Tour operators are said to be obliging hoteliers in the Balearics to lower their prices for 2020 or they will prioritise other destinations. In addition, tour operators are reducing bed quotas under guaranteed contract.
Gabriel Escarrer, CEO of Melià and the president of the Exceltur alliance for tourism excellence, recognises that the situation is delicate. With contract guarantees going, it will be hoteliers who have prepared for this circumstance who will suffer least in 2020.
The president of the Majorca Hoteliers Federation, Maria Frontera, explains that guarantees came about so that tour operators were assured of having minimum numbers of hotel beds to meet holiday package demand.
Tour operators now requiring lower prices will be, she says, "the general trend". Hoteliers will have to improve their contract negotiations in line with the "tourist product that we have" and adopt other marketing channels to complement that of tour operators.
Hoteliers in the Balearics believe that lowering prices is not the best way to remain competitive because of the negative impact this has on their bottom lines. But there is ample evidence of hoteliers already having done this for 2019.
An additional concern for the islands' tourism industry is that the Greek government has announced a reduction in the tourist rate of VAT from 24% to 13%. This is designed to increase Greek tourism industry competitiveness.
Gabriel Llobera, president of the Association of Hotel Chains, says that this is not good news and just adds a further problem for next year.
The tourist rate of VAT (IVA) in Spain is 10%.