Barcelona Metropolis

For tourism to have a positive impact on the citizens of Barcelona, its capacity and its pressure on the housing market must be reduced. The proposal to eliminate tourist accommodation licences is an excellent option. Moreover, the economic impact of tourism must be distributed fairly to increase the sector’s added value: the wages it pays, the taxes it bears and the profits it shares.

“Tourism is a key economic driver for the city, creating jobs and generating wealth.”

“Regions, provinces and municipalities that rely too heavily on tourism tend to have low levels of wellbeing, possibly reflecting that the benefits of this activity do not reach the local population.”

Let’s consider the first statement that begins this article. We’ve heard and read similar versions of it countless times. It appears to be supported by numerous studies that quantify the significant positive impact tourism is said to have on Barcelona’s economy. Yet the second statement presents the opposite view. And this doesn’t come from an anti-establishment publication but from a monograph on income distribution in Spain published by a prestigious academic institution.[1] How can this paradox be explained? In the first part of this article, I will address that question. Then, I will highlight something surprising: we are, in fact, moving towards ensuring that tourism in Barcelona has a genuinely positive economic impact.

The studies are generally wrong

The standard method for calculating the economic impact of tourism works like this: first, the amount tourists spend in the city on transport, food, accommodation, souvenirs and so on is measured. Next, the “indirect” impact is calculated – this refers to the demand created for suppliers by businesses serving tourists. Finally, the “induced” impact is estimated, which is the economic activity generated by the spending of workers who, directly or indirectly, owe their jobs to tourism. The assumption is that all this demand is additional, so the overall effect is incremental: more jobs, greater production and improved wellbeing.

In economic jargon, this approach is known as the “Keynesian multiplier”, named after economist J. M. Keynes, who developed the concept in response to the Great Depression of the 1930s. Keynes argued that in an economy with widespread involuntary unemployment, if the government initiated any public works requiring the hiring of workers, the effect on the economy would far exceed the initial investment as those workers would spend their wages at various businesses, whose employees would, in turn, spend more at other businesses, and so on.

The result? If the government spent 100 monetary units, the economy could ultimately experience a positive impact of 500 or even 600 units. This is why it’s called a “multiplier”. Keynes even argued that it didn’t matter what the government spent the money on; the effect would be positive regardless even, he claimed, if the project was simply digging holes in the ground and filling them back in again.

Keynes wrote this during the Great Depression, and as for most contemporary economists, they still have in mind the world of the last quarter of the 20th century – a world with persistent unemployment, where it was widely believed that creating jobs was a positive thing because it was seen as the way to tackle unemployment and generate wealth. Fortunately, we no longer live in that era, nor in the other, but in a context where there is no surplus of workers; in fact, there is a shortage. This is why tourism does not exactly create jobs, as orthodox studies tend to assume, but rather one of two things: either it attracts immigrants, or it displaces workers from other economic sectors.

In economies that are heavily reliant on tourism, only the first effect takes place. This is why, since the start of this century, the number of workers in the Balearic Islands has grown by an extraordinary 46%, but five out of six of them were born outside the region, and most are foreign nationals[2] In “global” cities like Barcelona, both effects are evident: on the one hand, hoteliers are opening new establishments, while on the other, property developers are investing in tourist housing. But even here, the majority of the jobs are filled by foreign immigrants.

And what’s wrong with creating jobs for immigrants? The problem is that, if the wages they earn are not much above the minimum and the contracts are not permanent, their contribution to funding the welfare state is negative.

And what’s wrong with displacing jobs from other sectors? The problem is that the tourism sector has very low productivity, because the work is seasonal (more so in the sun-and-beach model than in urban tourism), the level of training is low, and above all, wages are poor; in Catalonia, they’re 33% lower than in other economic sectors. That’s why, among the Catalan towns with the lowest per capita income, the most tourism-dependent ones are found: Lloret de Mar, Roses, Platja d’Aro, Salou…

The association representing HUT licence holders – in legitimate defence of their interests – has announced it will seek compensation, estimating the amount to be between 1 billion and 3 billion euros.[5] The first figure seems credible, while the second is more speculative. The courts will decide both the entitlement and the amount. Whatever the outcome, the operation is easily financeable because reducing the supply would increase the profitability of the remaining establishments, which could shoulder a much greater load than they do now. Not only could they, but they should.

In 2012, when the tourist tax was introduced, Barcelona recorded 16 million overnight stays in the city’s hotels, with revenue per room averaging €76. This season will close with 20 million overnight stays and revenue of €144 per room.[6] The main driver behind this extraordinary improvement in the profitability of the hotel sector has been the restrictive measures implemented by the City Council: the freeze on HUT licences, the hotel moratorium (PEUAT) [Pla especial urbanístic d’allotjaments turístics, Special Urban Planning Plan for Tourist Accommodation] and the crackdown on illegal rentals.

These measures have allowed hoteliers to easily absorb the additional tourist tax, which now generates €100 million annually for Barcelona City Council. I must emphasise: the introduction of a €4.95 tax per overnight stay in a four-star hotel has coincided with a €68 increase in revenue per room for hoteliers.

In 2023, Barcelona recorded 34 million overnight stays. Reducing this figure to 22 million would allow the City Council to generate €330 million annually with a €15 tax – a sum that would already be manageable today, and even more so once hoteliers face less competition.

Reducing the number of tourists and their impact on the housing market would already benefit all citizens, but it is also essential that the economic impact of tourism is distributed more fairly, which, as we’ve seen, is not currently the case.

Let’s return to the sector’s added value, meaning wages, taxes and profits. As for profits, the reduction in supply will directly affect them. Regarding taxes, the increase in the tourist tax should not only be a way to finance the reduction of supply; it should also help reduce the tax burden on citizens. There is no better way to raise awareness among the public about the benefits of being a tourist city than showing that taxes on tourists help improve public services and reduce the tax burden on local residents.

Finally, wages. It’s absurd to claim to be a first-class city while offering second-class wages. All wages in Barcelona should be decent wages. Here’s a fact: 160 km from Barcelona, the minimum wage is €1,500/month. Can the sector afford to pay these wages? Absolutely, especially when competition has been further limited.

We’re used to a world of constant growth, but for many years now, fertility rates have been well below the population replacement level, meaning that more workers are retiring each year than are joining the labour market. In this context, continuing to focus on increasing the number of tourists who visit us is not just outdated, but foolish.