Monitoring Desk
BARCELONA: Elena Arzak is already planning for summer at her three-star Michelin restaurant in San Sebastián — with gloved and masked waiters, seats left empty for social distancing reasons and possibly takeaways and off-site catering to make ends meet.
But as Spain’s tourist sector reels from the impact of the coronavirus pandemic, Ms Arzak — who has worked at London’s Le Gavroche, trained at the legendary El Bulli in Catalonia and has been feted as the world’s best female chef — knows such arrangements represent a best-case scenario.
Last year was the industry’s best on record; this year it is the worst hit sector in one of the worst hit countries in the coronavirus crisis. Practically the entire summer season could be lost.
The tourist sector is so important to Spain — and to countries such as Greece and Italy — that its problems risk pulling the economy further down and exacerbating Europe’s north-south divide.
“This is a situation that leaves you completely blank; restaurants have never been closed for so long before,” Ms Arzak said. “It will take four to five years to get back to the tourist figures there were before.”
If people have to take masks, gel and gloves to the beach, that’s not opening up for business. That’s scaring people off
Despite its heavy reliance on foreign gastrotourists, the eponymously named Restaurante Arzak, which specialises in “new Basque cuisine”, can survive even if her wished-for July reopening is delayed, she said. The chef is hoping to prepare dishes such as cuttlefish with fruit enzymes before the summer is done.
But thousands of other establishments are unlikely to withstand months without any revenue and the prospect of further losses when they return to business.
According to a report by Bain & Company and EY this month, Spain’s 280,000 food and drink businesses are particularly exposed to the impact of the pandemic, since they are typically small enterprises with little capital and margins of less than 6 per cent — half the national average.
“Many restaurants are not going to be able to open again,” Ms Arzak said.
They may not be even allowed to try for some time. At present the government plans only a gradual relaxation of the country’s six-week-old lockdown. Yolanda Díaz, Spain’s employment minister, has suggested tourism, leisure and cultural activities will not resume until towards the end of the year.
There are fears that even if restrictions are lifted, tourists will stay away from popular beaches © Jaime Reina/AFP/Getty
Exceltur, an industry association, estimates that in this case, the Spanish tourist sector would forfeit some 80 per cent of its 2019 income — more than €120bn.
Such a contraction would be painful for Spain’s €1.2tn economy, despite government plans to help the tourist sector by making it easier for seasonal workers to be included in temporary lay-off schemes. Tourism accounts for 12 per cent of gross domestic product and provides 13 per cent of the country’s jobs.
“We have always been the industry that has pushed the economy forward at times of crisis and now we are the most vulnerable sector — by far,” said José Luis Zoreda, vice-president of Exceltur, whose members include car rental business Hertz, the airline Iberia and the Meliá hotel group. “There is no economic sector in the world that can survive 10 months without any income.”
But at present revenues are virtually nil. Spanish government figures released on Thursday showed hotel occupancy fell by 61 per in March, ahead of the formal shutdown of the sector at the end of the month; in April the decline is expected to be virtually 100 per cent. In Italy, which imposed a lockdown about a week before Spain, hotel occupancy fell by 91 per cent in March, according to data provider STR.
Last year, there were 84m foreign visitors to Spain, with British, French and German tourists accounting for just under half. This summer, Mr Zoreda said, there was little prospect of a real return to international tourism, apart from limited numbers of French visitors to Catalonia and Portuguese in Galicia.
He is concerned that even if borders reopen, common testing protocols are agreed and flights resume, foreign tourists will be too fearful and out of pocket to return this summer.
“If people have to take masks, gel and gloves to the beach, that’s not opening up for business,” he said. “That’s scaring people off.”
Mr Zoreda and Ms Arzak hope domestic tourists will take up some of the slack this year. But Exceltur estimates that even under such a scenario — in which some hotels and restaurants retrieve part of the season catering to domestic demand — the industry would still forgo €92bn in revenues this year.
Spain’s problems are echoed elsewhere in the Mediterranean. Tourism in Greece officially accounts for 7 per cent of GDP. The country’s tourism association say the share is much higher when including all activities supporting the sector. Booming visitor numbers underpinned the country’s recovery after years of recession and provided much-needed investment.
Athens is hoping its success in containing the virus will help it “attract a greater share from a smaller pie”, said Alex Patelis, chief economic adviser to prime minister Kyriakos Mitsotakis. The country has seen a steady decline in new cases, with the daily number falling to single digits over the past week, and plans to start lifting its lockdown on May 4 “We are working on a scenario for opening up tourism and we believe this will be possible,” Mr Patelis said.
But, as in Spain, much will depend on appetite for travel and the protocols adopted by European airlines to maintain social distancing.
“The southern tourist economies are most at risk,” said Andrew Kenningham, chief Europe economist at Capital Economics.
Exposure to a stricken tourist sector adds to a litany of other problems left over in Europe’s southern countries following the 2008-9 financial crisis and ensuing sovereign debt crises, including high debt levels, strained public finances and relatively high unemployment.
“It means all the underlying inequalities in the eurozone are being exacerbated,” Mr Kenningham added.
In San Sebastian, Ms Arzak hopes there may yet be a positive side to the crisis, arguing that restaurants like hers will tighten their bonds with local customers and providers. “We in the Basque country and in Spain have always valued food over other things,” she said. “People are going to be poorer, but they are still going to want to be able to celebrate.”
Courtesy: (ft.com)
