Spanish beaches busy, but tourist spending down

By Ben Harding

BENALMADENA, Spain (Reuters) - Few Spaniards would sacrifice their annual summer vacation. But while Spain's beaches are still busy, shops and restaurants at its resorts are ominously quiet as the country's economic crisis envelops the tourism industry.

After 50 years of uninterrupted growth, Spain's overbuilt and relatively expensive resorts seem ill-placed to cope with a downturn, at a time of increasing competition from cheaper, less crowded destinations like Croatia and Turkey.

"In 48 years, I have never seen losses like this; tourism bosses I'm talking to have never suffered so much," said Domenec Biosca, president of Spain's Association of Tourism Directors and Experts.

He said that in many parts of the country, tourism is already in deep recession, as both Spaniards and foreigners travel less distance, stay less time and spend less money.

Spain's biggest hotel group, Sol Melia, reported profits fell 41 percent in the first half of the year, while those at business hotel group NH dropped 20 percent.

Revenues in the Canary and Balearic islands have fallen as much as 12 percent this year, Biosca estimated, predicting that such mature destinations will gradually decline in the face of foreign competition, despite lowering their prices.

Benalmadena, a resort near the southern city of Malaga, is one such mature destination.

Its wide strip of golden sand is shadowed by 1970s hotels, high-rise apartments and cul-de-sacs of whitewashed houses that stretch in a 50 km (30 mile) swathe of concrete from Malaga in the east to Marbella in the west.

While the town's beach was packed with sunbathers on a typical afternoon in late August, despite the explosion of a small bomb by Basque separatist group ETA on August 17, local businesses said sales were down.

British and Spanish tourists strolled past Hami Bhot's beachwear store, but only a few entered and fewer still spent any money. Takings have halved this summer, he said.

"I can perhaps survive another year but then I will have to close. Maybe I will go back to India; the economy is better there," said Bhot, who had dimmed the shop's lights to save money.

EURO TROUBLE

Tourism, which accounts for up to 15 percent of Spain's GDP and one in seven jobs, is suffering just as the economy needs it to take up the slack left by the rapidly contracting construction sector.

Until recently, towns on Spain's coasts relied on construction for most of their income and growth, but as foreign home buyers shun Spain, these towns can ill-afford to lose tourism revenues as well.

For the first time in a generation, Spaniards have had to slash spending on things like vacations as their incomes stagnate, prices rise and credit dries up. Unemployment, which leapt by over 100,000 in August to a 10-year high of 2.5 million, has become a major concern for the first time in years.