HOTELIERS FEAR WORST SEASON IN PAST 15 YEARS

Staff reporter BUSINESSES in the Balearic hotel industry are preparing for the winter holiday season by cutting back on plans to carry out reforms on buildings and by maintaining minimum staffing levels. Hotels are bracing themselves for the worst season in terms of profitability for the last 15 years. Directors of the Balearics Hotel Federation, amongst them their vice-president Ignaci Esteve, explained that they haven't experienced anything like it since 1990. The disappointing forecast is chiefly due to the reduction in bookings, hotels dropping their prices to promote “last minute offers” and increases in fixed costs. The result is that many establishments have closed their doors this year with accounts in the red. According to the Hoteliers' Federation of Majorca and the Association of Hotel Chains, accumulated figures for this year until September are down some 6%-10% in bookings when compared to 2002. This decline is particularly marked in specific areas, such as Cala Millor and Cala Rajada where the downward trend has touched 15 percent. “The most worrying of all” commented Esteve, “is that this year's declining figures are the same as last year's losses. The poor results of 2002 were, in themselves, 10 to 15 percent under par when measured against performance in 2001”. Hotel owners insist that in spite of the reduction of overnight stays and the fact that hotels had reduced their prices to launch last minute offers, hotel companies have had to confront increases in staff costs of between 5 and 5.5 percent on an annual basis over the last decade. As a result, hoteliers are going to have difficulty balancing their books in December, they confirmed. The Balearic hotel industry can't remember such an accutely worrying economic period since the Gulf War. Companies insist that the one they are suffering now is more serious. As a consequence of the Gulf war, hotels in the Islands registered a 10 percent fall in business, but that is less than the downturn being experienced at the moment. In the last three years alone, the average profitability of hotels has registered only some 25 to 30% of what it was in the period between 1992 and 2000. Hoteliers signal that the reduction in numbers of visitors from the United Kingdom and Germany, principal client markets of the Balearic tourist industry, has made a significant impact. As a result, there is tremendous uncertainty surrounding the forecast for the 2004 season.