Replacing mass tourism with quality tourism stands out as an objective of governments of all colors in Spain. In Barcelona, where the issue provokes heated debates, both the City Council and companies have congratulated themselves this year on the rises in hotel and airline rates, because in this way they attract the client they are looking for, the one who has money to spend in abundance. The less wealthy people are not interested in the business and now, in addition, they will have less opportunity to travel.
This is how economists and specialists in the tourism industry consider it. The era of the low cost model at knockdown prices is bottoming out after years of strength and traveling is once again a small luxury. For some, a luxury in capital letters.
The rate of flights and hotels has skyrocketed this summer –see graph–, with an upward rally that does not seem to let up. The increase in prices is consolidated for the last quarter of the year and the beginning of next, according to the data compiled by the main booking engines. "The average daily rate per room in Spain stands at 113.76 euros in 2022, when in 2019, a year of tourism record, it was 97.23 euros," explains Iván Font, head of strategy at TravelgateX, an online B2B marketplace for tourist companies that moves about 30,000 daily reservations.
For the first quarter of 2023, in low season, the average daily rate in Spain currently reaches 111.18 euros, compared to 100.51 euros in the same period of 2020 or 84.90 euros in 2019. In the United States United States, another of the countries with the highest tourist demand, the average price of accommodation for the first three months of 2023 exceeds 179 euros per day.
"Consumers who were used to being able to travel very cheaply will now find it more complicated, for this entire population it will be expensive," highlights Andrei Boar, professor of Finance and Accounting at the UPF School of Management. The low cost model has been strongly criticized for its impact on the environment, labor and the local population, although it has also contributed to democratizing travel among the most humble population. In Spain, the number of families that cannot afford to pay even one week of vacation per year has decreased from 46.6% in 2012 to 32.7% in 2021, according to data from the INE Living Conditions Survey . The reduction has occurred in the heat of the low cost explosion, while wages have not increased in the same proportion. The average salary in Spain was 24,248.78 euros per year in 2021, only 6.5% above that of a decade ago.
Airlines follow the same inertia as hotel establishments, apartments or campsites. The price increase not only does not loosen, but directors of the main companies recognize new increases in the coming years. “The covid crisis has dealt a heavy financial blow to airlines, fuel prices are rising and Europe is preparing new environmental taxes that will obviously burden passengers. In this context, they find it difficult to contain prices,” says Boar.
The CEO of the Ryanair group, Michael O'Leary, recently announced that the company's fares, the quintessential exponent of the low-cost model, would rise by 25% in four to five years. From 40 euros on average per ticket to 50 euros. "The demands for plane tickets at ten euros are going to disappear," O'Leary said last month before a group of European media, including La Vanguardia, at the Dublin headquarters. All airlines have raised fares this year and, in fact, the promotions of very cheap flights that they launched on a regular basis have practically disappeared. “They are in a difficult situation, because transport costs are going to continue to rise and they will have to measure very well how they charge the consumer; in fact, the evolution of the IAG share already anticipates this scenario”, adds the UPF professor. The Iberia and Vueling holding company has lost about 38% of its stock market value in the last year, although the announcement this week of profits in the third quarter has boosted it by 10% in recent sessions.
But apart from the ups and downs of the market and temporary variations in tourist prices, the industry anticipates a new era. "Let's go to this model, it is a structural change in which car and plane transport will rise in price", says José Antonio Donaire, Professor of Tourism at the University of Girona. The EU will force airlines to use a minimum percentage of alternative fuel (SAF), less polluting, within its Fit for 55 strategy. This is between three and five times more expensive than kerosene today. The Ministry of Finance also has on the table a proposal from tax experts to tax airline tickets at 7.85 euros and offset polluting emissions. The director of KLM's sustainability strategy, Reona Van der Zon, recognized during the BNEW festival in Barcelona that the environmental obligations of air transport will increase its costs and also the final price of the ticket.
"From a tourism business point of view, this does not have to be bad news for destinations like Catalonia," Donaire considers. When trips become more expensive, people tend to choose closer destinations, as has happened during the pandemic -although for other reasons-, and increase the average stay, "one of the objectives of the sector". However, this tourism specialist also warns that inequality in access will grow. “Traveling is not only a form of leisure, it also has positive effects on the person: mental, social and cultural”, he argues. And this activity will be available to fewer people.
Does this mean that demand will drop? In the short term, it seems not, according to the companies in the industry. “The upper-middle class – continues Donaire – will not give up traveling”. There will always be, in addition, a bag of wealthy people who can afford a good vacation. The number of fortunes is growing in the world and the richest 1% have increased their assets in the last year. They are the ones who can afford a luxury.
