Mallorca hoteliers lobby government for permission to convert hotels to residential projects as tourism collapses

Santanyi, in southeast Mallorca homes for sale
Mallorca in better times

Hoteliers in Mallorca want permission to convert obsolete hotels into housing as the collapse in tourism bites especially hard in the Balearics, and exposes the weakness of a sector that has under-invested for decades.

The coronavirus crisis is a disaster for hotels all over the world, but the outlook this year is particularly bleak for hotels in the Balearics, where access is more dependent on air travel, with no chance of getting to the islands by car of train.

It’s too early to say for sure, but it looks like the restrictions on air travel will make cheap flights to Spain a distant memory for most of this year. It’s hard to imagine how budget airlines can operate profitably with the social distancing rules being discussed. Michael O’Leary, boss of Ryanair, bluntly stated they won’t fly if they have to leave the middle seat empty in every row. He called the proposal “mad”.

So, whilst a summer holiday on mainland Spain still looks possible, arriving by car and renting a holiday-home, a break in the Balearics might be harder to pull off. That’s just the way things look right now.

If the tourist season is a write off this year, many of the smaller, family run hotels in the Balearics could be forced out of business, in a local economy that is already highly dependent on tourism.

A significant chunk of the hotel sector in Mallorca has been run for years or even decades without reinvesting in the business. As a result, there is a large stock of hotels in Mallorca that are cash poor yet in desperate need of renovation, with little hope of attracting discerning tourists when they holiday-makers start trickling back. These hotels businesses are at risk of being wiped out by the Covid-19 pandemic.

Change of use

Therefore it makes sense that the hotel lobby is looking for ways to turn these obsolete assets into something of value. The hotel industry federation FEHM is lobbying the regional government to make it easier to get change of use permission for hotels to be turned into residential accommodation.

Housing affordability is a serious problem in many parts of the Balearics, so there should be demand for more housing in certain parts of the island, offering an potential exit strategy for some hotels with no future.

This idea was already on the table before the coronavirus crisis, but has been made more pressing by the crisis. “It’s not the first time we have proposed this possibility, but now that we are in this extraordinary situation, it would be a good moment to implement it,” explains María Frontera, President of the local tourism industry federation FEHM, in comments to the Spanish press.

Old hotels in need of renovation will be some good locations, close to the beach, for example.
The hoteliers argue this move would help access to housing for young people and disadvantaged families, though it all depends on the location.

The hotel lobby is also begging for investment incentives, tax breaks and less red tape to upgrade facilities whilst empty. In my experience the Balearic region is one of the worst for red tape stifling business and investment, even by Spanish standards.

The way things look right now, with social distancing and travel restrictions still in place for the foreseeable future, it’s hard to see how hotels in Mallorca will be a viable option in time for the summer holidays. Holiday rentals, or self-catering aparthotels, might make more sense this year. It’s a disaster for an industry that was already struggling with home-made headwinds and reeling from a bad year in 2019.

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