The Tourism Problem

While some countries would no doubt welcome growth in tourism others are facing a tourism problem, as in too much of it, particularly in city centres.? Whether it’s Amsterdam, Prague, Florence, Rome or Venice, Tokyo or Kyoto, Barcelona, Seville or Madrid, the complaints are the same; overcrowding, noise and disruption, loss of local community cohesion, loss of affordable housing and the hollowing out of entire neighbourhoods, turning them into tourist-only deserts. And now, Málaga is the latest Spanish city to announce restrictions.?

Is it ever possible to balance the benefits tourism brings against the negative impact on city centre tourism hubs? As numbers rebound and even surpass pre-Covid levels, there is a significant rise in anti-tourism sentiment in many destinations, in the form of graffiti, public demonstrations and even physical violence. The numbers are just astonishing. In spite of the fact that consumers everywhere have been experiencing a cost of living crisis, or that’s the claim, the numbers just keep growing. In the case of Spain, the 2nd most visited country in the world (just behind France), international tourist arrivals are up 14.5% for the January to April period 2024 compared to 2023 which was the best year ever recorded.

Just how did we get here? I think there is no doubt that the emergence of online platforms such as Airbnb and Homeaway are largely responsible for the growth in private tourist rentals. Previously, the majority of city-centre visitors would expect to stay in stay in hotels. In the case of Airbnb the platform has grown from small beginnings in San Francisco in 2007 to listings in 100,000 locations in 2024 and 1.5 billion stays since launched. How and why did it go from an idea to give homeowners the chance to earn extra income from renting out spare capacity in their home, in effect a cheap alternative to an hotel, to entire buildings without any local residents, just short-term holiday lettings? Locations across the world, above all in city centres, have gone from no restrictions on this type of private rentals to outright bans, all in less than 20 years.?

Of course, without a simultaneous growth in demand nothing much would have changed. However, one of the big changes in tourism over the past couple of decades has been driven by the trend for people to take one or more short trips of a week or less during the year in addition to the annual summer holiday. These shorter trips are less likely to be linked to sun n’ sand breaks and more likely to be for a wide range of cultural tourism, such as art, exhibitions, museums, architecture and gastronomy, celebratory tourism, for example big birthdays and anniversaries, stag and hen groups and weddings, sports activities and trips when you are doing something, rather than flopped by a pool.

But there’s no problem with this type of tourism if the accommodation is hotel-based or in a private rental located in an urbanised area of detached houses, townhouses and apartments with a mix of residents and tourists. But when it’s city-centre based, rubbing up against residents whose lives aren’t one long party into the early hours, who have to get up for the school run and work, it’s a different story.?

In the case of Spain, central government devolved responsibility for short-term rental legislation to the autonomous regions in 2013. At that time a few regions had already started legislating for some restrictions, often no more than a requirement to apply for a licence.? Prior to this, no one had a clue who was renting what to whom and for how much. As a result, an unknown amount of money was out of the reach of the Spanish tax authorities but, back then, they estimated undeclared income from private rentals in excess of €4 billion. I imagine it will be much more now. However, passing legislation is one thing, enforcing it is quite another and lack of strict enforcement of the rules is one part of the problem. As recently as a couple of months ago the media reported on a case in Madrid in which one landlord had 20 holiday lets in the same building, all unlicensed, yet the city has been running a licensing system for holiday lets since 2014. Seems he’s in line for a substantial fine.

In many city centre localities rapid and often unwanted changes have occurred.? A big problem is a reduction in the availability of long term rental property because landlords can’t resist the more profitable short term tourist market. Inevitably prices have risen and long term supply has diminished.? Families who have lived in an area for generations can no longer find affordable homes to rent of buy and are forced to move further away from jobs and schools.

Another issue is the take over of entire buildings, to the extent that few or no permanent residents live there.? It’s unavoidable but when every apartment is for tourists the neighbourhood and environment changes. In effect, this surge of short-term tourism is annihilating the very characteristics that make historic city centres attractive places to visit. And then there’s the noise. Typically, a city-centre stay is 3 - 5 days so there is a lot of churn, comings and goings at all hours and people living in what used to be quiet residential streets complain of parties through the night and constant noise and disruption.?

So, when you see demonstrations demanding an end to tourist rentals, which, it should be noted are just as likely to be occupied by Spaniards from elsewhere as by foreigners, and graffiti daubed over the entrance to your Airbnb let, it’s these issues driving the protests.?

It’s seems likely that more controls are in the pipeline and I’ll discuss these in my next blog. I think most people agree that something has to be done, but getting agreement on what that something is will be difficult. And there’s money at stake. Tourism generates around 13% of Spain’s GDP but in the most popular tourist hubs it can be much higher; around 35% in the Balearics, Málaga province and the Canary Islands.