No Spain, no gain?
The irony of Gibraltar's headline status is not lost on Peter Canessa, the chief executive of the tourist board. "As a tourist destination, Gibraltar is doing quite well out of all the publicity," he says. "Lots of the UK national papers have been here and written about the political situation."
The political situation he refers to is Tony Blair's controversial decision to seek agreement with Spain over the future of Gibraltar. The proposal of joint rule has met with anger on the Rock. One of the last remaining corners of the British Empire, Gibraltar has been British for 300 years and most of the 30,000 population want it to stay that way. In March nearly 15,000 people demonstrated against Blair's plans and abusive names were hurled at Foreign Secretary Jack Straw when he visited in early May. Whatever the politicians decide, Blair has promised to put it to Gibraltarians in a referendum.
From a tourism perspective, however, publicity is exactly what Canessa wants, especially after the turmoil of 2001. This January the Gibraltar Tourist Board (GTB) began a PR campaign in London, believing it was a good time to target those travellers who were looking for short-stay options in Europe.
As a result there are posters at 100 Underground stations and 50 black cabs are painted red, white and blue with "Solid as a Rock" slogans. Radio ads on Jazz FM and London News Radio ran early in the year and an 0800 number was launched.
The GTB spent £100,000 on the campaign - money that would otherwise have been used on direct mailings. The post-11 September fallout was not as bad as had been anticipated initially and Canessa says the only area to suffer was the cruise business. In 2001 there were 150 cruise ships calling at Gibraltar, down from 175 the year before. Only 165 ships were scheduled to arrive for 2001 so the fall is not as great as it first appears.
Figures for tourism in general are less precise. In 2001 seven million people arrived in Gibraltar through the border with Spain or at the airport, but only 4.5-5 million were genuine tourists as opposed to those using the airport to get to southern Spain.
The tourist board's campaign would seem to indicate there is little concern over the political turmoil. Indeed, Canessa himself does not believe the outcome of this summer's deliberations will make any difference to the tourism industry on Gibraltar and so he is still working on a rolling plan of improvements.
But do hoteliers on the Rock share his optimism?
"Would joint rule with Spain affect us? The answer is, probably no," says Franco Ostuni, executive director at the 169-bedroom Caleta Hotel and chairman of Gibraltar's hotel association. "In fact, an agreement with Spain would open Gibraltar's airport, which would be positive. After all, access is the essence of our business."
His sentiments are matched by Stephen Davenport, general manager of the 104-bedroom Rock Hotel.
"The reality is that if the frontier is open, Gibraltar could find itself an extension of the Costa del Sol and we might get better occupancy because of that," he says.
Davenport estimates the three four-star hotels in Gibraltar have an average annual occupancy of 67%. The total average occupancy for all the hotels in 2001 was 49%.
The question is: how would Gibraltar's four-star hotels compete against the much cheaper Spanish hotels?
"It would be hard for us to attract Spanish clientele because our hotel rates are run on the UK currency. For Gibraltarians going to Spain the hotel rates there are well within their budget," Davenport says.
The Rock Hotel's average achieved room rate before 11 September was in the £75-£79 range. At the Caleta the average rate is £70 on rack rates of £145.
Canessa also believes an agreement with Spain would make life easier for tourism in general. Because Spain does not allow direct flights to and from Gibraltar, few Spaniards visit the Rock for tourism purposes. Joint rule with Spain could mean direct flights from Madrid or Barcelona, potentially opening up a city-break market, Canessa says.
Some local Gibraltarians believe the Spanish, not wishing to be reminded of Britain's long history there, would close the historic siege tunnels and sites of (British) military significance rather than see them benefit from tourism.
But Canessa does not think they would be so short-sighted. "Why would someone want to destroy a sure crowd-puller and money-generator?" he asks.
Ostuni is sceptical that Gibraltar will ever attract Spanish leisure visitors in great numbers, but he does see the advantage for business travellers to use the airport to access nearby Algeciras, where there is a large oil refinery on the southern Spanish coast.
Shopping destination At present there are too many unanswered questions for the hoteliers to predict accurately the outcome of a joint-rule decision. Gibraltar is VAT- and duty-free, making it an attractive shopping destination for many Britons. It has also built itself a reputation as an offshore financial centre, and much of the corporate business focuses on this.
At the Caleta, corporate business accounts for 40% of turnover, with leisure accounting for the remaining 60%. Of that corporate business, Ostuni estimates the financial sector accounts for 50%. He acknowledges that agreement on joint rule with Spain could jeopardise Gibraltar's offshore status.
Regardless of the outcome of the political wranglings, hoteliers and the tourist board alike know the airport is the key to improving tourist numbers. At present the landing strip is controlled by the UK's Ministry of Defence. The MoD sets the landing fees for carriers, and only GB Airways and Monarch fly to and from the UK. Low-cost carriers are not an option because they usually fly to secondary airports - and, more crucially, because Gibraltar's landing fees are too high.
"Gibraltar is a walled city in some respects with no natural catchment area that you can work outside of," observes Davenport, neatly summarising the challenge the hotels face. Travellers must be wooed from the UK, and for that air seats are needed. The current airlines are based in the South of England, realistically restricting the UK catchment.
Canessa is in talks with Fly Europa to begin services from the beginning of July five times a week from Stansted and twice a week from Manchester, opening up the North of England and giving Gibraltar an extra 45,000 passengers annually. The long-term plan is to give these extra passengers somewhere to stay, and Canessa talks of a three-star, 100-bedroom hotel planned on the east side of the Rock to be finished by 2004.
For the Caleta it would be competition, which Ostuni welcomes, but he sounds a cautionary note. "We are concerned about another hotel in Gibraltar without an increase in the [air] capacity for more visitors. Another hotel would just dilute market share," he says.
If agreement is reached with Spain, however, the hotels in Gibraltar may face a larger threat from the competition on the Costa del Sol. Only time will tell what challenges the Rock of Gibraltar's hoteliers face next.
Factfile
The Caleta Hotel
Tel: 00 350 76501
169 bedrooms
General manager: Franco Ostuni
Turnover: £2.4m
Average achieved room rate: £70
Business: 40% corporate; 60% leisure
Guests: 90% British
The Rock
Tel: 00 350 73000
104 bedrooms
General manager: Stephen Davenport
Turnover: £2.7m
Average achieved room rate: £75
Occupancy: 67% (pre-11 September)
