Coronavirus exposes Latin America tourism to economic earthquake – Pledge Times

Two tourists, wearing masks, shut down in Christ the Redeemer in Rio de Janeiro, from Tuesday. Antonio Laserda / EFE

Llamas in Machu Picchu will be able to graze freely and without fear of selfies for at least 15 days. The Coronavirus crisis has reached the heights of the crowded Inca fortress, which this week hung a closed banner. The calm of the animals is the fear of the strip. The outbreak of the epidemic on the continent has put the tourism industry in Latin America on alert, with heightened tension due to the wave of cancellations and losses of millions of dollars shortly after the start of Easter, when travelers fill beaches and museums and breathe life in a region with a troubled economy.

The sector is sandwiched between two forces. On the other hand, measures have been adopted in Europe and the United States to restrict internal movement and the consequent reduction in the number of departures. On the other hand, the restrictions imposed by a large number of Latin American countries to prevent the arrival of tourists from some hot spots. Argentina, Colombia and Peru, which are three important markets, have already announced entry restrictions.

Latin America, which finished 2019 with a minimum of 0.1% growth, has lost weight as a destination in recent years due to the emergence of Asia and the recovery of Europe. In 2018, it recorded the entry of 114 million international tourists, leaving about 97 billion dollars, according to the figures of the World Tourism Organization (UNWTO). South America grew by only 1% in 2018 and the Caribbean decreased by 1%, compared to 7% in Asia and 5% in Europe. Corona virus is now added to this decline.

Mexico, the main destination in Latin America and the seventh in the world, is the one that can lose the most. In 2018, it received 41 million international travelers, 35% of the regional total, leaving $ 22 billion. The sector’s weight is significant and represented 8.7% of GDP in 2018, latest available figures. In 2019, the number of arrivals increased to 49 million, an increase of 9%, according to official figures.

These figures give a dimension to the looming threat to the country’s already ailing economy, which fell by 0.1% in 2019. The cost of the crisis will range between 1% and 5% of tourism GDP and the flow of international travelers could be reduced by up to 10%. In the event that infections multiply, according to a study by the Center for Research and Tourism Competitiveness at the University of Anahuaq, published Friday and curated by academic Francisco Madrid.

The closest precedent is the 2009 H1N1 epidemic, when the number of international tourists arriving in Mexico decreased by 53% in May compared to the same period the previous year – the outbreak of the economic crisis only worsened the situation. Francisco Madrid points out the differences with the current pandemic, mainly due to the role of social networks. “The enormous potential for transmission and the way the information flow is managed makes it different,” he says.

Although the Mexican government has yet to consider drastic containment measures, the effects have already begun. 30% of Easter reservations are canceled, according to the Confederation of National Chambers of Commerce, Service and Tourism (Konkanako). And its boss, Jose Manuel Lopez, points out that it can still get worse. “The impact may be greater, because the connection restrictions will also apply to citizens,” he says. Air Mexico reduced its flights to Spain by more than half on Monday. The cruise industry, which has grown rapidly in recent years, is one of its most vulnerable industries. Princess Cruises has canceled five cruises that were scheduled to arrive on Cozumel Island in the next month and a half.

The rest of the major tourist destinations in the region have chosen the path of restrictions. In Peru, which received more than four million foreign visitors in 2018, the government decreed a national emergency, locking down Machu Picchu, the jewel of the Andean country, for 15 days. “We keep the minimum equipment, the rest of the staff, in their home in quarantine,” says Miguel Zamora, the coordinator of the archaeological area. Between tickets and transportation, the approximate loss per day, at a conservative estimate that does not take into account spending on restaurants and hotels, would be $ 700,000.

Without Machu Picchu, the Cusco region, the center of Inca civilization and Peruvian tourism, has begun to excavate from the air. The president of the Federation of Cusco Tourist Agencies, Silvia Okamaita, confirms that 60% of the packages have been canceled. “There is a sea of ​​cancellations due to the ban on flights from Europe and Asia,” Uscamayta says. “We went through a period of terror and cholera, but we never had a disability problem.”

Like Peru, Colombia has also closed entry to foreigners from all countries and suspended cruise ship transit and disembarkation. The upward trend in the sector, which created 1.9 million jobs in 2019, has countered the epidemic. “Don’t put your dreams down, put them aside” is the desperate mantra that companies peddle to try to mitigate the damage.

The losses between the eighth and the twelfth of March amounted to 45 thousand million pesos, or about 11 million dollars, according to the Colombian Hotel and Tourism Association (Cotilco). “Occupancy of national hotels has decreased by 2.3 percentage points. If the crisis continues for a longer period, there could be a disaster. Some hotels are considering closing or scaling down the operation,” explains Gustavo Toro, president of Cotelco. Airlines in the first row affected. Latam and Avianca announced a plan to reduce their capacity by 30-40% from Saturdays.

In the case of Argentina, the Coronavirus will slow the recovery of a sector that has been hit hard by the economic crisis plunging the country. The 32% tax on buying the dollar put the sector on alert late last year. Travel agencies made up for this with domestic tourism and anticipated that March sales would eventually stabilize the business. Everything changed with the epidemic. “We are not afraid, we are terrified,” sums up a Buenos Aires operator who prefers to remain anonymous and who is now putting out contingency plans to at least preserve his business structure.

Agencies spend their days processing the claim of those unable to travel due to air and immigration restrictions. “For international flights, nobody asks and the national flight has collapsed. What we are asking customers is not to cancel and postpone. Closed purchases for April and May are going down, because people don’t know what’s going to happen,” says the same operator. The closure of national parks such as Iguazu Falls and the Perito Moreno Glacier predicts that the coming months will remain difficult.

The spread of the epidemic in Brazil, the country that contributes the largest number of tourists to Argentina and whose tourism revenue is 8.1% of GDP, is another open front. The Brazilian Association of Airlines (Abear) announced on Monday a 30% reduction in domestic flights and 50% reduction in international travel compared to the same period last year. The Brazilian Association of Travel Agencies (Abav) paints a darker picture. The entity’s partial balance indicates a flight cancellation rate of 85% in March, predicting that “the sector’s biggest crisis” will generate a high level of bankruptcy among companies.

Recovery is uncertain

With the fall of international tourism, the industry has begun to shift towards domestic tourism, which is the bulk of the business. In Mexico, national travelers accounted for 73% of hotel capacity in 2019 and the rest 27% internationally, according to government data. The president of the Federation of Latin American Tourist Associations, businessman Armando Bogorquez, trusts this lifeline. “National tourism is what has always saved the sector from crisis. There will be better prices and offers and this can encourage you,” he explains. But this rebound in domestic tourism will be a question mark as the restrictions imposed on the country’s inland regions are expanded. Plus, they don’t spend the same. International traveler’s spending in Mexico, around $ 1,000 on average, is twice that of citizens, according to Bogork himself.

The prior depreciation of local currencies against the dollar makes the region an attractive destination, although the extent of this advantage remains to be seen in the context of the global health crisis. The Mexican peso lost 24% of its value last month and the Colombian peso 34% in 10 days. “It could have a competitive edge but if the market isn’t interested in travel because it has other priorities, that might not be important,” says Francisco Madrid. The World Travel and Tourism Council (WTTC) estimates that the average recovery time after a pandemic is 19 months.

Some governments have taken a step forward. Colombia and Argentina announced support packages for companies affected, including the opening of a line of credit. For the time being, Mexican President Andres Manuel Lopez Obrador has ruled out the rescue operations. “We are still receiving an influx of tourists,” he announced on Monday. “There is still no setback, and maybe there will be, but let’s not get ahead of ourselves.” Patience contradicts the sector’s claims. Concanaco will soon send a series of proposals to the government, including an extension of the tax payment. “Strategies must be activated in order for the recovery to occur as quickly as possible,” says its president, Jose Manuel Lopez. “It’s going to be a year with very bad numbers.”

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