Package holiday prices in the United Kingdom have hit an all time low with the biggest discounts of holidays to the Balearics, however, despite there still being holidays on offer for just £29, they are not selling. The Secretary of State for Commerce and Tourism, Juan Costa, said yesterday that tourism to the Balearics during the first four months of this year has fallen by ten per cent and the Canaries by five per cent. However, on the mainland, tourism figures have risen and with only the Balearics and the Canaries failing to perform this year, the Spanish tourist industry is expecting another good year. Costa does believe that the Balearic industry will pick up over the summer, although recession in Germany is having a highly negative effect on tourism figures. On the mainland, the strong British market is compensating for the German decline, but in the Balearics, although slightly up by four per cent last month, the number of British visitors needs to increase by 35 per cent to fill the gap left by the Germans. The Secretary of State admitted that the Balearic tourist tax is not helping the market “there are a number of reasons why the tourism in the Balearics is down ten per cent, but the region's tourism policies and the decision to introduce the tax is obviously having an effect.” Costa said that the government and the tour operators have a clear agreement over the environment “but what you can not do is use the environment as an excuse to increase taxes, especially at a time of an economic downturn and the fall out from September 11.” The rock-bottom prices in the UK are expected to remain on offer for at least the next month and some tour operators are prepared to introduce similar bargains for June holidays if the market does not start to pick up. But with the World Cup coming up, the Mediterranean resorts are facing tough competition. While there are one week holidays in Majorca for £29, five-day World Cup packages are being offered for under £400. During Euro 2000, holiday bookings fell by 10 per cent and the industry knows that unless consumers are getting a good deal, they will stay at home to watch the World Cup. What is concerning is that despite tour operators cutting capacity in the wake of September 11, about 1.5 million summer holidays were withdrawn, they still can not sell what is left. Initially tour operators warned that because of the capacity reductions, there would be no late deals, in an attempt to persuade the UK to book early, but they are having to think again.

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