Tourism: Survive and reinvent yourself

Fitur 2020: Spanish tourism faces the transformation of its model

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The sector faces the final journey of the desert before facing a profound and uncertain transformation

After the initial blow of the pandemic, the Spanish tourism sector is now facing its toughest months, in the final phase of a journey through the desert, with the hope that the vaccine will allow the slab that weighs on its activity to be lifted as soon as possible. The sector is aware that, after facing the challenge of survival, there will come an inescapable transformation, varnished by digitization and the ‘green economy. Although also, for safe mobility, as well as for other social and economic changes that have come with the coronavirus and that will leave their mark after the pandemic.

The first challenge will be the survival of the companies, while they wait for regulatory coordination between countries that will restore confidence to travelers and, therefore, increase bookings. In the ‘meanwhile’, there are investment funds that have set their eyes on hotels that are now offered at bargain prices; there are other hotels that are reformulating their proposals to give them a new life; and the echo of mergers and acquisitions in hotels and airlines is fed, as agencies seek to “reinvent themselves.”

In the midst of this desert, the vaccines that the sector hopes to start going through from Easter, to catch a “slow” but “stable” pace during the summer and thus put an end to the worst catastrophe in remembrance. Although the 2019 figures will not be recovered for another two, three, four, or five years. Spain will close 2020 with close to 20 million international tourists, far from the 83.7 million a year ago, the last of seven consecutive records.

According to a report by American Express and the world tourism lobby World Travel & Tourism Council (WTTC), the contribution to Spanish GDP from tourism was 15% in 2018 (191,000 million), triple that of the automotive industry. According to the Spanish lobby Exceltur, 67% of the fall in the economic forecast for this year by the Bank of Spain corresponds to tourist activity, therefore, recovery will largely depend on it. “Without tourism, it will be very difficult for Spain to overcome this crisis,” said Marta Blanco, president of the CEOE’s Tourism Council, this week during a forum at Deusto Business School.

The President of the Government, Pedro Sánchez, described tourism two years ago as a “lifeline” from the previous economic crisis. “Thank you for pulling the car in times of extreme difficulty,” he went on to say. Now that lifeguard cries for help. With hardly any income and with fixed expenses running, hotels, travel agencies, airlines, taxis, bars or restaurants, of all sizes, urge direct help before January, February and March arrive, the months of less demand.

“With an 80% drop in sales and being strategically important, we are going to receive much less aid than other sectors, I don’t know why,” lamented Barceló’s CEO, Raúl González, at the Deusto forum. Among its proposals: revitalize demand with bonds or reduce municipal expenses such as the IBI, IAE, or the garbage tax. “How are we going to pay this tax if we have not had garbage!”, He exclaimed.

Minister Reyes Maroto has promised to approve a specific plan before the end of the year, but the sector is not very convinced of its effectiveness. “It will be necessary to see because we are in a scenario in which the media prevails over the content. Tourism is not only bars and restaurants,” says the vice president of Exceltur, José Luis Zoreda. So important is the aid, as “the message”, according to the general director of Turespaña, Miguel Sanz Castedo. 82% of international tourists who arrived in 2019 did so by plane. For this reason, the sector calls for a “harmonization of measures” at the European level, to give tourists confidence and define what will be the element that governs travel: the vaccine, the tests, or the accumulated incidence?

Change of model

The tourism sector has been trying for years to achieve a change of model under the mantra of ‘fewer tourists, but of more quality and expense’ and now the time seems to have come. “We are looking for ways to finance but also new opportunities, new businesses, and new markets”, says Room Mate founder, Kike Sarasola. In their case, they are committed to attracting customers from the Asian and American markets “because they are the ones that leave the most spending.” They also want to diversify into hostels and campsites and launch a warning: “There will be many old offices that may turn into hotels.”

“The pandemic is going to change many of the foundations of the traditional tourism model,” he acknowledges. the president of the Spanish Confederation of Hotels and Tourist Accommodation (Cehat), Jorge Marichal. Among them, he appreciates a greater commitment to management, rather than ownership, and a growing interest in investment funds in these establishments. In addition, “some products that were experiencing difficulties in declining destinations and with economic problems in record years may disappear” and others may be converted into nursing homes or student residences, according to the account.

Although above all, the crisis will accelerate concentrations in the highly fragmented hotel sector, and perhaps also in air transport. “Probably some company will not operate and others will arrive”, according to Aena’s executive advisor and general director of airports, Javier Marín in the Deusto forum. For their part, the agencies seek to modernize. “If we really want to get out of this we must reinvent ourselves, value the travel agency and invest in knowledge because the client is very informed,” he explained. Juan Carlos González, general director of the corporate area in Ávoris, in an organized forum by Hotusa.

The transformation will go through digitization and energy transition. And for this, there will be the recovery funds of the European Union that raise the arrival of 140,000 million euros to Spain, 70,000 million non-refundable. “It is essential to take advantage of European funds to carry out projects attached to the territory”, according to former Secretary of State for Tourism Isabel Oliver, who is now part of the Office of the Secretary-General of the World Tourism Organization.

An example is Iberia’s proposal to connect the AVE with Madrid’s T4 to replace short flights with train trips. “We would produce between 20% and 25% fewer emissions into the atmosphere,” according to Iberia’s corporate director, Juan Cierco. But the coronavirus has brought with it changes in social and economic habits that will be reflected in the way of traveling. Some, such as a growing interest in the security or a decline in so-called business tourism, given the rise of new technologies such as Zooms or Teams, are more evident; but others may still be priceless.

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