“An unforeseen crisis.” Other headwinds intensify too.
Less than a month after the collapse of Thomas Cook, the global travel & vacation-giant and airline operator, the Spanish government has unveiled an €800 million taxpayer-funded bailout of its all-important tourism industry. During the presentation of the new 13-point royal decree, Spain’s vice-president Carmen Calvo described the measures as a “reasonable response to an unforeseen crisis” — though the term “unforeseen” is ironic because in February we warned about the precarious condition of Thomas Cook and in May we warned that it “verges on collapse.”
Initially, the rescue package was worth €300 million. It included €200 million of cheap credit lines and was intended to help the two regions most affected by Thomas Cook’s demise, the Canary Islands and the Balearic Islands. But as soon as it was announced, accusations of preferential treatment came flooding in from hoteliers and other tourism-related businesses in other parts of the country. Within a week the government had almost tripled the package, throwing in an additional €500 million of cheap loans to help boost “competitiveness in the sector”, which could cover just about anything.
Following years of robust year-on-year growth, tourism has played a central role in Spain’s economic recovery, accounting for around a quarter of the new jobs created since 2013. The industry has also played a big part in the resurgence of the housing and construction industry. Popular tourist destinations like Barcelona, Palma de Mallorca, Ibiza and Malaga are also among the hottest property markets, where prices have rebounded the most since the collapse of the last bubble.
A recent report in the financial daily Cinco Dias suggested there are now more than a million tourist apartments and homes in Spain, most of them operated by Airbnb, Booking and Vrbo. The breakneck growth of this market has sharply reduced local housing stocks, leading to a surge in property prices and rents, much to the delight of local landlords and the consternation of local tenants. These sky high rents are one of the many externalities of mass tourism (overcrowding, noise, environmental degradation, overstretched public services and infrastructure, etc.) that have fulled the growth of so-called “tourism phobia” in recent years.
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Nick Corbishley 