The significant volume of direct and indirect economic activity generated by tourism in the Canary Islands in the years prior to the pandemic, in which a share of 33% of the Regional Gross Domestic Product (GDP) and 36.5% of employment was reached in 2019, was affected in 2020 by a devastating fall similar to that of the rest of Spain. That year, tourism reduced its contribution to the Canary Islands economy to 17.8%, after losing more than half of its turnover; a situation that worsened until the first half of 2021, from which activity began to reactivate until recovering 57% of pre-pandemic tourist GDP at the end of the year.
This is roughly the quantification of the ravages of the health crisis in the tourism sector of the Islands collected in the Study of Economic Impact of Tourism Impactur Canarias 2020 with a first approximation to the close of 2021, prepared by Exceltur with the collaboration of Turismo de Canarias. Likewise, the Canary Islands tourism entrepreneurs anticipate that, for 2022, the recovery will accelerate, which could reach 90% of the tourist activity achieved in 2019 by the end of the year.
The Minister of Tourism, Industry and Commerce of the Government of the Canary Islands, Yaiza Castilla, and the executive vice president of the Alliance for Tourism Excellence (Exceltur), José Luis Zoreda, were in charge of detailing the content of this report, which on this occasion analyzes the evolution of the sector both before and during the pandemic.
“Despite the fact that 2020 was a terrible year for the main economic engine of the islands, from the summer of last year we began to recover and managed not to excessively accuse the sixth wave caused by ómicron, thanks above all to the reaction of the peninsular and Canary Islands market”, Castilla explained. In fact, tourist activity in the Islands experienced a remarkable reactivation from July and August, with a recovery of 70% compared to the same period of 2019, hand in hand with the peninsular, French, Belgian and Italian markets, together with the good response from the German market.
“This reactivation continued with greater intensity from October, despite the eruption of the volcano on the island of La Palma, which was barely noticeable on the other islands, and the expansion of the ómicron variant”, the minister continued.
This progressive improvement allowed us to close 2021 with a recovery of 57% of tourist GDP compared to 2019, when it reached 15,597 million euros, recovering 2,028 million that had been lost due to the fall in activity caused by the pandemic between March and December 2020. This translated into a growth of the Canary Islands economy in 2021 (+6.1% compared to 2020, according to ISTAC data), above the national average (+5.0% vs 2020, according to the INE).
Overall, the direct and indirect tourist activity of the islands in 2021 reached 8,834 million euros, 29.8% above the records of 2020, and raising the weight and contribution of tourism to the Canary Islands economy in 2021 to 21.7%.
According to Impactur Canarias 2020, in this year and from the month of March, the collapse of tourist activity in the Canary Islands occurred and its capacity to drag in the productive fabric was transferred to a fall in the regional economy as a whole of 18.1%, almost eight points above the national average, which was 10.8%, according to the INE. The dimension of the impact due to the restrictions on mobility generated by the pandemic was also reflected in the fall in the weight of tourism in the Canary Islands economy, which went from 33% in 2019 to 17.8% in 2020.
Impact on employment
Likewise, 50% of people employed in the different branches of activity linked to tourism in the islands were affected and the average number of people who took advantage of an ERTE in 2020 amounted to 63,023, 60% of the Canary Islands as a whole. Under these circumstances, the contribution to employment of tourist activity was limited to 22.9% in 2020, falling sharply compared to levels above 35% in the four years prior to the pandemic.
“Despite the scenario of strong uncertainties due to the successive waves of the pandemic, the Canary Islands tourism entrepreneurs made a great effort in the incorporation of personnel to start their operations”, Zoreda remarked, who highlighted the better performance of employment (50% in 2020 of the levels of 2019) than of the activity itself (44% in 2020 compared to 2019).
In addition, “the public administrations did what we had to do: continue betting on our main economic engine”, Castilla assured, who recalled that tourism allowed the Canary Islands economy to grow above the national average until 2019 (3.9% compared to 3.7% of the Spanish economy).
Public and private investment
In fact, Exceltur recognizes in the report the important work carried out by the Canary Islands institutions to minimize the terrible losses of activity of up to 16 billion since March 2020 until the end of 2021. To overcome this difficult situation, the Government of the Canary Islands promoted a series of support measures for the tourism sector to alleviate liquidity problems, such as the extraordinary plan of aid for self-employed and tourism SMEs, subsidies to cover the IBI of tourist accommodation establishments, the stimulus to demand through the tourist voucher and the greater allocation for aid to connectivity.
“This budgetary support to the sector both from the regional and local administration was always a constant, also in the worst of the pandemic. We are proud to see that the commitment of public spending destined to the tourism sector amounted to 1,039 million euros in 2020, only 5% below the levels of 2019”, Castilla assured.
“At no time did we leave aside our key economic engine and from the first minute we began to work on promotion, marketing, planning and training, as well as on guaranteeing the health safety of the destination”, the minister said. This strong public commitment to tourism sought to guarantee the safety of travelers and promote tourist activity during successive health crises, as well as to carry out specific actions to help companies in the sector and measures to boost demand.
A support that was crucial, taking into account that the Impactur report reflects that the investment of the private tourism sector in that turbulent period decreased to 435 million euros, a – 56.6% compared to the year 2019 when it had reached 1,003 million euros, due to the lack of activity and income, as well as the collapse of confidence levels and lack of certainties in the short term.
To this is added the collapse of tax collection associated with tourist activity in parallel to the collapse of tourist consumption and the added value generated. Specifically, the study quantifies the taxes collected and linked to tourist activity in the year 2020 at 1,372 million euros, which represents a fall of 51.2% compared to the 2,813 million collected in 2019.
“The commitment of the business tourism network to tourism in the islands evidenced before and during the worst months of the pandemic, together with better recovery expectations in 2022, in turn augur the greatest potential for competitive tourism transformation, provided that the most efficient use of the Next Generation Funds is ensured, prioritizing and agreeing on the final objectives of application with the entrepreneurs, to favor in parallel the greater private investment in the destinations of the archipelago in the coming years”, Zoreda added.
In this context, Exceltur highlights that “the allocation of the European Next Generation Funds represents a unique opportunity to promote an ambitious policy of integral valorization of the spaces and tourist facilities of the Canary Islands destinations, which we hope will be oriented with a vision of height, counting on the participation of the private sector, to promote its transforming effect in the face of competitive challenges and reinforce the sustainability of the Canary Islands tourism model”.
In this regard, Castilla recalled that the Government plans to manage for the period 2021-2023, 476.6 million euros from the REACT-EU program and the Mechanism for Recovery and Resilience, for major transformative actions of the tourist activity of the islands and of the public spaces in which it develops and that focus on improving the value contribution of our tourism to society, reducing its environmental footprint and improving its levels of business profitability, quality of employment and social recognition.
