A popular southern Spanish newspaper has recently reported on the state of the Spanish tourism industry. In the article it states some 65,000 bars and restaurants will close this year due to the Coronavirus pandemic. That’s the stark prediction made by hospitality leaders, who also forecast a loss of between 900,000 and 1.1 million jobs.
The COVID-19 lockdown and the subsequent plummet in tourism numbers have already seen 40,000 hospitality businesses close their doors. That number is on track to increase by 20,000 but could also soar to 85,000 if the second wave is as lethal as feared, according to data from the Together with Hospitality organisation, consisting of groups Hospitality of Spain, Federación Española de Industrias de la Alimentación y Bebidas (FIAB) and La asociación de fabricantes y distribuidores (AECOC).
According to a survey of businesses nationwide, 97.7% say their second-quarter sales are worse compared to the same period in 2019, while more than 60% think sales will be worse in the third quarter. Meanwhile, 19.6% of bars or restaurants have yet to open their doors since the end of the state of alarm on 21st June 2020, with 45.9% of these believing there is not enough demand to open. Around a third of these opened and then closed againwhilst almost another third have decided not to open until September.
Only 15.7% of hospitality businesses think sales will recover in 2021. Meanwhile, the number of jobs in the sector fell by 17.4% in June, with 300,000 people losing their jobs, while some 557,254 were furloughed. According to a study by the University of Valencia, the loss of jobs in June, directly and indirectly, is up to 1.1 million. More worryingly, businesses in the hospitality industry are expected to see annual turnover fall by more than 50%. This would represent a staggering loss of €67 billion. The sector is pleading with the government to focus their aid efforts on the tourism industry.
Hotels
The position is not much better in this sector. Many hotels have decided not to open and those that have must adhere to the rules relating to hygiene and social distancing which translates to less rooms being available to rent, less guests in public areas and in the most acute cases having to book time slots at the hotel swimming pool.
You may have read in the UK daily press reports of people with arriving on pre booked holidays to Spain only to find that the hotel they have booked is closed with no sign of opening in the near future. Some clients were even forced to sleep on the beach.
Cruise Lines
The largest Spanish cruise line, Pullmantur, the Royal Caribbean-owned Spanish cruise line has filed for insolvency, according to a statement from Cruises Investment Holding, which owns 51% of the line. Cruises Investment Holding and Royal Caribbean Group said they have filed for the reorganisation of Pullmantur under the terms of Spanish insolvency laws and has subsequently placed all three of its cruise ships into cold lay-up.
According to some media reports, crew aboard the ships are removing equipment and other fixtures for possible sale, suggesting the reorganisation may be the end of the cruise line altogether. Pullmantur has not commented on these reports, but its board of directors did release a statement saying that the unprecedented impact of the COVID-19 pandemic made the insolvency action necessary.
The cruise industry has been hit particularly badly by the Coronavirus pandemic, with all ships worldwide forced to suspend cruises, costing cruise lines billions of dollars in expenses, without any new revenue coming in. Even the largest cruise company in the world has been adversely affected, with Carnival Corporation announcing this week that it was planning to retire at least six of its cruise ships by August 2020 – with more earmarked for the same fate in the coming months.
In the UK CMV, Cruise and Maritime Voyages, a cruise operator focusing mainly on the British market, was placed in receivership. This ends several weeks of the cruise line struggling to find financing to help it manage through the global suspension in the industry. It also makes them the third cruise operator to go out of business in less than a month.
Timeshare
The story here is not much better, many resorts in both Europe and the Americas are still closed with a number giving no indication when business will resume. We have recently heard that the largest resort on the Costa del Sol, Club la Costa (CLC) is expected to open on 25thJuly 2020. Much like hotels they will have to limit capacity, observe social distancing and hygiene rules. Also being in Spain, the current law makes the wearing of masks compulsory everywhere with few exceptions; not at all comfortable when out and about in 32ºC plus temperatures.
We have heard that because of the shortened summer season, CLC have decided to continue to furlough their administration and sales people until January 2021. The corollary of this will mean that the resort will be less busy than in previous years and because CLC are not operating their “Fly Buy” programme, no new sales will take place.
CLC as a company are relatively cash rich so may be able to ride out the storm, but the same cannot be said for smaller timeshare companies. At TCA we are very concerned by this news and fear that there may well be a spate of insolvencies within the industry resulting in timeshare consumers suffering the loss of their ownership rights.
As an example we are closely watching a small resort on the Costa del Sol. This is a small family owned resort that is getting on in years; as are most of their timeshare owners. Dueto owners passing away and the lack of new sales, ownership levels are now as little as 27%. The resort is actively trying to sell the real estate and relying upon internet booking sitesto increase their occupancy levels. Of course given the current pandemic this may prove very difficult and could ultimately lead to bankruptcy.
The Future
Spain is certainly not over the pandemic by any means, Coronavirus cases have soared in just over two weeks, according to the latest figures from the Spanish Health Ministry, which were released Monday (23rd July) after a three-day delay. The cumulative incidence of Covid-19 is now 27.39 cases per 100,000 inhabitants, a sharp rise from the 8.76 cases per 100,000 reported on 3rd July. The cumulative incidence of the virus is nearly the same as it was on 11th May, when Spain began to deescalate the lockdown rules that were introduced in mid-March in a bid to curb contagion.
The Catalan government has announced it will implement new restrictions due to the rising cases of Coronavirus in the region. Social measures are already in place in the municipality of L’Hospitalet de Llobregat; which is located just 6 kilometres southwest of the city of Barcelona, including limits on the capacity of bars and restaurants, and the closure of nightlife venues, cultural activities and gyms.
Similar restrictions will now be rolled out to the Catalan capital, Barcelona and its metropolitan area. The regional government has also called on residents to limit their journeys as much as possible, and avoid travelling to second residences this weekend.
A recent study carried out by the CIS, Spain’s Sociological Research Centre, has revealed that nearly two-thirds of people in Spain think that the authorities should be taking a harder line in its fight against Coronavirus.
In a recent survey, 62% said they were in favour of “more demanding control and isolation measures”. Fewer than 95% of those surveyed said that they were worried or very worried about the virus, despite Spain having got over the first wave of the infection.
Our Thoughts
We are not in the business of scaremongering, but going forward there is total uncertainty about not only timeshare but the hospitality industry as a whole. It would be very sad if the pandemic causes timeshare resorts to go into liquidation but given the statistics this is becoming a stark reality. If you are an owner perhaps now would be a good time to review whether or not continuing to own timeshare is really in your best interest.
As the results of our maintenance fee survey are being analysed, it is clear that; with the exception of a small number of resorts, no meaningful assistance or refunds are being offered to owners who have lost their holiday entitlement in 2020, thus demonstrating that in reality owners are only viewed as cash cows and not valued customers.
Let’s chat
If any topic within this article has stimulated questions that you require to be answered, why not get in touch with the TCA so we can better understand your concerns as a consumer of hospitality products, notably timeshare.
Please remember that we are totally focussed on accurate unbiased advice and have a world of knowledge to help you make the right decision before it is too late.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk