Tough times.

[Nick]

It's all very well Spain being being "laid-back" and in some respects this is quite refreshing while holidaying there and escaping from the UK rat-race and all it brings with it, but, Spain's economy is collapsing and with 28% unemployment the country needs to get a grip and join the 21st century.

Tourism is one of Spain's main sources of revenue and for far too long it's rested on this without doing too much hard work.

Time to "buck-up" it's image methinks !!

 

[pescador2009]

I remember speaking to a Spanish lady working in a hotel in PP some 10 / 15 years ago. As NPN says, tourism still is, and has been for a long time, a very important part of the economy. The lady said then that she / her fellow workers worked 6 months for one year. Meaning they tried to earn one years wages in 6 months working in a hotel in PP / Mallorca, then going back home to mainland Spain - out of work - for the winter. Prior to mass tourism Spain's was very much a rural economy, then industry took hold and lots of people moved from the countryside to the cities. In the meantime the rural economy has become more mechanised and in recession the old jobs just aren't around anymore.
A Spanish girl I know here in the UK, who left university in northern Spain some 10 or more years ago, said even in those days as many as 2000 people would apply for one quite basic position to get in the Spanish equivalent of the Civil Service and that many of her ex-student friends failed to get a job even with a degree! Bad times have been going on for a while in Spain. We - as tourists - don't know the half of it, I'm sure.
If you look at PP or even Pollensa town and CSV, what is there to do, other than work related to tourism? Sparky, any knowledge on what the locals do... particularly in winter; do they travel to Palma for work, there can't be that much to do in northern Mallorca?

 

[Sparky]

A lot of them always used to move to construction work in the winter but of course even that industry has almost stopped. Some go to the Canaries to work as they have year round tourism, those who come from the mainland go back. Those who remain here have to eke out their money earned in summer and any dole money they receive, it's tough for the working people here and it's going to get tougher i am afraid .

 

[Deanscroft]

I think one of the main problems in this area is that they have had it so good for so long they do not know how to cope with a recession. For many years the tourist industry has provided a good living - the money just rolled in from affluent visitors who put there hands in their pockets and paid whatever price was asked without thinking about it. That has changed. Now there are alot less tourists and those that do come are more likely to seek out value for money. Unfortunately alot of the bars, restaurants, hotels etc around here do not understand the basic economics of supply and demand and still think that the way to deal with less customers and reduced turnover is to put the prices up hence the increasing number of failed businesses as the customers go elsewhere. Thankfully a few places (Menestralia for example) have realised that you can run a successfull business with large turnover and low per capita profit margins. Hopefully a few more will catch on before its to late.

 

[Sparky]

Sorry but i disagree. I can't speak for places that i don't frequent but those i do (and there are many) most have not increased prices at all for at least the last 3 years, the ones that have is by a mere 1€ for MDD, all drinks prices have remained the same and before anyone says it....NO i don't get cheaper rates for being a resident.

 

[CathB]

I agree Sparky ..we have found that you can eat as for the same price (in some cases less with the introduction of MDD) as we were a few years ago. What really gets me though is the attitude and poor service in some places (both hotels and restuarants ).A smile costs nothing and in the case of poor service they will find that people will quickly go elswhere

 

[cumberland8]

I would agree with Deanscroft ,but there are several exceptions for example El Mollies in Pollensa, Bodega Del sol in Alcudia, Positos in the Port.
One of the things that has confused us is the amount of Property on the market that is overpriced, yet the owners absolutely refuse to drop their prices?
Also why do the supermarkets in the Touristy areas charge up to one third more? even the massive stores.

 

[JMD40]

nOOOOOOOOO I have just taken 30mins to compile a reply and I was logged out and message has disappeared. I dont believe it.... shall have to go and have a glass of wine to rethink all this BUT basically,
IVA (VAT) went up from 16 to 18% last year, Rubbish collection increased by an embarrasing amount by Pollensa town hall, Electricity has increased by approx. 10% every year for last few years, costs increased with the excuse of increased oil and transport to an Island..... plus the owners of properties would have increased their rentals to the leasees. All of this is enough for the restaurants and bars to increase their prices substantially but I think you will find that 90% have failed to do this as they DO understand that the market will not allow for it however this means they have to cut their costs elsewhere and the only option would be staff or lower quality products or fail hence the number of bars and restaurants which have closed up in last 12months,including some very popular ones.
If a worker works a contract for 181 days, they will be entitled to 4 months unemployment allowance which is about 400/500€ a month. When that has expired there is nothing. Bar and restaurant owners would be self employed so they have no entitlment to any assistance during the winter months.
Times are very very tough in Mallorca as in all of Spain and I do not think anyone (UK or Spain) are able to handle the recession. I do agree that some locals have sat back for many years and taken all the money the tourist is willing to throw at them but that has not been the case now for the last 3-5 years. In a recession, the people who do not provide good service are often the first to fail and a forum like this does tend to keep people on their toes. Going to press the button now before I get logged out again.

 

[JMD40]

Cumberland8 - there are some amazing bargains to be had where owners have reduced their prices by 25 - 50% in a desperate attempt to wash their hands of a property before they loose it. Most owners who are selling are very realistic about the market price.

 

[pescador2009]

JMD - losing a 'post' (particularly a longer one) has happened to a lot of us over the years. Best to type it seperately first - then copy and paste it in to the reply message box. You have then still got the original if things go astray! (This tip will have been posted previously by others).

 

[cumberland8]

Clear & concise report JMD which helps deal with some issues, Thank You for that, but my last 2 ramblings remain a mystery?

 

[pollensafan]

There is no doubt whatsoever the euro has been the main cause of the problem. The year following it's introduction prices went through the roof. The whole thing is a total sham and doomed to fail. If someone can explain to me how you can have 20+ economys singing from the same financial hymm sheet then please feel free. You have a country like greece borrowing money to pay back money it previously borrowed that it can't afford to pay back. That my friends is the economics of the mad house and can not continue.

 

[lollipop]

Prices rise in tourist areas wherever you are unless you shop in the larger chains,e.g Asda or Mercadona,Lidle,eroski. I always feel I get ripped off in London.

 

[cherylbb]

Yes, lollipop, unfortunately prices have risen everywhere, bread, milk, meat, everything. If the price of fuel rises, this cost is inevitably passed on. General food shop at home has risen unbelievably over the past 18 months so we should expect to pay a bit more wherever we go.

 

[Smiddy]

I certainly haven't noticed any particular increase in prices in recent years (I certainly have at my local Tesco). Theres's loads of info on this board about getting the best value for your budget, i would urge anyone to read them or post before they're going over. It's also sensible to compare what the various meals would have cost you back home, and by that i don't mean the local "Charlie Chuckles". The Luna de Meil at the roundabout sell a 3 course with wine for 6 quid. Try and beat that at home. Go to O'Lume, Los Faroles etc and compare what it would have cost for similar food/service you in the uk.

Everybody has to tighten their belt these days, but there are many ways to have a reasonably priced holiday in PP, with a little pre planning.

 

[Doogz1874]

Economics is never straight-forward as "supply & demand": the local business also have to balance their expense Vs income and as JMD40 rightly points out most of their expenses have been greatly increased recently.

In simplistic terms this leaves local business with some choices:
1. Reduce their prices and hope to attract a larger %age of the available tourist revenue.
2. Increase their prices to try to absorb the income decrease / expense increase.
3. Try to reduce some expenses (less staff/lower quality ingredients) and risk losing income (if custom is less due to the drop in standards)
4. Try to maintain current price levels
5. Come up with something 'new' to attract more customers
6. Rely on customer loyalty and hope for the best !
etc.

Now if a local business select option 1 (and it works in attracting additional customers) they will increase their turnover and possibly their profits > however if this happens the other businesses that don't do the same then will lose money and ultimately fail. Eventually this will lead to a drop in supply so the prices will just go back up again.

Now if all local business adopt option 1 > then price drop will balance out and they will see no increase in custom so the only impact is for their income to drop.
The same thing applies if everywhere follows the "Menestralia" (or Jimmy Chung / Taybarns) model.

As with most things its all about striking the right balance: Sadly, during this difficult economic period it is very likely that some more businesses will fail. The ones most likely to succeed are the ones that are prepared to adapt and adopt a selection of the approach’s above (and others).

"Value for money" is what I think we (as customers) are all looking for but it is a very difficult thing to quantify, especially in relation to holidays and it varies greatly from person to person. Rather than the "supply and demand" rule it is really the "you pays your money and you takes your choice" rule that is more applicable.
I think everyone on the forum agrees that PP is a bit special and we're willing to pay a "bit of premium" for that (There are plenty of cheaper holiday destinations available to the South of the island or mainland Spain etc). It's certainly going to be a challenge for the locals to strike the right balance between having their prices set high enough to ensure their businesses are still viable while not exceeding the "bit of premium" the majority are willing to pay.
One of the best things about PP is there is a such a wide range of options: even with MDDs you can select between 6 and 30 EUR pp. So again, as customers we can select our own balance between the bargain MDDs and the "what the hell we're on our holidays" meals out.

 

[Smiddy]

Very good post! In my view the ones who survive are the ones who keep their standards and attract regular repeat visitors. I read an article a few years back that PP held the record for most repeat vistors to the same resort. Wouldn't surprise me.

 

[fil6699]

Very good post! In my view the ones who survive are the ones who keep their standards and attract regular repeat visitors. I read an article a few years back that PP held the record for most repeat vistors to the same resort. Wouldn't surprise me.

That is correct re the regular repeat visitors. And that's because the one thing the economy or anything else for that matter cannot spoil is the shear beauty, and the amazing Topography surrounding the area of Pollenca. And lastly and more importantly the people who live and work in the area, both native and the ones from other countries who chose to make it a permanent or secondary home all love and appreciation the resort keeping it a safe and tranquil environment. Its a unique combination which together draws people back year after year.