By Adam Clark

Planning to visit Barcelona for your summer vacation? You might want to wear a bathing suit.

Last year, protests on Barcelona's famous La Rambla boulevard made headlines when demonstrators squirted tourists with water pistols -- part of a worldwide backlash against tourists that continues today. Just this month, Venice announced it will continue to tax day trippers -- about $6 on certain busy days if paid in advance.

Barcelona residents complain they are being squeezed out of the center of the city and its housing market by the unwanted hordes -- 15 million tourists last year. The city's mayor, taking aim at Airbnb, plans to remove the more than 10,000 tourist apartments by the end of 2028 by not renewing their licenses.

Cruise lines, meanwhile, are being forced to dock outside of city centers in Barcelona and Amsterdam. In some ports, they have also agreed caps on the number of visitors.

So-called overtourism isn't the only challenge facing travel companies. Tourists from Europe and Canada, among other places, are canceling trips to the U.S. as the Trump administration wages a trade war against their nations. And water pistols aren't the only problem for Americans visiting Spain: The recent decline in the U.S. dollar makes overseas travel more expensive.

Still, analysts who follow the travel industry are undaunted as companies find ways to fight back. As some ports in the Caribbean complain about the crowds, the big cruise lines are building private islands where the biggest worry for cruisers is whether to order a piña colada or a margarita.

Royal Caribbean rebranded Little Stirrup Cay island as Perfect Day at CocoCay in 2019 with a $250 million renovation. The company plans to open another three private ports over the next three years, including Perfect Day Mexico resort in 2027, which is expected to be its largest private destination. Carnival Corp. plans to unveil a $600 million destination on the island of Celebration Key in July, welcoming up to four million visitors a year and adding to its six existing private island ports.

Analysts at Exane BNP Paribas expect Royal Caribbean to have 11.7 million visitors annually to its private ports in 2027 and Carnival to have 8.5 million. They recently gave Outperform ratings to Carnival and Royal Caribbean largely on the prospects for growth in their private island business.

In Juneau, Alaska, the industry body Cruise Lines International Associated negotiated a limit on daily cruise passengers, effective in 2026. "Cruise tourists are responsible, high-value tourists, who spend at a higher rate than other land travelers," the group said in a statement. "The destination knows exactly when ships will arrive with how many guests. The same cannot be said for other forms of tourism."

Airbnb faces a different challenge. In Barcelona, the platform has become synonymous with the sound of suitcases rattling over tiled streets in the crowded city center. Barcelona intends to freeze the number of tourist beds, including Airbnb and hotels, at the current level of around 150,000, while concentrating on cultural tourism, said Mateu Hernandez, director-general of Turisme de Barcelona, a public-private agency that promotes the city.

Owners of Barcelona tourist apartments are fighting back, seeking compensation of more than 4.2 billion euros, or $4.8 billion. Antoní Gutiérrez began renting out his apartment to tourists in 2013, and now manages 17 apartments on behalf of their owners. His business is at risk from the planned removal of tourist-accommodation licenses. "It seems unfair to me," he says.

Losing access to Barcelona would hardly be a crisis for Airbnb, which ended last year with more than eight million active global listings. The danger is that other cities follow Barcelona's example. Airbnb has already been hit in New York, where regulation on short-term rentals introduced in 2023 took almost 19,000 listings off the market according to market-research firm AirDNA. "If other geographies emulate these regulations, it could have a material adverse effect on our business and financial condition," Airbnb said in its annual 10-K filing.

"From New York to Barcelona, disproportionate blanket regulations have failed to address local challenges," an Airbnb spokesperson said. The spokesperson added that since a moratorium on tourist accommodation licenses was introduced in 2014, housing and overtourism challenges in Barcelona are "worse than ever."

One hope for Airbnb is in diversifying its business, into new product categories and into markets such as Latin America and Asia. Airbnb said in February that it will invest $200 million to $250 million to set up new businesses, with the aim of generating $1 billion in revenue. The company hasn't said what the products will be, although analysts have speculated they could include offering ways to rent transportation and home improvement for hosts.

One initiative that has already been announced is the relaunch of "experiences" to go along with rentals. Airbnb began to offer a limited array of excursions along with accommodations in 2016, but largely set the initiative aside when the pandemic hit.

Robert Mollins, an analyst at Gordon Haskett Research Advisors, said the experience launch should be more successful this time with better marketing and integration with the core platform. He noted that Airbnb has historically taken a 20% slice of the value of an experience purchase, much higher than the 3% commission it takes from hosts on accommodation.

Mollins upgraded his rating on Airbnb stock to Hold from Underperform in a recent research note, arguing that investments in new products should help underpin its margins and premium valuation.

Write to Adam Clark at adam.clark@barrons.com

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April 26, 2025 05:00 ET (09:00 GMT)

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