Friday, January 05, 2018

Blockchain To Tourismphobia In 2018

A new year, and there have of course been any number of predictions for tourism in 2018. Some of these have to do with issues beyond Balearic borders. Brexit is one, although the impact of this (if any) still remains one of speculation. Another is Catalonia. I remain unconvinced that a perception of instability in that region will have any negative impact on the Balearics. I don't see why it should have. Indeed it may even work to the benefit of the Balearics. Rather than "borrowing" tourists from Turkey and wherever, the islands might end up borrowing some from the Costa Brava. And they, at any rate, are used to paying a tourist tax.

Associated themes to do with Catalonia's politics may be more of an issue for the Balearics, which means "tourismphobia". More of that below.

Borders are mainly irrelevant when it comes to technology, and the greatest hype for 2018 concerns the blockchain. This is either the most revolutionary concept to yet be unleashed on these fast-moving technological times - it will create a new "internet of value" - or it is the most overstated.

The blockchain, if you are not familiar with it, is the technological infrastructure which enabled the launch of the bitcoin. In essence, it is a highly encrypted peer-to-peer network that requires the solving of a cryptographic maths problem in order to verify individual changes to data records. In other words, it is virtually impossible to hack.

The reason why it is being spoken about as the next big thing for tourism has to do with, for example, storage of traveller identities, the tracking of assets, such as luggage, and the elimination of overbooking. The blockchain will not attract much attention in the news pages because it isn't holiday rentals, tourismphobia or the price of holidays, but behind the scenes, it might indeed prove to be revolutionary.

Airline industry
Crossing physical borders, there is what is going on in the airline industry. IAG has got its hands on Niki and will make it a subsidiary of Vueling. This should represent additional competition to Lufthansa, which took the lion's share of Air Berlin. But the problems experienced last year suggest that there could be further consolidation in the industry, which in turn hints at higher prices, while the problems may not be over.

The financial weakness of some airlines was sharply exposed in 2017, and a report into airline debt-asset ratios points to a particular concern about Norwegian. Its rapid rise has incurred, it is said, a 55% debt value of its assets. By way of contrast, and for example, easyJet's ratio is only 16%. Ryanair's, by the way, is put at 35%.

EU directive
The European Union, as of 1 January, has a new directive with direct impact on tourism. This is the new Package Travel Directive, which member states now have to transpose into national law (and there's little wriggle room for not doing so). It will actually kick in from 1 July. What this directive boils down to is a way of addressing how holidays are now booked. The old directive was for tour operator packages alone because the idea of packages being put together by consumers (and intermediaries) hadn't, in internet terms, been invented.

To cut to the chase, while the directive is very good news for consumer protection, it may well end up costing consumers more. Sellers, whoever they are (not just tour operators), face possibly greater liabilities if things go wrong with holidays, meaning that they are likely to increase prices in order to cover these potential liabilities.

And just to make clear in a Brexit style, the UK government has all along said that it will transpose the directive, regardless of Brexit.


Coming to Balearic specifics, the tourist tax increase came into effect on 1 January, albeit that it won't apply until 1 May because of the freeze of the low-season rate. Will it result in the loss of a million tourists? I very much doubt it, though it would be a surprise were there to be an increase in the number of tourists this year. The recovery of other destinations (about which we hear endlessly and with varying degrees of certainty or uncertainty) and the cost of holidays are two factors which would make an increase surprising.

There are others, and Abta has suggested that anti-tourism "tourismphobia" could well be one. The association hasn't come right out and said that this will mean a drop in bookings, but it has implied as such by saying that protests (not only in Mallorca) represent an inflection point. It adds that around a third of holidaymakers are, in general terms, considering trying a new destination this year.

A point with the tourismphobia here has to do with the politics of Catalonia; I'm pretty convinced of this. Arran, who staged the protest with flares in Palma in July, were said to be under the guidance of the CUP, the extremist pro-independence party in Catalonia. How things pan out in Catalonia - either positively or negatively for the independence movement - may just influence things in the Balearics. The politics of independence, of sovereignty, of nationalism are, it seems to me, closely linked to the anti-tourism sentiment.

A response to this is the attempt to tackle "saturation". Holiday rentals, and the likes of Airbnb in particular, are seen as the principal cause of saturation and therefore of unrest. Some of you will disagree on this, but there is an overwhelming sense that politicians, most of the tourism industry and much of the media (including the specialist tourism media) do agree. Given the Balearic legislation and other measures, such as the Tax Agency's demands to be made of Airbnb and other online agencies, it would be additionally surprising if Balearic tourism were to increase in 2018.

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