Beyond “Tourist Traps”: The new rules for starting a successful business in Ibiza

Starting a business in Ibiza? Yesterday, I was reading the newspaper and found this article that is about a “very disappointing” season for some business owners . Then there is a photo of a street in Playa d’en Bossa which I know well as we live close-by. For me it is a miracle that some of these businesses generate an income at all… Same dresses, same bikinis, same shirts, same souvenirs… every year… open in April, close in October. Just open, wait, close.

It really hurts when I read this newspaper and see local shop and bar owners suffering due to declining revenue/income. This is not something new as similar articles about complaining business owners have been appearing as long as I am on the island... It gives a bit of a negative vibe. Especially, if you add up the affordable housing problems, it kind of highlights inequality on the island, a trend that seems to intensify in the past years. However, this is another topic. Why is the center of Santa Gertrudis, the Jordaan in Amsterdam or Notting Hill in London popular by tourists? Because it doesn’t offer the same tourist traps that people have had enough of. People are looking for authenticity, the local vibes and the local culture. Business owners, please adapt! It’s you that needs to put in the effort. Instead of opening & waiting, you need to be creating & hunting , just like anywhere else in the world where social media and influencers are taking over.

The numbers behind this story.

As most of you know I always back up my thoughts and conclusions with data. So, I have put in all day yesterday to investigate the business landscape of Ibiza in the past years. Find the facts here:

1. The number of businesses in hospitality in Ibiza has increased by 25% from 2020. (Source: IBESTAT)
2. 70% of businesses in hospitality have increased the number of staff compared to 2020. This means, the ones that are doing well are doing better (think more tables, food shifts).
3. Between May-2017 and May-2020, prices went up by 1,2%. Between May-2020 and May-2024, prices went up by 20,1%! Part of this is covered by increased wages, the other part should be compensated by choosing chicken over steak in a restaurant. Or adjusting the time of the stay.
4. Tourists are now staying in Ibiza for shorter periods. In May 2017, the average stay was 5.9 days, but by 2024, it dropped to 4.2 days in May. (June 2017: 5.9 days and June 2024: 5 days).

1. In 2018, one person would spend €172,30 on average per day. In 2024, this same person spends €207,93 per day. This is 20,7% more which - on average - equals the yearly salary raise of 3-4%. (Source: IBESTAT). However, the price increase - as mentioned above - happened in the period between 2020 and 2024 which makes us feel it much more in the past years...

Other trends to consider…

1. Going back to the article where many local business owners complain about their income... Fashion... Where you would see a lot of men walking around in fluorescent shirts from the big clubs, todays' Generation Y and Z are much more fashion-conscious and skip these "souvenirs".
2. Influencers, friends and Instagram decide the itinerary for the visit. If you are not on the list, forget it. You need to be on the hunt for your clientele.
3. With current prices in Ibiza, the middle-class tourist becomes a budget traveler in Ibiza.
4. Todays' buyers are looking for experiences… A mediocre business in a highly competitive market is set for declining numbers.
5. Ibiza is becoming an all-year round destination, tailor your business to the local buyer and tourists will follow… Location is everything in Ibiza!

Ask yourself the following questions before starting a “new concept”…

1. Are you passionate about the industry that you are starting your business in? Live and love your concept… Don’t just start something because you think there is a market for it in Ibiza.
2. Whom are you selling to? Is your product/presentation that special that people will drive for it? (In Ibiza, you need people to get into their car to come to you). High traffic locations are almost non-existent.
3. What way can you market your business next to just being there on the spot? Think of online marketing, partnerships with other local businesses, mouth-to-mouth, and so on…
4. Is your idea to start another venue in hospitality? Do your research on competitors… Also, think about whom you are going to hire and how to offer a competitive salary package if you are looking for long-term commitment. There is a huge housing shortage, so offering a high-end service might be a problem if you constantly need to train new people.
5. Do you have enough budget to start? Unless it’s part of your business concept to offer something basic, you will need to be prepared to invest. A strong business concept goes beyond a logo and a good product. It’s the (small) brands that survive, be unique, invest in a meaningful space for your concept. Typically, we see local brands investing in the full picture be more successful than the ones trying to do the minimum.

“The Big Idea”:

Don't just open and wait. Create something special and go find your customers! Use social media, team up with other businesses, and make sure people are talking about you. ALWAYS start with a brand strategy that includes the visual part and a very clear formulation of goals/ideas. Before having this, don’t even start with a marketing plan. Ibiza (and the world in general) is changing, and your ideas need to adapt. Think about what makes Ibiza special and how you can be part of that. Create experiences... Connect with the local community and the island's unique culture. If you can do that, you won’t just survive in Ibiza – you’ll have some amazing time ahead!  

Some good examples:

Papaduk . I think this is one of the best examples. The location - being below an averagely maintained residential building, next to a painting shop and some offices - is not the first one you would think of when starting a high-end perfume shop. Still, this business is doing very well and is thé gift shop on the island. A proof that a strong concept can survive anywhere.

Panevino - located just 5 minutes from our office- shows that you don't need a lot of investment to make a good restaurant. What makes it special? They serve lunch foods that are different from the usual dishes. The meals are creative, tasty, and not too expensive. If you want to open a restaurant, take note. Make food that's special to you. Be creative. If your food is good and unique, people will talk about it. Over time, more and more people will hear about your place. We need more places like Panevino in Ibiza...

Tsuma Ibiza . With a view on a gas station, next to a busy road, this place looked doomed to fail. Especially, if you think about spending €100 a head. However, walking into this place, you forget about the gas station and everything breathes quality...  The owners Magdalena Kasprzyk and Piotr Perzynski  are passionate about their products and the quality. The magic? The quality from start to end. From visiting their Instagram page (that makes you want to book instantly), to having your first bite (that wants you to have another, and another...) to leaving happy having, even when spent a fortune...

Good products or services and a strong idea are more important than just being in a busy spot. The key is to focus on making your business unique and your products or services excellent. If you do this, people will come, no matter where you are. A so-so concept in a busy place might not do as well as you'd think...