UK tour operators are putting pressure on Majorca’s hoteliers to get them to lower prices for 2017. The fall in the value of the pound since the referendum result is affecting demand, they maintain.
The hoteliers, however, are totally unwilling to accede to this, especially the hoteliers from the Palmanova-Magalluf association; the two resorts account for 46% of their business. Sebastián Darder, the association’s president, says that tour operators are making these requests but that they aren’t getting anywhere with them. There are other overseas markets which can fill beds, and their tourists will be paying what has been agreed for 2017.
The fall in the pound to its lowest level since summer 2013 is affecting British tour operators’ results and their expectations for 2017. The British tourist, it is reckoned, will be losing between 15 and 20% of spending power. This will therefore lead to a drop in bookings for next year.
During this summer, Majorca’s hoteliers have been negotiating increases of nine per cent with the leading tour operators, such as Tui, Thomas Cook, Monarch and Jet2, in contracting quotas of beds for the next season.
Darder concludes that if the UK tour operators can’t accept the increased prices, there are tour operators from elsewhere - Scandinavia, France, Italy, for example - which can.
Hugh Morgan told the Bulletin today that Spanish hoteliers, including Majorca's, have already been warned not to "kill the goose that lays the golden egg" by pushing up prices next summer.
The non-executive chairman at Broadway Travel Service, who now lives full time in Palma after having owned a property on the island for over 20 years, said that "greedy" Spanish hoteliers cashing in on record-breaking visitor figures could damage Spain in the long term.
Spain was the UK’s top destination in 2016, accounting for nearly 28% of trips abroad, according to government figures, and benefitted from a shift west due to terrorism in Turkey, Egypt and Tunisia.
"Potentially, prices in Spain are not sustainable," Morgan said. "Suppliers need to be careful not to kill the goose that lays the golden egg. You can’t control the markets, but some hoteliers have upped their prices by 15% to 20%. You might call that greedy and, add to that the drop in the value of the pound, we can modestly say that right now holidays for next year are nearly 35 per cent more expensive, with Greece and Turkey coming back online.
"And as soon as the FCO lifts the flight ban, the Britrish will be voting with their feet and flocking back to Egypt to the new, five-star, well-priced hotels."
The former Monarch chairman, who is executive chairman at Cosmos Tours & Cruises, said price hikes could see people seeking better value outside of Spain.
"We’ve seen this before. Yes, I can understand the hoteliers’ point of view - let’s make a killing - but it will not last. Maybe they will reap the rewards of geopolitical problems around the Med for another year or 18 months, but things will settle down and competing markets will hit back hard. Majorca, for example, will have suddenly found it’s not only priced itself out of the market, but by being smug it will have damaged important relations with the tour operators, whose turn it will then be to play hardball and turn the situation on its head.
"The short term fast buck doesn’t last forever and Majorca should have more foresight by now."