Competition drives Spain's hotel numbers up

In the run-up to FITUR in Madrid, UK-based hotel wholesaler JacTravel released booking data that explains Spain's recovery in hotel occupancy last year, crediting the improvement to low prices.

Looking back on wholesale rates over the past three years, JacTravel saw prices come down across cities and across star ratings in Spain by an average of around 10 percent from 2012 to 2013, and in 2014 they stayed low.

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“The price collapse in 2013-14 was the most drastic I’ve seen," Rita Buffa, JacTravel’s senior contract manager in Madrid, said in a statement. "Hotels not only suffered the lowest occupancy in history but lower rates have forced severe cost cutting and even closures. The good news is that clients are starting to come back - 2014 has seen an increase in the numbers booking but they are doing so at lower prices.” 

Madrid has been the worst-affected of all the major cities, suffering declines in wholesale rates of nearly 30 percent for a five-star hotel room in 2013. Last year, rates did improve, but only in the three-star and four-star categories; at the five-star level, rates fell further and are now 40 percent down on 2012. “A golden year of selling at higher prices has yet to come,” Buffa said.

“By comparison with Madrid, Barcelona had been more resilient," Mabel Ariu, JacTravel’s senior contract manager for Barcelona, continued. "It did not suffer such heavy declines in 2013—and, at times in 2014, room rates were close to the previous year. As a destination, it is growing, thanks to new air links to the Middle East with Emirates and increased traffic from Latin America due to a tie up between TAM and Iberia. However, the increase in demand has not pushed up hotel prices because of a strong increase in supply, which has caused downward pressure on room rates. At the end of an eight-year period from 2008-2016, Barcelona will have seen the opening of [about] 80 new hotels and 2,300 apartments.”

According to the World Travel & Tourism Council (WTTC), which is bringing its Global Summit to Madrid this April, tourism represents 16 percent of Spain's economy in terms of both GDP and employment.

JacTravel increased market share, growing its number of bookings in Madrid and Barcelona collectively by 48 percent in 2014 and by 52 percent at the start of 2015, compared to the same period last year.

Terry Williamson, JacTravel’s CEO, concluded: “We are currently more optimistic about Spain than we have been for some time. Clearly, aggressive competition has made the Spanish hotel market more competitive and, coupled with the decline in the value of the Euro, it is better value still, so this is an excellent moment to visit Spain.”