Palma.—The warning was issued just hours before the President of the Balearics, Jose Ramon Bauza, returned from the World Travel Market in London where he had been furnished with some very encouraging and positive data regarding the British market for 2013.

But, here in Palma, leading economists, looking at the long term, are not so up beat and confident.
Yesterday, the Director of Economic Studies for Sa Nostra building society and the Balearic University, Antoni Riera, said that the record number of tourists this summer neither served to lift the region out of recession nor halt spiraling unemployment.

He highlighted that 5.8 million tourists visited the Balearics during the third quarter of this year, spending 5.7 million euros but that had not translated into an increase in the region's GDP, which between June and September actually shrunk by 0.3 percent.

Hard to beat “The Balearics has hit tourism numbers which are going to be hard to beat, but we're not seeing the same economic return, in fact the region and the population are losing prosperity with unemployment rising, consumer confidence dropping and households finding it harder to make it to the end of the month,” he said. “We're also seeing a reduction in the number of services associated to the tourist industry,” he added underlining the need for the Balearic tourist industry to make a strategic change or to make the industry economically viable.

He pointed out that more and more visitors are staying in private accommodation, be it their own, belonging to a friend or rented not to mention the continual increase in demand for all inclusive packages.

Riera revealed that this year, the demand for package holidays has fallen by 9.4 percent to just under 49 percent of the total market while the number of independent travellers has risen by 22.7 percent in comparison to last year.

Free holidays
And, despite the record figures posted this summer, hotel occupancy fell slightly by 1.8 percent while the number of people staying with friends or family for free rose by 15.1 percent and holiday home rentals increased by 53.1 percent.

Riera said that the holiday property rental market has got to be properly regulated so that the relevant rates and taxes are paid by the property owners while the centre's findings have also revealed that 34 percent of holiday makers coming to the Balearics are opting for all inclusive hotels, only 26 percent hire a car and 67 percent do not travel more than an average of five kilometres from their holiday accommodation.

Hence why, the Balearic tourist industry needs a new strategy because, in the short term, an industry based on mass tourism is clearly not proving beneficial and is insufficient to compensate for the sharp decline in revenue from the construction and industrial sectors.

The service sector has been the only sector to have posted any growth in revenue this year, but alone it can not solve the region's financial problems.
Riera also pointed out that the Balearics has to pay more attention to external forces and what is happening around the region be it in Spain and further afield across Europe where the Balearics' main holiday markets are.

The region has some very tough months ahead, he concluded.