Spain announces €4.25 billion plan to aid tourism industry

The initiative falls short of sector's expectations after a crisis that may have caused up to €80 billion in losses

Spanish PM Pedro Sánchez at the presentation of the tourism plan on Thursday.
Spanish PM Pedro Sánchez at the presentation of the tourism plan on Thursday.Rodrigo Jiménez / EFE

The Spanish government on Thursday announced a €4.25 billion plan to help the tourism industry recover from the fallout of the coronavirus crisis. The package comes at a crucial time for a sector that accounts for 12% of Spain’s gross domestic product (GDP). For the past three months, the sector has been paralyzed by confinement measures and restrictions on travel, which were implemented in a bid to curb the spread of the virus.

Spokespersons from the industry are now preparing for a record-low summer season, especially in terms of foreign tourist arrivals. To address this concern, the initiative, dubbed the Tourism Sector Promotion Plan, will provide airlines with incentives to travel to Spain in an effort to attract the greatest number of international visitors.

But the spokesperson from the UGT labor union, Miguel Ángel Cilleros, warned that the plan falls short of the industry’s expectations. “For many the program is not as ambitious as was expected, but what’s important is to start advancing. There will be time to assess it,” he said at the government press conference.

The sector had been expecting a larger aid package for two main reasons. Firstly, for the size of its contribution to the Spanish economy and the severity of its losses, which tourism lobby Exceltur put at more than €80 billion for the year. And secondly, because the European Union is currently negotiating a €750-billion coronavirus recovery fund, of which Spain is expected to receive €140 billion. What’s more, Spain’s €4.25 billion plan pales in comparison to initiatives from other countries such as France, which will inject €18 billion into the tourism industry – four times as much as Spain.

“This is an imperative aid plan for tourism,” said Spanish Prime Minister Pedro Sánchez, as he began a press conference on Thursday. The Socialist Party (PSOE) leader explained that the plan will be focused on five areas: consolidating Spain as a safe destination; supporting companies in the sector; improving the competitiveness of the tourism industry; using marketing tools to promote international and domestic tourism; and building tourism intelligence with the creation of a new observatory.

The bulk of the aid package is comprised of €2.5 billion in loans through the state-owned bank Instituto de Crédito Español (ICO) for tourism businesses. In other words, 60% is aimed at facilitating funding, and will not take the shape of direct grants. Direct investment represents around €300 million, or 7% of the plan. Another €850 million is earmarked for sustainability and digitization projects.

At the press conference, Sánchez said that the tourism industry is vital to Spain, and not just for economic reasons. “It is of great importance to the image and reputation of our country,” he argued.

Spain’s tourism industry is heavily reliant on air arrivals, with more than 80% of travelers to the country arriving by plane

As part of the recovery strategy, the prime minister said that Spain’s airport operator Aena had agreed to reduce the tariffs airlines must pay when they land in a Spanish airport. “We hope this is going to help bring about the fastest possible recovery of air traffic to our country,” said Sánchez. Spain’s tourism industry is heavily reliant on air arrivals, with more than 80% of travelers to the country arriving by plane. This part of the program represents €25 million, an amount considered very low by the industry.

“A plan to aid tourism is a plan to aid Spain,” said Marta Blanco, the spokesperson of the CCOO labor union, adding that the ERTE furloughing scheme must be extended for tourism businesses as part of the recovery effort.

The government plan also includes a campaign to promote national tourism, but does not contain specific aid to incentivize local consumption, unlike Italy where lower-income families can receive €500 to go on a holiday in the country.

English version by Melissa Kitson.

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