Twin Obsessions: Playa de Palma and Magalluf

Playa de Palma in its entirety has getting on for 40,000 hotel places. Palmanova-Magalluf has slightly fewer than 30,000 places. These two resort conurbations account therefore for roughly a quarter of Mallorca's hotel places. In the past few years we have bombarded with news of the redevelopment of Playa de Palma. Over recent weeks, the bombardment has been renewed; new hotels of a luxury variety, so we are told. In Palmanova-Magalluf, or more accurately Magalluf, we have been bombarded endlessly with news. There may have been a time when there was no news bombardment, but when that was is lost in the mists of touristic time.

This coming winter, we are informed, will witness hotel investments and projects the like of which have not been seen for many a long year. They are aimed at increasing hotel prices, increasing profitability and increasing employment. All positive stuff perhaps, but the focus of attention is on projects in these two conurbations. Playa de Palma, Meliá, Viva, BH; the island's tourism news agenda is driven by two resorts. Nowhere else matters.

Both Playa de Palma and Magalluf are news for the wrong reasons, and we all know what these reasons are. The reporting of these wrong reasons is entirely understandable - it is not reporting with which I take issue - but it is separate to the other reporting, that to do with the investments in the resorts. Again, this reporting is perfectly reasonable. When there are developments, they should be discussed. But it is these developments which, because the media reflects the objectives of others, have created an obsessiveness. Playa de Palma and Magalluf are twin obsessions. Not because the media has made them so, but because political and commercial interests have, and they are twin obsessions which are a disguise and a diversion and which are potentially deleterious and prejudicial to the 75% of coastal hotel tourism land which isn't either of them.

Around the coast of Mallorca there are four principal concentrations of tourism: Calvia, Playa de Palma, the bay of Alcúdia and the bay of Cala Millor, to which can be added lesser concentrations such as Capdepera, Pollensa and Santanyí. Not all of these centres are ancient in Mallorcan tourism terms; much of Playa de Muro, for instance, is of more recent vintage. Not all are centres of high-rise, massive hotel construction; Puerto Pollensa, for example. But most of it is ancient and massive.

In Calvia as a whole there are almost 60,000 hotel places. 50% of them are, therefore, neither Palmanova nor Magalluf, but Palmanova, for the purposes of the obsession, is unimportant; just as Peguera and Santa Ponsa seem to be unimportant. The Alcúdia bay conurbation of Alcúdia itself, Playa de Muro and Can Picafort has over 50,000 places; the bay of Cala Millor, over 35,000.

Between 2012 and this year, we are told, 260 million euros have been spent on hotel redevelopments of some form another. They have been spread around: Alcúdia 33, Cala Millor 26 and even Colonia Sant Jordi with 23. It's not as if there isn't and hasn't been investment, but this is not the issue. The type of project is the issue, and it is this which gives rise to the twin obsessions.

Playa de Palma's redevelopment, for so long in the planning and the debating, has essentially been a political investment. Both national and regional governments have bet a great deal on its transformation. Magalluf's is more purely commercial than political. The white knight of Meliá has ridden into town brandishing the standard of saviour and has attracted the fellow-travellers which now also seek the accolade of transformer.

The twin obsessions of transformation are the consequence of political expediency (Playa de Palma) and of proximity (Magalluf). Meliá can attract investors to itself to embark on the beautification of Magalluf because of its man-made physical advantage; that many Meliá hotels in close proximity. Political and commercial sugar daddies are, though, short in supply. Other resorts have neither. It is not as if there isn't a political appreciation of the need for resort modernisation - both the 1999 and 2012 tourism laws spoke of it - but where is it going to come from?

Playa de Palma and Magalluf create disguises of and diversions away from the realities of other resorts - realities such as those of Calas de Mallorca, where Manacor town hall does at least seem to have been shamed into doing something after the criticisms of neglect which were highlighted last week. The self-congratulation that flows like champagne with every new announcement regarding the twin obsessions obscures the falling self-esteem created by the flat beer of under-investment elsewhere. The corks pop and champion the new-age Mallorca. But behind the mask of this shiny future, there is all the other old age, for which obsession does not exist.  

The Missing Funds For Resort Modernisation

Resort modernisation was one of the key themes behind the Balearics tourism law of 2012. One of the measures included in the law was the payment of a tax equivalent to 5% of the value of reconstruction or rehabilitation of a hotel that underwent a change of use. This change of use referred to the establishment of tourist condo hotels or a complete alteration to residential apartments for sale. Such conversions, and in the build-up to the passing of the 2012 law they were one of the most publicised aspects, have thus far been few and far between. Yet the pre-law publicity hinted that they would be many and close between and, moreover, that many 5% levies would find their ways into the coffers of different town halls who would then be able (obliged) to use the money for infrastructure modernisation in the vicinity of the converted hotel.

It all seemed, therefore, like a fairly decent scheme. But as conversion has been only fractionally more than zilch, it now seems like less of a decent scheme. Why hasn't there been a dash to convert? Finance almost certainly, but was there ever the demand for condos (or cash available to buy them) and is there not already a surplus of apartments for sale in tourist areas? And why might someone wish to buy an apartment in a tourist area from a former hotel. Not as a holiday rental private apartment, surely?

Conversion fever being absent, additional funds for town halls are also absent and so modernisation of resorts or parts thereof is being starved of additional funds. Yet these funds are badly needed. There are old, all but obsolete hotels in Mallorca and there are old, all but obsolete parts of resorts as well. Forty or fifty years on from the great boom times, the coastal urban areas of the island are showing their age and looking tired.

The regional government is hugely dependent upon the private sector to assist with this resort modernisation. The funds it receives by way of project investment from Madrid are laughably small - some 70 odd million euros in 2014 - and those which it can afford to allocate are similarly paltry and determined by a lack of cash and an inability to raise credit, even if banks were willing to extend it.

The tourism ministry has announced a series of projects that will commence in 2014 and run into 2015. The funds available amount to a little over 12.5 million euros. The government may be able to find some more cash and may also be able to announce more than the 15 projects that it has, but 12.5 million does not go a long way when one considers the scale of modernisation that needs to be undertaken across the island.

What is interesting about this 12.5 million, though, is that it is a sort of special fund. It comes from the hoteliers. Not because they have been disposing largesse but because they were liable under an agreement drawn up in 2009 to hand over 4,000 euros for every hotel place that had to be "regularised". There were, or supposedly there were, a whole load of hotel places that were illegal.

The then tourism minister Miguel Nadal and the Council of Mallorca reckoned that there were 50,312 hotel places that required regularising, though they weren't In fact all hotel places. Roughly a half related to tourist apartments of the type which hoteliers operate. Whatever the type of accommodation, there was an apparently large discrepancy between what these 50,000 or so places should have generated and what the government at the time anticipated receiving - up to 70 million euros. There is now an even greater discrepancy. Since 2009, the total number of places that have been regularised is less than 10% of the 2009 figure, and the amount raised has totalled only a bit more than 18 million euros, 12.5 million of which is now earmarked for the 15 projects.

So whatever happened to the 50,000 places and what, therefore, ever happened to the funds that were going to be raised? Both seem like pretty legitimate questions, but neither have an obvious or satisfactory answer. Perhaps the tourism ministry got the figures wrong back in 2009. Who can say? The process of regularisation and so the period for which the government receives funds are due to end in 2015, so 50,000 places are most certainly not going to be regularised.

The shortfall on the 2009 estimate potentially gives a lie to the government's belief in the private sector contributing to modernisation and also to the rapidity with which this might be undertaken. Though modernisation was a tenet of the 2012 tourism law, the legislative framework for the regularisation, the raising of funds and yes, modernisation, was, remarkably enough, established under the 1999 tourism law. Which all goes to prove how slowly things can proceed and how, even once they do proceed, they do not proceed as might have been anticipated. Modernisation? It'll take years.