Reserves point to a "good summer" but inflation will cut the profitability of the complexes

Tourists have returned to hotel complexes. In the image one in Lanzarote. / carrasco

The Canary Islands expect to approach the levels of 2019, although it will still be below. High prices and energy costs will "drag" the margins of establishments

hotel reservations are entering the Canary Islands at a good pace for the coming months and suggest that this will be
a "good summer" for the archipelago after the last two years of losses.

Tourism entrepreneurs expect occupancy levels to approach those of 2019 in the summer season, with specific moments of "full", such as the star period that runs from July 15 to August 15.

The sector therefore glimpses recovery. If the current trend continues,
The Canary Islands could close the year with around 10 million foreign touristsstill below the pre-covid figures (13 million) but on an upward trend.

The president of the Federation of Hospitality and Tourism Entrepreneurs (FEHT), José Maria Mañaricua, considers -and for now, the data for the first quarter proves him right- that
the islands will close 2022 with 80% of the tourism of 2019.

"We are doing well in terms of occupancy levels if we compare it with 2020 and 2021, but compared to 2019 we are still below," warns Mañaricua, who despite the good forecasts opts for caution.

“Everything indicates that it will be a good summer but we don't know. There are many
clouds on the horizon», indicates.

The
inflation It is one of them. The rise in prices may discourage tourist demand in the coming months.

the rise of
airline ticket prices due to the rise in the price of kerosene with the war is another factor that worries the sector on the islands, as Mañaricua points out and insists the president of the Tenerife employers' association (Ashotel) and also of the national hotel confederation, Cehat, Jorge Marichal.

"You just have to go to a search engine and realize that many people will stop coming to the islands because of the ticket prices," he says.

“The tone is recovered but there is no profitability”

Jorge Marichal. /
C7

The president of Ashotel is optimistic about the levels of marketing and sales in the Canary Islands and that he points out that "the tone is recovering". However, he warns that this summer the levels of 2019 will not be reached and stresses that inflation and high energy costs will eat up the poor profitability.

Marichal and Mañaricua also warn that, although sales levels are good,
rising energy prices and costs will drag down profitability of the tourist complexes. «Little by little the tone is recovering. The demand for the Canary Islands this summer is going to be important, although not as in 2019. The problem, however, is not this, but rather the operating costs. They are shot and it is going to affect the profitability forks of tourist farms, ”indicates Marichal.

Remember that many establishments have prices fixed prior to the escalation of costs and this prevents them from being adjusted. "If this continues like this, it will not be possible to have the profitability of 2019. The increase in costs will go to the margin," says Marichal.

"There will be a little less occupancy and, above all, much higher operating costs," he insists.

"In 2022 we will close below 2019 despite the improvement"

Jose Maria Manaricua. /
C7

The president of the Feht points to caution from the optimism for the improvement in demand compared to 2020 and 2021. He affirms that 2022 will close below 2019, before covid, and warns of the risks that threaten the sector such as the triggered inflation.

In the same sense, it is expressed
commercial adviser of the Lopesan group, Jose Alba. He acknowledges that the sector has been experiencing "some optimism" since March due to the rebound in tourist demand, but warns that inflation and the increase in energy costs "are eating up the little that is being generated."

“Even if things are going well, we are not sure that we are going to win because of the extra effort that has to be made in terms of costs,” he says.

Alba points out that "after the last two years, everything is good" although the sector continues with figures below 2019. «
The sector remains immersed in great uncertainty», insists Alba, who assures that tourist establishments will not return to profitability this year. «With everything that is happening I see it very difficult. Inflation is going to eat up whatever profitability there is », she says.

Alba refuses to compensate for these extra costs with a rise in rates, since the consequence would be a loss of customer volume. "Some do it to mitigate inflation but fewer customers enter and there is less business volume," says Alba, who assures that "there is still time" for the sector to return to 2019 levels in all its parameters.

Lopesan's commercial director warns, in line with what Marichal and Mañaricua said, that the forecast of "a good summer is taken with tweezers" by external factors, such as inflation and war. "I wouldn't toast with cider or champagne yet," he adds.

For May and June, the forecast is that the occupation will be around 65% and 70%.

Demand improves for May and June

  • 65%.
    It is the occupation forecast by the Federation of Hospitality and Tourism Entrepreneurs (Feht) for the month of May. It is much higher than 2020 and 2021 but still below 2019, before covid.

  • 28%.
    It is the increase in reservations made in the Canary Islands in the months of May and June compared to 2019, according to data from the online travel agency Destinia.

  • 6%.
    It is the increase in the reservations of national tourists, who represent 62% of the total. Foreign demand grows more, 96%. Not all bookings materialize

  • fifteen%.
    E the increase in the average price per person and night in a tourist establishment in the Canary Islands for May and June and with respect to the year 2019, according to data from the Destinia platform.

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