From here to God knows where.
Gran Canaria

Has the Canary Islands tourist boom peaked?

On this blog post, I take a look at the tourist visitor report for the Canary Islands in 2018. It may not be of interest to many but maybe worth knowing for some people.

If you are planning a holiday, buy property or retire to the Canary Islands it should be of interest to have an idea of how economically the Islands are doing.

Gran Canaria

The Canaries and the crisis

The world financial crisis hit the local people of the Canary Islands harder than most. The Canary Islands are traditionally an unemployment blackspot in Spain. The Islands tends to have an unemployment rate of 10% more than the Spanish average. During the crisis, the unemployment rate was almost 30%.

Most visitors to the Canary Islands tend to see just the tourist industry. Another major employer on the Islands is the government. The health service. Police. Teachers and other public service workers. When the crisis happened salaries and pensions got cut. Other than tourism. The service sector and government the islands do not have other major employers such as an I.T industry. I am not saying there are no I.T companies here, but they are not big employers overall.

Gran Canaria

People have told me that during the worse of the crisis years foreigners in places such as Puerto Rico in the south of Gran Canaria threw the keys of their holiday homes on bar tables looking for a quick sell for badly needed cash. They had overreached. As the famous investor Warren Buffet says, it is when the tide goes out you get to see who is swimming naked.

When I first visited Gran Canaria in 2013, it had bottomed out. The best way I can explain it is the price of a beer. In 2013 the 1 euro beer was easily found. In 2019 it is closer to 4 or even 5 in places.

Crisis what Crisis

The Canary Islands also got lucky. Traditional destinations such as Egypt, Tunisia and Turkey became seen as dangerous places to visit. The Canaries benefited as they are seen as a safe destination. Record visitors came to the Islands as world economies recovered.

I have seen a change between 2014 and 2019. Bargain hotel deals are now rare. Hotels running close to 100% full for most of the year in the tourist resorts are cashing in. The Canaries have become an expensive holiday for many people.

Ok, the Canary Islands are still cheaper than Paris London Dublin or Stockholm, but that is not the point. The increases have been rapid over a short time.

Gran  Canaria

Will the tourist boom continue?

2018 visitor numbers to the Canary Islands have been released. Some key numbers below versus 2017.

Non Spanish visitors were down 320,000 or 2.8%

Visitors from mainland Spain were up 2.5%

The lenght of a holiday dropped from 7.7 nights to 7.5.

Non- Spanish people stay on average 8.3 nights and Spanish mainland visitors 5.2 a difference of 45%. People from the Spanish mainland are more likely to have short breaks as Spain is nearer to the Islands.

Overall visits to the Canary Islands fell 1.5% v 2017. The total room night sold by Hotels and Apartments was 3.6% fewer than in 2017.

Gran Canaria

Before anyone starts to panic a 1.5% drop from record numbers is not surprising. The other destinations such as Turkey are recovering. I do however think the Canaries have seen their peak for now.

The Spanish economy like other European economies has shown signs of slowing down. It would not take to much for the growth in visits from the Spanish mainland to decline or reverse.

So what do these numbers mean for the tourist? If Hotels and Apartments had 4 million more room nights unsold than 2017, did they reduce prices?

The average daily price charged to guests in 2018 by hotels and apartments went up from 80.98 euro per day in 2017 to 82.49 euro in 2018 +1.9%. So at a time Hotels/Apartments had more empty rooms they still managed to charge more v the record visitor year of 2017.

Apartments seem to be the biggest driver of price increases. Apartment prices cost more in 9 months and less in 3 months in 2018 v 2017. Hotels prices were higher in 5 months and lower in 7 months of 2018 v 2017.

If we take the month of January as an example. The daily price of an apartment went from 48.32 euro per night in 2013 to 69.01 in 2018 +20.69%. Hotel room prices per day went up by 16.87% during the same period.

Gran Canaria

What is next? It will be interesting to see what the January 2019 visitor numbers will be. My guess is they will be down on January 2018. If visitor numbers continue to decline, then more unsold rooms should put pressure on prices to come down.

The Canaries used to be primarily a winter destination. Now people visit all year. The winter is still very popular as it is Europe’s go-to place for winter sun. If you are looking for the best time to come to the Islands at the cheapest price May and June are the quietest months. After Easter and before the main school summer holidays in Europe.

Las Palmas Gran Canaria

Las Palmas where I am currently living is a little different. It is a lot busier then it was five years ago. Prices for buying Apartments have risen each year for the last three years. More tourists come here as their chosen destination and not like before as day-tippers.

Rents have risen significantly and in a lot of cases, rent is the same as a local monthly salary. The one difference with the south is that the population of Las Palmas are mostly local Canarion people. Their salaries have risen very modestly if at all during the tourist boom. If a bar puts up the price of beer by one euro then people will go to the bar next door. That keeps life essentials such a beer in check.

Gran Canaria

For most of the local population, the record tourist visits have made little difference. Unemployment is still over 20%. Youth unemployment is at least double that. The Spanish economic recovery has meant that many young people went to Madrid or Barcelona as more jobs became available on the mainland.

The Canary Islands are a great place to live. Las Palmas is a special place but there are issues. The Canaries need industries other then tourism the service industry and government if it wants to offer all its people a future.

Las Palmas is trying to make itself a better place to live. There are a lot of good things happening here at the moment. It needs to make itself a better place to live for its people. Not blow-ins like me.

It also needs to make it easier to do business here. It’s not for many, but that is another blog for another day.

Summary

2017 may have been the peak for now for record numbers to the Canary Islands. Other markets have recovered. Visits to Morroco in the first half of 2018 are up 10% on 2017.

Despite 4 million fewer room nights sold during 2018 prices went up by almost 2%. If visitor numbers decline more in 2019 and there are more empty rooms it is difficult to see how prices can increase and they maybe will decline.

After years of record visitor numbers, I don’t think anyone is going to press the panic button yet if visits drop by 1.5% from a very high number. 2019 will be interesting to see if the trend continues. It may have a positive effect. The popular resorts of the Canary Islands have been growing every year. More apartments and more concrete. Maybe its time for more sustainable tourism. Be happy with the numbers now and offer them more to do.

Join me on my journey. 

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