The Spanish newspaper LaVanguardia reported on Sunday, that panic has begun to spread amongst hotel chains and a price war has begun which aims to fill the available rooms over the coming months.
The most expensive hotels in Spain are most affected by the slowdown, thus prices have begun to collapse with the market now littered with hotels of four-star and five-star ratings now offering rooms for as little as 60 euros per night.
The Guadalpin hotel in Marbella, one of the best-known hotels on the Golden Mile was offering prices of 30 euros per night and person in a double room over the past few weeks and during April it is even possible to find rooms below 60 euros in the Guadalpin Marbella hotel.
According to a study by the travel website Lastminute.com, which services 3500 establishments in Spain, four and five star hotels are matching prices with three-star establishments.
Greg Schellhammer, author of the best-selling e-book Survive the Crisis in Spain, predicts “hotel prices will fall dramatically over the coming 6-12 months as hotels struggle to fill their rooms and keep afloat with huge fixed costs… We will see the majority of hotels drop prices by over 50% with 5 star hotels ending up charging as little as 30-50 euros per night all the way to hostals and bed & breakfast businesses stays going for as little as 4-5 euros per night”.
“What we will also see, is big chains dropping prices first, given that they have the financial backing to operate in loss-environments, and ultimately smaller establishments following suit in order to keep up with the market and fight for survival”.
Spain has already dropped one spot to 6th place on the World Economic Forum’s list of the most competitive and attractive countries for travel and tourism earlier this month. The big tourism season has not even started yet, but tourist visits have already begun to decline sharply. In February, the number of tourists visiting Spain fell by 15.9 per cent compared to the same month a year earlier, the steepest fall since the economic crisis began to hit the country’s second-largest industry.
Hotel chains such as NH (NHH.MC) and Sol Melia (SOL.MC) have been offering steep discounts in order to continue to attract tourists and business travellers, making it possible to get five-star rooms for as little as 60 euros.