The Circle of Economy opens the debate to reform an exhausted mass tourism industry

BarcelonaFor years, the arrival of tourists has steadily increased. This constant influx of visitors has significant economic implications. Tourism has become a strategic sector, representing around 11% of Catalonia's GDP, primarily due to... more than 20 million foreign tourists that were registered last year, a figure that has more than doubled in just 25 years. This unprecedented growth has also had consequences for residents, with the overcrowding of city centers and the loss of local identity, as well as the disappearance of thousands of apartments from the housing market due to their conversion into tourist apartments, which are much more profitable than conventional rentals.

Against this backdrop, the Circle of Economy, through the Productivity and Innovation Initiative (IPI)The Catalan Association of Tourism has opened a debate about the type of tourism best suited to Catalonia, after observing that mass tourism "shows signs of exhaustion that require review." "The extensive expansion model, based on the accumulation of record arrivals, generates negative externalities that strain social cohesion," the organization argues in a report calling for a review of the Catalan model to guarantee its future.

Lower family income and lower productivity

A consensus among all the experts and business representatives consulted by the organization regarding the need to generate greater added value is supported by extensive data on this massive phenomenon, which is particularly noticeable in Barcelona and the Catalan coastal towns. The capital has benefited from the explosion in urban tourism thanks to the proliferation of low-cost airlines and tourist apartment rental platforms like Airbnb. As a result, between 2000 and 2024, hotel overnight stays increased from 7.8 million to 20.2 million, and tourist apartment stays reached over 12 million. This popularity generates very high revenue per available room (RevPAR), unlike coastal towns such as Salou and Lloret de Mar, which have fewer luxury hotels than Barcelona. In fact, profitability is lower than in other coastal destinations like the Canary and Balearic Islands, as the report indicates.

The specialization of some municipalities in sun and beach tourism is also reflected in a lower disposable family income. In cases like Lloret de Mar, it represents 59% of the Catalan average, and in Roses it's 66%. Despite these differences between the capital and the rest of Catalonia, the sector not only generates resentment among residents, but also results in low wages—32% below the average—and lower overall productivity than other autonomous communities like the Basque Country, despite having similar levels of industrial productivity. This indicates that sectors like tourism negatively impact the performance of the entire economy and make Catalonia less competitive than other tourist regions like the Balearic Islands.

How to improve productivity?

For the Circle of Economy, the key lies in finding ways to increase the sector's productivity. "We have an impressive asset, but we need to see how we can get the most out of it, and that requires talking to all the stakeholders," summarizes Miquel Nadal, the Circle's general manager. In this regard, economist Miquel Puig, who introduces the topic in the report prepared by the IPI, directed by Xavier Vives, points out that the low productivity level that has historically characterized tourism companies "is not an inherent flaw, but rather the result of a specific business model based on price competition and wage restraint." He cites the Austrian Tyrol as an example, a tourist region with one of the highest productivity rates and GDP per capita in Europe, a stark contrast to Catalonia's situation.

Puig justifies this situation with policies such as "immigration is contained through collective bargaining agreements that establish high minimum wages and require professional qualifications," and points out that a hotel employee in the Swiss corner of Grisons earns €64,000 annually. Such salaries are unheard of here, where, despite being a leading tourist destination, there are no prestigious training schools, unlike in Switzerland. The economist argues that the labor reform Mariano Rajoy approved in 2012 led to wage reductions for groups such as hotel chambermaids. "The result was an increase in competitiveness, the number of tourists, and migrant employment, but also a reduction in productivity," he criticizes. For him, the solution requires increasing wages, raising the tourist tax, and reducing the supply of accommodation—measures that are usually met with resistance from the business sector.

In this regard, other experts consulted by the Círculo de Economía, such as Professor Giacomo AM Ponzetto of Pompeu Fabra University (UPF), see measures like hotel moratoriums as a "protectionist temptation" that will generate monopoly rents for existing operators. "Imposing a reduction in tourist supply would imply obvious inefficiencies," Ponzetto points out, adding that "the price increase would also cause a loss for Catalan consumers, who represent the majority of Barcelona's restaurant customers." Instead of quotas, Ponzetto advocates for a tourist tax to internalize externalities without harming competition.