For a few months now, we have been receiving news of how economic activity was beginning to decline, so that the percentages of car and home sales are down by several digits. The shops are also noticing a decline this summer. The fact that tourists are spending less than the previous year, a matter that has generated some concern in the sector. Everything suggests that this trend will continue during this year and probably the next, depending on the greater or lesser effectiveness of the inflation correction measures implemented since last year.
It is clear that the market is self-regulating, and the ECB’s measures precisely seek to slow down the increase in prices by making less money circulating in the market and thus achieve that it also slows down demand. And of course, this measure also ends up influencing the consumption of tourists, who also find themselves with increased prices due to the inflation that is now being fought, which I imagine ends up influencing their purchasing decisions.
But it must be said that from the Marca Andorra Observatory we see this drop in local and tourist consumption as a conjectural and transitory fact, the result of a forced contraction of the market to combat inflation, and everything suggests that, once the CPI is around 2.5%, as the ECB intends, we will move towards a progressive normalization of consumption and get closer to the most optimal pre-pandemic levels. For practical purposes, this means that probably in the second half of 2024 we should already notice a recovery in consumption.
And this opinion is confirmed by the fact that one of the factors that has been traditionally served to measure the health of our economy is the greater or lesser strength of tourism, and it is worth saying that there are significant enough data to suggest that the tourism sector is on a clear upward trend now. Thus, if in 2022 almost pre-pandemic normality was recovered with a 55% increase in visitors and tourists compared to 2021 (clearly still affected by the restrictive measures), if we analyze data from the month of April 2023 with respect to twelve months ago, we find a growth of 24%, and in fact, all the subsequent indicators announce month by month, a sustained growth that already places us in the approximate annual figure of 9 million visitors and tourists.
At this point, it is necessary to break a lance in defense of the Government and Andorra Tourism and, in general, of all public and private tourism agents, because, thanks to their organizational and promotional efforts, tourism is growing strongly. Probably not even the citizens of Andorra themselves are fully aware of the efforts of recent years to reinvent and relaunch one of the great engines of our economy, and not only tourism in general, but also commerce, with respect to which some hopeful measures have been taken. And I say it in this tone because it is clear that the weakest sector at the moment that revolves around tourism is precisely trade, which for years has been lamenting a progressive loss of strength and demanding measures that do not ever arrive or, at least, not with the desired results.
In this sense, it is particularly significant that Tourism and Commerce have finally unified into a single Ministry, because both must be a part of a common strategy, each saving their own particularities. I also think that it is a very good measure that the board of directors of Andorra Tourism has included representatives of the private sector for the first time, and specifically of trade, hospitality and the CCIS (Chamber of Commerce, Industry and Services of Andorra). In addition to all this, at the end of the last legislative period the Strategic Trade Plan (Pla Estratègic del Comerç) was recovered and strengthened through the creation of three working groups: one for Commercial Excellence, to energize and attract new brands, the Trade Observatory, to analyze and reflect on retail, and one for Andorra Shopping, to improve and enhance the commercial experience. Now we must see the evolution of this initiative. We hope that, as indicated by the Ministry, adequate follow-up will be carried out and above all, the results will be measured and if they were not sufficiently obvious, in a positive way, appropriate corrective measures will be taken.
In the tourism field itself, I recover the “broken lance” in favor of the magnificent work that I advise all citizens of the country to visualize and that we will find on the website of visitandorra.com. The range of offers for the potential tourist is very wide and the number of “experiences” that are proposed can satisfy the expectations of the most demanding seeker and also with a clear commitment to deseasonalization, where the brilliant campaign “Atypical” stands out. Including both summer and winter, with “atypical” culture, shopping, nature, and wellness, with disruptive audiovisual material, which at the same time is well complemented by the agreement with Disney, with the Andorra Film Destination campaign that with a style targeted for all audiences, highlights some of the country’s iconic elements.
In addition, if we analyze statistics, we will see that the number of tourists and visitors has grown on the side of other nationalities, beyond the traditional French and Spanish, that demonstrates the effectiveness of the launched campaigns. The conclusion is obvious enough: with a lot of effort, but we are getting by, and we will surely end 2023 with the number of 9 million visitors what will not be the result of chance. We have managed to create a much more attractive Andorra for visitors, and somehow it must be measured in results.
Yes, it is true that trade is suffering more than it is desired, but it is not a new problem arising from the latest inflationary crisis, and it comes from further afield. Let’s imagine how much more commerce would suffer if we didn’t get to bet on pedestrian areas! Or what would happen without campaigns at the level of “Andorra Atypical!” And despite everything, the Ministry of Tourism and Commerce, and Andorra Tourism and its Strategic Trade Plan have a lot of work remained to do, together with the country’s traders’ associations, to move trade towards a new dimension, that of the digital world and the shopping experience, which undoubtedly mark the future of this sector.
From the Marca Andorra Observatory, we cannot imagine a prosperous economy for Andorra that does not include successful commercial activity and therefore, we will continue to monitor the evolution of the current work teams in charge of the strategy. A piece of advice: beyond great theoretical designs (which we have known for years), I think salespeople will appreciate practical, effective, and long-lasting efforts, and of course also a lot of tutelage and support that includes training, pedagogy, and follow-up, because it is not easy at all to execute the change successfully.
By Pere Augé, CEO and Founding Partner of Augé Holding Group
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