Mallorca-based María Antonia Llull’s hotel chain is losing at least 1.5 million euros a month, but she hopes this summer will be her salvation.
The coronavirus pandemic has closed almost all of its 30 hotels for months and the group, Hipotels, has put almost all of its 3,000 employees on leave. Only his establishment in Cancún – his only hotel outside of Spain – is open.
Llull is not alone: the tourism industry in southern Europe – a big part of the region’s economy – has been left in limbo as the slow roll-out of vaccinations and the latest increase in cases make it more and more likely a second summer wasted.
Easter might offer Llull minimal relief, bringing German tourist planes to Mallorca, but it is the summer season that will be crucial.
“Easter season is like getting some fresh air, before the water sucks you in again,” said Llull, who hopes to open eight hotels in Mallorca for the holidays. “What we need is summer, because with another lost summer, a lot of businesses are going to disappear.”
The tourism crisis of last year devastated the Spanish economy. According to Bank of Spain estimates released this week, foreign tourist income during the peak season from July to September fell 78% last year compared to the same three months of 2019.
Normally, tourism accounts for around 12 percent of Spain’s gross domestic product, so the collapse contributed to an 11 percent economic output contraction last year – deeper than any other country of the EU.
Although Spain is at the center of the crisis, the sector accounts for 11 percent of economic output in southern Europe and one in six jobs in southern European countries, including France.
These countries had already been hit harder than those in the north by the fallout from the pandemic and had higher debt levels, limiting their ability to support struggling businesses and jobs, said Nadia Gharbi, senior economist at Pictet. Wealth Management.
“The risk of another lost summer will only exacerbate these problems and put more pressure on politics,” she warned.
Jacob Nell, head of European economics at Morgan Stanley, said vaccination programs were not going fast enough: “There is a real risk that [European countries] have been so slow with vaccinations that they are wasting another summer. . . This leaves southern Europe at risk of [economic] northern decoupling. “
The Bank of Spain’s baseline scenario is that the economy will grow by 6% this year, with foreign tourist receipts reaching 56% of their 2019 level. While claiming that tourism and the economy could far outperform These expectations, the central bank also presented a “severe scenario” in which Spain manages only 3% of growth and tourism declines even below 2020, to only 14% of 2019 levels.
There are early signs that the recovery will be slow. Although Lufthansa’s flights between Germany and Mallorca are nearly full by Easter, it expects overall bookings this year to reach only 40-50% of pre-pandemic levels.
Other European countries are also bracing for continued economic damage. According to the Greek Tourism Confederation, income from tourism, which supports one in five jobs in Greece, fell 77% last year.
This year has so far turned out to be just as bleak: Hotel bookings in Greece fell 74% per year in February and internet searches for rooms fell 63%, according to data released this week. . Harry Theoharis, Greece’s Tourism Minister, recently expressed optimism for “a better year than last year” but admitted that “reservations are depressed”.
According to Allianz analysts, sales in the independent European hotel sector fell by half last year, and will only recover a quarter of that decline this summer.
Goldman Sachs has forecast a strong rebound in tourism, adding 1.4 percent to Spain’s total output this year and 1 percent to Greek output – but that assumes most restrictions will be lifted by June. He warned of a downside scenario in which restrictions would remain throughout the summer, leading to a 1.3% drop in growth in southern Europe.
The key is vaccination, which will help stem infections in countries of origin and destination, and boost governments’ readiness to allow people to travel.
The EU aims to vaccinate 70% of adults by the end of summer, although the tourism industry is alarmed by the remark by European Commission President Ursula von der Leyen that summer lasts until September 21. By then, the main holiday season will be practically over. .
Alan French, managing director of Thomas Cook, said that while he had “no doubts that the holidays will likely take place this summer, when and what criteria they will have is what we are speculating on” .
“We need to build confidence at the start of the summer to resume the season,” said José Luis Zoreda, vice president of Exceltur, a group in the Spanish tourism industry. “If that confidence doesn’t come back until October, it might be okay from a health perspective, but for our industry it’s a disaster. Some businesses have been closed since October 2019.. . What industry can survive two years without income? “
Right now, however, the industry faces other hurdles. Germany has ordered Lufthansa to stop adding flights above Easter and is considering a temporary ban on vacationing abroad after alarming at the number of Germans heading to the Balearic Islands.
Britain – Spain’s biggest source of tourists – increasingly restricts overseas travel. Most UK travel companies plan to reuse last year’s traffic light system, which designated destinations “green” or “red” depending on infection rates.
And Spanish authorities face internal criticism for seeking to accommodate European tourists while imposing internal travel restrictions on Spanish residents.
“The bottom line is for the industry to restart and be sustainable,” Zoreda said. “If we need more restrictions now to do that, okay, but what we’re asking for is that the vaccinations be sped up.”
In the meantime, the Spanish and Greek governments have made contact with the UK to try to secure bilateral travel deals if an EU-wide vaccination documentation program is not in place on time.
“We have to do whatever we can to save the summer season,” said Llull. “If I was only offered half of the activity we had in 2019, I would say, ‘Where do I sign? “”
