Lookinside.travel 2011 and the dreaded “Commoditization”

Today I was at the presentation of the Lookinside.travel survey for 2011. I have mentioned this survey in previous posts, as it is an extremely useful tool for anyone interested in understanding the Spanish traveller…or at least the Spanish traveller according to Google.

The initiative, by Google and in partnership with Exceltur, the government statistics office and a large number of private companies is not only commendable for its usefulness but also for its generosity. At last year’s presentation we got a neat USB stick with the executive summary of the survey on the way out but, alas, this year they weren’t quite as generous. So I’ll read the actual survey as soon as I can get a copy and report back here. In the meantime I thought I would share a couple of the highlights from today’s event that will not be in the report itself:

The Lookinside.travel survey claims to be “a survey on information and purchasing habits of the Spanish traveller”. If I had to sum up today’s traveller according to this survey in one word it would undoubtedly be: Commoditization. A strange choice, you might say, and not even an adjective but it is the fad in the trade today and I think every single speaker used it at least once (or at least they tried to use it because it is almost impossible to pronounce first time without stammering). The Wikipedia defines commoditization as “the process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers. It is the movement of a market from differentiated to undifferentiated price competition and from monopolistic to perfect competition” or according to my own dictionary of plain English: “I’ll buy the same product from whoever will sell it to me the cheapest”. It would appear that after years of investing in branding (and actively encouraging consumer snobbery), or selling products through values associated to brands at a premium …when the credit-crunch comes, consumers go back to their animal instincts of price first and last. Merchants, companies (and destinations) panic and drop everything but their trousers to give them that Price and the result is ruthless competition and a right old mess.

The risk of commoditization in the Tourism business in Spain is evident in the results of the Lookinside.travel survey where the top two criteria for choosing a hotel are first “Price” and second “value for money” (i.e. Price but related to quality of service…but price at the end of the day). Only if the price is right will the consumer start to look at things like location or basic services, let alone the filling used in pillows or the brand of complimentary toiletries.

The term was most used in the context of Spain’s future as an incoming destination and more particularly the effect of Tunisia’s aggressive strategy to attract visitors at any price. If the only commodity in tourism is a sunny beach then British and German tourists aren’t going to differentiate between a sunny beach in the Costa del Sol or a very similar sunny beach in Tunisia (which, by the way, is currently up to 70% cheaper).

The first part of today’s event was rather boldly presented as “The future of Tourism in Spain” and was, predictably, mainly about domestic tourism. I swear I could actually see the audience’s shoulders drop and backs hunch under the weight of negative statistics and predictions presented by venerable leaders of industry in the terms and with the tone that we have become used to from the evening news. At the end of his presentation (which was, by the way, very pragmatic, informative and refreshingly free from the usual politics) Manuel Butler, Director General of Turespaña insisted that Spain’s differentiation is its ability to bring happiness to visitors and Spain must therefore continue to develop their marketing campaign on the slogan of “I need Spain to be happy”. As I glanced around at the long and worried faces in the room I thought that we too should have a slogan for the outbound market “I need the Spanish to be happy”.

Luckily the gush of fresh air and optimism we needed to displace the foggy gloom of negative figures that was hanging over the audience came in the shape of Amuda Goeli, co-founder and CEO of online travel agency Destinia. Although he modestly described himself as a “freaky programmer”, this Egyptian entrepreneur obviously has more in his head than the roots of an enviable mop of dreadlocks. Amuda was great value to the event, not only because of the experience and truths he brought to the debate but also the humour and sincerity with which he expressed them. He was, for instance, shamelessly damning of the Spanish tour operator business. “They were late going online and when they finally did they screwed it up”. As a result the OTAs such as Destinia are, almost reluctantly, getting into the packaging business. “I have a friend who runs a big tour operator” he said “and he told me his problem was that his clients are literally dying off” it sounds cruel and a little exaggerated but there is no doubt that there is a generational change in the Spanish traveller. Amuda was more precise still and said “we are no longer seeing a generation of change as we have moved to a change in generation”.

As I said above, I will go into the actual results of the Lookinside.travel report later but as far as outbound travel is concerned there are not many changes from last year’s report and no big surprises. Two facts did however catch my attention. First a comment by Antonio Cladera the CEO of Amigo Autos that “we are noticing more and more cases of clients that simply don’t have a credit card to use to guarantee a booking, something which for years we have taken for granted has changed with the credit crunch”. The other interesting conclusion of the survey itself was that despite the fact that more and more Spaniards are using internet to plan and book their holidays they are visiting less and less sites per user. This makes sense as the market becomes more internet savvy, people are going straight to the sites they know work for them. By the way destination websites are growing in their influence.

Ironically this last fact would suggest to me that online travel agencies are managing to get brand loyalty by offering differentiation through quality of content and service and they are therefore avoiding the unfortunate and unpronounceable commoditization.

More to follow shortly.

The stage is set for the presentation of Lookinside.travel 2011

Ipsos España: 14% Less Spaniards plan to take a holiday this year

Following on from my last post about the drop in confirmed bookings for the all important summer season, on Friday trade trade magazine Agenttravel published a summary of a survey by research company Ipsos which appears to confirm the tendency to travel less. The main conclusion I would draw from this survey are:

1. Spaniards will still have leave from work (those that are lucky enough to be in employment) but 49% will stay home.

2. The further away the destination the less the effect of the economic crisis. Domestic tourism and European destinations suffer larger reductions that intercontinental holidays.

3. As a logical conclusion of points 1 and 2 above the average spend per holiday is increasing.

According to the research published by Ipsos España* the percentage of Spaniards planning to take a holiday this summer has dropped by 14% from last year’s 65% to just 51%. Putting Spain below the European average of 58%.

This shows that Spain like UK, Italy and many other European countries has added vacations to the list of things to be cut when savings to the household expenses have to be made. Holidays are the third item on the list of dispensable luxuries for Europeans after fashion and technology. Specifically for the Spanish market leisure is the first to go (where to be honest there was plenty of margin to reduce on nights out), followed by fashion and holidays in equal second. The exception so far are the French who have stubbornly refused to dispense with their vacations and have even shown a modest increase in intention to travel research by Ipsos.

14% less holidays from one year to another is a huge pill for the outbound trade to swallow but in terms of volume destinations will be suffering much more from the 10% reduction in the vast UK outbound market or a 15% in the Italian market which is significantly larger than the Spanish.

According to the Ipsos survey “more and more Spaniards consider the category of holidays should be cut, which is perfectly logical given the crisis”. Indeed it is logical but it is also a direct contradiction to the tendency over the last few years for Spaniards to consider vacations as a necessity.

To be fair it is quite a saving as the average spend per person per holiday is 1,863 € and this amount, despite the crisis has increased by 4.1% compared to last year. This might be surprising if interpreted as people spending more in the recession but my read on it is that it is logical to think that if there are less people travelling, those that are still traveling are the ones with enough money not to have to cut their holiday and therefore the average spend rises. 37% of those interviewed stated that they intended to spend les son holidays this year.

Of the holidays taken 53% will be in Spain (-6% from last year), 19% in Europe (-4%) and 4% in South America (-1%). This demonstrates once more that although the bulk of tourism in domestic or regional (within Europe) the market for long-haul destinations, although smaller in volume, is proving more resilient to the economic crisis.

*The methodology used for this survey was 3.523 telephone interviews carried out between 13/02/2012 and 26/03/2012 with residents from France, Spain, Belgium, Austria, UK, Germany and Italy. That would make around 500 telephone interviews to define the tendancy of the whole population of Spain.

Summer bookings from Spain show cause for concern.

Lately, all the tour operators and major players in the outbound industry that I have spoken to have been showing increasing concern that the “peak sales period” isn’t materializing this year. So I asked ForwardKeys if they could give me just a very brief snapshot of the sector, based on booking to 15th May 2012 to see if there is cause for concern.  The snapshot portrait of the market they delivered the next day may not be horrifying but not it’s very flattering either. The data shows that the recession is starting to bite the outbound tourism market in Spain.  

Remember that the analysis by Forward Keys is based on arrivals and bookings over the last months for those nationals spending more than one day in destination (so they do not take into account travellers returning to their own country of origin, those in transit through Spanish airports or those returning the same day). The idea behind incorporating these parameters is that we are isolate and monitor only “real outbound” as opposed to all flights departing from Spanish airports. Our analysis therefore is less prone to manipulation or misinterpretation and should paint a truer picture of how the market is really behaving.

Also note that Forward Keys analyses all the bookings of flights made through GDS systems (including online and offline travel agencies) however they do not have all the data from direct bookings made with the airlines. So that rules out quite a lot of the intra-European travel where increasingly consumers are booking direct on airline websites. It obviously excludes also holidays taken by car (mainly to Andorra, France and Portugal). This does not stop Forward keys giving excellent and extremely useful indicators of trends, tendencies and percentages if not of exact visitor numbers.

In brief, the main findings from the latest analysis of the Spanish Outbound market would be as follows:

1. Year on year departures grew steadily from May 2011 (only the “Easter Week effect” to be noticed in March-April which reflect the different months Easter fell in this year and last).
2. Summer period is, as always, the peak season for departures
3. Bookings are lower in 2012 so departures can be expected to decrease in the next months.
4. January-February were specially active for bookings this year
5. Summer period can expect lower number of departures from Spain according to bookings up to 15^th may.

Source ForwardKeys.com  Departures compared to previous year grew steadily until October 2012 but since then growth rates have slowed (April and March jump is explained by change in Easter week)

Source ForwardKeys.com   Bookings over last 12 months compared to previous year

So it would seem that the comments and concerns I have been hearing from my recent chats with tour operators and travel agents are far from unfounded and now supported by the real booking data.

The reservations for the vitally important peak season in June to September are still not forthcoming. The tour operator campaigns to encourage and incentivise early booking have not quite solved the problem. These campaigns however have definitely helped as can been seen by the increase in bookings (for travel at any time in the year), made in January and February coinciding with the tour operators’ advertising offensive.

Source ForwardKeys.com  Bookings the peak summer months

Looking on the bright side, as I tend to do, reservations are down as we would expect although not as dramatically as might have been expected and not for all destinations.

The optimist would conclude that people are booking later…the pessimist would say that people are not booking…the realist would say simply “bookings are down to date” and it’s up to us to react to this reality.

So how are agencies and destinations reacting?

This year there has been a sudden profusion of “outlets” for online travel agencies cropping up like mushrooms on a decaying log. Expedia, Viajar, Rumbo, etc. Have all launched similar sites with last minute offers which are emailed to registered clients. Last minute bargain deals are  obviously quite contradictory to the previous strategy of rewarding early booking so agencies are trying to present their last minute offers as fidelity programmes for their regular customers so as not to look too desperate for last minute sales of excess inventory.  Anyway these outlets together with other special offer emails such as Travelzoo and group buying plans such as Grupalia are all trying to entice the reluctant Spanish tourist with last minute offers they can’t refuse (but so far are managing to ignore). I plan to do a specific post looking into this trend and its short and long-term effect on the market but they are definitely a product of the times and a strategic reaction to the current market conditions.

As far as destinations are concerned I would like to think is a case of “fortune favours the brave”. Some destinations are taking the opportunity of low media costs and less competition from other destinations to seize a larger share of the albeit shrinking market. My own logic in these situations is focussed on the size of my slice and not the size of the pie. Despite the fact that less Spanish people are traveling there is no reason to suppose that I cannot increase the numbers traveling to my destination(s). Furthermore if I increase my share of the market now while my competitors are not looking or not caring then when the market starts to grow again my share of that growth will be higher. This week I keep seeing ads for Northern Norway, a destination that one would not normally think as a major player in the Spanish market. I don’t know how much they have invested on their current campaign on buses but it is the first time I can remember really noticing a campaign for Northern Norway and I suspect I am not the only one to notice. I am prepared to bet that the bold Northern Norwegians will be rewarded with a relatively high ROI for their campaign.

As a tourist destination…who are your real competitors?

Sometimes I am asked why I spend time (which ultimately implies money) in writing a blog that is read primarily by my competitors. This is a fair question but one that is deeply rooted in the 20^th Century (the century that gave us 2 world wars and one cold war).  Last century, anyone operating in your industry was immediately considered an enemy to be feared and if possible conquered. But for me the question today is who really is my competition. In a market where less than 10% of travel is to foreign destinations …where is the potential for me to increase visitor numbers? Is it in fighting like hyenas for a bit more meat from the bones of the market after domestic travel has taken the lion’s share or is it in working together to get more from the domestic lion? Actually I don’t even consider domestic tourism to be much more of a competitor than manufacturers of widescreen TVs or cars because our real challenge is to create demand for travel experiences rather than tangible consumer goods.

As a destination marketing consultant it is always a bit frustrating to see potential clients show fear of their neighbors than faith in their own product by specifying in their tenders for representation that it is considered a conflict of interest to be representing another destination in the same region. If they stopped for a moment to think about their customers, the tourists, they would know that the choice of destination is influenced much more by emotions than geography and their fears are both irrational and counterproductive.

Just the other night I had the pleasure and honor of dining with the recently appointed Minister of Tourism of Kenya who was visiting Madrid in his capacity of Chairman of the Executive council of the UNWTO. It might be because the Honorable Minister has be trained in Coca Cola and not the civil service but his approach was refreshingly pragmatic and difintely 21^st century. If you ask me, he confided (thus making the following a private and not official statement!),  “Kenya shouldn’t consider Tanzania as a competitor at all. They enrich our own product and add unique value to our regional tourism product making the East African region more competitive and attractive to tourists” . He even went further  “Indeed, if anything, we should actively be encouraging our guests to also visit Tanzania as part of their holiday experience in Kenya”.

On the other hand, this very same week there has been a totally bizarre episode in South America that is a painful reminder that some countries still have difficulty grasping the concept of “coopertition” and understanding the basics of destination marketing. The Chilean tourist board, using a sensible and commercially sound criteria, decided that neighboring Peruvians are potential visitors to Chile and furthermore, international travelers that this year visit Peru are the type of tourist that next year might enjoy Chile. With this logic they decided to advertise Chile in Lima’s airport. Well it’s not rocket science is it? Destinations have always used airports to present their messages to travelers. All was well until some Peruvian travel trade media got on their high horse and decided that it was insulting to have advertising for Chile in Peru’s airport “How could this be allowed to happen” they wrote “who is to blame for this terrible slip”. Suddenly the incident became a political hot potato and a crisis. They kicked up such a stink that the Chilean tourist office ended up having to withdraw the campaign. Now I could understand they might have taken offence if the Chilean’s had challenged their sovereignty by saying something like “welcome to Chile” as tourist arrived in Peru or an aggressive Australian inspired slogan like “Why the bloody hell aren’t you in Chile?” but that was not the case at all. I really can’t understand what the fuss was about. The tourists seeing the Chilean ads are, by definition, already on their holiday in Peru and it is not as if they are going to see the ad, change their minds and take the first plane to Santiago. Furthermore the airline they flew to Lima with is probably flying also to Santiago, the package they have bought might well include Peru and Chile and the reality is that the tourist’s choice was probably between South America or New Zealand rather than Chile or Peru.

When tourism is mixed with politics, which happens every day, tourism invariably loses out. Also the political involvement means that destination marketers end up losing their sense of humor for fear of losing their job should they be considered unpatriotic by some trade rag.

Well at least it is not always like that. I remember hearing of a guerrilla campaign some years ago by the Danish tourist board in Malmö, just across the bridge in Sweden. Some bright spark had the idea of putting posters on the back of the cubical doors in public lavatories in Malmö to illustrate how close they were to Copenhagen…”crap in Sweden and sleep in Denmark” and the ever pragmatic and liberal Swedes smiled and took less offence than the humorless Peruvian taliban.

Spanish Outbound tourism to Argentina

As I mentioned in my last post, yesterday I did my presentation, as requested by my good friend Damian Habib of Iggy Travel Consulting, to a packed auditorium in Buenos Aires as my modest contribution (all of 10 minutes!) to the highly successful Marktur Forum event. The audience were apparently interested to know “How the economic crisis in Southern Europe is affecting Argentina’s Tourism industry” or at least that’s what they asked me to talk about. I say apparently because many in the audience were from the public sector and I am not sure they were really that keen to hear anything other than the politically correct. Conscious as I was that I was speaking at an event sponsored by the public sector I opted to keep it as positive as possible, moderate my conclusions and obviously refrain from posing any awkward questions. I also have to be extra careful because my company represents the tourist board of neighbouring competitor Chile and I can’t afford for anyone to think I was speaking in that capacity. At the last moment therefore I chickened out, forgot the script I had lovingly prepared and improvised a lighter version that would subtly insinuate that something ought to be done without risk of offending those that ought to be doing it. Tourism policy makers and public sector marketers can bare a resemblance to the famous monkeys that see, hear and speak no evil and I didn’t want to spoil anyone’s dream with a rude awakening.

That said, looking into the case of Argentina over the last week has been fascinating and it would be a waste not to share some of the conclusions with anyone with a professional interest in Destination marketing or a personal interest in Argentina. So here is the literal translation of what I had planned to say yesterday:

First of all, let me give you the simple answer to the apparently simple question posed by Damián Habib for today’s forum. A priori it’s not bad news, or at least not as bad as you might think: For now the economic crisis in Southern Europe does not necessarily have to have a negative affect on the Tourism to Argentina from our markets. Although it is undeniable that the economic situation is extremely delicate in Spain and Italy, over recent years the populations of both markets have come to consider tourism, not as a luxury but as a basic necessity. Over here we are saving on a lot of other expenses before giving up our main holiday. So far, and contrary to what you might have expected, domestic tourism has been suffering more than transatlantic tourism. People are cutting back on the impulsive weekend break to a country hotel in order to save enough for their main holiday. Actually it is the luxury segment that is proving the most resilient to the crisis. By luxury I don’t mean 30,000 € safaris to hunt elephants rather any trip costing more than 3,000 €. To quote just a few examples, in 2011 despite the crisis, tourism from Spain to Thailand increased (+40%), as did Kenya (+12%), USA (+9%) and closer to Argentina, Chile increased by +6.39% (although, of course, there are still twice as many Spanish tourists in Argentina than Chile). Overall, outbound tourism from Spain managed to increase last year, despite the crisis, although the spend per trip decreased slightly (-1.33%). Interestingly in Italy it was the opposite, slightly less trips were made but the spend increased which would tend to lend weight to the theory that economic recession affects the middle class, mass tourism segments whilst the rich continue to travel.

Contrary to the relatively positive situation of outbound tourism from Spain and Italy to Latin America as a region, it is surprising to note that traffic to Argentina decreased. In the case of Spain the numbers went down by 5.6% (141,146 in 2010 to 133.248 in 2011). I have to admit that this figure surprised me as when I was in Buenos Aires this time last year the mood was very positive and I believe the growth at the time was close to +20%. Something seemed amiss as Argentina’s figures didn’t fit with the rest of the region.

My first assumption, and I guess that of everyone else was to blame the drop from on “natural causes” which I found in the form of the Chilean Volcano that blew it’s ash across the border to Argentina last June. This natural disaster caused short-term havoc on air traffic and had a devastating affect on tourism in the vital tourist area of Patagonia. It would be reasonable therefore to assume that this was the cause of the drop in visitors. However my experience in destination crisis recovery is that when tourists risk losing their flight the recovery is much faster than when they risk losing their lives. Almost a year later, there is clearly something holding back the recovery long after the ash cloud has cleared. Furthermore arrivals from Southern Europe were already at -8% in May whilst June and July, during the volcano crisis, the figure was -4% and instead of improving afterwards it dropped again to -9% in August and has continued to should negative growth since October. Although this is not directly related to the question at hand, it is important to analyse the general performance of the destination in order to evaluate, albeit by process of deduction, the relative threat of the economic problems in source markets if we are to avoid making decisions or changing our marketing strategy for the wrong reasons.

Source ForwardKeys

Source: ForwardKeys

To get a clearer picture of what is really going on I used ForwardKeys.com. This is definitely my favourite toy right now as it does not depend on official government statistics but gives real concrete bookings data. ForwardKeys.com is an analysis tool designed specifically to help hotels, DMC’s, tourist boards, etc. to anticipate demand, calculate ROI and make decisions based on reliable data. Each day the system draws airline booking data from 153,000 online/offline travel agencies around the globe (up to 1.1 billion flights a year). This gives us instant access to hard data about how many people have travelled to our destination from any source market and much more interestingly how many people plan to do so in the future. By managing data from bookings as well as arrivals we can have time to react.

I have always been a little wary of fortune-tellers and crystal balls as I always think “what if I don’t like my future?…I’d rather not know” and often I think this is the attitude of a lot of politicians in tourism. But the beauty of ForwardKeys is that it shows you the future in time to change it. According to this new data, not only are things not going to get any better for Argentina in the coming months they stand to get significantly worse.

Source: Forward Keys

Bookings for May-August indicate a general decrease for arrivals to Buenos Aires. June and July are critical months with overall decreases of -25% and -20% respectively. Now there is no need to panic quite yet as these are “just” comparisons of bookings made on this date for travel during those months compared to the same time last year so it might just be, for example, that people are booking later and things will pick up. However if we are looking at a potential drop of 20% in our sales it would be sensible to take some action to ensure a brighter future than the one we see in the crystal ball.

As I have already mentioned, arrivals from Spain to South America as a region have grown in the last 12 months and the official statistics are pretty much in line with the actual booking data. Specifically, the other two destinations that, together with Argentina, make up the top three destinations for Spanish tourists in the region performed well last year: Brazil + 13% and Colombia +8% whilst the ForwardKeys data of flight arrivals to Buenos Aires from Spain during the same 12 month period show a decline of 10%.

Source: Forwardkeys

However, and in contrast to last year’s results the overall bookings for travel from Spain to any country in the South American region from 1st May 2012 to 31st August 2012 are showing a slight decrease -3% and this most probably is due to the situation of Spain as a source market. It was bound to happen sooner or later and it looks like in the next few months the economic crisis in Spain will start to negatively affect outbound tourism. That said, it is still interesting to note that the decrease will be felt more by Argentina that any other destination in the region as bookings to date are down by -17%. Brazil for example is slowing it’s growth to +4% but at least remains positive and is proof that some destinations are more immune to the situation in source markets than others.

Source: Forwardkeys

The “on the book” decrease from May to August is significantly higher for Spain than, for example Italy and this might be an indication that the current political and commercial tensions between Buenos Aires and Madrid are influencing booking. To try to shed a little light on this point I tried to analyse business travel in isolation. The most recent study by GEBTA concluded that corporate travel shows more resilience to the effects of the economic crisis than leisure travel and that in 2011 business travel to Latin America from Spain increased by a very respectable +8%. Although the ForwardKeys system doesn’t register the reason for travel, it does allow for a very varied and sophisticated range of filter criteria. To identify the corporate traveller to Argentina from Spain therefore we use the criteria of a passenger traveling alone, spending 1-5 nights, not exclusively staying for the weekend. Using this criteria, the growth in corporate travel to South America from Spain over the last 12 months was +11% (a figure which is pretty much in line with GEBTA’s research). Business travel from Spain to Argentina in the same period decreased by -10%.

It is too early to analyse the effect of the Argentinian government’s recent decision to expropriate YPF from Repsol (in mid April) but I think it is safe to assume that there will be less Spanish executives visiting Argentina with a view to investing.

In summary therefore to answer the original question:

1. The economic situation in Spain has not yet had a negative effect on travel to South America.
2. It is highly probable that in the coming weeks the Spanish outbound market will start to suffer as a result of the economic situation.
3. The segments that have shown most resilience so far and will continue to do so are the high-end luxury traveller and the corporate traveller.
4. Whether we like it or not (and I don’t!) the image of a destination is affected directly or indirectly by political decisions as much or more so than by natural disasters.

Spanish tourism to Argentina “Don’t cry for me…”

Next week I have been asked to participate in a destination marketing forum in Buenos Aires Marktur Forum and answer the “simple” question of “Will the economic crisis in Southern Europe affect the Argentinian incoming tourism industry?”.

Spain and Italy are Argentina’s 4^th and 5^th most important source markets respectively and with both currently facing huge political, social and economic challenges I guess the Argentinian friends have cause for concern.

Specifically looking at the figures for Spain this concern would, at first glance, appear justified as last year there was a drop of 5.6% of Spanish visitors entering the country via the airports of Buenos Aires (141,146 in 2010 to 133.248 in 2011). But looking in more detail, this drop arguably has as much to do with natural disasters than a disastrous economy as last year there was a mass cancellation of flights to Southern Argentina as a result of a Chilean volcano eruption.

I happen to represent the Chilean Tourist board in Spain and I am proud to say that last year, despite the crisis Spanish tourism to Chile increased 6.4%. I know too that Spanish tourism to places like Brazil, Peru and Ecuador also increased last year. We have also seen and discussed in various posts, how outbound tourism generally has continued to increase despite the adverse economic climate and that high-end, long-haul destinations are faring well. So I think it fair to say that travel to the region has not been affected by the crisis and therefore the “simple” answer to their question should, in theory be “No, the crisis in the Spanish economy will not affect the Argentinian tourism industry”.

I’m not sure if I will dare to mention it to 400+ representatives of Argentina’s tourism industry (including a significant number of government officials) gathered in a meeting room in Buenos Aires but if I were them I would be more concerned about politics at home than the economics in source markets.

Just last week I mentioned how business travel from Spain continues to grow, (by 3%), despite the economic crisis and this growth has been particularly strong to Latin America where markets are booming and where traditionally Spanish companies feel at home with the language and the culture. Companies are cutting back on almost everything but they continue to travel in search of new business opportunities.

All of the big Spanish companies are present in some form or other in Argentina and those that aren’t yet, are actively looking at how to get there…at least they were until Cristina Fernández de Kirchner started to make it obvious that Spanish investment was not only not needed but not welcome in Argentina.

According to Diego Barcelo, the spokesperson for the Argentinian tourist board in Spain. The expropriation and nationalization of YPF from Repsol will not affect the tourism from Spain to Argentina “because the links between the two nations are too profound to be affected by an economic dispute between a single Spanish company and the government of Argentina”. Well he would say that wouldn’t he? I sincerely hope he is right because Argentina is a great place with great people and a great tourism product and it would be a great shame to see politics affect tourism. But it wouldn’t be the first time.

After fanatic religious intolerance, nationalistic radicalism is the most effective poison for any politician looking to kill off a destination’s tourism industry. Foreign investment implies confidence in the stability of the country and the more international companies that are present in a country the more people will visit. It is not just business travel that is affected by a country’s restrictions on foreign investment, expatriates take residence, friends and relatives visit them, even suppliers will follow a company’s business wherever it goes. Each of these individuals that visit the country and have a positive experience will become advocates for the destination. Also tourism should ideally be a two-way relationship and as the Argentinian government restricts the amount of dollars its citizens can take out of the country, it is making it difficult for them to travel and this will make it difficult too for airlines to justify increasing capacity (which increases tourism income).

I agree with Mr. Barcelo that there are very strong cultural links between Argentina and Spain and I don’t think that the Spanish tourist is the vindictive sort that will stop travelling to a destination because of politics but building a tourism market is as delicate as doing an intricate design with dominoes and politicians waving their flags too close to any piece can topple one piece and cause a great deal of damage.