With a record 18 million people visiting last year, Spain is by far the most popular foreign destination for UK holidaymakers. But as the country “fills up” with tourists – picking a package deal to the Costa del Sol or the Balearics over Tunisia, Egypt or Turkey – prices look set to increase.
Much of the rise in visitor numbers has been caused by ongoing security concerns over travel to north Africa and Turkey. Travel to Turkey suffered last year due to a failed military coup and from 2015 until July this year – when the Foreign Office updated its travel advice – British tourists were warned not to travel to Tunisia, following a terrorist attack on a beach in Sousse that killed 38 people.
In February, travel market analysts GfK reported a record number of British tourists had visited Spain in 2016, rising by 12% to 17.8 million people. At the time, early bookings for summer 2017 were already up 16%.
On Tuesday, Thomas Cook chief executive Peter Fankhauser told the BBC that in Spain “we have not enough beds for all the demand”, adding that he expected the price of a Spanish holiday to rise by up to 10% next year, as a result of the destination’s surge in popularity, combined with the weak pound.
Other industry experts agree. John Lucas, e-commerce director at loveholidays.com, said demand for summer 2018 was already higher than this time last year, with a growing number of people taking advantage of early-booking deals.
“Spain was very busy this year, so a lot of tourists would have missed out on the best hotels, best rooms or their first-choice properties,” he said. “What we’re seeing now is a huge interest in summer 2018, and that’s one of the first influencers of price. If the demand comes early, the hoteliers will be happy to hold their line as we get closer to next summer.”
Alexander Göransson, lead analyst at Euromonitor International said that it would expect accommodation prices in Spain to continue to increase in 2018, as a result of the Spanish economy improving, leading to an increase in demand from domestic visitors.
“There are indications that hoteliers in Spain are moving away from block bookings with tour operators, preferring to sell rooms directly to independent travellers, who they can charge more,” he said. “The current increased demand has given them the confidence to do this.”
Göransson added that although demand for accommodation will be high in 2018, putting upward pressure on prices, increased demand for travel to Spain could mean flight prices drop as airlines compete to lure passengers, helping keep overall package prices down.
“Aircraft have the advantage over hotels in that they can be diverted to where current demand is,” he said. “According to our industry sources, airlines are shifting capacity from the eastern Mediterranean to the Iberian peninsula. This increase in capacity and thus falling prices allows tour operators to offset part of the increased accommodation costs.”
Wayne Perks, managing director of Teletext Holidays, said that although capacity issues in mainland Spain and the Balearics are causing prices in peak season to rise, travel to Turkey is also looking more buoyant.
“Turkey has had a stronger summer than expected and predictions are that 2018 will see it rise to previous levels of popularity if there are no further issues,” he said. “This will mean that the Spanish hoteliers may have to revise their pricing to compete with the value that Turkey will undoubtedly offer.”
This could also be the case with Tunisia. In July, the Foreign Office revised its travel advice for the country, meaning tour companies can resume trips there. Thomas Cook has begun selling holidays there again, with trips starting from February 2018.
According to Euromonitor, tourists would be expected to drift back to north Africa and the eastern Mediterranean if they become more stable.
“The lack of demand has put downward pressure on prices, which could make them more appealing to price-sensitive consumers,” said Göransson. “This, again, would be more relevant if sterling remains weak, which it is likely to do as Brexit negotiations appear far from concluded.”
Karl Möller seems an unlikely poster child for a war on inequality. He is the lone male among a dozen women, each with a baby in her arms.
“I’m not used to it, but it’s a good experience – quite opposite to the male-dominated engineering workplaces I am accustomed to,” he says.
Möller, 45, is part of a city-wide programme in Gothenburg to mix social classes, genders and ethnicities to make Sweden’s second city a more equal place to live.
New integrated “family centres” such as this one, which opened in March, aim to target support at the families who need it most. “It is important for us to be in mixed areas to create more equality,” says manager Helen Antonson.
The centre-left has governed the country for 81 of the past 100 years, striving to be “the people’s home” – or folkhemmet – in which the social democratic state was like a family, caring for all and with no one left behind. Sweden became one of the most socially equal countries in the world.
Yet despite its reputation, even Sweden has had to acknowledge its own inequality problem in recent decades.
“The fact is, the growth in inequality [in Sweden] since the 1980s has been the largest among all OECD countries,” says Per Molander, a former IMF adviser and author of a recent history of inequality.
“There is a lot of rhetorical agreement on equality: very few politicians would say they are against it because we have such a strong egalitarian tradition here. But there is a large gap between rhetoric and reality,” he adds.
Sweden now possesses 178 krona billionaires – an increase of 22 since 2015, a survey found last year. Together, they own more than twice the annual budget of the Swedish state, and the number of dollar millionaires is rising sharply too.
A fad among Stockholm’s gilded youth is vaskning – the ostentatious “sinking” of bottles of champagne by pouring them down the drain. Meanwhile, in Malmö, the infamous Rosengård estate is populated by impoverished immigrants and a breeding ground for violent gangs.
Last year the UN children’s agency Unicef reported that Sweden was on a “downward trajectory” in terms of the life chances for its poorest children, a growing number of whom were “very disadvantaged”. A Swede with only a basic education can expect to live five years less than a university-educated compatriot, according to the country’s Public Health Agency.
The roots of this shift go back to the 1980s, Molander says, when the Social Democrats began experimenting with free-market policies and deregulated the credit market. But change accelerated after a deep economic crisis in the early 1990s.
“After that there was a sort of despair, a loss of control – the political energy to defend classical social democratic policies was simply not there any more,” Molander says.
Sweden’s centre-left pushed ahead with deregulation and privatisation of infrastructure – the post office, electricity, telecoms and the railways – while introducing “free schools” with private providers, on which David Cameron’s Tories modelled their education reforms of 2010.
Swedish Conservatives held office from 2006-14, cutting income and property taxes and repealing a tax on wealth, while introducing tax breaks for small business owners. Capital income from the sale of property and shares has soared owing to a booming housing market and stock exchange.
Senior managers’ income has “decoupled” from the rest, according to Thomas Carlén, an economist for LO, the country’s largest trade union confederation. “You can see growing inequality within firms here.”
Creating an equal city
Despite three decades of deregulated markets, tax cuts and slimmed down welfare, Sweden still has some of the most progressive taxation and spending policies in the world, Oxfam says, while its support for women in the workplace is exemplary.
But where Sweden really stands out is in its redoubled efforts to reduce the gap between rich and poor, the report suggests.
The pendulum began to swing back in 2014 with the election of a centre-left coalition of the Social Democrats with the Green Party, which set out to reverse “irresponsible tax cuts”. Helped by a booming economy, the coalition has increased benefits for unemployment, sickness and families with children, raised income tax on the better off and tried to increase taxes on banks, aviation and dividends.
While the measures are so far having a small effect in terms of redistributing wealth to the poorest, political opposition to them is fierce: “Big tax increases are now threatening jobs and growth,” says Conservative leader Anna Kinberg Batra.
In Gothenburg, Sweden’s industrial heartland, the new mayor has made tackling inequality her top priority.
“As a Social Democratic politician, you cannot have a bigger ambition than an equal society,” says Ann-Sofie Hermansson, 52, a former forklift driver at Volvo. “It is about decency, but it is also good for the economy … If you increase equality, you get more trust and stronger growth: it’s a win-win situation.”
The gap between rich and poor has almost quadrupled in Gothenburg over two decades, according to a survey commissioned by the council. Its most shocking discovery was that people in affluent areas are living nine years longer than those in poorer ones.
When journalists compared a street of private mansions on the coast with overcrowded apartments occupied mainly by jobless immigrants on the other side of town, they found an income gap of more than half a million krona (£50,000).
The mayor’s flagship programme Equal Gothenburg, promises long-term investment to create a more egalitarian city.
“For many years we have had projects to fix inequality,” she says. “We’d take some money, we’d have a project in the suburbs, and then the money ends and the project stops. The idea of Equal Gothenburg is no more small projects: we should think about equality all the time when we plan.”
Opposition to the programme is muted; while some question the goal of equality for its own sake when jobs are in short supply, on the right of the city council, criticism is more about how than why.
“We and the left parties have the same goal: that Gothenburg should be a cohesive city. But we have different means to reach that goal,” says David Lega, leader of the city’s Christian Democrats. “We have to put a lot of effort into improving the environment for small business, which creates nine out of every 10 new jobs.”
The centre-left has controlled Gothenburg city council for 23 years, Lega points out: the very years during which inequalities have spiralled.
“To create a city that is equal it can’t be a side project, it needs to be in the foundations of the budget,” he says. “We need to focus on the long term rather than quick fixes.”
Hermansson says she is helped by the fact that “all the big actors” in the debate are now concerned about inequality.
“Sweden looks relatively good in terms of health and inequalities, but our assumption – and the assumption of Swedish colleagues – is that they can do better,” says Prof Sir Michael Marmot, leader of a seminal World Health Organisation report that said health inequalities could be eradicated in a single generation.
“That is what we have to start with: there is more we can do, we can make a difference.”
Oxfam concurs, suggesting even those at the top of its new ranking have room for improvement. More than two-thirds of the countries included in the index are doing less than half of what they could to reduce inequality, the report suggests.
Many people in Sweden, too, believe there is nothing inevitable about the growing gap between rich and poor. “It very often boils down to resources – too few teachers, nurses, other professions. And if you want to fix that, it will cost money,” says Olle Lundberg, chair of the country’s Commission for Heath Equity.
“But there has been a change in the political climate in Sweden. Now all the parties are talking about inequality.”
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For two decades, Miguel has run one of the biggest hotels in Mallorca for holidaymakers on all-inclusive packages. But never has he been so angry and disappointed with his British guests. During a typical year, Miguel welcomes 9,000 British visitors, and many more from Germany and the Netherlands.
Two years ago the hotel, popular in Thomson and First Choice brochures, had just a couple of complaints for gastroenteritis (aka Spanish tummy). But last year Miguel was hit by around 200 claims alleging food poisoning. Every single one was from a British holidaymaker, with not a single complaint coming from the Germans or the Dutch. None of the Brits complained to the hotel at the time; all the claims were lodged by UK claims management companies once the holiday-makers returned home.
Miguel’s hotel has fallen victim to the epidemic of holiday-sickness claims that has begun to rival bogus whiplash claims in both their prevalence and resulting price tag. British claims firms, many of whom once wooed motorists and their passengers with offers of big payouts for whiplash injuries, have turned their attention to UK holidaymakers, encouraging them to claim compensation for food poisoning.
The specific targets are those tourists on all-inclusive holidays, as it is easier for the claims companies to successfully sue a hotel that is responsible for all the meals its residents eat.
The problem is so acute that last week tour operators warned that this summer could signal the beginning of the end of the much loved all-inclusive holidays, with the threat of a possible ban by hoteliers on British tourists.
Miguel, which is not his real name as he would only speak on condition of anonymity for himself and his hotel, says that hoteliers in Spain are “angry and disappointed” by the claims.
“We feel we have no defence because the law is so difficult. It should be the guests who have to prove that they were sick, not for us to prove they were not. They don’t even need to see a doctor to put in a claim.”
Inma Benito, president of the Federation of Mallorca Hotel Businesses, said that false claims cost hotels on the Balearic island €50m last year and that cases had soared by 700% since 2015.
It is not just in Spain where claims numbers have ballooned. Last week the Foreign Office warned of an increase in gastric illness touts in Turkey and Bulgaria and the Cypriot hotel industry said it had been hit with a £5m bill as a result of fraudulent poisoning claims.
Zacharias Ioannides, who heads the island’s association of hoteliers, likened the practice to organised crime, saying it was an exclusively British phenomenon. “It is always after the so-called event and sometimes it can be as long as three years before the bogus compensation claim lands,” he told the Observer from the organisation’s headquarters in Nicosia. “Action must be taken to safeguard the good name of the vast majority of British tourists.”
Britons make up almost half of the 3.2 million tourists who visit Cyprus annually. Marios Tzannakas, a senior official at the Cyprus Tourism Organisation, admitted that many in the industry were becoming increasingly angry and frustrated. In a tourist-dependent economy like that of Cyprus, the sector was effectively hostage to the tour operators behind the all-inclusive packages where the bogus claims were almost invariably observed. “You cannot argue with them because it is they who bring the tourists,” said Tzannakas.
But the problem in Spain is particularly acute. Agents for British claims management companies openly tout for business in Spanish resorts, telling tourists they can claim £3,000 a head with an allegation of food poisoning at an all-inclusive hotel, often following a package trip that cost only £500. Some holidaymakers are told that all the proof they need is a receipt for a packet of Imodium, the diarrhoea-relief medication, from a pharmacist in the resort.
An ambulance emblazoned with the words “Claims Clinic” was last year pictured touring around the Spanish island of Tenerife, allegedly parking outside hotels and medical centres. The side of the vehicle reads “Claim today – ask for details”.
The authorities have started to act. Earlier this month police arrested one Briton in Alcudia and questioned another on suspicion of involvement in the fraudulent claims. The Guardia Civil said in a statement that the action was part of an investigation into false claims of food poisoning, adding that the pair were suspected of working for a claims company and touting for business in tourist areas.
“Everybody is now trying to get evidence that the claims made against their hotel are connected to the people who were detained,” says Miguel.
In Britain, the travel trade organisation Abta last week launched a campaign, Stop Sickness Scams, urging the government to close a “legal loophole” which it says is encouraging lawyers to sign up people to insist they were ill even if they were not.
Anybody typing “holiday sickness” into Google is now met with a flood of claims companies offering no-win, no-fee services.
SickHoliday.com describes itself as “the UK’s leading holiday sickness claim experts”, running adverts on 130 radio stations telling holidaymakers that “if your scenic view was the bowl of the loo”, then they should put in a claim.
Set up in 2014 by Richard Conroy, it had a turnover of £3m last year and says it made a profit of £350,000. Claimants typically receive around £1,500 while the solicitors who handle the cases earn around £2,000 per file after costs.
Conroy says he has “fought tirelessly” to bring fraudulent solicitors and claims-management companies to book. But he says suggestions that most claims are bogus are untrue.
“The Claims Management Regulator and the Ministry of Justice say there are around 35,000 claims for holiday sickness per year. They admit that 25,000 of those claims are honest, legitimate and straightforward. The majority, then, are not fraudulent. From our point of view, Abta’s crusade against claims doesn’t address the real issue – and that’s that certain resorts, due to a lack of hygiene, are making scores of people unwell every year.
“The only reason that there has been growth at all is because there’s greater awareness that holidaymakers can claim when they’ve been made poorly. The reality is gross negligence, putting people into hotels which are serving unhygienic food that is unfit for human consumption.”
But tour operators and hoteliers are hitting back at claims. Professor Jaime Campaner Muñoz, a solicitor acting on behalf of Spain’s Federation of Majorcan Hotels, said: “We will be seeking convictions against anyone who is involved in these fraudulent claims.”
In the UK, the Solicitors Regulatory Authority told the Observer that it has been passed a file by the Ministry of Justice on 21 law firms involved in holiday-sickness claims where there are suspicions that rules regarding touting for business have been broken.
The Queen’s speech last week also promised a crackdown on bogus whiplash claims on car insurance, raising the possibility that this could be extended to tackling false-sickness allegations.
Ramón Estalella, the secretary general of the Spanish hotel owners association, flatly dismissed talk of a ban on selling all-inclusive deals to British tourists, arguing that such a move would be both illegal and counterproductive for hoteliers.
But he warned that some individual hotels might decide to close their doors to British visitors. “There’s no ban whatsoever, but there is the risk that some individuals who can’t come to an agreement with the tour operators may say, ‘Look, if you can’t guarantee that I won’t have to pay out for false claims, then I can’t sell to the British.’”
Marios Tzannakas, in Nicosia, said that a solution to the problem lies in British law. “Legislation related to consumer protection clearly needs to be amended. It cannot be that 500 people will eat from the same buffet but only the British will get food poisoning and suffer from diarrhoea.”
Additional reporting by Sam Jones in Madrid and Helena Smith in Athens