Is the holiday bubble about to burst?

The news that travel giants TUI, Europe’s biggest holiday company saw losses increase from €36.7m to €83.6m is troubling, not least for shareholders but the travel industry in general. The decline is predominantly blamed on two factors – weakness in sterling which is blamed on the uncertainties surrounding Brexit and an unusually hot summer in northern Europe last year meaning that many stayed put, taking a ‘staycation’. The company is also said to remain concerned about whether its airlines will continue to have access to EU airspace after Brexit – I am sure that they aren’t the only ones either.

I must admit that when the weather is sunny there’s nothing better than being at home, just relaxing in the garden and having days out. It does help having a pool, air-con and living within a couple of km of the beach. But the cost of doing that in the UK is astronomical and you need very deep pockets, especially if taking children out. On a recent trip back to the UK it actually physically pained me to pay £25 for a bottle of non-descript red wine in a local restaurant, one that at most would be a coupe of euro’s here. I certainly enjoy a nice glass of Merlot or Cabernet Sauvignon but equally I found a fairly decent red in Lidl which is under a euro!

I must admit though my days of wafting the likes of Nuits-Saint-Georges still bring back fond memories if not a tear to my eye at spending so much, but those were my frivolous pre child days!

Now I really struggle to see how people can afford to eat out – mind you, I am specifically referring to London now, where I was visiting and the bill for a meal out, starters and mains, no dessert or coffee came to just over £120! It was ok, nothing particularly outstanding and on a par with a good ‘menu del día’ here to be perfectly honest. Here in Benidorm €10 for a 3 course including half a bottle of wine is the norm and some, such as the legendary John & Joseph’s on Calle Gerona or the numerous Chinese restaurants offer one for almost half that!

I’d better start saving for my next trip back… the fact that I paid less than €40 return on my favourite low-cost Irish carrier, including priority softened the blow a little though.

The weaker pound is making it very difficult to improve margins on holidays sold to the Brits but look online or flick through a brochure and package holiday prices don’t exactly scream bargain to me. I typed in for 2 adults and 2 children for a week’s holiday to Spain at the beginning of July and the average price came up as £2,500! Crumbs, that really shocked me how expensive it was to holiday here – I certainly wouldn’t pay that. For about one thousand more I managed to find a fly drive to Florida including a two bed apartment.

Now the main hotelier associations in the Balearics want the controversial tourist tax scrapped – immediately! Continued worries about Brexit and stiff competition from Turkey and Egypt has seen a sharp decline in bookings. Currently holidaymakers are charged between €2-€5 per person per night in Majorca, Menorca and Ibiza, paid at the hotel reception. I’d love to know what this money is actually used for and who benefits as there is little evidence to justify it. I do remember paying this tourist tax in Milan last December – for two nights we had to pay an additional €16 in cash! Imagine a family of four going for say a two-week summer holiday, that can make a huge difference to the total.

This additional tax was initially introduced in the Balearics in 2016, then doubled last year which hoteliers said would damage business… and is now sadly, but not unexpectedly proving correct. On top of this is the added burden that the season won’t start in March but instead in late April because of how Easter falls this year. Many bars, restaurants and hotels don’t re-open after the winter break until a week or so before Easter, so they are already at a loss and unlikely to make it up. With this in mind it seems somewhat naïve that Benidorm town hall have just allotted yet more land in the La Cala area for the construction of further hotels, to add another 2,000 rooms already available across the resort. As visitor numbers continue to drop is this really a wise move? Mind you, the fact that they have allocated the land doesn’t necessarily mean that there will be anyone willing to make the investment.