BALEARICS IS FACING THE THREAT OF A PRICE WAR

SPAIN, in particular the Balearics, could be one of the biggest victims of the price war caused by the global recession and Iraqi crisis, according to tourism experts at the ITB International Berlin Travel Fair. Tomorrow (Monday) is Balearics day in Berlin but both the Balearic president Francesc Antich and Tourism Minister, Celesti Alomar, are going to be on their best behaviour, no antagonising Balearic hoteliers, even they realise there is a lot at stake. President of the Confederation of German Travel Agents and Tour Operators, Klaus Lapple, has singled out Spain, especially the Balearics, Greece, Morocco and Tunisia as the big losers of the price war. The winners, according to Klaus Lapple, are going to be Argentina, Cuba, the Dominican Republic and Mexico, all of which are already seeing holiday bookings rise. Lapple says that close and cheap European destinations such as Croatia, Bulgaria and Hungary will see further growth while Turkey and Egypt have already been pushed out of the market by the imminent threat of attack on Iraq. And there is going to be no quick fix for the tourist industry. Experts in Berlin fear that there is no short term solution to the crisis and tour operators are going to start cutting costs to ease the burden. President of the World Tourism Organisation, Francesco Frangialli, said “the industry is suffering the worst crisis in the history of global tourism.” “If the war starts, we hope it's going to a be short one and that it is geographically restrained,” he added. Many of the German tour operators have already started restructuring themselves, reducing costs as much as possible for the next few years. In Minorca tour firms are trying to renegotiate contracts with local hoteliers and secure 30 per cent reductions in accommodation rates. The big tour operators are also trying to change consumer habits, encouraging clients to book their holidays as early as possible and also develop a no-frills holiday industry where consumers pay as they go once they have purchased their basic holiday. But in times of recession, consumers across Europe are going to wait until the last minute to book their holidays, hoping to cash in on a late deal. But apart from the tour operators, Europe's no-frills airlines are locked in battle for passengers and air supremacy and, as in any battle, the experts are warning that there will be casualties and not all the no frills will survive the war. Both airlines and tour operators, all developing their own cheap charter airline operations, are caught in a catch-22 situation, with consumers booking tickets and holidays later and later, the airline and tour firms are having problems in calculating the extent of the capacity reductions, obviously not wanting to over cut. Two of the world's biggest tour operators, TUI and Thomas Cook, said last week that the outlook is grim, especially in Germany, where bookings are down as much as 15 per cent on last year, which itself was 13 per cent down on 2001. What is clear, even if the attack on Iraq never kicks off, the Balearics has a battle to fight of its own and will be in Berlin in force. Apart from Antich and Alomar, Partido Popular candidate for president, Jaume Matas, will also be travelling to Berlin and will tomorrow be holding talks with TUI and Thomas Cook in a bid to try and salvage the season. Spain's secretary general for tourism, Juan José Güemes, said that the Balearics still has a bad image in Germany, primarily because of the tourist tax, all of the tour operator bosses he met in Berlin yesterday asked for the tax to be lifted or scrapped. However he added he is “relatively optimistic” about the year ahead.