Majorca being warned not to price itself out of the market.

02-08-2016miquel a. ca

Some sectors of the tourist industry consider it a gamble, but Majorcan hoteliers have managed to increase rates by as much as ten percent for 2018.

Accommodation contract negotiations for next year are coming to a close, even though we have yet to hit the peak of this season, and those hotels which have undergone reformations and renovations and managed to move up a category have managed to secure significantly higher deals.

The hoteliers were under significant pressure from leading tour operators to not increase their rates so steeply but the hoteliers managed to hold out in the face of on going insecurity and uncertainty in other key destinations.

“This is not the average increase, but those hoteliers who have invested in major reformations and improvements over the past five years significantly improving the standards and quality of much of the hotel accommodation in comparison to other destinations have managed to secure better deals,” a source for the Majorcan Hotel Federation explained.

At the other end of the scale, those hoteliers who have not carried out any reformations or renovations, some 40 percent of the market negotiating rate increases of around three to four percent.

Hotel federation sources also said that the general improvement in quality and standards of hotels has changed the profile of the type of client coming to the island.

“The tour operators know exactly what the score is, the hoteliers put their rates up and that means they have to increase the cost of their packages.”

The British, German, Italian, French and Scandinavian tour operators do not want to get caught out with a shortage of beds for next summer, despite the revival of destinations such as Greece, Turkey, Tunisia and Egypt and, it would appear, are prepared to pay the price to secure accommodation in Majorca.

However, hoteliers are no longer as dependent on tour operators as they used to be.

Direct online sales are increasingly growing which is enabling hotel chains to bypass tour operators and sell at higher rates and make more profit by eliminating the “middle man”.

“There are hotels which are managing to sell on line with no involvement at all of a third party which means they make a greater profit. On average, hotels are now selling around 35 percent of their accommodation online while there are other which are hitting around 50 percent, “ hotel federation sources stated.

“So, we are not surprised that tour operators are accepting the rates because the competition for securing bed spaces is increasing.”

This year is going to be more profitable than last summer and next year will be even more beneficial for the hoteliers.
But, some tour operators in the UK have warned hoteliers in Majorca not to start getting too greedy.

This year is proving a very tough in the UK with uncertainty caused by Brexit, security and a weaker pound plus strong competition from destinations like Greece and Turkey which are posting very healthy booking figures.

In fact this summer, Greece is the most sought after destination in the UK so Majorca can not afford to price itself out of the market.

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