Revenue Growth and Margin Pressures in Spain’s Tourism Sector

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Tourism is poised for a historic year as demand from both domestic and international travelers rises and overall tourism activity gains momentum. While headline inflation has begun to ease, the industry already rebounded strongly after the pre-pandemic surge and is accelerating toward new peaks in employment, earnings, and overall activity.

The tourism GDP is expected to climb throughout the year, with forecasts revised upward to surpass 178.8 billion euros. This represents about 12% growth over last year and roughly 13.6% above the 2019 pre-Covid level. The sector’s leading lobby, which includes major players such as Meliá, NH, Iberia, Globalia, Riu, and Amadeus, reinforces tourism as a core national engine. The forecast also suggests tourism could account for around 12.6% of Spain’s total GDP, reaching levels similar to those before the pandemic.

Strong growth in tourist activity has largely been driven by higher corporate rates. In real terms, the industry’s GDP remains just below pre-pandemic levels after adjusting for price increases. Without the impact of rate hikes, tourism GDP sits about 1% under 2019 levels, according to Exceltur’s service analysis.

After overcoming the abrupt halt in travel during the pandemic, the self-driven growth of Spanish tourists was the primary support for the recovery. Now international demand is accelerating the most and forming the backbone of the current rebound. Government and industry forecasts anticipate foreign tourist arrivals to hit a record this year, potentially surpassing the 83.7 million arrivals reached in 2019 before the Covid disruption.

prices and margins

Tourism companies are reporting meaningful turnover gains of about 19.6% driven by rising activity and price increases that began mid- inflation cycle. Rates have climbed well above 2019 levels across almost all sub-sectors, including a 17.4% rise in travel packages and a 15.2% rise in restaurants, while air transport post-pandemic price comparisons show inflation trends near a modest 0.6% above pre-pandemic levels.

The Spanish hotel industry has effectively extended two solid years of gains with month-to-month price increases, according to data from the National Institute of Statistics. The accommodation sector expects continued rises in the coming months and a summer season expected to reach record rates amid historically high demand.

Price increases reflect stronger demand, higher costs driven by inflation, and the marketing of higher quality, value-added products following substantial investments in the sector. Companies repositioning to higher tiers must also manage debts accumulated during the pandemic.

Despite stronger sales and higher prices, demand growth has not uniformly translated into higher profitability for many operators. Increases are not fully reflected in profit margins, and the biggest challenge facing the industry is restoring healthy margins, according to industry observers. Jose Luis Zoreda, vice president of Exceltur, highlighted this concern at a recent press briefing.

Industry estimates indicate energy and other materials for tourism companies have risen by more than 30% over the past two years, while labor costs increased around 15% and financing costs climbed about 21% during the same period. The association notes that defending margins is crucial as costs soar and demand remains resilient, while warning that further profit pressure could emerge if demand weakens in the future.

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