Monday, March 27

Inflation eats the pocket of the foreign tourist at the gates of summer




Spanish tourism is on notice. Companies in the tourism sector expect a demand in line with the last pre-pandemic summers, but they already fear that the habits of travelers arriving in Spain will not be the same as then. The inflation that has finished triggering the war in Ukraine, is eating up the purchasing power of European citizens. Already in May, the rise in prices reached 8.1% in the eurozone, levels not seen in decades.

But above all, the decisions that may be made in key issuing markets such as the United Kingdom (inflation touched 9% in April in the British country) and Germany are worrying, in a summer season where the sector is not only at risk of recovery, but also that thousands of SMEs do not end up closing their doors, after two very hard years of the pandemic.

Although travel demand indicators for tsummer season In the entire continent they have been showing very positive data in recent months, some signs are beginning to arrive that sow uncertainty in the Spanish tourism sector just at the gates of summer. Some of them come from Germany, our second most important market until the outbreak of the health crisis (in 2020 and 2021 it was surpassed by France due to the border effect, in addition to the recommendation in the German country not to visit Spain due to Sánchez’s health management).

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Thus, three out of four Germans confess that this summer they will reduce or even eliminate beach holidays to adapt family budgets to inflation, which in Germany already amounts to 7.9%. This is confirmed by a study commissioned by the auditing and consulting firm PWC. “High inflation threatens to quickly dampen the burst of desire to travel,” predicts Ingo Bauer, head of transport and logistics at PwC Germany. The Teutonic country contributed more than eleven million visitors to Spain in 2019, in addition to being one of the European emitters that spent the most per capita on domestic tourism with an average of 1,047 euros per person in that same year. So Spanish tourism is already looking askance at a possible withdrawal of demand and spending from that market for the coming months.

The main responsible for the slowdown in demand could be the increase in the price of flights. The price comparison portal ideal, consulted by many German tourists, notes that a summer flight to Alicante from Germany cost more than 71% in May compared to three years ago. In Mallorca the rise was 61%. The German aviation industry association justifies the price increases with the increase in kerosene prices. However, aviation expert Michael Immel criticizes that the share of fuel in flight costs is 30% to 40% for airlines. Lufthansaparent company of Eurowings and Eurowings Discover, he explains to investors in a publication that the group was able to secure long-term low kerosene prices through so-called “hedging” and thus cushion about half of the price increase.

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Fear for the end of the year

But for the moment, the main tourist employers do not detect major changes in the behavior of foreign tourists. ANDhe Executive Vice President of Exceltur, José Luis Zoreda, assures that the ‘joy’ of traveling is being much more dazzling than that of tightening one’s belt. And he insists that the demand from the main emitting countries continues to be in good health. Also from Germany. What he does not rule out is that the ‘champagne’ effect that can be produced precisely by the spectacular growth in reserves perceived in recent months, ends up exploding in the last quarter due to the effects of price increases. That is to say, there is fear that ‘second vacations’ may be eliminated.

From the Tourism Bureau they also emit that same message. “The desire to go out after two years of the pandemic will be satisfied in the summer season, but it is possible that winter getaways will be cut back due to inflation,” he tells this newspaper the general secretary of the Tourism Board, Carlos Abella. In the case of this employer, they do assure that they are perceiving a certain retraction in demand from Germany in the form of cancellations, as well as reservations for fewer nights compared to other years.

They are also attentive to the behavior of the british tourist. Some indicators, such as the one carried out by Visa in collaboration with Payment Innovation, indicate that 62% of British visitors will stay in Spain for less than a week. Something that French travelers will also do (65%).

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