SpainDMCs Warns of the Challenge Posed by Hotel Rates and Terms

Demand drives prices, not costs. Costs have risen, but they do not explain the increase in rates: “The hotel charges what the market will pay.” This observation is the logical consequence of the current role of revenue management as a pure optimizer of revenue for each transaction. Privately, many hotel MICE sales departments confirm this “what can I charge you” mentality, which complicates the business relationship. It has its justification (who doesn’t want to optimize results?), but it can lead to a short-term mindset that harms relationships with clients who will bring in groups in the future and damages the destination’s image.

Demand is extremely high, with new segments paying high prices. Major events (F1, Champions League, trade shows, concerts…) drive prices sky-high… and then it’s hard to bring them down. Furthermore, individual tourists already pay as much as business travelers—or even more—when it comes to high-spending tourism (U.S., Latin America, Asia) or guests diverted from the Middle East. The craze for experiences, culture, and sports means that our market, which used to be “the jewel in the tourism crown,” isn’t quite so appealing anymore; other segments are very attractive.

With virtually no competition. New options such as apartments are used only marginally, limited to exhibitors at trade shows (MWC, ESMO) or long-term stays, but they do not replace hotels in the MICE sector. One DMC cites the example of VIP clients (F1) who used to stay at 5*GL hotels and now rent apartments, but according to the association, these are still exceptional cases.

Prices will continue to rise as long as occupancy remains high, according to the DMCs. Several members of SpainDMCs are already seeing signs of a plateau (cancellations or increasing difficulty in confirming bookings—a trend that several hotels have also mentioned to us)… but it appears the trend will continue: a study by AMEX GBT ranks Madrid first in Europe in terms of projected price increases for 2027 (between +6% and +9%, depending on the economic outlook).

These prices affect the rest of the event. According to DMCs, the client’s budget doesn’t increase, so when hotel rates are very high, the tendency is to cut back on the number of nights (from 5 to 3–4), limit the number of attendees or program services, or change the destination. And here’s a negative impact for our entire industry: the fact that experiences become less rich (shows, technical setups, dining, and other experiences are cut). The hotel is the part of the budget you can’t cut; everything else can be adjusted.

According to DMCs, mid-range business is being lost to destinations such as Lisbon, Athens, Portugal, Morocco, Croatia, and Eastern Europe. One DMC cites the example of an event quoted at €700,000 in Lisbon and €1,700,000 in Madrid the following year. In this context, high-budget clients continue to come, but mid-range events are seeking alternatives. DMCs also note that new destinations are being proposed, even though prices there are also rising, and that savings on hotels may be offset by transportation costs. The winners may be secondary destinations that are well-connected—a combination that isn’t always easy to achieve. Several DMCs note that Ibiza and Mallorca, with low occupancy rates, are offering attractive deals in the fall.

Prices are rising, but service isn’t keeping up. DMCs talk about “high budget, not high-end.” It’s a complicated issue: someone paying 400 euros for a room expects high-end service, but their hotel often maintains its usual level of service. Prices can change in an instant with a decision by the revenue manager, but service quality isn’t easily adjusted. DMCs ask that this be at least offset with added value: a meeting room included, a coffee break or cocktail reception, an upgrade for the group leader, early check-in/late check-out, complimentary amenities, flexibility in room assignments and deadlines, alternative dates…

The relationship between hotels and DMCs has deteriorated. DMCs—in an industry built on service, relationships, and collaboration—complain that revenue managers make the decisions and that the sales team is unable to avoid very rigid conditions (deposits, attrition, short release periods, validity periods, etc.). A recurring sentiment is that the hotel “forgets that the DMCs filled its rooms during the crises.” The relationship between hotels and DMCs still has an impact, even if only “to get a response” or to secure better terms and conditions, but this is no longer the norm. Manners are also important, and DMCs report unanswered or delayed requests, as well as the denial of courtesies that were once standard (private check-in, a designated area for handing out keys). Many feel that the power of the XXL international chains is growing, and that they “couldn’t care less” about the MICE sector.

Partner or competitor? They also note that the hotel sometimes competes with the DMC: —when a client contacts the hotel directly, they receive a lower rate than the one given to the DMC, or the public/OTA rate is lower than the group rate, which undermines the agency’s credibility. They are asking for the group rate to be protected and for professional DMCs to receive preferential treatment.

Rooms vs. Extras. On the one hand, DMCs are asking that the business be evaluated beyond just the room rate, taking into account the group’s total spending (meeting rooms, F&B, extras, repeat business), not just the nightly rate. However, while this must be taken into account, it should not be demanded to an excessive degree: DMCs complain about exorbitant minimum spending requirements, especially when an incentive group is not staying at the hotel.

Let’s say it again: this is a partnership that has achieved a great deal, that knows how to collaborate, and that has put Spain on the MICE world stage. But as with many partnerships, it’s sometimes good to see if we can improve. Our industry (not just DMCs) has a vested interest in ensuring that events are valued, that our cities are filled with convention and incentive attendees—not just Bad Bunny fans—that budgets can be allocated to events beyond just accommodations, and that Spain is seen as a destination that isn’t cheap, but is competitive. A purely short-term, financial approach to optimization isn’t ideal; the relationship, the balance between service and price, and taking care of the stakeholders who will deliver tomorrow’s profitable events—all of this is important.

We would like to thank SpainDMCs for organizing this survey for its members.