Spanish holidays under threat?

ETA's new campaign aims to threaten tourism

By BBC News Online's Emma Clark

Walk down the main thoroughfare in San Antonio, Ibiza, and you could be in any British nightspot.

Passers-by hail from Manchester, Liverpool and Glasgow, union jack shorts are in excess and the street corners boast "pubs" called the "Queen Victoria".

Almost 13 million Brits visited Spain last year

The only differences from a coastal resort in Blighty are the sun-burnt faces and the balmy temperatures.

Welcome to Espana - the place almost 13 million Brits like to visit. About 43% of holiday packages sold in the UK are for Spain.

But there's a cloud hanging over the Spanish tourist industry in the form of the Basque separatist group ETA.

Tourists targeted

Although the group has been a feature of Spanish life for 30 years, it has recently stepped up its bombing campaign by targeting tourist areas.

Several incidents, including a bomb which exploded outside a busy hotel in Salou on the Costa Dorada, and another defused at Malaga airport, indicate these are not idle threats.

Tourists may not be in a hurry to return after delays at Malaga airport

"They are making the news spread faster by targeting tourist areas... it is not just related to the Basque anymore," said Antonio Villarroya, an analyst on Europe at Merrill Lynch.

It would be an exaggeration to say that Spain's $50bn tourist industry is at risk, but the Spanish authorities are certainly keen to contain any economic damage.

Tourism is one of the country's biggest money earners, contributing about 9% to Spain's gross domestic product and employing 11% of its population.

Spain even uses revenues from tourism to balance its trade deficit, Manuel Butler, director of the Spanish Tourist Office in London, told BBC News Online.

"Three or four bombs couldn't have an impact on this industry," he said.

"Yes a couple of families in Salou were worried, scared, and are coming back earlier... but there has been no impact on tourist trends."

Impact on sales

The UK tour operator First Choice told BBC News Online that sales have shifted away from Spanish holidays to other resorts, just since the weekend.

But for the present, it is probably too early to judge whether sales of Spanish holidays will drop off.

Top five destinations in Spain

Canary Islands

Balearic Islands

Andalucia

Catalonia

Valencia

Source: ABTA

Most other tour operators and companies are not admitting to any problems.

The discount airline Go, which flies to six destinations in Spain, said categorically that the ETA campaign has had no effect on its bookings.

Similarly, tour operator Thomas Cook said there has been no noticeable downfall in holiday sales to Spain. "It's all looking very positive," said a spokeswoman.

And hotel occupation rates in Salou for the second half of August are still beating figures from last year.

Rattled

Still, Spanish newspapers are talking of a decline in tourists visiting Spain and any potential disruption to the industry is not to be taken lightly.

Nothing and no one of the criminal gang ETA is going to defeat our community or the tourism sector

Jose Hurtado
Head of Andalucia's tourist department

ETA has already rattled the authorities, which have spent £2m this summer on reinforcing security around tourist resorts.

Bomb scares are even affecting ferries operating on the routes between mainland Spain and the Balearic Islands, which have become one of the biggest summer party destinations in Europe.

Spanish and Basque regional ministers brought forward talks this week aimed at preventing the bout of separatist violence from hitting the tourist trade.

"We are going to remain firm in terms of security," says the head of Andalucia's tourist department, Jose Hurtado.

"Nothing and no one of the criminal gang ETA is going to defeat our community or the tourism sector."

After Franco

Since Spanish dictator Francisco Franco died in 1975, ushering in democracy, the tourist industry has grown exponentially, experiencing growth rates of 5-10% in the last few years.

The country now attracts 48 million foreign tourists a year.

Merrill Lynch's Mr Villarroya suspects there could be a deceleration of growth in the sector if ETA's campaign continues to scare.

"It could decrease the industry, but it's not going to kill it," he says.

And with Spain's annual growth expected to slip to 2.6% this year from 4.1% in 2000, local industry chiefs will be keen to keep confidence high.

Risks

For the time being, ETA is targeting tourist areas with the aim of damaging the Spanish economy and infrastructure rather than hurting foreigners, says Frances Tuke at the Association of British Travel Agents.

The real danger for the tourist industry will come if tourists are killed in an ETA blast.

Both Sri Lanka and Egypt, which have experienced more extreme attacks on tourists, can provide Spain with a salutary lesson.

After 58 foreign tourists were gunned down in Luxor in 1997, Egypt's tourist industry slumped.

Tourist executives estimated that the incident cost Egyptian tourism about 50% of its annual $3.7bn revenues in 1998.

Spain is unlikely to experience such a dramatic decline, or indeed incident, but the risk of a slump remains.

As First Choice points out, there is still time for sales to drop if "it's going that way".