Jorge Marichal - The Mysterious Island

President of the Spanish Confederation of Hotels and Tourist Accommodations

“The Mysterious Island”

The latest edition of the International Tourism Trade Fair (FITUR) held recently in Madrid (Spain) has shown the evolution of tourism in recent years and its current recovery process.

The Instituto Tecnológico Hotelero (ITH), where I hold the position of vice-president, has set up an installation inspired by Jules Verne at the fair, together with the employers' organisation that I chair, the Spanish Confederation of Hotels and Tourist Accommodation (CEHAT).

In one of Verne's publications, the book 'The Mysterious Island', the author describes an unusual place where the protagonist of the story, Cyrus Smith, and his fellow travellers are forced to land forcibly after wandering for several days in a balloon that they lost control of. An unknown island for Smith and his companions, which they will have to explore from scratch to adapt to the new environment. And that's where their new adventure begins, when they go from the stability of a familiar situation to landing accidentally and hopelessly on an island that poses a great uncertainty for the future.

Sound familiar? To live in a world where everything is familiar to us, where our activity is more or less stable, where we have knowledge and control of the situation, where everything flows and where, suddenly, an unexpected situation shakes the foundations of what is known and leads to a forced landing on a new scenario with great uncertainty. A "mysterious island" that we must examine with a magnifying glass and with all the tools at our disposal to analyse its characteristics, its behaviour, its possibilities... and re-plan our roadmap.

Verne gives us a fundamental key in his story to move towards a happy ending. And the fact is that the protagonist of this book and his companions were able to adapt quickly to the new environment thanks to a key ingredient: the knowledge they treasured and their good work in applying their experience, skill and wisdom to solve the problems they faced and even improve the conditions on the island.

It is the same for us. The same thing is happening to tourism because, in order to analyse this island that we have landed on after the pandemic, we have to analyse the new environment, know its resources, plan where we want to go and how we want to do it, what kind of actions we need to take so that the model is productive and sustainable for the environment, for people and for the economy. In short, to know what the current situation is and what is the environment in which tourism companies have to make our value propositions and find that leadership model necessary to inhabit and enjoy this mysterious island.

To do this, it is essential to have tools such as, for example, data analysis, which allow us to know where we have come from and to project where we are going. At the employers' association over which I preside, we periodically produce reports to analyse the evolution of this post-covid mysterious island and to plan our roadmap for the future.

The Smart Observatory is the latest analysis we have published, together with PwC, where we gather data on the evolution of the Spanish tourism sector. A study that allows us to analyse how the sector has behaved historically and to explore this new "mystery island" based on five key indicators that measure the macroeconomic context, tourism flows, tourist sentiment, travel intentions and future demand.

The latest edition of the report suggests that the outlook for hotel occupancy in Spain for winter 2023 is set to exceed the figures recorded in 2019, in the shadow of a possible recession this year.

The optimistic view is based on pillars such as portfolio sales, contained travel intentions, positive traveller sentiment, interest in Spain and the consequent reactivation of international tourism.

With regard to portfolio sales, according to the report, forecasts in our country for the December-February period are five points higher than the same period last year and those made directly are almost double those for the 2019 winter season. This increase in bookings is generalised in all Spanish autonomous communities.

In addition, net positive traveller sentiment towards Spain (+1.4 points) has recovered, after suffering since the beginning of the year as a result of the conflict in Ukraine.

The recovery of international tourism, sustained by a restrained travel intention during these years, is also evident. Despite the fact that the months from December to February are considered low season in a large part of the country's tourist market, interest in travelling to Spain remains 40% above pre-pandemic levels, with the highest growth rate in the outbound market of the Nordic countries and still awaiting the long-haul markets.

All this translates into an improvement in the airline industry, which already records 10.9 million passengers between September and October, figures close to 2019.

In this new scenario, as in "The Mysterious Island", our survival will depend on our ability to adapt to the environment and on building and strengthening our relationships with our island companions, so that, based on our knowledge, we have to carry out a triple analysis:

 In Spain, in the case of tourism, there are many agents and actors who have landed on this "mysterious island" and who are working and putting all our dedication and effort into continuing to make this sector the driving force of our country's economy. As I always say, we are the industry of happiness, since our job is to make the millions of travellers who enjoy our destinations happy every year, and with this objective in mind we will continue to strive to ensure that Spain continues to be a unique and exceptional destination on this "mysterious island".

However, on the other side of the scale are the macroeconomic factors of this "new island", which could cast a shadow over our expectations.

Thus, the main European issuing countries for our destination, such as the United Kingdom, France, Germany and Italy, have significantly cut their growth forecasts, which could have a negative effect on the flow of travellers from these destinations in the future.

On the other hand, the current inflationary context is directly affecting the sector, which is suffering a substantial increase in costs, especially those related to energy and food. For the time being, Spanish accommodation has been able to adjust room prices without eroding demand, but uncertainty remains as to how long this situation can be maintained if inflation, as it seems, remains above 4% in the coming years.

In this price context, interest rate rises and higher mortgage rates are other aspects that are reducing the purchasing power of households and could also have an effect on the evolution of the hotel industry. The devaluation of the euro against the dollar, on the other hand, is shown to be the only macroeconomic ingredient that is playing in favour of the sector and which is strengthening Europe as a tourist destination compared to the rest of the world.

The Smart Observatory also includes a series of retrospective indicators that show how the Spanish hotel sector is, little by little, strengthening its fundamental pillars and recovering from the consequences of the pandemic in both revenue per room (RevPar) and average daily rate (ADR) which, since June this year, are already above 2019 levels.

The authors are responsible for the choice and presentation of the facts contained in this document and for the opinions expressed therein, which are not necessarily those of Tourism and Society Think Tank and do not commit the Organization, and should not be attributed to TSTT or its members.

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