The Spanish tourism sector will recover profitability in 2022 despite omicron

The explosion of infections by omicron is having a lower impact than previous waves for tourism at the start of 2022, according to CaixaBank Research, who trusts that the pothole of the new variant of the Covid-19 will be overcome in the month of March, and that it will allow the sector to recover profitability thanks to the strength of national tourism -which will recover the level of spending of 2019- and the return of the international, for which it contemplates that spending will grow by 92% in 2022 and be around 70% of the 2019 level.

Javier Ibáñez de Aldecoa, author of the entity’s semi-annual sectoral report, explained to the Economist that its card payment data in Spain shows that, after a November at 2019 levels, in December there was a “small cooldown” of 4%, and the first week of January, the spending of Spaniards is 13% lower than before the pandemic, and that of foreigners is 19%, compared to falls of 48% and 67%, respectively, in the first quarter of 2021.

“We are seeing an impact, although of a very different magnitude than that of January of last year, which was much deeper because there were greater restrictions,” he says, and in the case of tourism, stresses that after almost two years of the pandemic, key issuing destinations that have had limitations such as the British and Americans want to come to Spain.

Ibáñez ratifies the conclusions of the study for this first half of the year, which predicts an “uncertain but promising” 2022 for Spanish tourism, so that the sector’s GDP will be at a level of 82% compared to 2019 -a record similar to that of 2016-, pointing to an annual growth of 51% and forming a “profitable year for the sector average, which reaffirms that the long-term sustainability of the tourism industry is beyond doubt” .

The document, to which you have had access the Economist, took data up to December 20 and lowers by six points the tourism GDP rebound forecasts that CaixaBank Research estimated in the autumn for the year 2022, although Ibáñez contemplates a future upward revision: “When I closed the report we believed that the wave of contagion it would not be as intense, but the impact on demand would be greater. We have been negative for January and February, but in January the impact is less intense than expected. Tourism demand is coping quite well with the pandemic.”

In addition, the author of the report emphasizes that the first months of the year have little impact on annual billing: “The sector plays it from May, which is when spending goes up, and by then we’re still positive.”

uneven recovery

Despite the general prospects for tourism growth in 2022 that “will boost the sector average to profitable levels of activity,” according to the report, Ibáñez emphasizes that the recovery is uneven according to destinations and subsectors. Thus, the impact is greater in transport than in restaurants, and in summer there were very different data on overnight stays according to the autonomous regions, with cases of drops of more than 40% compared to summer 2019 and growth of almost 10%.

CaixaBank has also analyzed card spending in hotels, which was 16% lower than in the summer of 2019, although more than 25% of the hotels with CaixaBank TPV maintained falls of more than 52% last summer, while the 25% of hotels with the best performance achieved growth of more than 19%.

That is why the document coincides with requests made on Thursday by Exceltur such as extending the Ertes and providing more aid to the sector to overcome the effects of the pandemic and strengthen its future competitiveness. In this sense, Ibáñez highlights that it is a very large and relevant sector for the Spanish economy that needs support, and celebrates the existence of the SEPI rescue fund for “prevent key agents from falling“, although he considers that a specific Perte for tourism would not be necessary, but rather to integrate it into existing ones, such as the one dedicated to the rehabilitation of real estate.

“Only 337 million euros, something that seems very limited given the magnitude of the tourism sector”

The report does criticize the low budget allocated to digitization in the State Tourism Sector Modernization and Competitiveness Plan linked to Next Generation European funds, with “only 337 million euros, something that seems very limited given the magnitude of the tourism sector, which in 2019 reached a GDP of 154,000 million euros“. He details that the development of digitization requires significant investments, but the crisis caused by the pandemic has considerably limited the investment capacity of companies.

In the environmental field of the sector, the support is greater. Within the Tourism Sector Modernization and Competitiveness Plan, it is the axis that will receive the most investment, with a budget of about 1,900 million for the next three years. CaixaBank indicates that pollution levels have increased, and the lines of improvement range from more efficient buildings with higher energy quality, through more modern conditioning systems, to cleaner mobility.

Metamorphosis in business travel

Business tourism performed better than leisure tourism in the worst moments of the pandemic, but its speed of recovery is not as fast. With the drive of digitization and the rise of telecommuting, business mobility has changed very quickly. “Fairs will continue to be important, but smaller meetings and conferences can lose weight. Tourism focused on business must adapt to changes,” says Ibáñez.

The tourism of business generated 8.2% of total tourism spending in 2019, but it is key to keeping activity alive in the winter months and for urban destinations. Domestic business tourists were 30% below 2019 in September.