How is the UK performing?
We are having a very good year, especially from the UK market where we are seeing solid growth – north of a 20% increase across all of our destinations – and that’s after a very strong performance the year before where we also saw 20% growth.
In fact, the UK has now overtaken Germany as our biggest European market and now accounts for 18% of our overall business. The outlook for 2026 is looking positive too.
What is driving this growth?
The UK growth is across all our destinations but is particularly driven by certain destinations. Morocco, for example, now has more flight connections from the UK thanks to Jet2 holidays, so we are seeing a lot more traffic to our two hotels there.
Tunisia is a positive outlier as well, with close to 50% growth from the UK. We believe Tunisia is a destination with strong pent-up demand because in recent years it hasn’t been the focus of the UK travel industry. But it’s now back on the table for the UK market thanks to the likes of easyJet Holidays, On the Beach and Travel Republic.
Currently there is one big player missing – Jet2 holidays – which hasn’t decided yet whether to go back into Tunisia but we will see what happens in the future. Tunisia is great value for money, especially in these times when people tend to be more price sensitive. I think the potential is still very high. We have eight hotels there across our family-friendly Waves Iberostar and our Iberostar Selection brands and, based on our reviews, we are at the top end of the market.
The Balearics are also running ahead of the average, and thanks to new Jet2 flights to Andalucia – specifically to Jerez –we’ve seen growth there too. It’s a stunning region with a lot of golf courses and it speaks directly to UK customers.
How much influence do you have on your airline partners in their route planning?
Jet2 Holidays is our biggest partner but I certainly wouldn’t be telling CEO Steve Heapy what to do! We work very closely with others too, so we have been growing significantly with easyJet Holidays who are doing a great job. We obviously try to show them the opportunities that are still out there. I think it’s interesting for the market to explore new destinations like Morocco and Tunisia, and then destinations like Jerez, Costa de la Luz might be quick wins for the UK market.
What about long haul?
Long haul is growing heavily but it’s a little bit more difficult because the flight connectivity is very much controlled by TUI, for example, because the other big UK tour operators don’t offer long-haul flights. Since the demise of Thomas Cook there’s been a lack of diversity – with only TUI left with a meaningful amount of seats – and then there’s Virgin – but on a big volume scale, there is room for more.
Perhaps Jet2 Holidays would go long haul? I think probably at one point that would make sense. Any partner who puts on flights and takes some risk will have a good opportunity because there’s a lot of product, new product, in Mexico and the Dominican Republic, where there is more room for growth.
And the Canaries?
We’ve seen some interesting market shifts in Fuerteventura (main image), where the southern part of the island has been traditionally heavily German but we’re seeing it now becoming popular with the UK market. We’ve worked closely with our partners to diversify that so now we have a meaningful share of the UK market in the south of Fuerteventura.
We have three hotels in the south of Fuerteventura and they have been renovated in recent years. We’ve invested in our product there, upgrading our family-friendly hotels and adding more large family rooms that can sleep two or three or four children, rather than having to book a second room. That’s a very scarce product.
These hotels have now become destinations in their own right and for those looking for a family experience in the sun, we really have a great product there. We have also just re-opened the Iberostar Selection Fuerteventura Palace, a five-star hotel located on Jandía beach, following an extensive refurbishment. These product upgrades give us a good lever to push the destination into the market.
Are there other refurbishments and new openings in the pipelines?
Yes, we will be investing around €200 million in the next year, which is around the usual amount we tend to spend each year in upgrading our product. Next year we will renovate the Iberostar Waves Tucan and Quetzal in Playa del Carmen, Mexico. It will reopen at the end of 2026.
There are other projects on the table in Mexico. In November of this year we will open a Selection hotel in Puerto Moreles in Mexico, close to Cancun – the Iberostar Selection Riviera Cancún. It’s a renovation of an existing hotel.We have just opened a new build in Aruba, which is a new destination for us, and we have plans for more product on the island. I think Aruba is going to be an interesting story in the next few years.
And here in Majorca this year we have this year launched the Iberostar Selection Es Trenc, which is a really exciting opening for us. It’s like a cruise ship. We took over an existing hotel and upgraded it to a Selection. We actually reduced the number of rooms to create larger, higher quality accommodation such as junior suites.
We are responding to customer demand for this premium product where guests want to feel special, where there is hyper personalisation. It’s something we are doing when we renovate other hotels as we see how we can make the best use of our inventory.
How important is the UK travel trade to your business?
I believe a clear reason for our growth is our strong positioning in the UK travel trade. It’s vital. In the UK, 70% of our business comes through traditional channels – travel agencies tour operators and online travel agents. Our relationship with the UK trade is one of our strongholds.
We have a team of three business development managers in the UK who are out there every day helping agents get to know our product, and that’s key to our success. We know agents are extremely critical to the success of our business and we are very close to them.
We have a Facebook group which is very active, with updates continuously keeping agents informed and we just launched ‘Premier’ events where we invite agents to a cinema to watch a movie and then we share our experiences, which makes it a fun event.
We also invite travel agents to visit our hotels and then do a report with a professional documentary team to record their experience so they can share tutorials with other agents. We know agents have to be confident in what they sell and what better way than to hear directly from other agents.
The travel trade is in our DNA as Iberstoar actually began life as a travel agency, when our founder Don Miguel acquired three agencies in Spain. We have our own tour operator, World To Meet, which has around 200 travel agencies in Spain and Portugal. We have a lot of understanding about the agency model and we believe that there is a revival of the package holiday. In Covid and due to other negative experiences, where customers were stuck in destinations, the package holiday model is now in greater demand, not just for the UK but in other countries too.
We also see from our own data that when a sale is made with some sort of human interaction – whether it’s through an agent or a call centre agent – we see the value of that booking is significantly higher. Travel agencies have the tools and the knowledge to explain why it makes sense to upgrade to a room with a sea view or to a higher board basis. We see a lot of value in selling through our agency partners.
What about the recent demonstrations in Majorca and in other destinations where you have hotels? What impact is this having?
Obviously, it affects the business. I think that’s clear. But on the other hand we see our figures are still strong. I think as a brand we are more resilient against specific downfalls of demand like this. I think people feel more comfortable booking with us because of our strong sustainability agenda, although I don’t want to over interpret that. We definitely see that with our agent partners.
In the mid-term there is a risk to the business but nevertheless I think here in Majorca the narrative has shifted. People are realising that tourism is not the problem – a lack of housing is the problem.
The population of Majorca has grown by 40% in the last 20 years while there has only been a 20% increase in residential housing. Is it a problem of tourism? No it’s not. Housing is the problem and it’s something that needs to be tackled by politicians. The Government needs to take action and it is aware that this needs to happen.
In 2022 you signed an alliance with IHG. How is this going?
It’s working out well. It’s a commercial alliance. For IHG, it was a way of increasing its presence in the all-inclusive space, which is what all the big hotel companies seem to be looking for, and for us it gave us access to IHG’s loyalty programme and is helping us reach customers – particularly in the US – that we could not have otherwise reached, which is particularly important for our Caribbean hotels.
I think also being part of the commercial promise of IHG brings security and safety to the customers. But it is purely a commercial alliance, not a Joint Venture, and IHG does not have any influence on our expansion strategy or other decisions. It has taken some time to complete the integration and we now have the first full year of the set-up and we see this is working out pretty well. We see it makes sense and we have managed to reach a customer base that we maybe haven’t reached enough in the past.
