Tourism Boom Helps Boost Spending

Tourism Boom Helps Boost Spending

Tourism Boom Helps Boost Spending

Spain’s tourism industry continues to fuel the economic recovery and this summer it smashed its own records. A total of 9.1 million visitors spent at least one night in the country in August, up 8.8 per cent from a year earlier, according to government data. These foreign tourists spent around 9 billion euros during the month, up 8.7 per cent. In the first eight months of the year, tourist spending rose 7.4 per cent to 43.5 billion euros. Visitors from the UK arrived with the deepest pockets in the January-August period and spent 7.6 per cent more year-on-year, reflecting that country’s improving economic outlook.

On the downside, average daily spending by tourists rose just 0.2 per cent in the eight-month period, compared with a 2.2 per cent increase in 2013. The sharp contrast is mainly the result of the decline in the Russian tourism market to Spain, badly hit by the weak rouble and European Union sanctions.

So Spain’s hospitality sector is on the right track, but what does the future hold?

TOURISM DRIVES SERVICES SURPLUS

The tourism industry contributes about 11 per cent of Spain’s GDP and employs 12 per cent of the workforce. It also makes a major contribution to the balance of payments and is one of the key components fuelling a recovery in the service sector in the last year. In 2013, net tourism earnings accounted for 81.7 per cent of the services surplus.

But the tourism business is likely to play an even more important role in Spain’s recovery in 2014, against a backdrop of weaker external demand. Last month, the Spanish government raised its growth forecasts for 2014 and 2015, in sharp contrast to the decision by Eurozone peers like France and Italy to slash their outlook. While exports have led the revival in the Eurozone’s fourth largest economy over the last year, the slowdown in growth amongst some of Spain’s key partners will have a negative impact. But strong tourism figures are expected to offset slower export growth in 2014.

LESS SEASONAL SPENDING

While Spain’s sun-and-sand formula remains a winner, some tourism experts are convinced that more can be done to boost the sector’s earnings potential. One of the problems of Spain’s tourism business is that it is extremely seasonal, so visitors’ spending is generally confined to three or fourth months of the year. The government is keen to promote sub-sectors such as agro-tourism, gastronomy and culture to ensure that foreign travellers make Spain their destination of choice and swell the country’s coffers throughout the year.

For information on investing in Spain, contact corporate law firm Argali Abogados.

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