The Balearic tourist industry is going to have a tough summer and will not see signs of a recovery until 2005, said the managing director of Thomas Cook, Manny Fontenla-Novoa in Palma this week. The biggest problem, especially in the United Kingdom, is that there is a lack of confidence on the High Street and families are not travelling, hence the Balearics, a family destination, is suffering the most. However, the Balearics have not helped the situation either and were too slow to react to September 11. Thomas Cook, which owns JMC, was one of the tour operators that was quick to respond and immediately started talking to overseas hoteliers about how to best deal with the situation. Manny said that in most destinations hoteliers and the tourism authorities were keen to help and discuss price reductions, etc. But in the Balearics, hoteliers refused to drop prices and adjust to the sudden shake-up in the market. Most of the hoteliers, including the authorities were resting on their laurels thinking that the Balearics, as a safe destination, will ride the problem because whatever the cost people will always come here, but that has not been the case. It (the Balearics) was too slow to react, there were no promotional campaigns in the UK, Manny said. He added that now the tourist industry is paying the price for failing to spot the market trends as other destinations have. It's not a security issue, it's a price issue and with Britain hit by thousands of job cuts for the sake of £5, a family will go somewhere else. However, by going to Greece or Turkey, some people are saving £60 to £70 a head, Manny said. He also added that the tourist tax, especially the confusion with some hotels charging it and others not, had not helped. Katy Sayburn, area manager for the Balearics, said that there have been complaints from people who booked their holidays before being aware of the tax and from others over the confusion in hotels. Manny said that fortunately for JMC and Thomas Cook, the hotel chain Iberostar were not charging the tax and were co-operating in getting through the tough season. Manny also said that the Balearics completely misjudged the market. While the UK started selling summer holidays before Christmas, the German market did not open up until around February, by which time the Balearics were convinced that bookings would recover and that it was just a UK issue. But the reality is that the German market has been hit worse than the UK and since the New Year bookings have continued to fall. Some people in the Balearics have become too complacent and the problem is not only going to be this year, but next year as well with winter bookings performing badly. But having been quick to spot the trends, Thomas Cook and JMC, which have reduced capacity by 18 per cent in the Balearics, have consolidated their market while some of the four main tour operators, which did not reduce capacity and consolidate in response to September 11, have been forced to drop package holiday prices to the extent that they are losing as much as £150 per holiday. Manny said that a package holiday for under £200 signifies a loss for the tour operator. The problem is that normally we all start to drop prices until we find the narket, but this year the prices have kept on falling, failing to find the market and they are still not selling Manny said. But the Balearics has also become an expensive destination. Manny explained that they have a huge market in Ireland, but despite the booking economy, even the Irish are not coming to Santa Ponsa this year. There are an estimated one million holidays still on sale for June in the UK, but Manny said that around July 13th is the crucial time. If there are still 750'000 unsold holidays by then, that's it for the summer. On the whole the holiday market is down, but Greece, Crete and Cyprus are doing well and Turkey is making a comeback. He said that the Balearics are right to compete on quality not quantity. But what do they mean by quality. Quality for us is not just about five star hotels, as far as I'm concerned a good one star pension can provide quality. Manny said that mainland Spain is not doing particularly well either, despite the figures. Package holidays are down and the passenger figures are up because of the low-cost airlines. The situation is not good, but finally hoteliers in the Balearics have reailsed that we all need to co-operate, although with regards to this summer, the Balearics have missed the boat.