My students here in Barcelona speak English among themselves. And they spend most of their time together, in small or large groups. They can be attended in English in stores and restaurants. They do have their home stays, though there are two students to each house, and we speak Spanish in class, but the program is only 6 weeks long. I think I was in Spain four months the first time before I began to understand what people were telling me. I had a much more immersive experience.
[I feel embarrassed when I have to switch to Castellano instead of Catalan. Just being able to say bona nit or adeu or fins ara feels satisfying. When I bought a folder in a papeleria I was able to say "blau" instead of "azul' when asked for the color I wanted in Catalan. I am very proud of a few conversations I had in Portugal in which the entire thing transpired in Portuguese. I am reading a long tedious novel by Saramago in Portuguese.]
It's not really the students' fault. It is very hard to speak in Spanish to people when the common language you have together is English and your Spanish is not so fluent. The group dynamic is so much stronger than the impulse to practice Spanish. Touristic experiences, even with a cultural aim, end up being, well, tourism, not study. The students are not dissatisfied, since they are having fun, but I think we should have some kind of pledge not to speak English, like they do in Middlebury.