ROME -- A major shift in booking practices among some hotels in Italy is forcing one tour operator to look for alternate accommodations for its groups.
Perillo Tours said that it is being "kicked out" of hotels it has worked with for years as they are no longer making space for the tour operator's groups and are instead focusing only on taking what Perillo said are direct, FIT bookings.
Steve Perillo, CEO and owner of Perillo Tours, said the switch some of its hotel partners made this year are likely residual effects of the pandemic.
"The hotels lost a fortune. And then the business came back like crazy. So all the higher-end hotels thought, 'We're going to sell the rooms directly and charge $700 a night,' he said, adding that hotels are taking the opportunity to recoup their losses by charging higher rates as travel demand continues to be high among people who are still willing to pay premium rates for their vacations.
But while capitalizing on that demand, Perillo said, hotels are cutting out tour operators by not holding the same number of rooms they usually do for group business, essentially forcing suppliers like Perillo Tours to look for accommodations elsewhere.
"We were kicked out of hotels," Perillo said.
Europe's rising hotel rates
Sky-high hotel rates are nothing new in the years since the pandemic ebbed and travel returned with a bang of pent-up demand.
Lighthouse, a data intelligence company for the hospitality industry, found that Europe had the highest regional hotel pricing growth in 2023, with an 11% year-over-year rate growth in the first half of the year, followed by a 10% increase in the second half.
"After the pandemic, there was a massive backlog of interest in going to Italy," Perillo said. "Hotels saw this coming; they went two years without making money."
Perillo said he believes the higher rates and the move to turn away group bookings is temporary, but the practice is having an impact on operations.
For example, Perillo Tours is offering slightly fewer hotels in some destinations as the company looks to replace the hotels it can no longer book. And it is having to book some hotels that would not normally be a first choice.
"We could get pushed into a hotel we don't necessarily love," Perillo said. "But we also get pushed into higher-end hotels because sometimes they do have the space because they're not on our main four-star bus tour circuit."
Irene Capano, a Perillo tour guide, stands in front of the high-end Hotel Parco dei Principi in Sorrento, across the street from Hotel Isabella. Photo Credit: Nicole Edenedo
The Parco dei Principi in Sorrento is one of the hotels Perillo Tours typically uses for two nights on tours of southwestern Italy, such as its 10-day Vesuvius tour. The hotel is located on a cliffside overlooking the Bay of Naples. It has a private beach, botanical garden, terrace patio and a large swimming pool.
But when the luxury hotel stopped taking group bookings from Perillo Tours earlier this year, Perillo pivoted and found space at the Hotel Isabella across the street, a hotel with not nearly as many amenities as the Parco.
Irene Capano, a tour director who has worked with Perillo Tours for 17 years, said Parco is "one of the most beautiful and luxurious hotels in Sorrento; it has the best view of Sorrento and the Bay of Naples." She noted that Perillo has used the property for decades.
A room at the Hotel Isabella in Sorrento. Photo Credit: Nicole Edenedo
Perillo said the company is currently pricing 2025 tours and working to expand its roster of upscale and luxury hotels in Italy. He added that 2025 tours that include the Hotel Isabella or comparable hotels will be priced differently than tours with only higher-end hotels.
Despite the change, Capano said the impact on the Perillo guest experience has been minimal since itineraries in Sorrento are full days packed with activities.
"Hotel Isabella is just a place to rest at night because we are out between Pompeii, restaurants and Capri," Capano said, adding that she doesn't think the trend of Parco excluding group bookings will last. "They will experience some difficulties sooner or later, and Perillo will come back."