bar. Other bar owners chipped in. They couldn't recall a busier October. These weren't "newbie" bar owners. They've been in Alcudia for years. They've known the very best and the very worst of times. Moreover, they are bars in the main tourism centre, where all-inclusive dominates. What was going on, someone asked. Something must be right for there to be this many people, for business to be as brisk in mid to late October.

A further piece of evidence was at Bellevue, the giant complex of economy-class, overwhelmingly but not exclusively all-inclusive offer. With the capacity for up to 5,000 guests, it isn't necessary to keep all the seventeen blocks open as the season winds down. Yet they only started closing them a week or so back. They would normally have been closed earlier. The solitary bar that serves the outlying part of Bellevue, which is shut down before any other parts, only closed a few days ago. It was a long season for the bar. Uncommonly so.

Two weeks ago there was a report with a headline which referred to a bad end to the season. Evidence was supplied by the Mallorca restaurants association and by one of the associations which represents smaller retailers. Of the two I'm more inclined to listen to the former. The retailers bleat so often that their words are lost amidst their constant complaints and their unwillingness to admit that there is oversupply of non-differentiated offer and fierce market dynamics of the internet and shopping malls. I've all but given up with them. The restaurants, on the other hand, are worthy of attention. Business from September onwards was down ten per cent.

Yet this same report said that in early season - March to May - there had been increases in turnover of up to ten per cent. How does one explain the apparent difference, as explained by these associations, with September and October? September, in particular, is a month always anticipated by businesses. The tourist profile changes from the predominantly family one of August, which isn't typically a high-spending segment. As far as the associations are concerned, the main reason was the lack of tourist spending power. Are tourists in September and October that different to those in April and May that they can mean a yo-yo of up ten and down ten per cent? Generally speaking, they are not.

Lower tourist spending has become the accepted excuse for when things aren't as good as might be hoped. This lower spending can be related to all-inclusive or not. But something happened between spring and autumn which may offer more light on the swing in spending - the holiday rentals' legislation.

One again relies on mostly anecdotal evidence, but there is plenty which suggests that the legislation has had a dramatic impact. With apartments being pulled from the market, it would seem that a good deal of business has dried up, or at least this is the impression formed in those areas with a high reliance on rentals, such as Puerto Pollensa and even Palma.

It is useful to note that Alcudia ranks only three places below Pollensa in a national analysis of the proliferation of holiday rentals per head of population. Alcudia has the fourth highest level in the whole of Spain. But on the basis of what one sees and hears (and even now, closer to the end of the month, things still seem unusually busy), Alcudia is doing well where Pollensa is not.

The number of hotel places is markedly different, yet so many of these places are all-inclusive. So, what gives? Once more, it may well all depend, and much will depend on the sheer level of demand. Where hotel occupancy remains comparatively high right up to the end of the season, general business is ok, regardless of all-inclusive. The other part of the equation must be holiday rentals, and one really does begin to wonder what effect there will be next year. There was a mid-season shock in the form of the legislation. Will that shock persist next year and right through the season?

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