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Canary Islands needs to renew its hotel plant to increase prices

28.11.2017

Canary Islands needs to renew its hotel plant to increase prices

The Canary Islands is a very cheap tourist destination with an obsolete hotel floor. Despite the tourist record of the last two years, difficult to repeat, the Canary Islands suffers from little investment in the renovation of its facilities and accommodations and in updating the strategies to adapt them to the demands of tourists. In fact, the Canarian tourism sector is not prepared to face its direct competitors when they recover from the situation of insecurity they suffer, in the case of Egypt and Turkey.
Javier García-Mateo, partner of the consultancy Deloitte, warned yesterday that this scenario of insecurity of the main competitors of the Canary Islands "will not last a lifetime" and a recovery of these destinations can mean a fall of tourism in the Islands of 20 percentage points, which would mean lowering 87% of average occupancy to 67%. According to García-Mateo, the tour operators do not divert tourists to these destinations because they do not want to take risks, but they will do so as long as they can.
This situation favorable to the Islands "has to make us realize that we have to take care of our product" and betting on improving it in the horizon of the next ten years to ensure that there is no setback of the sector and promote an increase in benefits it generates, García-Mateo said in a day of debate with the sector that starred in the Santa Catalina hotel and organized by the Association for the Progress of Management (APD).
The representative of Deloitte presented the report The Hotel Property Handbook, made by the consultant, to investors, businessmen and bank leaders. It concludes that the Canary Islands is one of the cheapest tourist destinations in Spain and this situation is more damaging than the long-term benefit to the sector as it slows down its profitability and delays the renovation of the accommodation establishments, something essential to gain in quality and in prices. "The Canary Islands is a year-round destination and they say it's good, but the good can not be cheap," he said.
Another phenomenon that is occurring in the Spanish tourism sector is the massive arrival of foreign investment to acquire hotels. According to data provided by García-Mateo, in this year the purchase and sale operations in the Spanish tourism sector amount to nearly 3,000 million euros, of which about 700 million have been produced in the Canary Islands, representing 26% of the volume total. In this way a quarter of the foreign investment in Spanish hotel groups is produced in the Canary Islands. 57% of this investment affects establishments located on the island of Tenerife. Deloitte ensures that purchases will continue to increase.
The analysis carried out by the consultancy, which advises numerous tour operators and investors, also sets the main challenges that hotel groups have to face in order to modernize and be competitive in an increasingly global scenario. Innovation, digital strategy, renewal, repositioning of the brand, personalized experiences and sustainability are the key elements for improvement.
"You have to reinvent yourself, you can not always compete with the same thing," said García-Mateo, who questioned the Canarian hoteliers' strategy for delaying the renovation of accommodation to make the most of opening them throughout the year. In this sense, he pointed out that there is a certain "conformism" when it comes to "stretching chewing gum to the maximum" with a model that is exhausted and that is not that of international investors.

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