canary islands holiday prices rise kerosene war

War in Middle East sends Canary Islands holiday prices up 9%

Holiday prices could rise 9% from next month

The cost of package holidays to the Canary Islands will feel the first effects of the war in the Middle East from next month. Tour operators are expected to increase prices by up to 9% within weeks, driven by the rising cost of kerosene, the jet fuel used by virtually all aircraft bringing tourists to the archipelago. This price hike is one of the major consequences of the conflict between the United States, Israel, and Iran, along with other countries in the region. However, this could prove to be the lesser evil, as the real threat would be if planes departing from Berlin or London were grounded due to a shortage of this fuel.

Excelcan warns of fuel price impact

The business alliance Excelcan, which brings together the main tourism companies in the Canary Islands, issued this warning on Tuesday 19 May during the presentation of its report on the sector’s performance in the first quarter of 2026. A rise of between 7.5% and 9% in the price of package holidays represents the most favourable scenario; in other words, the least damaging outcome for the archipelago’s main industry. This increase would be driven by the surge in kerosene prices, which have already doubled since the conflict began. Fuel now accounts for 27% of the total cost of a package holiday.

This situation will raise costs for companies providing these services, but at least for now, the impact can be absorbed by the value chain. Tourism businesses currently have enough financial strength to cope without passing the cost on to visitors. José Carlos Francisco, vice president of Excelcan, explained: “Airlines might make a little less profit, tour operators pay a bit less, and hoteliers work with a slightly lower margin – it can be compensated. What I mean is that in the baseline scenario of expensive kerosene, we believe we have the capacity to absorb these cost increases.”

Real threat is fuel shortage, not just higher prices

The real problem would be a shortage of kerosene, which has been highly sensitive to the closures of the Strait of Hormuz. Before the conflict erupted, 40% of the world’s kerosene passed through this strategic waterway. Although Spain is not among the worst-affected countries – it holds reserves and produces more kerosene than it consumes – the situation is far more delicate in some of the main source markets for tourists, such as the United Kingdom and Germany. However, Canary Islands tourism business leaders stressed that this scenario remains unlikely.

From safe haven to distant destination?

As a result, the Canary Islands could be facing the full consequences of the Middle East war on its main economic engine. Initially, it was suggested that the islands might become a safe-haven destination, attracting tourists who would otherwise avoid areas close to the conflict. However, as the months have passed and problems with kerosene distribution have emerged, there are now fears that the archipelago – thousands of kilometres from the mainland – could become a remote, low-priority destination due to the larger fuel investment required by airlines to reach it. For now, however, this remains the worst-case scenario, not a reality.

Strong first quarter despite occupancy dip

If this worst-case scenario does not materialise, the outlook for Canary Islands businesses for 2026 remains positive, with figures similar to those of 2025 and the possibility of a soft landing in visitor numbers. At least, that is what the figures for the first quarter of the year suggest. Hotel companies have been more profitable than in the same period last year, despite a fall in overnight stays and occupancy rates. How is that possible? A hotel can have fewer rooms filled and still make more money if it earns more per night or controls costs more effectively.

Although the accommodation occupancy rate in the first three months of the year stood at 74.63% – 1.12 percentage points lower than in 2025 – revenue per available room (RevPAR, one of the most reliable hotel profitability indicators) rose by 6.31%, reaching €123.29 per room. Another indicator of the healthy state of the tourism business in the early months of the year was total tourism accommodation revenue, which reached €1.749 billion. This figure is €6.1 million higher than in 2025. Tenerife accounted for 36.95% of total revenue across the archipelago, followed by Gran Canaria with 31.96%. Compared with the previous quarter, revenue increased by €100 million, representing growth of 6.10%.

Hotel beds up, holiday rentals down

During these months, the Canary Islands also saw an increase in its tourism bed capacity, at least in hotels. The report indicates that the archipelago’s tourism offering reached 372,831 beds, an increase of 1,066 compared with the same period in 2025 (+0.29%). On the other hand, the holiday rental segment – following the approval of the Sustainable Regulation of Tourist Use of Homes law, which aimed to tighten regulations on this type of accommodation – has seen its bed numbers fall by 9%. The Canary Islands recorded 180,107 holiday rental beds in the first quarter of 2026, a reduction of 17,665 compared with the same period in 2025. Tenerife suffered the largest decline, with more than 7,000 fewer beds. Occupancy rates, average daily rates, and total revenue linked to this activity also experienced a downward adjustment in the first quarter of the year.

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