Holiday Rentals: Now they go international

The Spanish Confederation of Hotels and Tourist Accommodation (CEHAT) has issued a report in which it says that holiday rentals that are not within the law generate a black economy sum of almost 3,000 million euros.

This is a staggering amount of money, so staggering that it is hard to know what it actually refers to. Is CEHAT saying this is an annual sum? As always with these amounts that are thrown into the media fire, they are designed to stagger without substance being offered to support them or to explain them. Let's just accept, though, that there is a lot of black money associated with holiday rentals; it is undeniable.

This 3,000 million is from the "oferta alegal". The use of "alegal" is not unimportant as it doesn't mean the same as "ilegal". It means "not within the law" and can also mean "unregulated". The distinction is important because across Spain many holiday rentals are "alegal" in that there is no legislation in several regions of the country that expressly deals with this type of accommodation. There is one region, however, that does have legislation, and we are of course familiar with it: the Balearics tourism law.

The need for regions to have their own laws is one consequence of the reform of the national tenancy act. Madrid, by this reform, effectively abrogated any responsibility for holiday rentals, placing this responsibility with regional governments. It was a reform that had the support of the hoteliers (some might say that it was a reform drawn up by the hoteliers) as, in certain parts of Spain, the hotel lobby is all powerful, e.g. in the Balearics, and heavily influences regional legislation.

It was a reform, however, that was curious in one particular way. The national plan for tourism, published in June last year, identified "an increase in residential tourism" as a strength of Spain's tourism. Though the plan's document avoided reference to holiday rentals, concentrating instead on second homes and on family use of such homes (permissible under the tenancy act), this type of tourism is only an element of the catch-all term "residential tourism". Another element, and a very significant element, is the "oferta alegal" or "ilegal" where illegal can be used.

What was doubly curious was that, having identified this type of tourism as a "national" strength, a reform that does not directly come under the heading of tourism, that to do with the tenancy act, which is property legislation, went in the opposite direction. By handing responsibilities to regional government, not only was a national strength ignored but the potential for diverse and so confusing legislation was also heightened. To give one example, and a very different one to the Balearics, in Catalonia, where there is regulation, the offer of holiday rental places has soared. CEHAT says that, in Barcelona alone, it greatly outstrips the number of places in hotels or previously regulated types of accommodation, so bringing about conditions under which it is impossible for hoteliers to compete.  

But what CEHAT doesn't say is that Catalonia introduced a tourist tax last year. The government there saw a need to harmonise this tax for different types of accommodation and also saw a revenue opportunity; it has regulated holiday rentals in order to bring in more money. And what CEHAT doesn't admit is that growing tourist demand cannot be met by hotel supply and will not be met by a new boom in hotel construction (there are due, for example, to be some new hotels built in Mallorca but only a few). 

There has been, again according to CEHAT, a very significant rise in the "oferta alegal" over the past three years: a rise of 300%. We will have to take its word for it. There is little doubt that there has been a steep increase and there are good reasons why - demand, economic circumstances (of owners who need to supplement incomes), the emergence of P2P websites such as Airbnb. Alarmed by this, CEHAT sees the threat not just nationally but also internationally. At the meeting of the European Trade Association of Hotels, Restaurants and Cafés in Europe that takes place shortly in Athens, it hopes that "international best practice" can be established to guide regulation of accommodation that is outside the law.

CEHAT, as with the hotel federation in Mallorca, cries foul against the "oferta alegal", warning of the dangers it poses to the tourism industry and claiming unfair competition. It will keep on issuing these warnings and making these claims, while all the time not admitting that its aim is to eliminate competition; and competition, moreover, that is needed in order to satisfy demand.

There's No Such Thing As Unfair Competition

Time was when only scant attention, if any attention at all, was paid to health and safety in Mallorca. There are still examples of this attention being scantily clad but an unsafe and an unhealthy cultural tradition has been replaced by one that bears more resemblance to Anglo-Saxon fastidiousness than the previous Latin-Mediterranean couldn't-care-less-ness. And when it suits certain interested parties to come over all safety-concious-righteous, they will play the H&S card for all it's worth.

Safety, or the perceived absence of safety, is invoked as a means of attacking unfair competition. Go back a couple of years, and you might recall all the fuss about the Mallorca Rocks hotel in Magalluf. Objectors to this dealt the safety card (all those thousands of people packed into a hotel inner square with a swimming-pool slap bang in the middle). But the safety thing was really only a healthily-safely correct smokescreen to disguise the main source of objection - the alleged unfair competition that was being provided by an upstart operator who had allied with a hotel chain to provide music concerts and so threaten the years of dominance of certain clubs in Magalluf. One in particular.

Safety isn't really the issue. It wasn't in Magalluf and it isn't in Alcúdia, where the taxi-drivers, to no one's surprise, have launched their objections against the tourist mini-train. When it was announced some while back that the tourist train was making a comeback, I wondered how it could make a comeback. It was primarily the taxi-drivers that ganged up in order to ensure the demise of the old train. Yes, there was a fair old dose of politics as well, but while these might have changed in the thirteen years since the tourist train hit the buffers, taxi-driver business hasn't. Bringing the train back was always going to prompt objections from the interested party that is the taxi-driver collective of Alcúdia, and it has taken only a few days of the train being operable for the objections to surface.

The taxi-drivers see the train as a competitor. This is the issue. There isn't another one. They append the "unfair" adjective to competitor, because unfair competition is a regular way for interested parties to seek sympathy for their cause. The competition was unfair at Mallorca Rocks (for reasons that were never that clear, given that concerts finished by midnight and that clubs don't get going until midnight), the competition to bars and restaurants from all-inclusive hotels is unfair (when in fact it isn't, as it is competition driven by a free market), the competition to hotels from so-called illegal accommodation is unfair because this accommodation does not adhere to the same standards of safety, quality and tax disclosure (a spurious argument, as it would adhere to these standards if such accommodation could be fully regulated rather than exist in a legal vacuum).

The unfair competition gambit goes only so far, however, in creating sympathy for the cause. It is not as emotional an argument as the safety one; hence, the reason for safety being invoked. In the case of the train, think of all those little tourist kiddies who might be thrown to their deaths from a vehicle with no doors. Or something like this. Yes, there is, in theory, a safety risk. But have there ever been any incidents? There are tourist trains in Playa de Muro, Can Picafort, Cala Bona and elsewhere, but I have never heard of there being any accidents, or any that have been at all serious.

The taxi-drivers simply can't accept any competition. As established operators, they will object to anything that might be. It was similar when the Alcúdia sightseeing bus started. There were objections to this from the taxis and also from the local public-bus operator. In fact, the sightseeing bus was denounced. On what grounds? It was an excursion bus. People couldn't just hop on and off and use it as a means of getting from A to B.

The tourist train is as much an excursion as it is a way of getting from one place to another. It is a pretty inefficient way of, say, travelling from Bellevue to the port. It goes slowly, it stops en route, it doesn't go right into the port. It is also, for a family of four as an example, more expensive than a taxi. If two kids qualify for the kids' rate, the family of four will pay eight euros, forty. A taxi wouldn't cost as much.

The taxi-drivers reckon that the train has already meant that their local business is down by 40%. Perhaps it is, there is no way of being able to dispute or verify this, but it would be a surprise if it were, but not a surprise because such statistics are tossed around as further evidence for building up the case for sympathy. But sympathy is in limited supply. There is none from the town hall and there will be none from tourists. The tourist train is back, and competition or not, unfair or not, tourists like little tourist trains.


Any comments to andrew@thealcudiaguide.com please.