Ibiza arrives at Fitur with the hope that in 2023 the recovery that began in 2022 after the pandemic is sustained, however there are the logical doubts raised by the consequences of the war in Ukraine as the world economy trembles in the face of inflation, energy costs and labor tensions. Some tourism officials assured at the last WTM, the London Tourism Fair, that they were confident that the British would regain the steam lost after the pandemic and Brexit, something that could already be seen in Madrid, but it is possible that things have not gone quite as well as to return to a precovid situation.
Fitur: Reviewing the data
In fact, the economist and vice president of the Confederation of Business Associations of the Balearic Islands, José Antonio Roselló recalls that Fitur Madrid is held at a “very tense time for the economy of our main source market, the United Kingdom”, where a GDP contraction of 1.4% and an inflation rate of 7.4% are forecast for 2023: “This situation comes on top of the recession already underway in the UK economy in the last quarter of 2022, as well as the record inflation rates achieved,” he says. In addition, “household consumption will also fall by 1.9% and domestic demand will decline by 2.3% overall, including a drop in business investment”. In other words, a contraction is expected “of household disposable income” the Bank of England’s “severe, increasing and unequivocal interest rate policy, aimed at subduing inflation”, will also suffer, and will attempt to reduce the level of expenditure.
Less income, less travel
And that will have consequences on tourism: the lower the income, the less there is available to travel. That same macroeconomic picture “predicts a drop in the purchase of goods and services (including tourism) abroad of 5.5%,” warns Roselló.
There are, however, positive data, such as “the forecast for wage increases, which is estimated at 4.3%, in addition to the low unemployment rate of 4.1%”. These are aspects, the economist points out, that “tend to favor British tourism”. In parallel, “the value of the pound has experienced a depreciation of about 5% during 2022, but with episodes of greater intensity. At present, it is expected that there will be what is known as a lateral movement, which ultimately means a certain stabilization, albeit precarious”. What we are interested in, at least on Ibiza, is a strong Pound: the stronger it is, the more they spend here.
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