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Poor expectations are the reason hoteliers warn about cancellations of up to 20%

Although inflation is driving up hotel prices, it will not affect occupancy.

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Poor expectations are the reason hoteliers warn about cancellations of up to 20%

Although inflation is driving up hotel prices, it will not affect occupancy. In fact, 70% of the Balearic Islands' accommodation has been reserved since June, so there is still plenty of room for everyone. According to the INE data for May, the average room price has increased 25% compared with last year. However, the "immense need to travel" will see the summer season surpass the record levels set in the summer of 2019.

According to the Spanish Confederation of Hotels and Tourist Accommodations (Cehat), the arrival of international tourists will continue at the same pace as before and the recovery of national tourism will make this summer an extraordinary time for hotels. They also stated that prices have accelerated reservations. During the presentation of the report, Jorge Marichal, president of the organization, stated that "buying at the last minute will be more costly and the Spanish have recognized it and are anticipating how they will purchase."

These reservations still have high cancellation rates compared to 2019. They are still 19% more than they were before the pandemic. Cehat explained that "The economic instability, as well as the rising prices, are causing reorganizations of travel and is weighing down some reservation," they said.

Also, it is important to remember that the pandemic changed consumer behavior. They book vacations and wait until the last minute before deciding if they will actually go. This is also due to the covid policy, which allows hotels to have more flexibility in cancelling reservations. Marichal said, "You never know what could have been better. Perhaps without the flexibility to cancel reservations now we wouldn't have the level of intent to travel because of the lack of confidence within the sector." All this is not to mention the strike of workers at some airlines this summer, and the cancellations in Europe of thousands of flights due to a lack of personnel. This causes cancellations because of fear of running out of flight.

The hoteliers warn that the inflationary episode is not temporary but will last until 2024. Prices will continue to rise, even though they are expected to slow down in the next few months. This will make it difficult for us to see prices at levels we have not seen in 15 years. They said that they would be watching to see how it affects the purchasing power and purchasing power of Spanish families.

They believe that prices are rising on one side and costs on the other, that is to say that the cost increases that businessmen assume are not being transferred entirely to final consumers are increasing based on supply-demand.

Marichal said that the sector of accommodation is heavily dependent on energy. As a result, costs have increased by 34% in this region alone. He points out that the sector has seen a 30% rise in its costs, as well as an increase in food and labor prices.

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