It brings buckets of money, but what are the consequences?
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
Barcelona, Europe’s most visited non-capital city (at least officially speaking), is now so saturated with tourists that even the tourists are complaining. In a recent study by the City Council, 40% of the tourists surveyed thought that prices in the city were too high, while 59% believed that the streets and tourist hotspots were too crowded.
They’ve got a point. In 2015 the city, with a total permanent population of 1.7 million, drew 8.9 million visitors, 6.5% more than the year before and a five-fold increase from 1990. And that’s just those who stayed in hotels. Airbnb hosts provided accommodation for a further 900,000 visitors. By 2016 that number had climbed to 1.25 million. Many Airbnb offerings are considered illegal, according to the City Council.
The tourism boom has brought with it buckets of money. According to Mastercard’s Global Destination Cities Index, Barcelona rakes in over $12 billion a year from tourism and is the third-ranked European city in terms of tourist expenditure, just behind the two global powerhouses of London and Paris. However, this money has come at a heavy price, as the documentary film Bye Bye Barcelona documents.
A common complaint among residents is that the Barcelona they know and love has become a theme-parked city that is reaching the outer limits of its physical capacity — just as has happened with Venice, whose permanent population has shrunk from 180,000 in the 1960s to less than 60,000 today, as more than 2 million visitors flood the city every year. They have a point.
The sheer volume of tourists are crowding out local residents from many of the city’s most attractive districts while putting unbearable strain on public services and the city’s private housing stock. As a new study by the online real estate market place Idealista shows, rents are already on the rise across many parts of Spain, though there are still over half a million vacant properties. The cost of renting in Madrid and Barcelona, which between them account for 16% of those vacant properties, has reached historic highs. In Madrid, rents have risen on average by 27% since 2013, but in Barcelona they’ve surged over 50%.
One of the main reasons for this is that real estate owners and developers are refocusing their attention on meeting the much more profitable needs of short-term visitors. And short-term property speculators, domestic and foreign, are piling in, too. It’s simple math. According to a British real estate platform, Nested, renting a property on Airbnb can be as much as 256% more profitable than a traditional lease. That’s based on a survey of rental properties across 75 global cities.
In Barcelona, that would mean the difference between earning an average of €1,222 a month on a lease, or €4,350 renting to tourists. The result: fewer houses for locals and soaring prices for those that do still exist.
Just yesterday, a friend told my wife that she and her husband are paying over €1,000 a month for the new 30-square meter (323 square feet) apartment in the Eixample neighborhood. Five years ago, €1,000 a month could have got you a three or four-bedroom apartment in the same neighborhood, probably with change left over. This is all happening at a time when the salaries for jobs in many sectors of the local economy, including tourism, are either stagnating or dropping.
In a bid to stem the influx of tourists, Barcelona’s Mayor Ada Colau has declared open season on websites like Airbnb and the professional landlords that are using them to rent out multiple unregistered apartments at a time. But so far, as the numbers of tourist apartment rentals attest, it’s a losing battle.
As long as the global tourism boom continues and Barcelona remains an attractive destination, especially compared to traditional competitors that have lost some of their appeal, like Egypt, Turkey or Tunisia, tourist numbers are going to continue to rise.
Even the global financial crisis barely put a dent in the sector’s onward expansion. By 2030 the United Nations World Tourism Organization (UNWTO) forecasts international tourist arrivals to reach 1.8 billion globally (from 1.18 billion today and a meager 25 million in 1950). In 2016 the industry generated €7.15 trillion (roughly 10% of global GDP) and provided work for 292 million people.
But for Barcelona and cities like it, this is not just about money or jobs; it’s about the city’s very soul. Everywhere you look traditional, often family-run shops, bars, and restaurants are closing down, unable to pay the soaring rents. All too often they are replaced by convenience stores, fast-fashion stores (many belonging to Spanish retail giant Inditex) or franchise-owned bars or restaurants. As a consequence, the city is fast losing its distinctive character – the very character attract tourists in the first place – in the face of homogenization that accompanies the arrival of multinational chain stores.
As the local newspaper La Vangaurdia reports, along a 600-meter stretch of a pedestrianized street in the traditionally working class neighborhood of Poble Sec there are now 45 bars and restaurants, many of them franchises. Many of the patrons are tourists. Poble Sec is cheap, chic and cheerful, scream the tourist guidebooks and websites. And the tourists are arriving in droves, most of them ironically in search of a momentary respite from the noisy crowds of the Ramblas and the surrounding Gothic Quarter. Poble Sec is still cheaper than other barrios, for now, but many of the locals are already being priced out.
The more tourist numbers rise, the more monodimensional Barcelona’s local economy becomes. You can have too much of a good thing. Tourism may bring in lots of money and create lots of jobs, but it is also replacing other activities and displacing locals and their economic contribution. And the more monodimensional the economy becomes, the more dependent it becomes on a sector that is highly taxed but pays low wages and is notoriously prone to swings and roundabouts. By Don Quijones.
From the Doom Loop to the Black Hole. Read… Three More Reasons to Worry about the Euro’s Future
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Nice article, really nice.
I had lived my entire life in Barcelona but once I graduated, found my first job and tried to move out of my parents’ house I realized that there was no way I could ever pay the rent there (nor in the other smaller cities of the metropolitan area). And keep in mind that that was about 2 years ago, now is even worse (as you have already explained).
So, in the end I had no option but to leave the city If I ever wanted to live on my own. I could say, therefore, that I have been forced into economic exile.
Now where I live, the real state market is not so overheated (and I hope never will be). I pay 400€/month for 70 square meter, which is about 5,7€ per m2 and month. Now do the same math with the very same example you have given: 1000€/month for 30 square meter = 33 €.
Such a bubble, isn’t it.
I will never understand how Millennials and younger generations are as passive and complacent as cows despite the Deliverance-style reaming they’re getting from the Fed, central bankers, and their financial sector and corporate accomplices. Young people face a bleak future of being priced out of the housing market and struggling to find work in an economy where living wage jobs have succumbed to “shareholder value.” And yet for the most part they are easily duped election after election into voting for the crony capitalist status quo and its captured Establishment political parties.
The young never knew a different world.
How do you know they even vote? They may be assuming someone will take care of them.
Well, it’s sad but true. Young people do not have the habit of voting, at least here in Spain. BTW, It goes without saying that for my part, I don’t miss a single election, even if it does not make any difference.
And yeah, it’s also true that the millenial generation is a passive one, but just as the previous one was. It’s easy to demonize the younger generations but it wouldn’t be fair, as someone else has said, we haven’t known another world… we have been fed resignation and individualism but those who preceded us.
and hey,don’t forget that it’s the baby-boomers who have messed up the wholly thing. This generation will go down in history as the greediest and blindest ever.
Typing mistake, I wanted to say
“we have been fed resignation and individualism BY those who preceded us.”
Sorry.
Hiho
Fear not the bubble will collapse when it all goes pearshaped.
Met someone with a similar story about ten years ago. Educated, middle class, and had to leave Barcelona where he was born. Can’t imagine how bad it is now.
I can tell you that Barcelona is not the only place that has an out-refugee movement if it’s any comfort.
It would be more revealing if the article delved into who the majority of these tourists are. What is the major currency being exchanged for euros? This information would give some indication of where the money and people are coming from, hence an idea of what basis this wealth has. Savings? Credit? Loans? Revolving credit? Surly there are stats on how and what method of payment is used for purchases, including rents.
If you want to have an idea, go to the Flight Radar 24 website and look at the El Prat airport. As I am typing this (around 20:45 Central European Time) there’s a long queue of aircraft from low cost/charter airlines lining up for landing, plus an Airbus A380 and an A330.
If you look at where the flight originates, here’s a short list: Antwerp, Geneva, Amsterdam, Munich, Milan… apart from those two widebodies all the flights originate from other European countries.
The article says the tourists are international. Wolf, is this an effect of Spain remaining in the EU? i.e., as an EU peripheral country, Spain’s economy is stuck in stagnation because it doesn’t control the euro and therefore cannot devalue its currency to reset prices, thus making it an initially cheap destination ripe for hot money industries like tourism? Or is it an effect of the global wealth gap eventually leading to the type of gentrification that chases out less affluent residents such as we see in US cities today? Or both?
Almost every country wants more tourists. Tourists are sitting ducks. You hit them with huge taxes on flights, rental cars, and hotel rooms, and you take their money in restaurants – those folks staying in hotels have to eat out because it’s hard to fix a meal in the room.
In places like San Francisco, another tourist mecca, you extract large amounts of money from tourists via parking tickets (not turning the front wheels against the curb on even a slight slope, parking during times when there is no parking, such as for street cleaning or during rush hour when the parking lane converts to a drive lane at 4 PM, and thus into a tow-away zone … this costs over $500!. Parking tickets are a huge profit center in tourist cities, and tourists just don’t know….
So having lots of tourists is generally considered a boon for the local economy. Once tourism starts replacing other economic activity, it can do some damage to the local economy, and the pendulum of benefits swings back.
==> “Or is it an effect of the global wealth gap eventually leading to the type of gentrification that chases out less affluent residents such as we see in US cities today?”
Yes, that has been happening for years in many cities – not only those with a lot of tourism but also with those that appeal to the global elite, such as London, Paris, NYC, and so on.
Wolf,
Quick question: Why do tourists bother to pay for parking tickets in SF?
If you’re in a rental car, your rental car company pays the ticked and charges your credit card without asking you. Someday you’ll just see it on the statement… plus the processing fee.
If you’re from anywhere else in CA, which many who drive their own vehicles into SF are, they’ll collect from you directly.
If you drive into SF from out-of-state, chances are CA has a bilateral agreement with that state to share traffic information, and your state may even penalize you for not paying a ticket in CA (vice versa too). AND/OR if you re-enter CA and get stopped, you’ll have an outstanding ticket, and now you’re in real trouble.
Paulo- if in a rental car, it’s billed to the agency which then passes it on to you via your credit card on file.
And you could add that tourist are also a sitting ducks for small time scams. Hotels, car rentals try to scam you wherever they can. Pure profit. I am talking about experiences in Barcelona, Spain, but could be anywhere.
According to data from the city’s tourist board, Americans were the biggest visitors to Barcelona in 2015, accounting for a grand total of 725,000 hotel occupants, followed by the UK (719,000), France (675,000) and Italy (484,000). In 2016 the two top spots switched places with the UK providing 812,000 visitors and the U.S., 760,000.
could it be currency related ? the euro has taken a beating from helicopter Draghi .
A lot of it has to do with high number of cruises embarking and disembarking at Barcelona from Spring through Fall.
looks like trickle down economics at work. As paper net worth increases via asset inflation, people liquidate or borrow a portion of their portfolio to enjoy a holiday. On a side note i wish i had seen more of the world when i was younger and i had a stronger balance sheet . It seems that many of our classic cities/cultures are losing their identity .
Yes it’s not all good that’s for sure My German nephew had his camera stolen from under the table at a restaurant by a very young Roma kid Barcelona was overrun by Roma and the usual petty crime and begging in 2010 anyway I preferred Madrid myself
Plenty of Roma in Madrid too. But I agree. Madrid may be one of the finest cities in the world.
A couple of years ago a policeman told me Europe’s fastest growing industry is begging.
Apart from cities like Rome where beggars are part of the scenery (as Goethe already remarked), even countries like Sweden which took pride in eradicating begging have seen a massive resurgence in the last few years, chiefly driven by non-enforcement of ordnances.
These beggars are not people who fell on hard times but either members of criminal organizations or people they recruited for the purpose (invalids are very much in demand). If your old fashioned clochard tried begging in “their” area he’d be beaten into a pulp or even murdered, something that sadly happens far too frequently.
Europe might want to consider the American approach. You build a city for tourists. We have two. Las Vegas and Orlando.
Walt Disney, corrected the mistake he had made with his original Disneyland wherein he only created the tourist draw but didn’t capture the hotel accommodation business it created built Disney World in Orlando. Here he provided everything. Entertainment, roller coasters, hotels, restaurants even a planned community for permanent residents.
Las Vegas did much the same with its gambling industry. Tie the casino to the hotel with Hollywood stars as entertainment and the tourist didn’t need to go sightsee. The casino provided everything!
Boring Hate both those places with a passion Fake cities attract lots of fake tourists Ill take the real thing anytime I guess I’ve become less American from traveling so much
Slovenia and Croatia tried that approach: they have fully inclusive resorts which often include casinos and dental clinics (long story short: getting your teeth fixed in most of Western Europe is so prohibitively expensive even wealthy people “go East”… as my teeth degrade with age and a few knocks too many, I am considering that option as well). They are doing quite well, albeit gambling is under serious pressure from cruise ships in the Adriatic.
I live about a 40 minute drive from Disney. I’ve been there maybe 5 times in my life. I cringe at the thought of it. Disney is a machine that takes your money. I have a friend in the upper echelons there.
If you ever go, you can open an account with them, put some money in, and they give you a bracelet to scan to buy stuff from the account. Why?
Well they did a study. Turns out, parents will rarely give their kids more than $20 bucks to buy stuff. Mostly because they are afraid the kids will lose the money. The bracelet lets the kids buy much more. Turned into a huge success. Plus, most folks will leave money in the account for their next visit, and Disney invests the float for themselves.
I’d be interested to know how many non-resident slaves have been imported into Barcelona to work for food, water and a place to sleep on the floor.
I suggest a yes-or-no referendum put to permanent residents of Barcelona with the following proposition.
“Reduce the number of tourists allowed into the city by 50%.”
Would the yes side win? I very much doubt it, and for all the very same “negative” reason$ that Don $tate$.
Paris has been going through this torture-or-blessing paradox for many decades. My wife and I visited there in 1992. At that time the locals on the street treated us fairly well, but in restaurants what the staff really wanted was for us to leave our money at the door and get lost. (Parisian restaurant service is the perfect argument against the automatic inclusion of a server’s tip in the total price of the meal.)
Nowadays, Parisians would probably prefer Ben Bernanke’s “helicopter money” solution to their unsolvable conundrum and not let the helicopter land anywhere in France.
“I’d be interested to know how many non-resident slaves have been imported into Barcelona to work for food, water and a place to sleep on the floor. ”
Not so many, with and unemployment rate of more than 25% (50% among youth) there is no need to import slaves. There is a reserve army of unemployed willing to work for far less than the minimum wage (675€/month).
Anyways, provided there was this kind of referendum, my guess is that the “yes” would win.
So, even with unemployment rates and wages as you describe, you still predict that the “yes” side would win ………. even though that might very well INCREASE the unemployment rate, taxes, reduce government services, etc.
Yeah it surely would. You should take into account that:
1) The jobs tourism creates are shitty and nobody really wants to depend on them. No to mention that massive tourism might be crowding-out other kinds of economic activities.
2) Rents, house prices and other prices in general are being inflated by tourism. Far beyond the means of the average resident. Which means that the overall economic impact might not be as positive, even if you manage to get a shitty-slave-like job as a waiter or something like that.
So, we don’t want these kind of jobs, especially if it means not being able to even survive in the city.
3) Here in spain the voter turnout rate tends to be far higher among retired people. Do you understand what does it mean?
yeah, really good article, Mr Quijones / and i plan on watching the doc on barcelona later when my stomach is prepared. all of this is so surreal how fast this stuff spread from SF all over the world…
Makes me glad I visited Barcelona back in 1974!
It sounds worse than Venice and I’m glad I saw it in the 70/s as well.
Good article. Many Americans of a certain age (old!) and class remember travelling to great European cities for the first time as college students. The sense of history, the beauty of everyday things, the great museums (virtually empty) provided new experiences of incredible intensity.
Returning to those same cities today feels sad, largely because they have been eviscerated by mass tourism. I took a grandchild to visit London and Paris, and what she mostly remembers is the crowds at museums and horrendous traffic. It was a waste of her time and my money. And it led me to ask–what’s the source of mass tourism? Why do travellers descend en masse on cities like Barcelona? The distinctive character of these cities is vanishing, prices are exorbitant and the locals resent us. Why don’t we just stay home?
Another great city is becoming a big tourist trap loosing in the process its main attraction: a sense of place. It’s happening all over the world. Way back when I visited Machu Pichu it was a free for all, backpackers that we were. Now it’s all run like a big Disney World. Under President Toledo, about 2 administrations ago, a beer commercial was authorized to be filmed in the ruins with the result that a crane came down on the sun dial and broke it. Which is a fitting metaphor for how capitalism operates: nothing is sacred but money. Gotta make more money. The often prophesied end of globaloney and industrial society can’t come fast enough for me. But come it will and the world will be a bigger place again. Tourist crowds problem, solved.
This is a good problem for any city to have. Of course…the elected leadership must mange the tourists to the benefit of all – declaring airbb illegal and building more hotels would be a good start.
“..leadership must mange the tourists.”
Or send them home with bedbugs at least.
It’s a mess.
How much you pay to see MESSI, anybody knows?
Tickets for Camp Nou start at around €100, but you can spend a whole lot more than that.
And yes, it’s a mess.
Interesting article but it fails to mention why Barcelona has become such an attraction. What’s really drawing them in?
I could understand the appeal of say Amsterdam. What can people get in Barcelona that they can’t get anywhere else?
No- I’ve never been there.
You should go there. You’d see immediately why it such an attractive city.
Know someone who owns airbb. These cheapo tourist are total pigs, eating pizza in bed and so on. Raising interest rates to 5% would solve this tourist boom problem overnight; the same people in soup kitchen lines, and they would not know what hit them.
Take a look at the Mastercard document and you can see a massive increase in the number of visitors to Tokyo and Osaka since 2011.
Osaka is up from 1.81 million to 4.58 million and Tokyo from 3.26 to 8.08 million from 2011 to 2015 – huge % increases.
Sure, but 2011 is a bad year to use as base. That’s when the earthquake, tsunami, and Fukushima wreaked havoc with tourism in all of Japan. It would be better to use 2010 as base year.
That said, the wave of Chinese tourists is getting huge (same as in San Francisco).
Yeah, it did, but the falling yen and easier visas have made the number of tourists going to Japan surge.
2010 total for Japan was 8.6 million, 2011 was 6.2 million, and then in 2012 it was back up to 8.3 million.
I think that number for 2016 is up well over the 11 million mark for Tokyo alone and the first time that has happened as well.
IIRC the number of people visiting Japan is actually greater than the number of Japanese visiting other countries.
First time that has happened since the 60’s and the number of visitors is over 24 million in 2016 which is also a first.
Another stat to throw out is that in 1995 there were 3.3 million visitors to Japan.
Kyoto is being overrun and people have the same complaints as Barcelona.
We are going to Japan in October – November for three weeks and are worried about finding a decent place to stay.
We may end up out in the middle of ‘nowhere’ to find one at a decent price.
Thanks for the 2010 numbers on tourism.
Enjoy your stay. I heard Airbnb is getting big in Japan :-]
When we stay in Japan for longer, we always rent an apartment – but we’ve never used Airbnb. There are plenty of agencies that offer corporate type apartments. Now with Airbnb muscling in, I think even hotels are getting worried. So maybe it’s not as hard as you think it might be.
Forgot to tell you: I envy you!
Lee evidently they enjoy radioactive sushi No thank you
traveled all over the world from 1969 until 2012. mostly as a businessman. not as a tourist. and most destinations were devoid of tourists as i refused to travel from mid-june through mid-october.
in november 2011, barcelona, rome, napoli, siracusa, palermo, malaga, cadiz, funchal beyond their ports were virtually devoid of tourists. i suppose that this was the last year that the bulk of the tourists arrived via cruise liners. and they never went too far away from the ports.
best adventures were always in the markets. for some reason, most tourists never saw them as places to learn how the indigenous population really lived.
but, i saw the handwriting on the wall. millenialls and retirees walking around with their heads/eyes focused on their “dumb” phones. really oblivious to the surroundings. i often wonder how many people were bowled over, injured, while overseas by a collision with one of the “dumb” phonesters.
i also wonder how many are traveling overseas just to say that they have been there. without really being there.
all i know is this. i have hung up my spurs. commercial airlines are a part of an auto da fe. as are most cruise ships. and this is self-inflicted torturous activity.
i am so pleased that i did all this traveling when i was younger. before tourism became an industry.
it reminds me of when i was trout fishing in the nelson district of the new zealand south island in 1992-1994. the wineries had yet to be established. no one was there. it was virginal.
still, i stayed at a lodge that did fill up with some elderly masters of the universe. who were unable to wade. they were too old and infirm.
i concluded that one needs to get traveling out of one’s system while one is still young and energetic.
and go hit ’em where the tourists ain’t.
Same here. Can’t stand the crowds of ordinary tourist and their chatter. And it is getting ever harder to find places to go. Thinking of high mountains and the arctic? Well, no. Recently, the unseasonal storm on the Annapurna circuit stranded a great number of “mountaineers” who have never done anything in the mountains before and only traveled with guides. Another one, apparently there are guided tours to the Antarctica to visit the nesting colonies of emperor penguins – Asian tourists taking close-up pictures of penguins. WTF.
Eastern Europe I like Warsaw Krakow and Zagreb a lot
Barcelona is a really beautiful city.
I came to Barcelona as a tourist, and …. stayed there for 4 excellent years:)
But it’s reaching an overcapacity point. Even for me, non-local, the noisy crowds became a reason to move out. Still couple of years ago, in low season, city was extremely enjoyable, without tons of tourists. Now even in winter it was quite packed, with all the consequences – quality of life and services are going down (why try hard, when the next crowd will consume anyway), and prices are going up. I just can’t imagine, what locals feel, especially those who don’t get a cut from tourism boom.
But, as long as Barcelona will stay an almost ideal destination, very little can be done to reverse a trend.
That was supposed to be an answer to:
>>Why do travellers descend en masse on cities like Barcelona?
Came to Barcelona in 1981 and left in 1994, moving up the coast to where I now reside. Back then, unbelievably as it may now seem, there was very little tourism and it was totally confined to the summer months and the downtown area. The city was actually quite provincial: most shops and all restaurants were family run (IIRC, there was a KFC mid-Ramblas & a BurgerKing just below Plaza Cataluna–that was it for fast food chains); charmingly, very few people spoke English (schools still do an abysmal job at it, but French was the language taught back then); quality hotels were nonexistent; and there was a small expat community of maybe a hundred English-speakers–most of whom I knew, worked and partied with. Great years! The 1982 World Cup put the city on the map for Europeans as a future vacation destination, especially the Italians, who loved it here. As it might be guessed, the 1992 Olympics was when Americans and the rest of the world discovered the city. Before that, it was rarely on Americans’ European travel itineraries. As I said, I got out in 1994, more for work reasons than for being grossed out by the changes, but, in hindsight, it was the perfect time. (Can’t imagine having raised my two children there.) It’s still a beautiful and fun city but crowded all year, noisy, expensive, and, as mentioned above, losing a lot of what made it special.
Our host in Barcelona drew a big circle around the Muslim slums on the map and said “no go”!
We went anyway and saw drug sales, filth, prostitutes in their early teens and more.
I spent a few months in 2014 in Barcelona and nearby beach towns. Honestly, I don’t see the huge appeal, I would never go back without a specific reason. It’s a nice enough city, the climate is mild, but culturally it has much less to offer than most other larger European cities. It is basically a giant party town with lots of chain-store shopping.