The local authorities are talking "tourism saturation" at the moment. These are the new bywords which are used by both local government and council officials. Tourism saturation means too many tourists who are causing headaches for local residents and the island's stretched resources. I would say that it is a problem which really only extends to Palma and during the peak summer months. Yes, when Palma is visited by four giant cruise ships on the same day it does cause problems and yes the city does feel overcrowded. This problem could be easily overcome if there was careful planning to ensure that cruise ships didn't all visit the city on the same day.
I do get the impression during the summer months that the "overcrowding" problem is not only causing problems for the city, it is also ruining the experience for cruise ship passengers. The local authorities also have to be careful. No one is too sure whether we will have a record season this year as a result of the sudden rise of competing resorts in the eastern Mediterranean. One of the principal reasons that there has allegedly been "tourist saturation" is because of the security fears surrounding Turkey and resorts in North Africa. The Balearics are considered a safe haven holiday destination and many tourists switched from east to west. But Turkey and other destinations are popular again, so my advice to the local authorities is not to talk about a problem which may not exist.
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