Today is D-Day for tourism: D for Díaz, Spain’s employment minister Yolanda, who is embarking on the latest round of negotiations for ERTE. Oh that it has come to this, that it is an employment minister who holds the fate of an entire industry in her hands and not the minister responsible for the industry. But such is the fate of tourism, and not just tourism.
They aren’t the hands of Yolanda Díaz alone. The minister for social security has his role as do the representatives of the “social agents” - employers’ associations and unions. One of these, the CEHAT national confederation of hotels, has set out its negotiating position - an ERTE extension for the whole of 2021, plus tax aid, something that isn’t in the gift of Díaz. Rescuing tourism is in fact multi-ministerial - consumer affairs, employment, finance, health, interior, social security, transport. Oh, and tourism as well, which, where much of business is concerned, has been trailing others in the survival and resuscitation of the tourism industry.
But the employment ministry has assumed the key role, and there can be no other result from the negotiations than an extension beyond the current end of January deadline. Díaz, as befits a Unidas Podemos politician (any politician quite frankly), will enter the negotiations with the spirit of extension and therefore the assurance of workers’ jobs. However, she is part of a collective, a government which has to consider how long it can maintain the furlough scheme and on what terms.
A further three months until end-April will surely be the minimum. If any confirmation of the dire straits in which tourism finds itself were needed, then a quick glance at the latest figures from Frontur offer them. The November numbers for foreign tourist movement were awful enough for the Balearics - down 89% - but tourism in Madrid was all but wiped out. The Canaries, always the winter leader, mustered 160,000 tourists, eight times more than the Balearics, but winter presents a very different scenario to that of summer. The Canaries were down 94%. And that was November. Things have moved on since then. Or rather, they have come to ever more of a halt than they were in November.
Easter, so the tourism industry in Majorca feels (and with good reason), can be forgotten. The hoteliers federation and others have made their preemptive strike by warning that there won’t be an Easter. ERTE has to therefore be in place to cover Easter, with hopes being pinned on some genuine activation in June. That means that the industry is looking to May or June at the very least for an extension.
If a June restart is a realistic assumption, this won’t of course mean that everywhere will miraculously reopen. The CEHAT position reflects this. Hotelier chains will open some establishments, not all. Demand but also caution will determine their management decisions. The revised principle of ERTE applying to individual establishments rather than to hotel groups should hold good, but for Díaz and the government there may well come a point (will come a point?) at which ERTE can no longer be defined according to force majeure but to productive reasons. And that does influence the terms; adverse trading conditions aren’t the same as decimation by pandemic.
The great worry is that ERTE might, if not totally, but partially be substituted by ERE - redundancy in other words, because a case for productive ERTE is less justified and employers are faced with no other option than layoffs because demand, vaccine notwithstanding, is sluggish. There is therefore a hell of a lot at stake in these latest negotiations.
Let’s hear it for the tourism optimists
Fritz Joussen, Tui’s executive chairman, is the eternal optimist. Throughout the crisis he has been making positive statements, typically to find that they are rendered redundant by circumstances. His latest observation - “relative normality” kicking in for the summer - is one which we all hope will be fulfilled.
He also said that 2021 will be a year of transition. Optimist but at the same time a realist, and his mostly cheery disposition can be attributed to some extent to the knowledge that Germany’s Federal Development Bank is guaranteeing Tui a line of liquidity worth 500 million euros until July 2022.
This is by no means the only assistance heading Tui’s way. The German government intends providing another 1,250 million euros. In total, Tui will end up having received almost 5,000 million euros, a risk of insolvency now averted. Part of this aid is coming from private investors (at least a tenth of the total), and this private sector involvement has seemingly convinced the European Commission that all the rescue funding is acceptable.
A consequence of this rescue is that the German government will effectively have nationalised a quarter of Tui. Capital contribution is to be converted into shares. But even with all this aid, Fritz Joussen has had to bow to the inevitable. Tui is to cut its airline fleet by half (from 35 to 17 planes). Unions have been told that 8,000 jobs will have to go.
Meanwhile, other assets are due to go. Joussen has said that it isn’t necessary to own ships in order to offer cruise tourism or to own hotels to provide accommodation. For Joussen the optimist, there is the acceptance that Tui will emerge from the pandemic a different company to the one which was confronted by it.
Jet2holidays aren’t in the same state as Tui. The company doesn’t carry the sort of debt that Tui does and it has been offering its own optimistic vision. “2020 has been a very unusual year, but 2021 is shaping up to be a fantastic year.”
The Jet2 optimism is based on a survey which concludes that for UK holidaymakers, their next summer holidays will be “the most important” of their lives. These holidaymakers, the tour operator says, will want dream holidays in order to put all that has happened behind them - a fortnight in destinations with at least nine hours of sunshine, temperatures of 28 degrees, white-sand beaches, luxury hotels with pools ... . It does indeed sound fantastic. Bring it on and bring it to Majorca. And let’s pray for the vaccine, which Fritz Joussen believes will remove the need for restrictions.