LOW COST BOOM SPARKS HOTEL PRICE WAR

By Humphrey Carter THE low cost airline revolution is not only enabling European to travel cheaper and more often but also now reap the rewards of a price war raging between the hotel sector and the booming residential tourism market. A report published by the online accommodation booking service Hotels.com yesterday reveals that hotels across Europe have launched an aggressive campaign to combat the growth in the low-cost airline-fuelled residential holiday market and protect its existing trade by cutting room rates. In Barcelona, for example, hotels have cut prices by as much as 14 percent and, during the final quarter oif last year, European hotel rates were reduced by an average of 9 percent. Hotels.com's director of marketing for Europe, the Middle East and Africa, Patrik Oqvist said yesterday “the low coast boom has led to an increase in holidaymakers looking for more economic prices and hotels are having to adjust their rates accordingly.” What is more, as the tourist industry in the Balearics has witnessed over the past few years, the residential tourism market is booming with holiday home owners visiting more often and friends and family jumping onto a low coast flight and popping down to the Balearics in the meantime. While package holiday and tourist resort hotels have to control their prices to match customer demand, city centre hotels have also had to cut their rates. Stockholm and Hamburg, for example, are where hotels rate have been slashed most with Barcelona in third place. Madrid hotel prices fell by four percent during the final quarter of last year. Oqvist said that Barcelona is now served by a host of low cost flights and is growing rapidly as a city break destination, Madrid has yet to experience the low cost boom - hence why hotel prices have not been cut so drastically. Low cost airlines are having such a massive affect on the holiday markets that last year, for example, from a survey of 20'000 hotels in 40 different countries, it was Spanish hotels which experience the biggest rise in the volume of hotel bookings and most of the establishment were in, or near to, destinations served by low cost airlines.