The Illogic Of Mallorca's Tourism

There are two organisations in Mallorca which above all others deserve being listened to when it comes to tourism issues. Neither may be totally independent - (which organisation can be?) - but each does its best in being objective. The organisations are the Chamber of Commerce and the Universitat de les Illes Balears. They strive for objectivity, and one reason why they generally succeed in doing so is because they both undertake their own research.

Antoni Riera, professor of applied economics at the university, has been making some observations about the nature of Mallorca's tourism, drawing on a study that was undertaken last summer. The findings will come as no surprise, but they will be findings which, in certain respects, will be ignored. A key one has to do with private accommodation tourism, aka holiday lets. Tourists who rent accommodation spend on average 30% more than tourists who stay in hotels. This is spend which is necessary. It is what keeps a great number of the almost 50,000 tourist-related businesses (the complementary sector and tourism services) going.

Who will be doing the ignoring? Those who are not objective; the regional government being among them. The hoteliers will also want to ignore the findings except to point out that this rental market is partly illegal and unfair competition. It is unfair in different ways, one being that the accommodation is generally cheaper. And so it may well be. But that is the reason why those doing the renting can spend 30% more than the hotel-based tourist.

This 30% figure is striking not just in that it shows a much higher level of spending. It is also very similar to the figure for the total spend by tourists in Mallorca that ends up with the complementary sector. That figure is 29%. Where does the rest go? On hotel accommodation and price of the holiday package.

It needs to be noted that the hotel part of the equation includes all type of board and so not only all-inclusive, but all-inclusive has exacerbated the situation and quite dramatically so. Economic crisis brought about a significant increase in the level of AI. The consequence has been that, although Mallorca has registered record numbers of tourists in the past couple of years and has in fact registered record levels of turnover, the level of spend has declined and is continuing to decline. All-inclusives have seen to this and will continue to see to this.

As I say, none of this will come as a surprise. Indeed, none of it is new. But it sometimes needs organisations with real credibility to try and get the message across. The trouble is that they are consistently ignored, as was the Chamber of Commerce when it issued a report in 2006. This looked at the level of private accommodation holiday rental. One of the report's conclusions was that spending behaviour between hotel and rental tourists represented two distinct profiles. The former spent less than the latter. Another conclusion was that rental tourism lengthened the tourism season (the hoteliers have consistently said that it doesn't). A further conclusion was that a "more stable" tourist resort required a capacity for rental tourism.

We were given grand figures this week for the economic contribution of all-inclusives. 2.5 billion euros. At least there was an admission that the lion's share of this comprised the cost of hotel accommodation and the package. I've been seemingly banging my head against a brick wall for years trying to explain that spend statistics primarily consist of these costs. Just as others, like the Chamber of Commerce and the university, have been trying to explain that there is a vast tourism population which contributes negligible amounts to the local economy and that there is a significant tourism population which stays in rental accommodation which contributes a great deal to the local, non-hotel economy. If there was any logic to Mallorca's tourism, you would think that someone in government might reflect on the model of the island's tourism and conclude that the all-eggs-in-the-hotel-basket model is not necessarily the best model.

But then, when did logic have anything to do with anything? If it did, then the government would accept that there are distinct profiles of tourist, as the Chamber of Commerce noted in 2006, and as Professor Riera has reiterated this past week. One profile being that which makes a telling contribution to the general economy and another one which doesn't.

The Chamber Of Common Sense: Holiday rentals

The Chamber of Commerce in Mallorca and the Balearics is a body which deserves to have greater prominence and which deserves to be listened to rather more closely than it perhaps is. This is an organisation which in the past has produced one of the most informative and insightful reports into tourism (which it did in 2003) and an organisation which drew into serious question government estimates for passenger use on the eastern-coast Manacor to Artà railway. While it wasn't against the railway, it addressed the pure business case and found it wanting. Amid all the arguments over finance having been withdrawn for the railway and over its abandonment, nowhere have these arguments ever referred to what was an independent report which, had it been given proper attention, would have questioned the wisdom of ever proceeding with it.

The Chamber cannot be totally independent in that it does have business interests to consider, but it is a very much more independent body than the government or some of the business associations which represent specific sectors. It also tends to ally itself with a group known as the Economy Circle, one comprising leading businesspeople and which boasts as its various member companies banks, consultants, retailers, wine traders and even the odd hotel chain.

The Chamber of Commerce and the Economy Circle are unusual in Mallorcan business in being voices of sense, and the latest example of this sense has come from the Chamber of Commerce. It has to do with the rental of private apartments as tourist accommodation. Its president has written to tourism minister Carlos Delgado and outlined the serious harm that the demonising of private apartment rental will have and is already beginning to have. He sees the impact that the witch-hunt against holiday rentals will have. It is an impact that should be transparently obvious, but it appears not to be, to the government at any rate.

The Chamber's president points out that tourists may opt to go elsewhere, such as to Catalonia. Why Catalonia? Isn't there a crackdown on private apartments there as well? If you believe some media reporting, then there is, but this is a misunderstanding. Catalonia has a tourist tax, and the government there wants to properly register accommodation in order that it can apply the tax. Far from cracking down, Catalonia is in fact opening up. It is a region where there is an appreciation as to revenues that can be derived, which is the opposite to the Balearics, where a toothless government, controlled by the hotel industry, acts in a vindictive and myopic fashion.

What is interesting about the Chamber of Commerce's intervention is that it establishes that, other than disgruntled property owners, there is in fact a whole range of business interests opposed to the rules on holiday rentals. These include the powerful supermarket lobby, already at loggerheads with the government over its green taxes. For the first time, one senses that a genuine opposition is being mounted to the government over tourist apartments, an opposition which isn't that of what might be perceived as tax-fiddling owners but of those who are capable of impressing upon the government an economic and business case for adopting a different posture.

To the Chamber of Commerce can be added certain mayors who are only too aware of the potential damage that might be caused to their own local economies were there to be a withdrawal from the market of much accommodation or a decision made by tourists to head to alternative destinations within Spain that take a different view to that of the Balearic Government. There is, one feels, a groundswell of opposition that the government will find hard to fob off.

One can probably expect, as a result of the Chamber's intervention, that the hoteliers will go into propaganda mode, lamenting occupancy figures (which will not be anything like as bad as they make out) and decrying the lack of standards, the unfair competition and the tax fraud that the private accommodation sector, in their view, represents. They will do so, because this is what they habitually do. But even if they do not, for the government to ignore what powerful sectors of Mallorca's business are saying and to so ignore the Chamber of Commerce will only serve to emphasise what is widely understood to be the case - that the government acts firstly and almost exclusively in favour of the hoteliers. The government will, therefore, be exposed as not having the full interests of the tourism industry or of the Mallorcan economy at heart.


Any comments to andrew@thealcudiaguide.com please.

MALLORCA TODAY - Chamber of Commerce calls for government to relax rules prohibiting holiday apartment rental

The president of the local Chamber of Commerce has written to Balearics tourism minister Carlos Delgado to express concern about the impact of regional government legislation that does not permit the commericalising of private apartments for holiday rental. He points to the value of this type of accommodation to the general economy and fears that prohibition will lead to a flight of tourists to other regions of Spain, such as Catalonia, where there are far less prohibitive measures.

See more: Diario de Mallorca