Today tourist activity is practically paralyzed globally. The containment measures applied by the countries affected by the coronavirus pandemic, as well as the impossibility of traveling, are causing what is perhaps the greatest economic impact in the history of tourism and that affects all sectors of the industry equally: transport, accommodation, travel agencies, guides, tourist activities. No one has escaped the crisis.

In Chile, the Covid-19 has chanllanged the industry, which had already been weakened by the social outbreak in October and which, with the sudden stop of demand, faces an unprecedented scenario, a “perfect storm”, as the president of Fedetur, Ricardo Margulis, described it. There is consensus among all the actors that this is the worst crisis in the history of the activity, and losses of US $ 3.9 billion and at least 2.6 million fewer visitors to the country are already projected.

Between the first and last week of March, air traffic collapsed by 90% due to the closure of borders and cancellation of flights. At the end of April, practically all of the country’s accommodations are closed, only 2% remain operational, but with an occupation that barely reaches 10%. Of the almost 300 thousand dismissal letters registered the Ministry of Labor in March, the sector with the highest increase (93%) was that of accommodation and food service. A crisis that has also affected SMEs.

How to face this catastrophe? Which are the ways of recovery after the crisis? Eurochile spoke with two European experts who advise the Foundation on its projects, to analyze the current scenario at the global – and national – level, as well as the measures that are already being adopted in that continent to help the tourism industry.

First measures: finance to companies and support for workers

Although each European country has adopted its own measures, they have a common objective: to financially support industry and unemployed workers in the face of cessation of activity. “In the case of Spain, the first measures have been the possibility of requesting Temporary Employment Regulation Files (ERTEs) during the closure of the companies. The State is responsible for 75% of their salary and, on the other hand, companies do not have to face social costs”, explains Luis Baldó, Spanish tourism expert and Eurochile consultant.

At the same time, the Official Credit Institute (ICO) launched extraordinary financing lines for tourism companies, which are credit lines to finance currency endorsed by the State itself, and also some governments of autonomous communities and municipalities have enabled credit lines financing, postponement or even suspension of local or regional taxes and fees.

“Obviously, freeing companies from personnel costs without the need for dismissals is a fundamental help due to the greater expense that tourism companies normally present. On the other hand, avoiding layoffs guarantees (in the vast majority of cases) their possible reincorporation once the crisis is over, also avoiding the loss of human capital, “says Baldó.

In France, which is the first world destination with more than 80 million visitors per year, and where there are 270,000 companies in the tourism sector, strong measures have been taken along the same lines since the start of the crisis, explains Peio Olhagaray, a French expert in innovation and tourism association.

Among the main ones, until the end of June the State undertakes 84% ​​of the salary of all employees who cannot join companies; a public solidarity fund was created that provides 1,500 euros per company; payment of gas, energy and rent bills was temporarily suspended; 300 billion euros were allocated to loans 90% guaranteed by the State; and tax measures were established for all companies, such as the postponement of social contributions, rates and state taxes.

Today special measures are being negotiated, such as special funds for self-employed professionals, and the cancellation of social charges for companies in the service sector, and especially for the tourism sector, hotels, restaurants and bars.

At a macro level, says Luis Baldó, “in Europe, from several countries – and promoted by Spain – work is being done so that tourism is included preferentially in the plan of ‘European reconstruction’ that is being designed, although today there is no concrete measure. ”

Should the taxes and charges to the sector be reviewed? Peio Olhagaray`s opinion is that regulations and rates should not change, because the economic structure of companies does not suffer from this cause, but rather from the weakness of the real profitability of the activity. “If it is calculated that it is three months without invoicing, but with some expenses, that means that accounting is falling to very dangerous levels for most SMEs,” he says.

Luis Baldó agrees on this, explaining that some European countries are considering lowering VAT on tourism and hospitality as support for recovery. “In Spain the VAT on tourism is 21% and transport 10%, and lowering it could be helpful but of very limited impact in the face of demand. Also in some destinations they are considering eliminating the ecotaxes at least for this year, but their impact on the final price is also low, “he says.

Recovery of the sector: confidence will be key

“With the impossibility of receiving clients, the tourism industry is suffering a lot and this situation will last for several years, because a supply of services that feed the development of the sector will disappear, and that mainly affects small companies,” says Peio Olhagaray regarding the recovery of the sector.

“As we know,” he adds, “the tourism industry belongs to a very complex value chain that integrates companies, the public sector, but also destinations of all kinds (beaches, mountains, landscapes, gastronomy, crafts, museums, etc.). The strength of each link and its capacity to resist will be essential to ensure a future for the industry. ”

For Luis Baldó, thinking of a recovery is possible, because tourism has always showed an ability to do so, much higher than other industries. And in this case – he says -, although it is a crisis of enormous depth, it is expected to be limited in time.

“Let’s not forget that tourism not only recovered, but grew after the 2008 financial and economic crisis, which was (we hope) much longer. Today it is impossible to know what percentage of companies will be affected, but I think this crisis will affect medium-sized companies more; the big ones have greater financial capacities to bear it, and the small and micro are more flexible and are possibly the first to be able to recover their normality, ”says Baldó.

The recovery of visitor confidence in destinations, both agree, will be key to the recovery of tourism. “Trust is the number one argument, it is essential to choose a destination. After the crisis, there are three questions that will arise directly and that will overcome everything else in this election: Is the destination health-safe? Who guarantees my level of security? If I get sick, who guarantees my return home? “Olhagaray argues.

“The current restrictions will be joined by the fear of traveling or consuming in public establishments,” adds Luis Baldó. “The only way to regain that trust will be through ‘social immunity’, which is unknown how long it can take to achieve, or through the development of a vaccine that provides confidence and peace of mind. The vaccine will possibly be the one that marks the return (more or less) to normality. ”

To regain that trust, says Olhagaray, first, trust has to be created towards citizens, informing about the country’s health reality, giving figures, examples, initiatives, and organizing international controls by the WHO, for example. Second, hope that the current crisis will disappear completely. And third, dedicate to inland tourism.

“In the case of Chile, for example, if foreigners cannot choose the country due to travel restrictions, the Chilean population remains. It is important to give competitive offers, organizing high-quality internal trips at cheap prices. It is already known that they like to discover on their own territory. This does not have to be for lack of foreigners, but for a strategy of giving priority to its population, because we know that the best ambassadors of a destination are the inhabitants themselves, “he says.

It will also be necessary, says Luis Baldó, to develop stricter sanitary standards, implement them and guarantee their implementation. Likewise, at least initially, distance and non-crowding measures will be essential, such as reduced capacity and control of common areas.

“In Spain, health protocols are being developed to recover activity in the short term, promoted by the Secretary of State for Tourism. These protocols will be approved by the Ministry of Health and subsequently approved at the European level. Coordinated and approved work is essential, so as not to confuse potential visitors with lots of different rules and protocols, or employers when implementing them, “he adds.

Reinventing tourism and trends for recovery

According to Peio Olhagaray, this crisis is developing in Europe a very strong idea: “What happens is the result of our way of life, which uses our Earth without precaution, traveling without limits, buying without concern… The issue of economic globalization and globalization of attitudes are certainly up for debate. My conviction is that the tourist activity will have to change completely with demands of a new type: more of authenticity, cultural discovery, personalized experiences and encounters, gastronomy with local products”.

In this scenario, he says, world destinations with an economic model of large concentrations, such as the destination of beaches, for example, will be the ones that will suffer the most from this crisis, and at the same time the destinations of cities or large capitals will grow in countries because they will contribute health and personal safety, because this topic will not be forgotten.

“At the same time, domestic tourism will grow due to the difficulty of traveling or due to higher prices, and those who develop a sustainable tourism policy in all its aspects will win: the role of its population, the relationship with its clients, the management of territory and the image of the destination, the province and the country ”, he affirms.

For Luis Baldó, in the first instance, nature and rural tourism, not overcrowded and with small-capacity accommodation models, will be the most benefited, and of course the proximity markets that allow car trips to avoid crowds. “As for sustainable tourism, hopefully after this crisis we stop considering it as a type of tourism. Sustainability must be an intrinsic characteristic of any tourist modality”, he adds.

“During these days,” he adds, “there is a lot of talk about a new post-Covid society, and of course about a new tourism, although I am not so sure that major changes in trends in tourist consumption or flows will occur once the situation normalizes. I do believe that a demand will arise that is much more concerned with aspects such as health or safety than price, and measures will be taken to guarantee that safety that will be maintained over time, as happened after 9/11. Companies will have to respond to these new demands”.

Impact in Chile and the region

Today, says Luis Baldó, it is difficult to make a general analysis of Latin America due to the enormous differences that exist between the different countries, but those who start from a better starting position (in all aspects) will be those who least notice the impact of the crisis.

“In the case of Chile in particular, I believe that it has an unbeatable opportunity to boost internal tourism, not only as a step prior to recovery, but as a fundamental segment of activity in the future for those territories that have a lower degree of development tourist”, he adds.

“I think that Chile and Latin America have a real future in terms of sustainable tourism. Due to its cultural and geophysical riches, the global destination is of great potential. My recommendation would be to massively support the sector, favoring the creation of companies and jobs, private and public investments, developing management training sessions and creating sustainable offers”, complements Peio Olhagaray.

And in this, both agree, associativity will be key. “It is essential!”, says Olhagaray: “If the chain breaks, the sector falls and the destination becomes poorer and less attractive. My recommendation would be to take advantage of this crisis to adapt public policies dedicated to tourism to the realities of each province. This would strengthen Chile’s global destination, which brings together several destinations, various offers, various value chains and a multitude of actors.”

The overcoming of this crisis from the tourist point of view, adds Baldó, can only occur from an enhancement of public-private collaboration, there are many aspects on which to depend and will depend on the public part.

“From this point of view, associativity is essential as speaker with public administrations, in order to design some exit measures that take into account the point of view of companies and entrepreneurs. On the other hand, professional and business associations must play a fundamental role in the education and training of their partners for the new scenario”, he concludes.