Spanish hoteliers have been warned not to increase prices for next summer as changes in the exchange rate could already raise prices by as much as a quarter.
Addressing about 100 Spanish hoteliers at this week's Loving Andalucia British Tourist Trade Forum in Malaga, Monarch Group overseas director and head of purchasing Hugh Morgan said the pound's fall against the euro has left tour operators facing increases of as much as 23%.
Morgan warned that any more price increases introduced by hoteliers could further damage Spain's UK market, which was 17.7% down in the first quarter of this year. He said: "This year is already difficult for all of us and the obstacle is price.
"Next year, most major tour operators are looking at [a pound being worth] €1.10 to €1.15, so the prices that we sell holidays for next year will have to go up.
"One of the key obstacles for 2010 in Spain is if hotels put the prices up. It is going to have a major impact even if they put the prices up by 2% or 3%."
Association of Independent Tour Operators Derek Moore agreed, adding Spanish hoteliers had already been too slow to react to the economic crisis, which took off last autumn by refusing to reduce prices then. "The damage has already been done," he said.
Morgan agreed: "A lot of hoteliers have been really complacent, they take the view that the British will come. They've taken us for granted."
However, Travel Counsellors chairman David Speakman argued that hoteliers could still partially salvage the situation for summer 2009 by cutting prices now as customers book increasingly late.
Villair Travel partner Mike Richardson added hotels can also drive the market by offering additional value offers like free upgrades and additional meals at no extra cost.
He added: "As long as it is of value to the client customers are going to do the mental arithmetic and say they'll go for it. We don't want to go down the internet price-slashing route."
However, Moore argued simply introducing additional value offers would not be enough in the current climate, adding: "I agree price is not everything and in most years I would argue for added value.
"However, if you are adding value to a product that's gone up 24% or 25% then that really takes it out of people's budget."
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