Spain to incur €88 billion shortfall due to nosediving tourism

27 August 2020 2 min. read

Spain is expected to see 54 million less tourists hit its shores in 2020, according to an analysis by global consulting firm Simon-Kucher & Partners.

According to a study by the firm’s Spanish wing, the Covid-19-induced restrictions for travel and related consumer hesitations to travel due will see 65% less tourists visit Spain in 2020, compared to the year previous. Taking into account direct and indirect spending patterns of these consumers now staying away, Spain will have to forego €88,000 million of economic value, which equates to around 6.2% of the country’s national gross domestic product (GDP).

In 2020, about six million tourists from the United Kingdom are expected to visit Spain, down from 18 million last year. With just one third of Brits returning to Spain this year, Brits represent the group with the largest fallout of demand. This will in particular impact Spain’s coastal holiday regions such as the Balearic Islands, Canary Islands, Andalusia and Valencia, which are the most popular destinations of English, Welsh and Scottish tourists.

According to the survey by Simon-Kucher & Partners, most of the Brits remaining in the UK have abandoned their holiday aspirations altogether. Around 40% said they will instead enjoy a domestic holiday.

Spain to incur €88 billion shortfall due to nosediving tourism

With 19.4 million tourists last year, the Catalonia region in northeastern Spain including its capital Barcelona is the country’s most visited location by tourists. Followed by Balearic Islands (13.7 million tourists); Canary Islands (13.1); Andalusia (12); Valencian Community (9.6); and the capital region of Madrid (7.6).

But while some regions such as Catalonia and the Balearic Islands [including Mallorca, Menorca, Ibiza and Formentera] will see a drop of over 75% in tourism numbers, others are forecasted to fare relatively better. The Canary Islands for instance is expected to see a drop of 53%, on the presumption that travel numbers will increase in autumn.

The Canary Islands of among others Tenerife, Fuerteventura, Gran Canaria, Lanzarote and La Palma are particularly popular destinations between October and May, when the weather is warmer compared to mainland Spain. “The autumn-winter season could help the eight islands recover much of the lost travellers so far,” said Carles Munich, a Manager at Simon-Kucher & Partners.

Spain’s economy is hugely dependent on tourism. According to the IMF, the country’s GDP is on course for an 8% drop by the end of the year, which would mean the largest drop since its 1936 to 1939 civil war. In 2021, a recovery of 4.3% is forecasted, based on current Covid-19 recovery scenarios.

Globally, Simon-Kucher & Partners warns that the economic value of damages could surpass $5.5 billion if travel restrictions are prolonged into the third quarter. “An alarming figure,” said Dimitris Hiotis, Global Head of Leisure, Travel & Tourism at the consulting firm.