Spain’s tourism sector will continue to grow rapidly in 2024-2025

After growing by a significant 2.5% in 2023, in a context of weak growth in the major European economies, Spain’s economy has once again exceeded expectations in the opening months of 2024. In Q1 2024, GDP grew by 0.7% quarter-on-quarter, driven by a revival of investment and a new increase in exports of tourism services (+19.0% quarter-on-quarter). This good performance in the tourism sector is also reflected in the increased surplus of the tourism services balance, which in March 2024 reached 4.2% of GDP, compared to 3.7% the previous year (12-month cumulative balance). This improvement, of 0.5 pps of GDP, means that tourism exports are responsible for more than half of the improvement in Spain’s current account balance over the last year.¹

There is no doubt that part of the reason behind the current buoyancy of Spain's economy is the strength of the tourism sector. Following the sector’s excellent performance over the past year, all the tourism activity indicators have accelerated in the first four months of 2024 (exceeding the records of the same period in 2023), suggesting that it will enjoy strong growth in 2024. According to our estimates, tourism GDP accounted for 0.9 pps of the Spain’s annual GDP growth of 2.5% in 2023. The new forecasts for 2024 anticipate that the sector will contribute around 0.6 pps to the expected growth rate of 2.4%. Tourism GDP will thus account for 13.0% of total GDP.

Up until April, 24 million international tourists arrived in our country, marking the best start to the year in the available series: in just a few months, 3 million more foreign tourists have visited us than in the same period in 2023 (a year-on-year growth rate of 14.8%). The average expenditure per person exceeded 1,300 euros (average from January to April). This is some 245 euros above the pre-pandemic average and represents a 19% increase over 2019 figures, although this is mostly due to a price effect rather than a greater propensity among tourists to spend in real terms (tourism inflation has accumulated 21% growth since 2019).

On the other hand, the domestic tourism indicators maintained a good tone and remained at high levels, although the combined balance of the first four months of the year reflects fewer trips taken (–2.2% year-on-year in January-April), fewer overnight stays (–1.1%) and a moderation in tourism spending in the country (+5.4% year-on-year on average, according to the indicator from the CaixaBank Research Real-Time Economics portal).

This buoyancy is also reflected in the labour market, which also broke records in 2023 with 3 million registered workers in the branches of activity that are characteristic of the tourism sector (in 2019, they employed around 2.7 million people). In the first four months of 2024, tourism employment grew by 4.2% year-on-year (average from January to April), with the most buoyant segments of the market being air transport (11%) and travel agencies (7.8%), while sea transport was the least buoyant (1.8%).

Spain’s hotel sector is also enjoying an exceptional moment: between January and April, there were 87 million overnight stays (+7% year-on-year and the best ever start to the year for the sector). Overnight stays by international tourists far exceeded pre-pandemic records (+12.0% in the first four months of the year compared to the same period in 2019). Overnight stays by residents are 1.1% below 2023 levels, although they remain very close to their historical highs.

Despite the strength of demand, the hotel supply has not increased and is even slightly below 2019 levels: there are around 400 fewer establishments, although practically the same supply of rooms. This slight decline in supply is concentrated in lower-grade establishments (3 stars and below), as the supply of 4 and 5-star hotels has increased by 9% since 2019 (there are around 240 more such hotels). Therefore, it comes as no surprise that, in terms of room numbers, the supply is practically the same as it was in 2019 (the decline occurred in lower-grade hotels, which tend to be smaller and have fewer rooms). Therefore, there has been an increase in the quality of the supply in the sector, either because existing establishments have invested in recent years to improve their quality or because at the height of the recession triggered by COVID-19 the lower-quality establishments disappeared.

The balance of a somewhat stronger demand than supply has led to high occupancy rates: in 2023, 67.5% of available rooms were occupied on average, compared to 65.8% in 2019. Interestingly, the average rate in high season is very similar in both years (around 75%), suggesting that occupancy has increased to a greater extent in the rest of the year.

This greater occupancy allows for higher profitability in the sector: in 2023, it generated an average income of 74.34 euros per available room (the RevPAR index),² 10 euros more than in 2022 (annual growth rate of 16%). In the high season (June-September), the sector collected 94 euros per available room (occupied and not occupied), compared to 86 euros in 2022 and 76 euros in the high season of 2019. At the beginning of the current year, there has been hardly any moderation in prices: between January and April, revenues stood at around 67.2 euros per room, 10% more than in the same period in 2023.

In terms of the origin of tourists, one of the few disappointments in the sector in 2023 was that two of the major source markets for Spanish tourism, namely the United Kingdom (the leading country of origin) and Germany (second, before the pandemic), ended the year with fewer tourists than in 2019 (–3.7% and –0.9%, respectively). British tourism has been weighed down in recent years by Brexit, the fall of large national tour operators (such as Thomas Cook in late 2019) and, more recently, the economic crisis. Germany, for its part, has lost its position as the second country of origin to France in recent years, having been also weighed down by the economic crisis and its particular vulnerability to the energy crisis. However, in Q1 2024, 4.4 million British tourists and 3.2 million Germans arrived, marking the highest number of arrivals for both nationalities in that period in the available series.

Right now, Asian countries (–12.8% compared to 2019), the Nordic countries (–6.1%) and Russia (no data since the start of the war in Ukraine) stand out as the only ones that have not yet recovered their pre-pandemic levels. In the article «How has international tourism demand changed since the pandemic?» which appears in this same Sector Report, the changes that have occurred since the pandemic in the structure of tourism demand by source market are analysed in more detail, using internal CaixaBank data.

Catalonia is the autonomous community that receives the most international tourists in our country, but it is also the only one that failed to return to its pre-pandemic level of arrivals in 2023 (18.2 million tourists, one million less than in 2019). Broadly speaking, this lower inflow of tourists was due to the fact that the region’s main source markets performed somewhat worse than those of other regions. Specifically, the region suffered as a result of the late lifting of restrictions in countries in Asia (Catalonia receives half of all the Asian tourists who visit Spain), the loss of Russian tourists³ and a lower influx from the main source countries (there were 500,000 fewer French and British tourists compared to 2019). In any case, the region received 5 million tourists between January and April in 2024, marking the best start to the year in the available series and suggesting that this year we will see a return to pre-pandemic levels of foreign tourist arrivals.

The Valencian Community and the Canary Islands are the autonomous communities that have seen the biggest increase in interest among foreign tourists since the pandemic (in 2023 they received some one million additional tourists each compared to 2019). In the former, this is thanks to the recovery of European markets,⁴ while in the latter case it is a reflection of the region’s great appeal, in spite of its high dependence on British and German tourists (between them they account for 45% of all hotel stays in the Canary Islands) and its high prices (its hotel sector has the highest average daily rate in the country).

According to CaixaBank Research estimates, real tourism GDP grew by 7.6% in 2023, allowing pre-pandemic activity levels to be recovered (exceeding the 2019 peak by 5.2%). This growth has allowed the sector to recover its former relative weight in the Spanish economy, reaching 12.6% of GDP in 2023 (the same figure as in 2019). In 2024, we expect that tourism GDP will grow by 5.0% in real terms, driven by international tourism, which we expect to record significant growth (+5.5%), exceeding 90 million international tourist arrivals. This rapid expected growth is thanks to the recovery of European households’ purchasing power in a context of falling inflation, the economic recovery in Europe and the perception of greater security offered by our country in a context of high geopolitical instability in the eastern Mediterranean.

This forecast reflects a slight slowdown in the sector compared to the rapid growth at the beginning of the year⁵, given that there are several factors that will tend to moderate the rate of progress, such as the gradual recovery of other competing destinations, the impact of the Olympic Games in Paris in 2024 and our expectation that domestic tourism will record relatively weak growth (+0.8%). After several years of recovery, in which Spanish tourists have opted for local destinations, this year we expect to see an increase in travel beyond our borders, thanks to the increase in households’ disposable income and the pent-up demand for tourism abroad.

The exceptional recovery of tourism in the aftermath of the pandemic has also brought to the table the need to further improve the management of tourism flows in order to help the sector to continue to grow sustainably. In this regard, any actions that help to reduce the negative impacts that tourism can generate for destination areas, such as the impact on the local housing market (increase in purchase and rental prices, and the conversion of homes for residential use to tourist use), the pressure on basic public services (health and transport) and the occupation of public spaces, are of great assistance. In addition, the sector must continue to invest in adaptation and decarbonisation measures to address climate change, one of the biggest challenges in the medium and long term.

Among the measures that are being implemented in some European countries and several Spanish regions, one of the most prominent is the tourist tax (which is already in place in Catalonia and the Balearic Islands). The available studies find that demand shows little sensitivity to its introduction and, moreover, suitably channelling the revenue generated by the tax can help to mitigate the aforementioned negative impacts. The regulation of tourist rentals is also on the rise in certain locations where their share of the available housing stock has grown significantly in recent years.⁶

Finally, climate change poses a major risk for tourism in Spain, as we have been warning for some time. We have already seen how tourism in Spain is growing more in the more temperate areas,⁷ so it is crucial that the sector is prepared and invests in adapting to warmer and more volatile temperatures. In addition, our estimates based on internal card payment data suggest that international tourists are less likely to travel repeatedly to Spain if they have experienced a heat wave – an aspect which we analyse in greater depth in the article «Tourist loyalty and climate change», in this same report.