Healthy outlook: Spain analysis

All the indicators for Spain’s economy and, by extension, its business travel market, looked positive in 2023.

The Spanish economy grew by 2.5 per cent last year, down from 5.8 per cent in 2022 but still healthy compared to some of Europe’s other economies, which is down to a robust services export performance and increased public consumption.

The growth was directly translated into business travel. Spanish residents made 17.8 million business trips in 2023, compared with 14.5 million in 2022, an increase of nearly 23 per cent, according to the country’s official statistics body INE. The number of trips is now comfortably above those made in the pre-Covid era.

Travel agencies had a very happy year, financially at least, in 2023. INE has reported that the turnover of travel agencies and tour operators grew by 27 per cent during the year.

Several travel agency groups reported the best years in their history. El Corte Inglés said its 2023-24 financial year (most of which is in calendar year 2023) was a record year for its travel businesses. Profits from travel were €93 million, up by 84.5 per cent year on year. Nautalia said 2023 sales were at the same level as 2019 but with doubled profits.

But it was not all good news for agencies. In December, Spain’s National Markets and Competition Commission announced that it had launched an investigation into whether a number of travel groups, including El Corte Inglés, Nautalia and Ávoris had violated competition rules relating to public tenders for the provision of travel agency services. The investigation is still ongoing.

Spain is the 11^th biggest business travel market in the world, according to the Global Business Travel Association. The market’s forecast spending of $24.7 billion grew by 19 per cent, although that growth is the lowest of the top 15 markets, the association said.

Major suppliers in the Spanish market also performed well in 2023. Iberia announced record operating profits of €940 million for the year on revenues of €7 billion. New transatlantic services proved popular and the airline has now increased the frequency of routes to Dallas and Washington to year-round services as a result. During the year, the carrier rolled out its next generation suite-style seat with direct aisle access in its Airbus A350 business cabins.

The growing numbers of travellers in Spain’s major cities, meanwhile, pushed hotel rates higher. Research from Cushman & Wakefield for the year revealed that hotel rooms in Spain were 8.3 per cent more expensive in 2023 than 2022. The average daily rate of €144 is now 22 per cent higher than in pre-Covid 2019. The market research company said that it was the best ever year for the hotel industry in the country.

Looking ahead, GDP growth is expected to be around 2 per cent over the next two years. The IMF said in its June 2024 assessment that, “the Spanish economy has demonstrated remarkable resilience to elevated global uncertainty and tighter financial conditions”.