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Spanish hotel rates reduced 30pct on 2008

Wed 8th Jun 2011

Tourism to Spain could see the most growth in over 5 years, according to research by Euromonitor International. The country's hotels have reduced prices by 20% or more in 2011 to compete with destinations in North Africa where recent protests have discouraged holidaymakers.

Package holidays to Spain are now cheaper than those to Turkey for the first time in 4 years, said Ignacio Vasallo, director of the Spanish Tourist Office for the U.K. and Ireland.

"Reducing prices to secure a steady flow of guests has been the only way," Vasallo said. This year will be the best for Spain's hotel owners since 2007, he said, also helped by rising fuel prices, which have made it more costly for Europeans to travel further afield for their holiday.

A comparison of Spanish hotel prices has fallen by 30% since a 2008 peak and in March reached the lowest in 11 years, according to the country's National Institute of Statistics (INE).

Cheaper prices, combined with concern over political unrest in northern Africa, are having a positive effect. The number of tourists visiting Spain this year may increase 8% to reach 55 million, Vasallo said. Of those, over 40% would probably have booked resorts in northern Africa before the protests began earlier in the year.

In comparison Hotel occupancy in northern Africa has dropped 46% in 2011 so far, while it grew 6% in southern Europe and 7.8 % in Spain, according to researcher STR Global. The growth in tourism, which accounts for about 14% of Spain's GDP, will benefit businesses on the Costas, who were forced to cut prices and increase promotions to attract clients during the 2009 recession.

In response to demand TUI Travel is offering 10% more holidays to the Canary Islands over 2011, whilst Thomas Cook , last month reported a 45% increase in demand for the Balearic islands and a 37% increase for the Canaries.

However, experts do not expect the good news to last indefinitely. Egypt's tourism industry is expected to fully recover by 2013, by which time Spanish arrivals are expected to tail off once again.

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