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The Summer Vacation: A Phenomenon in Transformation

The Summer Vacation: A Phenomenon in Transformation

July 2nd, 2024

Topic of the Week:

With the arrival of June, Spain enters the summer season from two perspectives: the astronomical one, which goes from the summer solstice between June 20 and 21 to the autumn equinox, and the meteorological one, which covers from June 1 to August 31. However, it is in July that the summer vacation begins, a period marked by the mass exodus of Spaniards to vacation destinations, breaking the work routine.

This season is also characterized by the influx of international tourists. A recent report by the Bank of Spain reveals significant changes in tourist behavior patterns during 2023. Here are some of the most notable findings:

1.Record Tourism: In 2023, Spain reached record highs in tourist arrivals, surpassing 85 million, almost two million more than in 2019. Tourist spending also increased, driven by inflation and a preference for higher-category stays.

2.Desestacionalización: Aunque las llegadas de turistas en temporada alta crecieron solo un 1%, hubo un notable incremento de entre el 10% y el 25% en los meses de otoño e invierno.

3.Norte Peninsular en Auge: Las regiones del Cantábrico, Navarra y La Rioja experimentaron un aumento del 26% en turismo, beneficiándose de temperaturas más frescas.

4.Cambio en el Origen de los Turistas: Hubo un aumento del 40% en turistas procedentes de América, especialmente de Estados Unidos.

These changes suggest a new paradigm in Spanish tourism, influenced by climate change. Although the deseasonalization of tourism can be beneficial, it also poses future challenges due to global warming.

Tourism: Economic Pillar and Local Challenges

Tourism is vital for the Spanish economy, representing 12.8% of GDP in 2023. However, the phenomenon of «touristification», where cities prioritize the tourist economy at the expense of local residents, is generating tensions. This year, record highs in tourism have been observed, leading to an increase in noise, traffic, saturation of services, and a shortage of long-term rental housing.

Neighborhood protests and a growing sentiment of «tourist phobia» reflect the frustration of residents. Examples of this are the demonstrations in the Canary Islands and the persistent complaints in Barcelona and Mallorca.

Policies for Sustainable Tourism

The Ministry of Industry and Tourism is implementing strategies to mitigate overcrowding, promoting quality over quantity, and encouraging deseasonalization. The goal is to diversify destinations and spread tourist activity beyond the summer months.

Current trends, influenced by rising temperatures, could help alleviate tourist concentration in major cities and promote more balanced and sustainable tourism, taking advantage of the diversity of destinations that Spain has to offer.

The Lighthouse of the Markets:

We could describe last week as a transitional week in the equity markets where the variations in the main indices were minimal. The S&P 500 rose by +0.06%, compared to the declines of the Nasdaq 100 (-0.08%) and the Euro Stoxx 50 (-0.27%). The Ibex was the most penalized, falling by 0.80%. The market was very quiet throughout the week, waiting for the US inflation data (PCE) on Friday, which met expectations by standing at +2.6%.

On the other hand, there were movements in fixed income, with the profitability of bonds increasing, which seems to be a move away from the euphoria settled in the market and that had led yields to levels where several interest rate cuts by the central banks were discounted. Politics (elections in the US and France) is beginning to gain prominence, a fact that would be generating a more conservative tone in terms of monetary policy projections by investors, who seem to be facing the beginning of the summer with a much more cautious vision than they had just a couple of weeks ago. The 10-year Treasury closed the week with a yield of +4.39%, that is, an increase of +13 bps in its yield, while in Europe the increases were +8 bps to leave the Bund at +2.49% and the Bono at +3.41%.

Gold remains at $2,339/oz, within a very narrow range after the strong rise it has accumulated this year and waiting for the global interest rate outlook to be definitively clarified. We do not expect major movements unless there is a loss of short-term support which is at $2,270/oz. On the other hand, oil maintained its positive tone and rose by +1.37%. The latest forecasts regarding the increase in global demand by OPEC+ have driven purchases, but for the US EIA the situation is not so buoyant and considers that geopolitics could take a toll on global economic growth. Their projections would bring the price of Brent close to $7 per barrel by the end of the year, so again the zone of $87 per barrel could become an important reference in the short term.

From a macroeconomic point of view, there is little else to highlight beyond the PCE: i) GDP was revised upwards by one tenth in the US to +1.4%, ii) the trend in the US housing market continues, with prices rising and sales falling, iii) strong data from the University of Michigan with consumer confidence and expectations above estimates, and iv) the Chicago PMI well above expectations, +47.4 vs. +39.7 and 35.4 previously.

This current week will not have much economic data, but we highlight the following: i) the PMIs for China, the Eurozone and the US will be published, ii) the CPI and retail sales for the Eurozone will be known, and iii) US employment data will be published, JOLTS, ADP and unemployment rate (4% estimated). Remember that Wednesday will be a half-holiday and the market will be closed in the US on Thursday.

The Phrase:

And we say goodbye with the following quote by Pablo Picasso: «The purpose of life is to find your gift. The meaning of life is to give it away.»

Performance summary of major asset classes (1/7/2024)


This report does not provide personalized financial advice. It has been prepared independently of the particular financial circumstances and objectives of the individuals who receive it.

This document has been prepared by Portocolom Agencia de Valores S.A. for the purpose of providing general information as of the date of issue of the report and is subject to change without notice. Portocolom Agencia de Valores S.A. assumes no obligation to communicate such changes or to update the content of this document. Neither this document nor its contents constitute an offer, invitation or solicitation to buy or subscribe for securities or other instruments or to make or cancel investments, nor can they serve as the basis for any contract, commitment or decision of any kind.

The information contained in this report has been obtained from public sources and is considered reliable, and although reasonable care has been taken to ensure that the information contained in this document is not inaccurate or misleading at the time of publication, we do not represent that it is accurate and complete and should not be relied upon as such. Portocolom Agencia de Valores S.A. assumes no liability for any loss, direct or indirect, that may result from the use of the information offered in this report. Past performance of variables may not be a good indicator of their future outcome.