Thomas Cook strikes agreement with Spanish hotels

Operator pledges to give difference if equivalent to 5% discount not reached

The Spanish Confederation of Hotels and Tourism announced today that it has accepted an offer from Thomas Cook in the dispute over the operator’s threat to introduce 5% discounts. The operator, which confirmed that an agreement had been reached, had contacted the hotels and offered to work with them to increase capacity.
If the extra capacity fails to stimulate revenues equivalent to the 5% deduction, Thomas Cook promises to reimburse the difference by the end of November. If capacity does not increase in certain hotels, the operator agreed that it would make up the 5% by the end of March.
As reported, last year a sudden decision by Thomas Cook to cut its payments to hotel operators in holiday destinations such as Spain and Greece by 5% shocked and angered already cash-strapped hotels. It prompted Hotrec to condemn the move as “unfair, unwarranted and amounting to a breach of contracts”.
Since a series of mergers in 2007, Thomas Cook has been one of the “big two” operators together with TUI, rapidly reducing competition in the industry. The hotel association said that it was abusing its market dominance by threatening to withdraw future business.
However, Thomas Cook has argued that it was forced to cut payments to hotels because of the severe knocks it has been forced to endure during 2010, such as the volcanic ash crisis and the impact of austerity measures on people’s ability to travel. The operator has said that it assumes hotels would rather accept the 5% cut in payments than to see cuts in capacity, which it said was the only possible alternative.
TTG / The Guardian
[pictured: Hotel Maritim Varadero Beach Resort, Spain]