Travel and Tourism - Spain

Euromonitor International's Travel And Tourism in Spain report offers a comprehensive guide to the market at a national level. It looks at travel accommodation, transportation, car rental, tourist attractions and retail travel. It identifies the leading companies and offers strategic analysis of key factors influencing the market, including background information on tourism inflows, disposable income, annual leave and holiday taking habits.

EXECUTIVE SUMMARY - Publication date: Apr-10

Spanish market reaches turning point as economy worsens
The Spanish tourist market halted as a result of the economic slowdown in 2008. Inbound arrivals slumped, driven by the fall in number of British and French tourists, as their home countries were also slipping into a recession brought about by the global crisis in the financial markets. The domestic market was also badly affected by the deteriorating economic conditions in 2008. The travel expenditure of domestic tourists fell sharply, amid soaring unemployment.

High-speed rail network expands further
The Spanish high-speed rail network, AVE, can now connect Barcelona and Madrid in just 2hrs 40 minutes. The train not only eroded market share in what is the busiest route for Spanish air carriers, but also caused profound changes in the way Spaniards travel throughout the country - changes that are certain to remain in place as the rail network will continue expanding over the forecast period. The line will reach Valencia, Galicia and the Basque Country in the coming years, and will soon link Spain with Lisbon as well as the French high-speed rail network. It is expected that by 2020 high-speed trains will reach every one of the 49 region capitals, with a 10,000km high-speed network and 90% of the Spanish population living within 50km of a high-speed train station.

Market downturn sets base for further consolidation
The deterioration of the economic climate accelerated the market’s consolidation. Air travel was the most affected as the hike in jet fuel prices and the decline in tourist trips put companies under pressure. IBERIA and British Airways started negotiations to create what will become the third leading European carrier. Vueling and Clickair, the two Spanish low-cost carriers, also decided to merge into one single company. The SAS Group also started negotiations to sell its stake in Spanair, the third leading Spanish carrier. In other sectors, such as travel retail, companies also looked into possibilities to merge or acquire competitor’s divisions. However, these operations were hindered by the credit crunch. Access to funds closed or dried up amid the global financial turmoil, while the private equity sector, which had financed many of these operations in the past, began divesting from the Spanish tourism market.

Internet bookings gain ground
The penetration of the internet in the Spanish travel industry has been historically lower than in other European countries. However, it is increasingly gaining ground to the detriment of traditional travel agents. The boom of low-cost carriers has helped to develop the usage of the internet among Spaniards. The expansion of the new high-speed rail network also contributed, as online fares can be 60% cheaper than regular fares. As Spanish tourists become more used to internet transactions, internet penetration is set to increase as tourists surf for the cheapest available holiday breaks. The development of mobile internet technologies is also expected to boost the usage of the net in the travel industry.

Sluggish recovery ahead
The Spanish tourism industry is expected to diminish further in 2009, with only sluggish recovery thereafter over the forecast period. Many sectors will actually stagnate over the forecast period, while others will only resume positive growth rates from 2011. Price competition is expected to be the key driver of value sales. The economic downturn will boost the number of last minute bookings, shorter stays and falling travel expenditure; but will also bring further market consolidation. Some of the changes boosted by the current economic recession will have a longstanding impact on the Spanish travel industry.