Analysis Of Tourism Market In The Balearic Islands

1. EXTERNAL ANALYSIS

GENERAL ENVIRONMENT

1.1 POLITICAL FACTORS

The Balearic Islands are a group of islands divided into Gimnesias (Mallorca, Menorca and Cabrera) and Pitiusas (Ibiza and Formentera).

The Government of the Balearic Islands is composed by its president and its councilors. The president is chosen by the members of the Parliament for the term of four years and is responsible for the decisions made by the Government before the Balearic Parliament. Moreover, the President chooses his councilors and it is not necessary for them to be part of the Balearic Parliament.

Nowadays, the Balearic Islands have a high level of safety and a good political stability. Security concerns over travel have had a serious impact on the travel and tourism industry, leading to increased business failures, a drop in the number of visitors and loss of expected growth in some destinations.

Although this community is currently the main destination for German and British tourists, which makes it the richest province in Spain and with the highest income per capita, the islands’ infrastructures and environment are under severe pressure because of the high amount of visitors. That is why the local government has approved a bill to tax tourists for their stay in Mallorca, Menorca, Ibiza or Formentera. This eco-tax affects more than seven million tourists who visit these islands every year. Visitors staying at hotels, camping sites, apartments and holiday flats will have their bills increased by between 0.25 euros and 2 euros per night. The proposed tax has been unpopular with hoteliers, environmental groups and also with the Spanish central government, which is committed to introduce tax cuts. The Balearic Government originally proposed to charge the tax at the point of entry, but changed the basis of the tax due to pressure from airport authorities and residents who wouldn’t be exempted from the tax. One of the reasons for that discontent is the fact that the tax will not affect visitors who rent apartments or holidays flats for longer than a month.

The capital of the Balearic Islands and the island of Mallorca is the city of Palma de Mallorca, where the seats of the Balearic government and the insular Council of Mallorca are placed.

Apart from the autonomic Government, the islands are divided in four insular councils: Mallorca whose capital is Palma de Mallorca, Menorca with the capital city of Mahón, Ibiza, with the capital being the town of Ibiza, and Formentera with the small town of San Francisco Javier as its capital. Previously Formentera was included in the insular Council of Ibiza-Formentera, but since 2007 with the reformation of the statute they are separated.

The last elections for the Parliament of the Balearic Islands were celebrated on the 22nd of May, 2011. Since that day the Partido Popular (Ramón Bauzà) governs with absolute majority.

Elections of the Balearic Islands 2011

POLITICAL PARTY % SEATS

Partido Popular

46,37 35

Psoe 21,39 14

PSM - Iniciativa Verds - Entesa 8,61 4

PSOE-Pacte per Eivissa

3,02 4

Partit Socialista de Menorca

0,89 1

Gent per Formentera + PSOE 0,45 1

1.2 ECONOMIC FACTORS

The Balearic Islands are today an important tourist destination, and since the second half of the 20th century, tourism has modified the whole economy of the islands. Nowadays about 72% of the population are employed in the tertiary sector (services sector); before 1960 only agriculture employed 40% of the active population. Tourism and the building industry are the two main forces of the economy. Industry has been losing importance and it only provides employment for 9% of the population. However, lately, the local government is making an effort to diversify the economy by promoting the industry sectors.

The primary sector of the economy employs 3% of all workers and it is divided into two large sectors, agriculture and livestock (94.5% of this 3%) and commercial fishing (5.5% of this 3%).

Agriculture is centered on vegetables and potatoes, and some vines and nuts. Livestock is concentrated on cattle for milk production. The catches of fish are 4.000 tons. a year (3% of the catches of the Spanish Mediterranean fleet).

The secondary sector which employs 25% of the active population can be divided into two main subsectors: construction (16% of this 25%) and industry (9% of this 25%).

Construction is directly linked to tourism, and has undergone a considerable increase in the recent years due to several factors, the good economic conditions, the positive tourist evolution, investment reasons, and the acquisition of new residences by German and British citizens.

Industry is organized around three main subsectors:

The food and drink industry with traditional high quality products concentrates on the domestic market, the main products are vegetables, potatoes, wine, cheese and the local sausage, “sobrasada”.

The manufacture of leather and footwear, located in Mallorca and Menorca is now developing policies to improve the design and marketing.

The wood industry specializes in the production of furniture.

The tertiary sector (services sector) is the most important and provides employment for 72% of the active population. It comprises trade, tourism and other services.

The trade subsector is dominated by small and medium enterprises (23.339 businesses registered), it is a family-type business or microenterprises located in a shopping street of a city or a tourist area.

Tourism, with two most important subsectors, accommodation and the food and beverage industry (restaurants, cafes, bars…), is the most important sector in the Balearic economy. It is the Spanish Community with the largest number of accommodation establishments and it can offer up to 400.000 places. The Balearic Islands are the second Spanish region with the largest number of foreign tourists, behind Catalonia. Every year the islands are visited by about 9 million tourists, which make tourism the most important sector of the economical activity of the Autonomous Community. According to data provided by AENA (Spanish Airports and Air Navigation)

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