A recovery of up to 90% of pre-pandemic levels is expected, driven by the return of international tourists.
One of the biggest uncertainties is the impact of the war in Ukraine on families and businesses.
If there is one word that describes the tourism sector at the moment, it is optimism. Optimism because the worst of the pandemic seems to be over and the Easter campaign may be the definitive leap towards a long-awaited recovery for two years now, when the coronavirus had a full impact on one of the country’s main economic sectors, which in 2019 accounted for 13% of employment and more than 12% of the Gross Domestic Product (GDP). The increase in international bookings, with 2019 levels in some destinations, and the forecast that domestic demand will continue to prefer to stay in Spain as a precaution support this outlook.
“At the moment we have a moderate, but necessary optimism. And I say necessary because after everything we have been through, we already need to move in this scenario”, explains to RTVE.es the general secretary of the Tourism Board, Carlos Abella. According to him, the sector “is beginning to see light at the end of the tunnel”, and they hope that this will be the definitive one, since last year the summer season “responded very well” but “suddenly” they ran into the omicron variant. “And again back to the abyss,” he laments.
After two campaigns weighed down by the coronavirus, which has left many companies on the verge of bankruptcy, the sector is confident of a strong recovery in the Easter campaign, where occupancy and an average turnover of 90% is expected in some destinations, although there is some uncertainty as to what the impact of the war in Ukraine will be on the pockets of families.
They reiterate, “there are many differences depending on the tourist area”, but the estimate that handle from the Bureau of Tourism places the occupation in the vicinity of 60% and 70%, with a peak that exceeds 80% or even 90% in the last holidays. Although masks and some safety protocols established by the Health Ministry will remain in force, restrictions have been substantially reduced in recent months and “there is a great desire to return to normality,” they say. In addition, the weather situation is expected to be favorable, once the heavy rains of the last few days have been overcome.
“If the advanced forecasts of dry and sunny weather are confirmed, hotel occupancy levels similar to those of 2019 could be reached,” said the Hotel and Tourism Business Association of the Valencian Community (HOSBEC). According to its president, Toni Mayor, this will be “the first major tourism event” once the pandemic has passed into a stabilization phase and although the level of contagion is still high, “the truth is that the pressure on the health system has been greatly reduced, which is what is really worrying”.
Good expectations from international markets
The Valencian hotel employers’ association bases these positive forecasts on the international factor, which “is proving to be key”, as foreign tourists continue to grow, already representing 50% of the share of overnight stays. The British are once again the leaders in the international market, confirming the good upward outlook for this market. “The good news is that not only does the good performance of domestic tourism continue, but we are also seeing an upturn in the international market. The British are traveling again and have already surpassed the national client for the first time in destinations such as Benidorm, in view of the expected bookings for this Easter,” explains Abella.
In fact, according to the latest data on the issuance of international air bookings to Spain by the tourism intelligence company ForwardKeys, presented last Friday by the Ministry of Industry, arrivals from abroad are expected to be 13% below the values for Easter 2019. Thus, these numbers place Spain as the fourth most recovered global destination for the Easter campaign, behind only the Dominican Republic and Mexico, with 12% and 5% more bookings than in 2019, and Greece, with 11% fewer arrivals than before the pandemic.
The truth is that the tourism sector in Spain has started 2022 with a positive trend and already in February 71% of international tourists were recovered. Then, more than 3 million travelers arrived and the level of spending exceeded 3.7 million euros, according to provisional data from the Tourism Expenditure Survey (Egatur) published by the INE; while for this summer there are already about 197% of bookings scheduled between June and August.
In addition, many hotels are leaving behind the Temporary Layoff Plans (ERTE) and hiring has shot up nearly 150% compared to last year. The human resources company Randstad estimates that 63,500 new hires will be made, half as many as at this time before the pandemic. They will occur mainly in Castilla-La Mancha, which will practically triple last year’s figures, as well as in the Basque Country and the Community of Madrid, which will more than double them.
Uncertainty over the war in Ukraine
Against this backdrop, the main uncertainty is how the Ukrainian war in Spain will influence Spanish tourism. For example, Catalonia is one of the favorite destinations for Russians: last year alone some 134,000 tourists from Russia traveled to Spain, despite restrictions due to the pandemic.
On the other hand, it also matters what impact it will have on the spending capacity of families. And, with the increase in energy prices, Abella laments, “it is possible that families may decide to cut back on their vacation days or do so in a more measured way”. In addition, “the increase in the price of kerosene and fuels will increase the price of tickets, which also reduces demand,” he adds.
In addition, the upturn in inflation will also have a major impact on companies’ income statements. “In the case of hotels and other types of establishments, energy costs increase in such a way that one of two things happens: either they pass that price increase on to the customer, so that demand can also shrink; or they don’t pass it on and the losses get bigger.”
For the time being, according to the Alliance for Excellence in Tourism (Exceltur), the Russian invasion has had a negative impact of 7% on tourist reservations for Easter, a lower figure than the Exceltur alliance expected at the beginning of the conflict, although it has had a higher effect on the costs of the companies. The invasion has made the prices of energy and other products even more expensive, but the businessmen consulted by Exceltur point out that they will only be able to pass on an average of 26% of the cost increases, so that 74% will have an impact on their profit and loss accounts, in a sector that during the two years of the pandemic has seen a 54% drop in its income.
The industry demands a plan for tourism
However, the sector insists on remaining cautious. And is that “we are still far” from recovering the figures of 2019, according to the secretary general of the Bureau of Tourism. “That’s still a long way off. At least we will go to 2023 or even in some segments of the tourism sector, such as conventions, it may take even longer,” he stresses.
Therefore, they demand the Government to put the focus on a capital sector in the economy and design a Strategic Plan for Economic Recovery and Transformation (PERTE) that integrates public and private efforts to act on the “most vulnerable destinations and for which there will never again be an opportunity” as offered by the EU Next Generation funds. “We do not understand how a PERTE has not been made for the tourism sector nor is there any intention, when they are being elaborated for other economic sectors. Obviously, I am not saying that they are not needed, but we consider that they contribute much less to employment and to our country’s economy,” Abella stresses.
According to the secretary general of the Mesa del Turismo, the ICO credits “have not been enough”, since now the companies must pay them back and many of them do not have sufficient profitability. “As I was saying, we see the light at the end of the tunnel. But as I say, with all these uncertainties, let’s hope that the light we see is not an oncoming train,” he concludes.
