Tourism Declines in Spain In June

Well, as they say, it never rains but it pours, even if "the rain in Spain does mainly fall on the plane". Now we find that foreign visitors to Spain are down, and tourism is taking a hit. This is what it means when we say that the "external conditions are going to be difficult", nowhere else in the rest of the Europe is going to be as badly hit as Spain by the credit crunch (the UK will probably come nearest) but Europe in general is heading for slowdown and probably recession as we enter 2009 (my guess is that in Q2 2008 the eurzone as a whole contracted - we will soon see), so increasing exports, or attracting tourists is going to be hard work (especially with air travel costs rising so much).

Data out today showed hotel stays dropped 2.3 percent year-on-year in June, down from growth of 6.6 percent in May. Tourism. which had been after construction the second-largest driver of the Spanish economy had held up so far but the effects are obviously now starting to seep through.

Spain is the world's second most popular holiday destination, attracting some 60 million tourists last year. On Monday, the government said foreign tourist arrivals dropped 0.7 percent in June and today the national statistics office (INE) said 57.7 percent of hotel rooms were full in June, 5.4 points lower than in the same month a year earlier. Even at the weekends, occupancy was 63.9 percent, down 3.1 percent year-on-year. Hotel prices rose by 1.6 percent year-on-year in June, below the overall inflation rate of around 5 percent. In May, prices rose 1.3 percent. So margins are being crimped, since price leverage really doesn't exist given the level of excess capacity.