May Joy Or Gloom For Mallorca?

It was a joyous Easter for the hoteliers. Occupancy figures across the island were exceptionally high. From Andraitx in the south-west (90% occupancy) to Alcúdia, Muro and Pollensa in the north (85% on average) to Colonia Sant Jordi in the south (90%), the reported figures show that a combination of a late Easter, excellent weather and a recovery in the domestic tourism market made the hoteliers very happy Easter bunnies indeed. With slightly under three-quarters of hotels across the island open, the numbers were very good.

But happiness can quickly turn to sadness and anxieties. The high Easter numbers have to be placed in context of what went before and what is going to happen in May. For the first quarter of the year the number of tourists coming to the Balearics fell by almost 25%. That is far from good news when compared with increases in the order of around 10% or more to Catalonia, Valencia and Andalusia. To add to this gloomy statistic is a further one for anticipated occupancy in May. The Mallorcan hoteliers federation is warning of a fall of 20% over last year, which would mean 50% occupancy.

This warning, coming immediately after the successful Easter, puts a dampener on things but it might be considered to be a rather strange warning. Just prior to the holidays, the hoteliers were saying the opposite. Occupancy would be up by an average of 10% was one statement. From different parts of the island, there were positive forecasts. Cala Millor was looking better than last May. Playa de Palma up by almost 15%, thanks to a strong German market. There was a similar forecast for Palmanova and Magalluf. So good were the prospects that they were being spoken of in terms of tourism numbers not witnessed in May since the mid-1980s. And also so good were they that some hotels had stopped selling because of fears of overbooking.

The 20% decline that is now being forecast may not be wrong if a similar forecast for last year is anything to go by. At a similar time in April in 2013 the hoteliers were predicting occupancy for May of slightly under 70%, and the prediction was pretty much bang on. This previous accuracy notwithstanding, how is that there can have been such a change in forecasts in the space of a week? Which ones should be believed? Any of them?

There is always a risk in taking pronouncements from the hoteliers at their word, as they engage in a good deal of special pleading and in laying the groundwork for propaganda, that which is typically directed at the competition of the holiday-let market. More often than not the warnings do not match actual performance. Indeed, I would be greatly surprised if a forecasted 50% occupancy level were to be registered, because if it were, then it could be considered little more than disastrous and totally out of step with the general prognosis for yet another record season.

The hoteliers are currently engaged in battles on different fronts. The holiday-lets front, one which the hoteliers have little risk of conceding, is but one battle. It is getting ever more fierce though because of the growth in so-called P2P selling (the Airbnb's of this world). There are calls for legislation to curb this. The other fronts have to do with costs and prices. On the latter, while the hoteliers have been happy enough to increase their prices, they have been less happy with rates of IVA (VAT), but their wish to see the rate which applies to them - the already reduced rate of 10% - reduced further will not be granted. Knowing full well that it won't be, the other battle - labour costs and so the annual wage negotiation - is the one that the hoteliers will hope to win, but if they don't then this will doubtless be a convenient excuse if May occupancy levels were to prove to be as bad as they are forecasting.

But I doubt very much that they will be. The forecasts have to be seen as bargaining chips. Unfortunately, the local media give them far too much credibility as well as exposure. A disastrous May? If it is, then I'll admit to having been wrong or I'll be mightily suspicious that the figures have been doctored. They were worried about overbooking only a week ago.