Big discounts being offered as hotel supply outstrips demand

A form of price war is said to therefore exist in certain resorts, e.g. Alcudia and Cala Millor. There are discounts of up to 40%, which clearly affect hotel profitability. There is also concern that these offers may attract a type of clientele that is harmful to a resort's image.

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Over the past week or so, seventy more hotels have opened, taking the total to 683. But these have merely been added to a scenario of too much supply and too little demand. Forecasts aren't being met, while hoteliers continue to face uncertainty and the possibility that foreign governments will change their travel regulations.

In certain instances, occupancy, it is being said, is running at only 15 to 30 per cent. This means that decisions are having to be taken to close hotels and reallocate holidaymakers who have booked to establishments within the same group that have higher occupancy levels.

The offers are either through direct sales or online agencies. With tour operator agreements, prices are fixed. However holidaymakers choose to book, though, there are concerns that if reservations from the main foreign markets don't pick up in the short term, hotel businesses will have to act in order to try and avoid losses.