Low hotel prices make Spain a bargain

Rates fell from 2012 and have stayed low

The weak euro and fierce competition are worrying hoteliers in Spain, but low room rates make the country an attractive destination for buyers, according to UK-based wholesaler JacTravel.

“We are currently more optimistic about Spain than we have been for some time,” JacTravel CEO Terry Williamson commented. “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.”

Prices reduced across cities and star ratings by an average of 10% from 2012 to 2013 and in 2014 they stayed low, the wholesaler says.

“The price collapse in 2013-14 was the most drastic I’ve seen. Hotels not only suffered the lowest occupancy in history but lower rates have forced severe cost cutting and even closures,” said Rita Buffa, JacTravel’s senior contract manager in Madrid.

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

Mabel Ariu, JacTravel’s senior contract manager for Barcelona, said: “By comparison with Madrid, Barcelona had been more resilient. 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.”

TTG Asia

[pictured: Hotel Indigo Madrid; courtesy IHG]