Hoteliers have commenced negotiations with both German and British Tour Agencies for summer 2011.
The President of the Federation, Juanjo Riera, has expressed his concern that it will be more difficult to sell tourist beds next year because of the increased costs due to the increase in VAT rates, in a market which remains very price orientated. He continued that his members were not just reliant on the national economy, but on the financial situations in Britain and Germany too. Therefore, the early forecast was for another tough year in 2011 as European Governments continue with their cost cutting measures.
Riera continued by explaining that changes have been made in the way contracts are negotiated, as previously they were based on “guarantees”, where the tour operator paid for the amount of rooms contracted, regardless of whether they were occupied or not. However, the majority of hotels will now only get paid for rooms which have been sold, ensuring there is a constant price-war amongst the island’s biggest hoteliers.
Despite this constant battle Palma remains the second most expensive place for hotel rooms in Spain. According to the monthly European room rate check carried out by Trivago, the average room rate in Spain is €95 per night, whilst it hits €140 in the capital of Mallorca, putting them only just ahead of San Sebastian on €145.
However, there was good news in general as industry experts confirmed Spain would continue to be the UK’s number one holiday destination as the demand for independent holidays, rather than on traditional packages, continues to increase.
Speaking at a Barclays Travel Forum last week, Paul Evans, Low Cost Travel Group chief executive, challenged the misplaced consensus that everyone was now going to Turkey and Egypt. In fact UK numbers to Turkey were down this year, with the destination only gaining share in the traditional charter market.
Evans said: “We have to look at Spain and Turkey in proportion. You have 22 million people going to Spain, five million going to Turkey.”
He continued, “Of course Turkey is up because you are measuring the package charter market which is a minority of the overall market. Look at Spain, the majority of people are going on low-cost or scheduled carriers. Spain will always remain the number one market for the UK.”