Luxury hotels pushed to discount prices

By Daisy Sampson daisy.sampson@algarveresident.com

Five star hotels are feeling the strain more than most as occupancy levels plummet across the Algarve as the global economic crisis hits the region’s tourism sector.

Statistics released recently by AHETA, the Algarve association for hotels and tourism, have consistently shown a drop in occupancy levels in the five star sector, with the latest figures revealing that during February occupancy was down by 16.9 per cent.

Despite anticipating a poor year, hotels are yet to be able to confirm exactly how deep the impact of the crisis has been on the region’s premier hotels.

Michael Borges, head of sales at the Hilton Vilamoura As Cascatas Golf Resort and Spa, told the Algarve Resident: “We will not know how the economic climate has affected us realistically until the end of the year. However, ultimately the crisis is going to affect everyone.

“We are being proactive rather than reactive to the crisis, offering clients reduced rates for early booking while looking to environmentally friendly ways to save money,” he said.

“Although there are many five star hotels in the Algarve, the level of demand for these is perhaps questionable and it seems inevitable that some of the new hotels will suffer during these times. Quality products will survive the economic crisis.”

British market

Sales Director Lourenço Ribeiro, of the Grand Real Santa Eulália Resort and Hotel Spa, said the hotel in Albufeira was also feeling the strain: “We have seen a reduction in room occupancy, especially from British tourists, who traditionally are our second biggest market.

“We have implemented various promotions for both the summer and the winter but it will not be clear for some time as to how effective these promotions have been.”

He added: “Tour operators are expecting us to discount rooms even more heavily but we will not be giving any more discounts at least until we have assessed the months of May and June.”

Lourenço Ribeiro believes that the number of five star hotels in the area has also compounded the economic crisis: “In normal times, perhaps having so many five star hotels would be good, making the Algarve synonymous with a luxury destination. However, in these times, the huge competition will, of course, have an impact on occupancy in a negative way for most hotels.”

Repeat clients

However, not all five star hotels are reducing prices. Teresa Caldeano, director of sales and marketing for Hotel Quinta do Lago, told the Algarve Resident: “We will not be dropping our rates because we want to be able to maintain the level of service offered to clients by the hotel.

“There has been a small difference in the number of guests from the British market and we are expecting a slight decrease in occupancy. However, most of our business comes from repeat clients who continue to come to the hotel. Because of this, the coming year is not looking so scary for Hotel Quinta do Lago.”

Occupancy levels in the coming months will prove crucial to the five star hotels in the region, as the summer months are when occupancy should be at its peak.

It will only be at the end of 2009 that the true impact of the crisis on luxury tourism in the Algarve can be realistically measured.

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