The good, the bad and the ugly of cut-price tourism - Monocle Monocolumn / 2011
14/02/22 09:54
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A daily bulletin of news & opinion
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27 July 2011
THE GOOD,
THE BAD AND
THE UGLY OF
CUT-PRICE
TOURISM
— Lisbon
As high summer approaches, it’s easy
to resent the summer tourist hordes on
your turf, but for many in Portugal, the
increasing number of visitors is a
welcome sign that their country is still
open for business.
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According to Paulo Rita, MA director
at the ISCTE Business School Lisbon,
incoming tourist receipts went up 8.7
per cent between January and April
compared with the same period last
year. Last year, the number of foreign
tourists had already risen by 6 per cent,
recovering most of 2009!s 8 per cent
fall, while hotel revenues increased 3
per cent. British, German, Spanish and
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The good, the bad and the ugly of cut-price tourism - Monocle Monocolumn / 2011
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14/02/22 09:54
French holidaymakers accounted for
nearly two-thirds of all international
tourists – significantly, at a time when
the number of people travelling from
those countries decreased.
Allan Katz, the US ambassador to
Portugal, says the country should be
targeting the American market, as it
has everything it is looking for (“old
things, good food, good wine”).
Europe’s other troubled members,
Greece and Ireland, are seeing a similar
boost in visitors, given the weak euro (a
draw for visitors from the US), VAT
rate slashes for tourists in both nations
(down from 13.5 per cent to 9 per cent
in Ireland), and price reductions on
tourist attractions and hotel rooms.
“It is understandable that when facing
macroeconomic difficulties, firms try to
entice consumers with severe price
reductions due to more fierce
competition,” Rita says.
This popularity has its downsides,
however. TAP, Portugal’s flag carrier,
has lost billions in the last four years
thanks in no small part to the rise in
budget airlines, namely easyJet, which
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The good, the bad and the ugly of cut-price tourism - Monocle Monocolumn / 2011
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14/02/22 09:54
has settled in at Lisbon’s Portela
airport. Ryanair, which has bases in
Porto and Faro, has also made public
its interest in having a third base in
Lisbon. TAP has lost many passengers
on routes to London and Paris because
of, it believes, aggressive marketing
techniques and skewed perception; the
airline is not that much more expensive
than low-cost providers. “If we go too
far down the cut-price holiday path,
margins will become too narrow
because of substantial price cuts,”
warns Rita. “If companies are cutting
costs significantly, this will undoubtedly
affect service quality.”
Luís Faria, co-founder of think-tank
Contraditório, points out that the last
few decades has seen a number of
different sectors successively elected as
the catchall solution to economic
problems, without much success –
tourism being the evergreen “holy
grail”.
“The role of government should be to
remain sector-neutral and to unleash
entrepreneurial energies across the
board,” he says. “In tourism, like in any
other sector, new practices should
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The good, the bad and the ugly of cut-price tourism - Monocle Monocolumn / 2011
14/02/22 09:54
emerge by ongoing experimentation.
Instead of showing what the ‘right way’
is, Portuguese people should be given
the opportunity to fish when the fish
are there – not just when the weather is
good.”
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