Putting Tenerife Recession into perspective

"If you can keep your head when all about you are losing theirs ... " - Rudyard Kipling

A voice of reason speaks out about recession in Tenerife

There are so many people who are now feeling so depressed about the global economic situation that not only have they become resigned to the fact that they are in deep trouble, they have also told everybody else that they are soon to be in deep trouble.

Pessimism has an uncanny knack of being self-fulfilling.

There’s no wonder that almost every single quoted share in the world has gone down significantly, most by at least 40% and many by much more. In some cases this so ridiculous that we have the situation where the total value of a company’s shares is equal to less than the amount of money they have in the bank!

Even the most solid companies, such as HSBC, which has no real exposure; or BP, which has significant oil reserves; or a company like Dell, which has an enormous amount of cash - the shares of these companies have traded down considerably.  That is the result of our general pessimism.

The present condition has also been a wake-up call for those who have lost sight of understanding the businesses in which they invest. There have been far too many people out there trying to profit from the shuffling of papers and commodities and derivatives and options and hedging: really sophisticated instruments - but all too clever by half.

What we all need to do is to sit down, calm down and go back to basics.  And most important of all, to shed this sense of pessimism.  It is only with a sense of optimism, preferably accompanied by a sensation of energy and laughter, that we will be able to pick ourselves up and trade in today’s conditions and not look back wistfully at easier times.

Finding ways to do business today and ensuring that there is a future, is the way forward.  Remember; when the going gets tough, the tough get going!

What has this to do with Tenerife?

It’s exactly the same scenario but in miniature.  Yes the number of tourists has dropped…… Stop and think about by HOW much, 5%? If your business directly depends on the physical presence of tourists, this means that instead of serving 20 clients you’ll serve 19! Hardly a disaster is it?

Even if that drop will amount to 10% in 2009 is it really a disaster or could YOU improve your business marketing/business management? Are you sitting around moaning (being pessimistic) or are you taking a good, hard look at your business practices?

We know that for clients visiting from the UK the value of the pound has declined dramatically over the last twelve months but even though people will grumble and cut back on some things tourists will still spend. Large differences in currency values have happened before and will happen again. Just ensure that you provide the right conditions for clients to spend money in YOUR business.

We know that times are a little more difficult but unless we have a real catastrophe such as another ice age, Tenerife will always have the best climate in the world and millions of people will want to holiday here.

We hear doom and gloom for the Tenerife property world but it’s not all bad news, think of the tens of thousands of UK residents who own property in Tenerife, their property value has rocketed in relation to the pound. A Tenerife property that was worth £100,000 in late 2007 is now worth £145,000 or perhaps a little less if you wanted to sell quickly, a pretty good return in any language. Compare today’s value of any Tenerife property bought two years ago to the value of bank shares (usually considered one of the safest share investments) bought at the same time.

Tenerife property gives excellent letting returns in the long term. With it’s wonderful climate Tenerife property can be let to holiday makers all year round, we have slight ups and downs in demand but overall higher than almost anywhere in the world. We have:-

• Winter visitors who visit Tenerife to get away from the cold climes of Europe, often staying for more than the normal 10 days/two week holidays of other seasons.
• Winter half term which varies from country to country and even for differing areas in the same country, there’s also Tenerife Carnival around this time.
• Easter holidays, not only for Northern European but a heavy demand from mainland Spaniards.
• Summer holidays, the traditional two week holiday usually taken in June, July and August.
• Late summer, September/October, often favoured by people with pre school age children and pensioners.
• Autumn half term when Tenerife offers lovely sunshine when the rest of Europe is starting to shiver.
• Christmas and New Year, the busiest two weeks of the year for Tenerife.

It’s far from unusual for clients to get 40 weeks bookings per year and for those who offer really good accommodation and have built up a good returning clientele it’s not unheard of to get 50 weeks bookings with two weeks set aside for refurbishment/decoration.

Good rental returns as well as one of the most stable property price regions in the world, what more could you want?
When I visit my clients I always walk in with a smile on my face, who can say no to a smile? Come on people, wake up, be optimistic, smile and let’s welcome our clients to this wonderful island.

Rob Carless
Tenerife Ideas S.L.