Essential Business

80% of hotel business wiped out in 2020

 In News, Tourism

Around 80% of Portugal’s hotel bookings were wiped out this year because of the coronavirus pandemic.

And around 25% of hotels were shut in September and with the new State of Calamity and Covid cases rising in Greater Lisbon and in the North, that figure looks set to rise.
This is the dour news from the Portugal Hotel Association (Associação da Hotelaria de Portugal – AHP) which refers to “a lost year” in terms of both lost bookings and revenues worth a staggering €3.6Bn to hotel owners, their staff and suppliers and the Portuguese economy.
“Summer was a lifebuoy, but a cold bucket of water immediately afterwards,” admits Cristina Siza Vieira at a press conference to present the results of its survey “Impact of Covid-19 on the Hotel Industry – 4th Phase – Summer Balance/Autumn Prospects,” carried out on its members between 21 September and 15 October.
According to data collected and collated by the AHP, in June 52% of hotels were closed, but, with the reopening of the air corridors, that amount went up 30% in July, 28% in August and 25% in September.
“From September onwards numbers will fall. The prospects are that the number of hotels that will close will rise,” he added.
According to Cristina Siza Vieira, hotels which depend heavily on events, congresses and conferences will be extremely hard hit and unlikely to open their doors until the end of the year.
Quizzed about the possibility that some of these hotels will close their door permanently as hotel groups go under, she said that the scenario was unlikely for 90% of its members.
“There are situations of a brutal closedown in activity and some possible closures, but we don’t see the hotel sector on the whole going into meltdown,” said Cristina Siza Vieira, adding that Portugal’s hotel industry is not like a small business and did manage to accrue some financial autonomy from the boom in tourism in recent years.
The problem, however, has to do with keeping staff on that are not so necessary in quiet periods, and it here that those canvassed said Government support measures would still be necessary.
According to AHP data, 51% of members do not intend to reduce their staff teams and 45% said they would.
The AHP expects the hotel industry to close the year with a 70% loss of bed occupancy, which means a loss of 40.5 million guests.
However, around 46,000 jobs could be saved if the Portuguese Government agrees to temporarily reduce VAT payable by the hotel and restaurant sector for one year, from October 2020 to September 2021 according to a study from the hotelier’s association AHRESP.
Compiled by consultants PwC, the maths appears very clear: if VAT was brought down to 6% (from the current 13%), overheads would be slashed by €732 million, allowing the sector to maintain 35,000-46,000 jobs.


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