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An interview with Maria Frontera, President of the Federación Empresarial Hotelera de Mallorca (FEHM) (Hospitality Business Association of Mallorca)
In the space of barely a month, two different sets of elections have taken place, one national and one regional. These, among many other issues, have affected Balearic Island tourism regulations. What does the FEHM expect for the sector in the immediate future?
We still haven’t managed to get the current government to advance at the same pace as the private hospitality industry, which has made an unprecedented effort to reposition itself. It has contributed significant through diversifying their offer, extending the tourist season, creating employment, improving profitability… Notwithstanding, and as I said, the government has not been agile in this sense and has not stood behind the industry with fiscal incentives for investment, through public events or by improving infrastructure or reducing bureaucratic obstacles.
We need a campaign that showcases and supports the value of tourism. Public-private collaboration, which we have always endorsed, should be real and effective in order to get the positive results our community needs. The political parties that make up our new government body should share this vision of tourism and outline a clear and well-defined road map for it.
Just a few days ago, you were asserting the urgent need for “judicial security” in order to stabilise this industry, which the majority of the families in this community depend on, directly or indirectly. What criteria should these legal guarantees be based upon?
It is essential that tourism be considered a “matter of state” and that a comprehensive tourism policy be enacted, giving tourism the priority it deserves. We demand a broad regulatory framework that comprehensively addresses tourism and is responsive to its transversality.
Another fundamental aspect is the need to reduce administrative burden and fees borne by companies with special attention to the matter of double charges. Government formalities should be simplified, thereby cutting back on fixed costs for companies. We should have a fiscal policy that incentivises, not penalises. These are key issues for improving productivity and competitivity.
One of the hospitality industry’s priorities is continuing with the transformational process that was begun years ago under the 4th additional provision (DA4) of Spanish Law 8/2012 on tourism. To that end, we must have urban regulations that promote investment and provide continuity to hospitality industry reforms. These reforms have made it possible for us to increase quality as well as improve efficiency and the services offered.
One of the topics that currently sparks the most controversy is the regulation of holiday accommodation. What is the FEHM’s opinion on this subject and what does it believe should be done across the diverse accommodation spectrum of shared, single-family, urban and rural accommodation, among others?
The FEHM has always been very clear on this matter. Hired tourism accommodation has always existed and coexisted with hotel accommodation. The problem, as we all know, is rooted in the emergence of commercialisation platforms over which there is absolutely no control. As tends to occur, private development has progressed faster than governmental initiatives, which have been overwhelmed and, once again, “shown up late” due to their slow reaction time.
What we ask is for tourist accommodation to carry the necessary licences since, without them, clandestine operations continue to be protected. Likewise, they should be subject to the tax obligations derived by their operation, whether as natural or legal persons, specifically, the declaration and payment of Spanish personal income tax, value added tax, corporation tax, etc., as applicable.
They should also be subject to quality and service requirements just like the rest of the hospitality industry, and undergo the same inspections as traditional operators. What we want is for tourism inspection to avail of sufficient personnel and material means in order to guarantee compliance with regulations in equal conditions by all players. As of now, it is incomprehensible that the current government does not have powerful technological tools for inspections and cross-reference tourism data with tax agency data in order to detect illegal operations.
In connection with the prior topic, what is your opinion on mass tourism in Mallorca? If you believe this to be the case, what role has holiday accommodation played in this perception?
We need to be very careful about the words we use when we speak about mass tourism. We are continually projecting messages about this and the burden falls upon our outward-looking markets. At specific trade fairs, tourism operators have asked us whether the Balearic Islands have a problem with tourists, and that is worrisome.
It is clear that the emergence of new business models, which have used the misnomer “sharing economy” as an umbrella to defend themselves, jeopardise our islands’ delicate natural balance with the unbounded and uncontrolled growth of this type of offer.
For this reason, we believe that the question is sufficiently important as to merit attention beyond regional government regulations with the intervention of the Spanish national government. They should stop this by passing a national regulatory framework, within their competencies, which is common to all regions in Spain and is aimed at guaranteeing the right to housing, quality of community life and security for companies, workers and our guests, as well as curbing intrusion and the shadow economy. This does not just apply to the hire of accommodation, but also to transport, leisure and business, to mention but a few examples.
Bufete Buades advises the FEHM on legal matters. Which areas tend to require the most legal advice? Is the appearance of new technology for client accommodation and hire systems resulting in new and important cases?
Yes, the FEHM has worked closely with Bufete Buades on highly important matters such as claims against air traffic controllers for the events that occurred in December of 2010. The FEHM makes specialised legal aid concerning the diverse legislation affecting tourism companies at the European, state, regional and local levels available to associated establishments. The most-frequently requested consultations focus on the diverse government procedures regarding the sustainable tourism tax (ITS), intellectual property management, construction law, the practical application of tourism regulations and questions regarding health and food safety, swimming pools, industrial safety and accessibility, among others.
There are so many regulations that apply to the hospitality industry that legal aid has come to be an extremely important player in the FEHM’s activities, both through the legal department and specialised external advisors.
In your opinion, what key business practices should every hospitality establishment in Mallorca implement over the coming years in order not to lose their competitive edge?
First, continue investing. We have invested heavily in quality and in repositioning our hospitality establishments and can boast an investment of 1,800 million euros to date. We need to continue along this path insofar as legislative tools allow us to do so.
Digitalisation is a lever that has changed traditional consumer habits. Today, the Islands are a strategic location for entrepreneurship and the development of tourism technology. The standing government’s involvement is crucial. We need to develop plans for innovation that situate the Spanish tourism industry at the technological forefront as the global leader and tourism powerhouse it is. We also need to implement programmes to help companies develop R&D+i plans with an overarching and integrated vision of tourism.
Furthermore, we need to promote education and training. Available training must correspond to real needs. We need to refocus vocational learning to increase employability in this industry. We are willing to collaborate with the standing government on the design of educational programmes in order to reach this goal.
Whilst the last tourist season on the Islands was particularly noteworthy, a significant decrease in hotel occupancy is predicted for the future. What does the FEHM predict and why?
Just as we have predicted, first at the FITUR fair (Madrid, Spain) and then at ITB (Berlin, Germany), reservations are slowing down as a consequence of a decrease in growth in leading European economies, among other factors.
We are noticing a downturn in reservations, most notably among German and Scandinavian tour operators, owing to a variety of reasons, including the continued rise of competitor destinations along the southern and eastern Mediterranean coast, as well as in Turkey, Egypt, and Tunisia, which enjoyed double digit surges in 2018. That has continued in 2019.
The uncertainty generated by Brexit, the devaluation of the Turkish lira, which makes their tour operator packages more attractive for the price, and the appealing climates in visitors’ home countries in 2018 have already been felt, and everything points to a similar situation for 2019. Domestic travel is a significant source of competition for us,
in addition to the adoption of certain policies, such as unwarranted double taxation in the form of the ITS, which have contributed to the decline in our competitive nature as a destination. These measures do not reflect the great lengths the private sector has gone to in order to improve our tourism product’s positioning and revalorise this destination, actions that have contributed to strengthening the weave of the fabric of regional business.