Exchange Rate Hides Changing Market

The weak Pound has masked an underlying trend in tourism that will affect many expat owned businesses on the island.  The nature and demographics of the British tourist is evolving and business owners in Tenerife need to adjust to changes in their market because even an improvement in foreign exchange rates may not bring back their custom.

The weak Pound has given business owners a reason for a drop in demand.  Still hovering at the 1.1 mark, it seems an age ago since the Pound occupied the lofty height of 1.40 and beyond.  Back then, the shops, restaurants and bars of Tenerife were cheap for British tourists who make up the bulk of the island's visitors.  And cheap tourists came in their droves.

But even as the UK starts its erratic ascendancy from recession and holidays are being booked once again, the businesses that served the bargain basement mass tourism boom are still struggling.  Bars offering a Euro a pint attract a few stragglers, because the crowds have moved up the road.  Newly opened bars and restaurant, with their designer décor and prices to match are the ones pulling the punters.

The nature of the British tourist is changing fast, and so are their demands.  This change in demographics has been the aim a long term strategy by Tenerife's Tourism Authorities.  The marketing of Tenerife as a quality destination and the preponderance of four and five star hotels have contributed to the changes in tourist demand.  The discerning tourist is the future of Tenerife and local businesses need to adapt. 

Many of the local businesses that appeal to the 'old style' tourists are expatriate owned.  Opened by people who themselves were once tourists, they have that feeling of being stuck in time.  It is these bars and restaurants that are feeling the tightest pinch now.  Slashing prices and reducing profit margins has become their last weapon, trying to restore some power to the tourist Pound.  Its a short term tactic that will work as long as the Pound stays weak and the British economy is still struggling.

But these businesses are fighting a losing battle.  As the British economy recovers, whether it is accompanied by a strengthening Pound or not, Tenerife's tourists will be looking for more than 'cheap'.  Tenerife Businesses should take a long, hard look at themselves and ask if they are providing what the market really wants.