August 3, 2018 / 7:11 AM / 19 days ago

Spanish hotels cut prices as competition from Turkey, North Africa heats up

MADRID (Reuters) - Spanish hotels are cutting prices on summer holiday packages as tourists return to destinations like Turkey and resorts in North Africa while visitor numbers to Spain start to peak after five record-breaking years.

People sunbathe on the beach in Palma de Mallorca, Spain August 2, 2018. REUTERS/Enrique Calvo

Tourism accounts for around 11 percent of Spain’s economic output and the number of foreign visitors rose to 82 million last year, making Spain the world’s second most visited country after France.

Spain’s hotels have cashed in on the country’s popularity as a tourist destination and increased prices on average by 21.4 percent over the 2013-2017 period, according to official statistics.

But now rivals Turkey, Tunisia and Egypt are experiencing a resurgence in tourist numbers, marking a revival of demand for these destinations, which were shunned by holiday-makers following militant attacks and an attempted coup.

This season they have been competing for German and British tourists with cheap, all-inclusive deals, Spanish hoteliers said.

People walk along the marina in Palma de Mallorca, Spain, July 28, 2018. Picture taken July 28, 2018. REUTERS/Paul Hanna

“We’ve generally seen less demand this summer, mostly because of the comeback of competitor markets like Turkey, Egypt and Tunisia which are offering substantially cheaper packages than the Balearic Islands,” Alvaro Pacheco, a spokesman for family-owned Spanish hotel group Barcelo, said.

Medium-priced hotels in the Balearic Islands - Spain’s Mediterranean resort islands - were suffering more than luxury establishments, Pacheco said, adding that Barcelo had cut prices by around 15 percent in some instances to stimulate demand.

“AUGUST SOLD BADLY”

Hotels in Spain are having to compete with offers from places like three-star resorts on Turkey’s Mediterranean and Aegean coasts that are up to 73 percent cheaper than the Balearic Islands, according to one study by the Tourism Intelligence unit of data specialist Mabrian Technologies.

Hotel chain Melia, which owns hotels in the popular Mallorca resort of Magaluf, agreed that the resurgence of Turkey and North Africa was putting strong pressure on prices.

“Competition is especially strong for package tours,” Maria Umbert, a spokeswoman for Melia, said.

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On the island of Ibiza, famous for its nightlife, hotels are cutting prices between 10 and 20 percent on average, said Antonio Torres of tourism lobby Descubre Ibiza in a telephone interview with Reuters.

Package holidays in Spain aimed at families are also feeling the heat.

“Family tourism has suffered because there are other destinations where all-inclusive packages are much cheaper,” said the managing director of one family-run hotel chain on Mallorca who spoke on condition of anonymity.

“There are many offers out there: August sold badly.”

In Tunisia, tourism jumped by 40 percent in the first half of 2018, according to government statistics, driven by a strong return of European tourists three years after they were targeted in militant attacks.

In Turkey, official figures show tourism grew by nearly a third in the same period after slumping in 2016 after a series of bomb attacks and a failed coup attempt.

In contrast, the number of tourists visiting Spain rose just 1.8 percent from January to June this year, down from double-digit growth rates booked in the first half of 2017 and 2016, according to the country’s National Statistics Institute.

Reporting By Sonya Dowsett. Editing by Jane Merriman

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