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Barcelona: growth or sustainability, tourism seeks the right road

Barcelona, the capital of Catalonia -Spain's wealthiest region with a GNP at 20%-, is one of Europe's leading destinations alongside Paris, London, Berlin and Rome. Nonetheless, recent political changes are affecting the future of tourism in Barcelona, whether they are local – the new mayor, former Indignado, wanted to regulate tourism – or regional, with the victory of the independence party which casts uncertainty over the idea of maintaining Catalonia in the country.

Since 2014, Spain's economy has regained momentum, which accelerated in 2015 with 3.3% growth in the GDP. This growth is sustained by renewed domestic consumption despite an unemployment rate that remains high, although it is down compared to its highest level during the crisis. Tourism is one of the growth engines: in 2015, tourism revenues grew further and the sector represents close to 15% of the national GDP. The GDP for the sector increased by 3.7% across the year and a similar increase is expected in 2016. The country thus benefits from both a recovery in national demand and a shift of travelers from destinations currently experiencing unrest in North Africa and the Middle East.

The political situation in the country was nonetheless disrupted by recent legislative elections in December 2015 that brought new political parties to the parliament: Podemos, an emanation of the Indignado movement, and Ciudadanos. The government must also face the rise in power of independent parties in Catalonia, winners of the regional elections in September. After their proposal for independence was voted down in September, the latter nonetheless adopted a resolution that entered a process that should lead to the declaration of an independent sovereign State of Catalonia by 2017. The stakes are high: the region alone represents around 20% of Spain's GDP; it is also the leading tourist destination in the country. Barcelona, Spain's "economic capital" is a major Mediterranean port with many corporate headquarters; it is one of the favorite destinations in Europe. Since it hosted the Olympics in 1992, the Catalonian has experienced growth in arrivals and popularity, cultivating a young, dynamic and open image. Since August 2015 it has been led by Ada Colau, the city's first female mayor and former Indignado, who is regularly seen in the news concerning her drastic measures whether they are social (creation of a new minimum wage, a new local currency, an end to expulsions) or economic with the tourism sector. It is in this context that the city is trying to find a compromise to reconcile growth and sustainability in tourism.

A leisure destination that is international and young 

Barcelona's economy relies a great deal on tourism, which represents no less than 14% of its GDP and has shown strong growth since the beginning of the 1990s and the Olympics it hosted. In 2014, the city counted a total of 7.9 million arrivals and 17.1 million nights in Barcelona's hotels, to reach 4.5 times the number of arrivals in the city, which amounted to 1.7 million in 1990. Between 2010 and 2015, the international airport El Prat de Llobregat registered no fewer than 10.5 million additional passengers, resulting in 39.7 million passengers in 2015, or a 36% increase in five years.

Spanish tourists represent only 20.5% of arrivals in hotels in 2014 as Barcelona is a great success with foreign travelers. France is the leading foreign source market, which is logical considering its proximity, and generated 680,400 arrivals, ahead of the United Kingdom (677,000). The United States ranks third as a source of international clientele (654,000 arrivals), followed by Germany and Italy (486,000 and 485,000 arrivals respectively). The number of arrivals continued to grow in the first semester 2015: at hotels in the city they rose by 5.5%. Increases could be observed for all the primary nationalities, particularly Spanish (+7.7%) and Americans (+8.6%).

Business tourism is significant in the Catalan capital and represents 39.6% of travelers' reasons for visiting the capital. Activity slumped slightly in 2014, as there were fewer congresses (271) and conventions (1,564). But the city remains primarily a leisure destination: 52.5% of visitors. It offers many kinds of tourism: cultural with its historic center (Ciutat Villa), and rich architectural heritage; seaside; athletic with Barcelona soccer matches; and also cruises, as the city is the leading cruise ship port in the Mediterranean. The work of Antonio Gaudi is central to the city's appeal with the Sagrada Familia, iconic monument, that saw its visitors grow by 41% between 2010 and 2014 to reach 3.26 million entries, while Parc Güell is the city's second most visited site (2.5 million visitors). Tourist clientele in Barcelona are particularly young: 55% of tourists are under 34 years of age and more than one third are age 25 to 34.

Steady demand is reflected in hotel figures. According to data from Hotel Compset, the occupancy rate in Greater Barcelona increased by 2.5 points in 2015 to reach 76.4%, while the average daily rate increased 5.4%, allowing the RevPAR to climb 9%. Outside the suburb, the occupancy rate in the city climbed 1.6 points across the year  to settle at 79.1%, and the average daily rate reached 121.9€, for 6.3% growth. Hotels in the old city posted steady occupancy (81.8%) with the average daily rate up significantly (+9.1%), to 121€.

Varied and innovative accommodations

This growth in tourism attracted hotel investors who significantly developed the supply. As of January 1, 2015 the hotel supply was 373 properties for 34,689 rooms. Since 2010 the supply experienced strong growth by 9.2%. The chain supply in the city proper, meanwhile, reached 202 properties for 26,007 rooms, with an occupancy rate of 75%. But beyond the classic hotel supply, the most visited city in Spain also has a well developed supply of youth hostels (around one hundred) and pensions (252 units for more than 3,000 rooms).

The capital is an innovative and favorite destination for new concepts, particularly well-adapted to young clientele. Generator, the new generation youth hostel operator entered the city in 2013 with a resolutely modern design address, with 726 beds. In 2014, a hybrid hotel-bakery "PraktikBakery" opened its doors in the city center. The Spanish brand Room Mate just completed the conversion of the 88-room 987 Barcelona Hotel into a property called Room Mate Carla, where it has developed its innovative services: breakfast until noon, free WiFi throughout the city using a wireless pocket device. And there is no shortage of projects. In 2018, the Meininger group will open its first property in Spain, with a concept concept that is a cross between a youth hostel and hotel, with a capacity of 186 rooms for 682 beds. In addition, the budget brand Easyhotel should enter the city in 2018 with its first property in the country. The supply is also developing on the luxury segment: the Monument Hotel, occupying a 19th-century building, opened its doors in the Catalan capital at the beginning of the year. Finally, among the major projects, the 38-floor Torre Agbar 38 designed by Jean Nouvel is to be converted into a luxury hotel under Grand Hyatt, with 417 rooms and several restaurants.

But Catalonian city also has a plethora of apartments for rent. The city has some 9,600 "viviendas de uso turistico" registered in 2014, representing one third of the supply of beds in the city. But the popularity of shared housing through platforms such as Airbnb and Abritel made rental announcements for private accommodations, sometimes undeclared, flourish. On Airbnb's website 18,200 accommodations were available for rent as of January 1, 2016, while 4,637 others were available on the Homelidays website. This implies a much larger bed supply in the city, equal to or greater than the classic hotel supply.

Towards regulated tourist activity

Growth in arrivals and new kinds of accommodations is not without concern for Barcelona's citizens. On several occasions local residents have taken to the streets to complain about the "invasion" of their city - and now some buildings due to private rentals - by tourists. This generates disturbances, sometimes due to the noisy presence of festive young clientèle. Banners saying "go home tourists" are popping up in the busiest neighborhoods in the center of Barcelona. Although the sector is essential to the city's economy, there is a growing fear that mass tourism could swallow up the city's Catalan spirit.

Mayor Ada Colau, who was just elected in 2015, has made tourism regulation one of her war horses. Her first step was to regulate growth of the supply of accommodations of all kinds through a one-year moratorium on the delivery of building permits for tourist accommodations. This implies the freezing of forty hotel projects -some of which have since been approved, while fifty or so that were at more advanced stages proceeded nonetheless - as well as of authorizations for private rental apartments. The new mayor also hopes to involve residents in the decisions and elaboration of a development scheme, by creating a City and Tourism Council, a participatory organization for citizens and representatives from different economic sectors in the city.

Finally, the city has entered a war more particularly against sharing accommodations that have been developed uncontrollably and sometimes illegally. The city increased its monitoring of undeclared and unregistered apartments (cf article on regulation). Fraudsters may be fined 15,000€, which may be reduced by 80% if they agree to turn their property into social housing for a 3-year period. Moreover, sharing platforms must present apartment's registration number, and provide it to City Hall within 15 days or risk facing sanctions. The two primary platforms in the city have already received 30,000 € each in fines for advertising illegal apartments on their site. In some central neighborhoods, the mayor encouraged tourists to report apartments rented illegally.

The new municipality is thus trying to fight mass tourism and control the development of the tourism supply by adopting strict measures and increasing controls. The impact of this policy has given rise to much criticism, particularly from investors who point out the risk of decreased tourism investment in the capital due to the legal uncertainty created by the freezing of several projects. A slump in growth of the supply within a context where demand is strong will also have an impact on prices, and this dynamic already began to show up in 2015 (+6.3% in the city's administrative perimeter, according to data from HotelCompset).

Tourism in Barcelona is an undeniable asset for the city in economic terms and notoriety. Development of the accommodations supply also leaves room to introduce innovative concepts, in keeping with the dynamic, young image of the Catalan capital. After sometimes poorly managed growth in supply and demand, the capital nonetheless appears to be reaching a mature phase. It questions itself and is examining what form of tourism it should adopt in order to conciliate growth and sustainability, quantity and quality. Time will tell if the first responses of the new municipality are well founded or not.

Also read:

  • 40 projects blocked by Barcelona's moratorium
  • Barcelona puts a freeze on delivering permits for new hotels
  • Barcelona: what lies in store for tourism after the municipal elections?
  • Stronger presence for Barcelo in Barcelona
  • Spain reports new record arrivals in 2014

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