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Spain announces €4.25 billion tourism plan; EU visitors to 'enter freely' from June 21

Some tourists have been allowed to fly directly to Spain's Balearic Islands, but the rest of the country opens up to most EU visitors on June 21


Nerja, on Spain's Costa del Sol. Photo: Deposit

Nerja, on Spain's Costa del Sol. Photo: Deposit

Nerja, on Spain's Costa del Sol. Photo: Deposit

Spanish Prime Minister Pedro Sanchez yesterday announced a €4.25 billion package to bolster the country's battered tourism industry.

"The good news is that thanks to how the epidemic has evolved, we've been able to move forward the re-opening of our borders," Sanchez said Thursday at a speech in Madrid, referring to the decision to allow members of certain European countries to enter Spain freely as of June 21.

The €4.25 billion package includes a previously announced €2.5 billion tranche of the government's loan guarantee program that can be used exclusively by companies in the tourism industry.

New measures include €200,000 euros for guidelines on cleaning and other safety measures and €859 million in loans to bolster tourism companies' digitalisation, use of renewable energy and modernisation of facilities.

The package also includes a moratorium on mortgage-loan payments for some tourism businesses.

Thursday's announcement follows a bumper stimulus program for the country's car industry announced earlier this week, as the government takes steps to shore up key areas of the economy slammed by the coronavirus pandemic.

Executives in the car and tourism industries have been clamouring for additional financial support from Madrid. They say the government's €100 billion loan guarantee program and the funds spent to support millions of furloughed workers, among other emergency aid, have been vital - but still short of what's needed to weather the unprecedented downturn.

Spain's Hostelry Association said they weren't satisfied with the tourism announcement because, among other reasons, it didn't include tourism vouchers to encourage Spaniards to spend on restaurants and hotels in their own country.

More than 80 million tourists visited Spain last year, making it one of the world's most popular travel destinations. The blow to such a crucial sector from the pandemic is one reason Spain's economy is expected to contract more than most of its European neighbours. The Spanish central bank forecasts a worst-case-scenario contraction of as much as 15pc this year.

While some German tourists have been allowed to fly directly to Spain's Balearic Islands as part of a special program, the rest of the country opens up to most European Union visitors on June 21.

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Most Spaniards still aren't allowed to travel between provinces as the government slowly eases one of Europe's strictest confinements.

The shortened summer season has put tens of thousands of jobs at risk.

Swathes of the Spanish workforce depend on paychecks earned from May to September to make it through the rest of the year. Sanchez's government has expanded such workers' access to unemployment benefits but economists are concerned many will remain jobless - or at least face lower demand for their work - for several years.

The Bank of Spain expects the unemployment rate to remain above 17% through at least 2022.

Among Spain's largest tourism companies are hotel chains Melia Hotels International SA and NH Hotel Group SA, state-controlled airport manager Aena SA, airline booking software firm Amadeus IT Group SA and airline operator International Consolidated Airlines SA's Iberia unit.

As part of government's push to support tourism, Aena will be cutting airplane landing fees in Spanish airports, Chairman Maurici Lucena said in an interview published Thursday in newspaper Expansion.

Restaurants and small retail shops - essential to tourism industry - are likely to suffer among the greatest job losses in Spain because of social-distancing restrictions put in place to stem the pandemic, according to a research report published by the Bank of Spain in May.

Workers in those areas don't have the necessary skills to find jobs in sectors that are likely to see increased demand in the coming months and years, such as e-commerce.

The central bank's economists are calling for a nationwide re-training program for those workers to ensure Spain's already high structural unemployment doesn't surge even higher.

(c) Bloomburg / The Washington Post 2020

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