Salou, in northeastern Spain, in late July. France and Germany have advised their citizens not to travel to Catalonia.
It was never going to be a stellar holiday season for Spain’s tourism sector, but after a terrible first half, there was hope that the crucial summer months could be salvaged, at least in part.
Then came a fresh surge in coronavirus cases and the U.K. government’s decision to impose a quarantine on travelers arriving from Spain, crushing the sector’s hopes for a late-summer rebound.
“The U.K. government’s decision was a huge blow to the Spanish tourism sector,” said Jose Miguel Bielsa, president of the hostelry association of Las Arenas beach in Valencia.
Twenty hotels and restaurants located in the seafront promenade of Valencia belong to the association. This summer, the hotels facing the Mediterranean sea were booked at around 60% of their capacity, Mr. Bielsa said.
“It wasn’t enough to balance the losses due to the pandemic, but we thought the summer season could at least provide some relief for the sector,” Mr. Bielsa said.
After a dreadful start to the year, with Spanish hotels remaining closed for more than three months during the lockdown, the sector’s hopes were centered on the summer. Between 65% and 70% of the Spanish tourism sector’s revenue is generated in the summer months, according to Santiago Aguilar, president of the Spanish Association of Tourism Professionals.
“This year the summer season started late and full of uncertainty,” Mr. Aguilar said.
Hotel owners across Spain hoped business would pick up in August but with 65% of their customers coming from abroad, the British government’s decision to impose a quarantine looks set to cripple the hoped-for recovery.
In mid-April, Mr. Aguilar said Spain’s economy could lose up to 90 billion euros ($105.67 billion) if international tourism wasn’t allowed or European tourists were reluctant to travel over the entire summer. Now partway through August, this worst-case scenario has been confirmed, he told The Wall Street Journal.
Only half of all hotels in Spain reopened this summer, and even those were booked at between 30% and 40% of their capacity, Mr. Aguilar said. Then, there was a spike in coronavirus cases and cancellations started to pour in.
The U.K. imposed a quarantine on travelers entering from Spain on July 25. Two days before, the French government was already advising its citizens not to travel to the Spanish region of Catalonia, a popular destination for French tourists. On August 5, the Swiss government added mainland Spain to its quarantine list, leaving out the Canary and Balearic Islands.
The number of daily new cases of Covid-19 has more than quadrupled in Spain since June, when the country lifted the state of emergency it declared in mid-March. On Monday, Spain’s Ministry of Health reported 1,486 new cases, down from 1,895 new cases on Friday and reaching a total of 322,980 confirmed cases of coronavirus in the country since the pandemic started. Authorities had identified 675 active outbreaks as of Monday, with Spain’s northeastern Catalonia and Aragon regions at the epicenter of the rise in cases.
“The spike in cases in northeastern Spain will without a doubt make locals and foreigners more cautious, generating a further hit to services, such as travel and hospitality, even without lockdowns,” said Antonio Garcia Pascual, a visiting scholar at the Johns Hopkins School of Advanced International Studies.
This is set to drag Spain’s economic recovery. Mr. Pascual expects the contraction in Spanish gross domestic product to be closer to 15% than to a consensus forecast of 12% for 2020.
Out of all eurozone countries, Spain’s economy was the worst-hit by the virus in the second quarter, recording a historic contraction of 18.5% after a 5.2% decline in the first quarter.
“The Spanish economy has gone from an outperformer to a laggard,” said Jessica Hinds, European economist at Capital Economics. The recent rise in virus cases is likely to hold back tourism in the third quarter, meaning Spain’s economy will struggle to rebound as quickly as its neighbors, Ms. Hinds said.
Travel and tourism account for 14.3% of Spain’s gross domestic product and 14.6% of the jobs in the country, according to a World Travel and Tourism Council report from 2019.
Spanish tourism is very dependent on European travelers, especially on visitors from the U.K. Of all international tourists arriving in Spain in 2019, 21% were British. They account for 15.3% of total tourist spending in Spain, according to the latest official data before the pandemic.
When Spain opened its borders to visitors on June 21, there was an immediate surge in bookings by British, German and Scandinavian tourists, according to Spain’s Secretary of State for Tourism.
“German tourists were the bravest, they didn’t change their behavior much due to the pandemic,” Mr. Aguilar said.
Representing 14% of visitors to Spain in 2019, German travelers are the second most important group for the tourism industry. Two days after the U.K. government’s decision, Germany advised its nationals against nonessential travel to three Spanish regions: Aragon, Navarra and Catalonia. On Tuesday, it extended the travel warning to the Basque region and the city of Madrid.
International tourism fell 98% in June, as Spain only reopened to tourists in the middle of the month. July data haven’t been released yet, but Mr. Aguilar forecasts similar results.
“If you go for a walk by a touristy area you can hear that the language spoken is Spanish,” he said.
Domestic tourists still account for an important part of Spanish tourist expenditure, said Giada Giani, European economist at Citi. This sets Spain in a better position than small, strongly tourist-oriented economies such as Greece, Croatia and Portugal, where foreign tourists account for almost all the internal consumption of tourism services.
Spanish residents will offset the lack of foreign tourists, but not fully, Ms. Giani warned. In normal times, Spaniards spend around 2% of the country’s GDP on international travels, while foreigners traveling to Spain spend the equivalent of nearly 6% of Spain’s GDP.
Domestic tourism has also struggled to keep up with previous years’ levels. With the pandemic, Spanish tourists are traveling less and spending less, Mr. Aguilar said.
“Insecurity and uncertainty are the two worst enemies of tourism. The pandemic has combined both,” he said.
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