UK’s Move To Discourage Travel To Spain And Mandatory Quarantine Is Last Straw For The Tourism Sector

British in one of its tourism spots in Spain

Boris Johnson’s government has announced it will impose a 14-day quarantine on travellers from Spain in response to the surge in reported cases in our country in recent days. This decision has fuelled discontent both in the Spanish government and in the tourism sector as well as with the airlines which connect the UK with the various British tourist spots in Spain. The tourism sector represents about 12% of Spanish GDP, with the British accounting for 20% of all tourists. Furthermore, this move from the UK threatens Spain’s foreign tourism revenues of 8.7 billion euros between August and September, according to figures from Exceltur.

Without doubt the measure should alert us to the importance of the outbreaks, as well as the risk to the sustainability of the recovery of economic activity. That said, it also reflects the state of UK-European relations and the countries’ interest in promoting domestic tourism. Up until the last moment, the Spanish government tried to negotiate the exclusion of the Canary and Balearic Islands from the quarantine (their epidemic level is well below the Spanish average). Meanwhile, the operator TUI has cancelled all its flights to the peninsula until 9 August.

In addition to the UK’s recent decision, countries like Norway, Ireland and the Netherlands have already demanded quarantine for people returning from Spain. At the same time, the French and Belgian governments have recommended that their citizens do not travel to certain Spanish regions, due to the increase in cases of Covid-19. Particularly Aragon, Catalonia, Navarre and the Basque Country.

All of the above may have been the last straw for the Spanish tourism industry which was already expecting one of its worst seasons in decades. That was investors’ take on on it. Given the sector’s importance in Spain’s GDP, they chose to unwind positions there. In the IBEX35 (-1.7%), there were clear declines in the shares of those companies linked to tourism, such as Meliá Hotels (-6.4%), IAG (-5.9%) or Amadeus (-2.6%).