It brings buckets of money, but what are the consequences?

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

Barcelona, Europe’s most visited non-capital city (at least officially speaking), is now so saturated with tourists that even the tourists are complaining. In a recent study by the City Council, 40% of the tourists surveyed thought that prices in the city were too high, while 59% believed that the streets and tourist hotspots were too crowded.

They’ve got a point. In 2015 the city, with a total permanent population of 1.7 million, drew 8.9 million visitors, 6.5% more than the year before and a five-fold increase from 1990. And that’s just those who stayed in hotels. Airbnb hosts provided accommodation for a further 900,000 visitors. By 2016 that number had climbed to 1.25 million. Many Airbnb offerings are considered illegal, according to the City Council.

The tourism boom has brought with it buckets of money. According to Mastercard’s Global Destination Cities Index, Barcelona rakes in over $12 billion a year from tourism and is the third-ranked European city in terms of tourist expenditure, just behind the two global powerhouses of London and Paris. However, this money has come at a heavy price, as the documentary film Bye Bye Barcelona documents.

A common complaint among residents is that the Barcelona they know and love has become a theme-parked city that is reaching the outer limits of its physical capacity — just as has happened with Venice, whose permanent population has shrunk from 180,000 in the 1960s to less than 60,000 today, as more than 2 million visitors flood the city every year. They have a point.

The sheer volume of tourists are crowding out local residents from many of the city’s most attractive districts while putting unbearable strain on public services and the city’s private housing stock. As a new study by the online real estate market place Idealista shows, rents are already on the rise across many parts of Spain, though there are still over half a million vacant properties. The cost of renting in Madrid and Barcelona, which between them account for 16% of those vacant properties, has reached historic highs. In Madrid, rents have risen on average by 27% since 2013, but in Barcelona they’ve surged over 50%.

One of the main reasons for this is that real estate owners and developers are refocusing their attention on meeting the much more profitable needs of short-term visitors. And short-term property speculators, domestic and foreign, are piling in, too. It’s simple math. According to a British real estate platform, Nested, renting a property on Airbnb can be as much as 256% more profitable than a traditional lease. That’s based on a survey of rental properties across 75 global cities.

In Barcelona, that would mean the difference between earning an average of €1,222 a month on a lease, or €4,350 renting to tourists. The result: fewer houses for locals and soaring prices for those that do still exist.

Just yesterday, a friend told my wife that she and her husband are paying over €1,000 a month for the new 30-square meter (323 square feet) apartment in the Eixample neighborhood. Five years ago, €1,000 a month could have got you a three or four-bedroom apartment in the same neighborhood, probably with change left over. This is all happening at a time when the salaries for jobs in many sectors of the local economy, including tourism, are either stagnating or dropping.

In a bid to stem the influx of tourists, Barcelona’s Mayor Ada Colau has declared open season on websites like Airbnb and the professional landlords that are using them to rent out multiple unregistered apartments at a time. But so far, as the numbers of tourist apartment rentals attest, it’s a losing battle.

As long as the global tourism boom continues and Barcelona remains an attractive destination, especially compared to traditional competitors that have lost some of their appeal, like Egypt, Turkey or Tunisia, tourist numbers are going to continue to rise.

Even the global financial crisis barely put a dent in the sector’s onward expansion. By 2030 the United Nations World Tourism Organization (UNWTO) forecasts international tourist arrivals to reach 1.8 billion globally (from 1.18 billion today and a meager 25 million in 1950). In 2016 the industry generated €7.15 trillion (roughly 10% of global GDP) and provided work for 292 million people.

But for Barcelona and cities like it, this is not just about money or jobs; it’s about the city’s very soul. Everywhere you look traditional, often family-run shops, bars, and restaurants are closing down, unable to pay the soaring rents. All too often they are replaced by convenience stores, fast-fashion stores (many belonging to Spanish retail giant Inditex) or franchise-owned bars or restaurants. As a consequence, the city is fast losing its distinctive character – the very character attract tourists in the first place – in the face of homogenization that accompanies the arrival of multinational chain stores.

As the local newspaper La Vangaurdia reports, along a 600-meter stretch of a pedestrianized street in the traditionally working class neighborhood of Poble Sec there are now 45 bars and restaurants, many of them franchises. Many of the patrons are tourists. Poble Sec is cheap, chic and cheerful, scream the tourist guidebooks and websites. And the tourists are arriving in droves, most of them ironically in search of a momentary respite from the noisy crowds of the Ramblas and the surrounding Gothic Quarter. Poble Sec is still cheaper than other barrios, for now, but many of the locals are already being priced out.

The more tourist numbers rise, the more monodimensional Barcelona’s local economy becomes. You can have too much of a good thing. Tourism may bring in lots of money and create lots of jobs, but it is also replacing other activities and displacing locals and their economic contribution. And the more monodimensional the economy becomes, the more dependent it becomes on a sector that is highly taxed but pays low wages and is notoriously prone to swings and roundabouts. By Don Quijones.

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