Spain tourism sector sees 100-billion-euro loss over virus

Devastated by the pandemic, Spain’s all-important tourism sector is expected to incur losses of more than 100 billion euros ($120 billion) this year, an industry body warned on Wednesday, October 21. 

If the dire prediction proves correct, it would take the sector’s annual income back to the level it was in 1995, the Exceltur tourism association said. 

“We would go back 25 years in terms of what the Spanish tourism sector generates,” Jose Luis Zoreda, the association’s vice president, told a news conference, saying it would be a “dire scenario.”

Exceltur has been forced to further amend its annual predictions after regional authorities stepped up restrictions to slow the virus which has claimed some 34,000 lives and infected a million people – the highest figure in the European Union.

Since early October, the Spanish capital and close to a dozen nearby towns have been subjected to a partial lockdown, and across the northeastern region of Catalonia, bars and restaurants have been closed for a fortnight. 

Including the impact of the latest restrictions – which Exceltur estimates will cost almost 7.5 billion euros – the sector’s annual losses are seen rising to 106 billion euros by the year’s end.

After an initial 3-month shutdown at the start of the pandemic, the industry then suffered a catastrophic summer with holidaymakers shunning Spain before taking a new blow from the October restrictions, with annual turnover seen plunging 70% on last year’s figures. 

Tourism is hugely important to the Spanish economy, accounting for some 12% of gross domestic product (GDP) and 13% of employment.

Zoreda said the government had not fully understood the extent of the crisis affecting the industry, saying an “urgent rescue plan was needed…including direct aid” along the lines of the bailouts granted to the banking sector during the financial crisis.

‘We need to survive today’

In June, the government of Socialist Prime Minister Pedro Sanchez announced a 4.2-billion-euro rescue package for the ravaged tourism sector, but the funds largely amounted to state-sponsored loan guarantees, a moratorium on mortgage payments, and lower airport taxes for airlines.

Even though Spain will be one of the main beneficiaries of the European virus rescue plan, under which it will receive around 140 billion euros, “we cannot discern any clear prioritization of the tourism sector,” Zoreda said. 

Sanchez’s government has said it is planning to drive 70% of the funds into medium- to long-term investments in the environment and the country’s digital transformation. 

For the tourism industry, the immediate challenge is “how to make it to the end of the month,” he said. 

“To be able to bet on tomorrow, we need to survive today.”

Exceltur has also demanded that the government extend its furlough scheme – currently set to run until January 31 – until the end of next year.

It has also asked that it drop the requirement for participating companies to freeze layoffs for 6 months after it ends. 

Spain is also expected to see its GDP slump by 12.8% in 2020, the International Monetary Fund has warned, in what would make it the hardest-hit country among the world’s advanced economies. – Rappler.com