(Bloomberg) --
Before the coronavirus pandemic besieged Europe, Kike Sarasola worried about whether he was building enough hotels to capitalize on the region’s long-running tourism boom.
Such concerns have disappeared, along with the tourists.
The only guests at three of his six boutique hotels in Madrid are doctors and nurses fighting the deadly disease. The transformation of Sarasola’s Room Mate Laura hotel and dozens of others into lodging for hospital staff reflects how the crisis has overwhelmed the health-care sector and also brought the tourism industry to a halt.
The sudden standstill is particularly notable in Spain and Italy, the epicenters of the outbreak in Europe, with more than 160,000 cases and 16,000 deaths. Millions of visitors travel to both countries each year, fueling economic growth.
Now, lockdowns mean nearly all hotels are closed. As the virus continues to spread, there’s little prospect for an easing of restrictions on all but essential travel anytime soon.
Doctors and nurses have “arrived crying and exhausted,” said Sarasola, president of Room Mate, a chain of three dozens hotels around the world. “Nobody thought we were going to get these levels of sickness and death so quickly. It’s mind boggling.”
He and other hoteliers in Spain and Italy have donated empty rooms to health-care workers. In Madrid, some are isolating themselves from loved ones because they are concerned about contagion, and others were brought in from elsewhere to help in the city, where there have been the most deaths in Spain.
Sarasola supports the strict lockdown to stop the virus, and is counting on a rapid rebound after restrictions lift, when he thinks cooped up consumers will seek out sunny beaches to recover.
Others aren’t so sure. Even if there’s a boost to domestic tourism as people remain reluctant to travel abroad, that won’t cover the losses in foreign visitors.
“For Italian hotels, it will be a summer of domestic tourism, which however is worth less than 50% of the total and will be weaker than usual, since Italians will have less money,” said Bernabo Bocca, president of lodging association Federalberghi.
It’s a similar story in Portugal, where tourism accounts for one in every five jobs and 19% of economic output.
“People are being told to stay at home, which means the sector has ground to a halt,” said Francisco Calheiros, head of Portugal’s Tourism Confederation.
At stake is billions of euros in revenue and millions of jobs.
For many Spaniards, the summer season is their only shot each year to work consistently for several months at a time. Economists expect a jump in Spain’s already-high unemployment rate. The magnitude of the increase will depend in large part on when tourists are able to return.
Before the spread of the virus intensified during the past two weeks, tourism companies were hopeful that activity would get somewhat back to normal for the all-important Easter break in April. Since then, airports in Spain, Italy and elsewhere have shuttered most of their terminals, and airlines have grounded the bulk of their fleets.
Ryanair Holdings Plc, which brings millions of visitors to Spain and Italy each year, doesn’t expect to operate flights during April and May.
Without airlines supplying customers, hotels have little opportunity to fill beds, and some operators are considering closing for the rest of the year, according to Carlos Cendra of Spanish travel analytics firm Mabrian Technologies.
“It’s no longer about having a good high season -- it’s about saving the high season,” Cendra said.
The outlook has been further clouded by events in the U.K., a key source of travelers to southern Europe.
Its containment came later than in other European countries, which could mean the peak of the pandemic there is still weeks away, keeping Brits at home for longer.
Beyond the immediate concerns about the coming travel season, the virus could spell structural changes for the industry. Travelers may be less willing to take part in mass gatherings like conventions, fairs, and even soccer games.
“We need to understand how a series of distortions with respect to mass tourism and over-tourism could be fixed,” said Lorenza Bonaccorsi, Italy’s undersecretary for tourism. “Restrictions on gatherings of people could last a long time.”
Tourism executives and analysts say that many people -- particularly older travelers -- are likely to remain cautious about venturing abroad. Also, cash-strapped airlines may re-introduce services only gradually to slowly repair their damaged balance sheets.
“When all the bars, all the restaurants, all the stores, all the museums are closed -- when there’s not even a single soccer game being played, what tourist activity can there be? Zero,” said Jose Luis Zoreda, executive vice president at Exceltur, a lobby group for Spain’s tourism industry. “We went from business as usual in February to no business at the end of March.”
©2020 Bloomberg L.P.
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