A confluence of geopolitical and economic factors mean that the Spanish tourism sector is cutting prices as the summer season arrives.
The Spanish tourism sector is lowering prices in response to a slump in bookings for the summer season, something unheard of since the start of the pandemic.
Some industry insiders, however, suggest discounts may follow as a way to recoup losses.
“Advance bookings have come to a standstill, and discounts are a quick fix to boost sales,” one spokesperson for a major travel agency group told Spanish daily El País.
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Hotels and travel agencies alike are reportedly slashing prices in a bid to avoid a repeat of last summer when historically high prices had a direct impact on overnight stays.
There were 325,000 fewer German tourists in Spain last year and French tourists some 28,028 fewer, leading to a drop in hotel occupancy in the middle of the peak season.
In fact, prices have soared so much in recent years that long haul trips have become as affordable as short stays in Spain, a country renowned as a summer destination for holidaymakers across Europe.
Last summer room rates hit record highs to such an extent that a one-week package holiday including flights to Punta Cana in the Dominican Republic or Riviera Maya in Mexico cost almost the same as in Menorca or Mojácar, Almería.
The price calculation, provided by online travel agency Destinia based on bookings made in the last week of May for holidays between the first and third weeks of August, showed how the cost of travelling to some Spanish destinations was now approaching that of others in the Caribbean, or comfortably exceeding those in Turkey.
Prices for the five Spanish major destinations analysed by the travel platform (Gran Canaria, Mallorca, Tenerife, Menorca and Mojácar) show sharp double-digit falls compared with those of 12 months ago.
The biggest drop is in Mojácar, with a fall of 23.3 percent less for a package deal, which works out to €627 less. This is followed by Mallorca, with a reduction of 22 percent (€480 less) and Tenerife, with a fall of 20.2 percent (€426 less).
Spain’s tourism sector, which makes up roughly 12 percent of GDP, has been buffeted by a confluence of international factors in recent months.
The new economic and geopolitical landscape that emerged amid war in Iran in late February has contributed by rising oil prices and spiking inflation following closures in the Strait of Hormuz.
These issues have communed to have a direct impact on purchasing power in Spain’s three largest source markets, the UK, Germany and France, which account for 45 percent of foreign tourism.
However, major Spanish airlines have indicated that they do not foresee significant cancellations or disruptions to their routes during the peak tourist season this summer and have for now pledged not to increase prices.
Many airlines have been warning of price hikes and cancellations for months due to the fuel crisis and some international companies have already added higher fares.
Spanish airlines, however, claim to have taken steps to minimise the impact on their operations and costs.
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