I met a 30-something Irish couple late last year who were reasonably happy with the cost of their Lanzarote flights and accommodation. They paid roughly €450 for return flights for the two of them and their 11-month-old son. Self-catering accommodation for 12 nights set them back approx. €400.
I was bored the other day when this chance meeting sprang to mind and just to be nosey, I checked out similar flights and accommodation for the same time (mid-October) this year.
Flights would now cost them €550 with Aer Lingus or €520 with Ryanair. The accommodation is roughly the same price (€420, "incl. discount"!). This means the same holiday in recession-hit 2010 would cost roughly €100 more (€850 compared to €940) than it did in 2009.
Pardon my ignorance on all matters of economics now, but this strikes me as slightly odd. The recession gets worse, people have less money, but consumer prices go up!
Whatever about the inner workings of Aer Lingus and Ryanair's pricing strategies, I assumed accommodation prices in Lanzarote would have come down. Or at least would be negotiable - is it not better to have someone in your apartment/villa paying even 50% of the landlord's mortgage rather than having no one at all there?
If someone could enlighten me, it would be much appreciated.
Hey Pub Spy,
ReplyDeleteThere are a few bogeymen putting inflationary pressure on prices this year.
First off accommodation owners are being squeezed at both ends: holiday makers are demanding lower prices, while many accommodation providers have found their costs going up over the past 2 years. This is particularly true for UK owners who have been hammered by the horrible exchange rate between the Euro and the Pound. Low interest rates have helped some but most have found their mortgage costs sky rocket over the past two years.
On the back of horrible 2009 rental demand when many had to slash prices to fill space, you can understand why some are pushing prices a little higher this year because they expect to sell less weeks. Tough times.
I'm no expert on flights but the airlines are seeing a double whammy this year: oil prices have risen from their recessionary lows and less people are travelling. Higher costs and lower passenger numbers can mean only one thing: higher fares.
Expect another tricky year, although it certainly won't be as bad as 2009.
Thanks for the insight Richard. This whole recession business is tough alright.
ReplyDeleteThere seems to be a 'chasing your own tail' element to accommodation letting at the moment. Less bookings = less income. But less income means higher prices for the few bookings you have. But higher prices = less bookings! I'm glad this is just a hypothetical problem for me.
This type of paradox applies to the airlines too, I imagine. Also, many airlines seem to have reduced the number of flights they operate. And less choice/seats for passengers means airlines can puch up prices.
Not a nice state of affairs whatever you look at it.
I hope you're right about 2010 being better!