How does Mallorca compare with other vacation destinations in terms of cost? | CCL

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Median salaries of 321 euros per month (the equivalent of) and 1,970 euros per month. These are according to the Salary Explorer website. They are median salaries for hospitality and tourism in Turkey and in Mallorca.

Always allowing for some possible lack of rigour, these figures do give an idea. More certain, and under the collective bargaining agreement for Mallorca’s hotels, the lowest base salary for any job category for the period April 2019 to March 2020 was 1,268.83 euros.

The median salary given by Salary Explorer is definitely on the high side, as the highest listed under the agreement was 1,816.25 euros. There again, there will be hotel employees on more than this (management not covered by the agreement), while the projected top base salary for 2021 to 2022 was 1,931.83 euros; the lowest was 1,349.57.

The pandemic meant that annual salary increases were held over, but this doesn’t alter the general situation. In Mallorca, hotel workers are the best paid in Spain. The figure of 321 euros for Turkey shouldn’t be taken as read, but if one accepts it as a sort of ballpark, then a median salary in Majorca is six times higher.

The collective bargaining agreement in 2017 was recognised as having been pretty generous, and it was an agreement that was reached at the proposal of the hoteliers. It was they who tabled a 17% salary increase over four years. It was recognised, and still is, as representing the best there is in Spain’s hotel industry, and the lowest base salary for 2019 to 2020 was quite significantly above the new minimum wage in Spain.

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No one can claim that these are huge salaries. They are not. But they serve to understand why prices in Mallorca will tend to be as they are. By comparison with Turkey, the cost of labour is huge.

I can recall a few years ago presenting a similar comparison when publicity was given to prices for a five-star all-inclusive in Turkey. Yes, the prices were good, but then take into account how much (or how little) employees were being paid. Something similar has happened in the past few days. OTA Insight, a UK data analyst, has drawn attention to prices in Spain being two to three times higher than in Turkey for equivalent hotels. So, Spain as a whole, not just Mallorca.

It has been reported that the hotel industry in Turkey is preparing a price strategy to recover market share this summer. This strategy means lower prices than in Majorca and Spain, with the principal target markets being the UK and Germany.

Turkey was looking forward to high numbers of Russian tourists - Russia is a big market for Turkey, which it isn’t for Spain - but the war looks destined to disrupt these prospects. Hence, there is particular interest in the UK and Germany. We hear from sources like the Mallorca Hoteliers Federation that they won’t engage in a price war. The fact is that they don’t have much margin to do so even if they wanted to. Their costs are what they are, partly because they have set them. And like everywhere else, they are now subject to rising costs - electricity bills are just one.

Prices in Mallorca are what they are because the costs are what they are. Where there is much lower cost of labour, the margin for setting low prices is far wider. It’s a pretty simple enough equation. But while prices for holidays are, as always, currently determining holiday decisions, there are other factors. Where Turkey is concerned, it is close to what’s happening in Ukraine. In this regard, Mallorca and Spain may have an advantage.

However, and was the case with Covid, we are in the realms of the uncertain. A study of bookings for Spain after a week of the conflict in Ukraine pointed to how much these had fallen in various countries. The German market was down 37%, UK by eight per cent. This said, TUI Germany has reported this week that it hasn’t observed any fundamental change to bookings. Mallorca is one of the top destinations, so is Antalya and so is Crete. Normal, therefore.