/cloudfront-eu-central-1.images.arcpublishing.com/prisa/A4RGZAHGHBFC7JLGP4HFIDWOJQ.jpg?fit=%2C&ssl=1 "Spanish Banks Drive Up Interest Rates on Consumer Loans, But Spaniards Prioritize Financing Vacations")
The tightening of monetary policy is causing interest rates on consumer loans to rise. The Spanish banks have made the type of these loans more expensive, placing them above 10% in just one year. This has not prevented the Spanish from financing their vacations. Between paying more for a loan or not going on vacation, citizens have a clear preference. Almost half of those surveyed by Amadeus for its ‘Consumer Travel Spend Priorities 2023’ report consider travel a priority expense. The BNP Paribas Cetelem observatory confirms this trend in Spain. Going sightseeing is among the top two options in terms of purchase intention in July for the next three months, along with fashion and sports.
According to the latest data on the amount of outstanding balances provided by the Bank of Spain, 45,868 million euros were requested in short-term consumer loans, 7.9% more than in June 2022. Around 10% of this type of credits up to one year are dedicated to trips according to the Association of Financial Users. Therefore, in June 2023 around 4,500 million euros have been granted for holidays in Spain. In addition, as Antonio Luis Gallardo, head of studies at Asufin, indicates, vacation credits have been gaining importance for three consecutive years, it is not a temporary or recent trend, since it is prior to the pandemic. Other destinations of these credits are works and reforms, studies, vehicle purchases or treasury.
However, financing vacations is a risky action for the financial health of families. “The main problem with these types of loans is that they are not usually very thoughtful loans,” says Gallardo. Loans for tourist uses are not normally made through a bank, but are often arranged by the travel agencies themselves. This implies that the consumer does not analyze the conditions, nor compare with other entities.
In addition, interest rates are almost always higher than those of financial institutions, about one or two percentage points, and there is a tendency to pay them in cheaper installments, which entails greater and more lasting debt. “It may be the case of a snowball effect that suddenly makes it difficult for us to finance the next trip, back to school or during Christmas,” adds the person in charge of Asufin.
Spent
Loan amounts being borrowed are higher, mainly because tourism spending is increasing due to inflation. Observatur indicated an increase of €15 per person, reaching €625 during their holidays. CaixaBank It also registered a year-on-year rise in tourism spending in June (+5.7%), which also allows us to glimpse a certain slowdown in growth in the sector —it is the lowest rise figure since spring 2021—.
Some increases very similar to inflation in tourist products, which are very sensitive to price increases. Even so, according to the tourism expert at the EAE Business School, Diego Santos, “very few people have changed their behavior because of inflation.” In addition, he explains that we must wait until the end of the year to find out if the companies are making a profit from this volume of tourists and the increase in spending due to the increase in costs.
Savings, another way of financing
Despite the increase in credit and the weight of other financing methods such as cards, according to the same Amadeus report, 40% of citizens finance their vacations with savings worldwide, a similar percentage in Spain, according to the experts consulted. for five days. And it is that despite the fact that it fell by around 10 percentage points between 2020 and 2022, this spending on vacations is being prioritized over other types of consumption.
This feeling has been established since the Covid pandemic, according to the president of the hoteliers confederation, José Luis Yzuel, who explains that since then there has been a change in mentality. “Today I’m going out, but tomorrow I don’t know if I’ll be able to,” summarizes Yzuel. On the contrary, Diego Santos, a tourism expert at the EAE Business School, points to a change towards “a lifestyle in which travel is one of the fundamental pillars”, but not because of the pandemic.
A record summer with nuances for tourism
Prices. Inflation is hitting the tourism sector hard. Tourism products are very sensitive to inflation, mainly to the increase in energy and food prices. Tourist packages have become more expensive by 26.8% in one year, the highest peak in the entire historical series. Domestic flights accumulated a price increase of 8.4% and international flights of 12.5%, although in July they were 1.2% cheaper than a year ago. Hotels, hostels and pensions increase their prices by 8.9% per year. As Caixabank details in its quarterly report on the tourism sector, “the higher the category, the higher the inflation rates have been.”
massification. “We are facing another record year, but I think we should take it with a grain of salt because there are more and more crowded destinations and this is beginning to cause quite a few coexistence problems between locals and tourists,” analyzes Diego Santos from the EAE Business School. Destinations with smaller populations such as Santiago de Compostela are suffering greater tourist pressure than cities such as Barcelona. The Galician capital received 95,691 travelers according to the INE hotel occupancy survey, almost as many as the number of people residing in the city.
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2023-08-18 04:01:32
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