Operators worried about rising hotel rates

Thomas Cook warns of “knock-on effect”, but Egypt may “bounce back” quickly

The CEO of Thomas Cook has expressed concern that tour operator margins could be affected by rising hotel prices in destinations such as the Canaries as a knock-on effect of the turmoil in Egypt.
Operators have quickly been switching capacity to safer holiday destinations like Spain and the Canaries, but as the number of available beds gets swallowed up there are concerns that hotels may be tempted to raise rates.
“We are redirecting our capacity to destinations such as the Canaries,” Thomas Cook’s chief executive Manny Fontenla-Novoa confirms. “Many operators are having to shift capacity and there may be a knock-on effect which may affect our ability to source beds at a reasonable rate and affect our margins.”
Other operators add that “The challenge for operators is whether hotels are going to get greedy and see it as a chance to increase prices.”
However, the fact that Egyptian President Hosni Mubarak resigned on Friday has encouraged Egypt’s hotels to offer discounts of 30-40% in an effort to win back customers.
Egypt is likely to “bounce back very quickly”, said the commercial director of Discover Egypt, Philip Breckner, as many thousands of clients already booked are unwilling to cancel.
[photo: Santa Cruz de la Palma]