Five weeks off and nowhere to go: How coronavirus sabotaged the European vacation
Last week, the Czech Republic’s alcohol industry trade body shared some sobering news.
Although market researchers had noted a 14% year-over-year uptick in booze sales for March, those sales comprised all that retailers had sold to locals who were staying at home during the country’s coronavirus lockdown. Sales in hotels, restaurants, and bars had flatlined—unsurprisingly, given their closure—and, when measured by alcoholic units, overall sales were actually down by a quarter.
And the main driver for that, in this notable inebriation destination, was the lack of tourism. “The explanation…is the closure of borders,” said Vladimír Darebník, head of the Czech Union of Liquor Importers and Distillers (UVDL), in a statement.
The Czech Republic’s borders slammed shut on March 16, making it one of the first European countries to self-isolate in the context of the COVID-19 pandemic. It would not be the last. Six weeks later, among the 27 European Union member states, only the Netherlands and Luxembourg are allowing unrestricted travel in and out of their territories by land.
For Europe’s $2 trillion tourist industry, which would in less crazy times be preparing for a summer-holiday bonanza, it may as well be the end of the world.
“We are in the unique position of there being no demand and no product,” says Tom Jenkins, CEO of the European Tourism Association (ETOA). “You could not devise anything worse.”
‘We were looking forward to a record year’
The figures are staggering. In the Czech Republic (which on Monday started allowing its own citizens to leave the country again), tourism revenues are expected to be down 75% this year. In Spain, where tourism accounts for 12% of gross domestic product, the anticipated drop is 80%, or $130 billion.
And Greece, where tourism represents a whopping 20% of GDP, is steeling itself for the prospect of two-thirds of its hotels going bankrupt.
Much of this catastrophe is the result of people’s inability to travel into Europe, where external borders closed March 17. Jenkins notes that the once-every-decade Oberammergau Passion Play was to have taken place in the Bavarian town of that name this year, which would have helped boost tourist traffic from the U.S. into Europe by between 10% and 20%.
“From an incoming point of view, the sad thing is we were looking forward to a record year,” he says.
But the shutdown of intra-European tourism is also devastating—EU residents typically spend around 80% of their tourism expenditure within the bloc. And for good reason: Almost all EU countries are within the so-called Schengen Area of free movement, rendering the EU’s internal borders practically invisible. Like the ability to operate businesses across borders, this is something Europeans take for granted. But for now, the Schengen system is no longer functioning.
Europeans are facing the unthinkable. Endowed with an allotment of paid-vacation days that is the envy of the developed world—by statute, workers in the EU are guaranteed a minimum of four weeks off; add in a packed calendar of public holidays, and it’s not uncommon for Europe’s workers to be plotting elaborate trips with the five or six weeks of annual leave they receive—Europeans are now being ordered to stay put.
Germans, in particular, take advantage of these generous holiday allotments; its citizens are also among the most enthusiastic tourists in other European countries. Home to 46 Unesco World Heritage sites, Germany is a popular tourist destination unto itself. It too won’t be spared, neither as a supplier of tourists nor as a place for other countries’ tourists to come. The DRV travel industry association predicted Sunday that two-thirds of its travel firms are on the brink of insolvency.
“It is feared that the majority of the 11,000 travel agencies and over 2,300 tour operators will not survive this existential threat from the corona pandemic, and tens of thousands of jobs will be lost if the federal government does not soon put a protective shield over the industry,” said DRV president Norbert Fiebig in a statement.
Conflicting road maps
The effective suspension of the Schengen free-movement system (named for the small Luxembourg town where the agreement was signed 35 years ago) is emblematic of a wider crisis in the EU structure, which largely revolves around the issue of economic solidarity, as individual countries struggle to cope with the pandemic.
But, symbolism aside, those closed borders are a practical problem that nobody is quite sure how to solve. Each EU country still retains ultimate control over its borders, and the bloc’s central administration—the European Commission—can only do its best to try nudging governments toward some kind of coordinated lifting of border controls.
On April 15, the commission published a “European road map to lifting coronavirus containment measures,” offering sets of criteria that member states should consider when deciding on the opening of their borders. “A highly coordinated way forward is a matter of common European interest,” the commission pleaded.
What’s happening now is anything but coordinated. Instead, some European countries are proposing bilateral agreements that would allow people to enter from some other EU member states—but only a handful.
The Czech Republic, for example, is in talks with Croatia about establishing a so-called corona corridor that would allow tourism between the two countries, for holidaymakers who can demonstrate they don’t have COVID-19. That the two countries do not share a common border is apparently no issue. What they do have in common is a relatively low and manageable caseload of coronavirus infections.
Austria, which has realized that its tourism industry will go bust without German tourists, has a similar plan—though German Foreign Minister Heiko Maas is less than keen on tourism fueling new spikes in infection rates. “A European race to see who will allow tourism travel first will lead to unacceptable risks,” Maas said Sunday.
Marie De Somer, head of European migration at the European Policy Center, characterizes the reimposition of border controls within Europe as chaotic. “If that chaos is repeated in the lifting [of controls] then we will be in trouble,” she says.
De Somer points out that, despite the general existence of free movement within the EU before March, some of the internal border controls established in the 2015 refugee crisis never quite went away.
“Until March and April, Germany, France, Austria, Norway, Sweden, and Denmark were still upholding…border controls aimed at identifying so called secondary movements of asylum seekers from their countries of first arrival [in the EU],” she says. “It was likely about imagery, and about being able to tell the national public there were border controls in place, [but] that also doesn’t bode well for the future, because it clearly shows that introducing controls is an easy thing to do, and lifting them is quite different.”
This year, as French and Italian politicians have suggested, staycations may be the only option. But border issues aside, it is unclear what tourism might look like in Europe—and indeed everywhere else—once it becomes viable again.
It is by no means a certainty that a COVID-19 vaccine will become a reality anytime soon, if at all, so the hospitality sector will likely need to enforce distancing rules that make for a very different vacation experience. Think bars with spaced-out stools, and deck chairs that are no longer as tightly packed on Europe’s beaches as they once were.
Key players in the travel industry are deeply skeptical about how this might work in practice. For example, Ryanair CEO Michael O’Leary has said his low-cost airline won’t resume flights if that means leaving the middle seat in each row empty. “We can’t make money on 66% load factors,” he said last week.
“Every service business has high fixed costs and runs on the basis of maximizing the use of capacity to offset these fixed costs,” agrees ETOA’s Jenkins. “If you open your business, be it a shop, a restaurant, a theater, an airline, or a coach, every incentive will be there for you to push attendance up towards capacity…What is being offered to the tourism industry is the chance to have no business or a loss-making business. That isn’t much of a choice.”
And what of the idea of “immunity passports”?
Involving digital documents that prove the holder has been infected and is therefore supposedly immune, this has been regularly proposed as a way to revive the travel and tourism industries—Delta CEO Ed Bastian, for one, certainly seems to think they may become a reality.
But the World Health Organization (WHO) poured cold water on the concept in a scientific brief published late last week. “There is currently no evidence that people who have recovered from COVID-19 and have antibodies are protected from a second infection,” it said.
And even if they did work as promised, immunity passports may not make for a great sales pitch. “If you want to attract visitors you attract visitors by welcoming them, not by treating them as lepers unless otherwise proved,” says Jenkins.
More coronavirus coverage from Fortune:
—What the law says about forcing employees back to the office
—Coronavirus turns the outdoor industry’s crucial spring into the most challenging in years
—5 lessons for the coronavirus recovery, from an expert on success and failure in crisis
—What to know if your small business is applying for Round 2 PPP loans from the SBA
—There may be 22 hidden coronavirus hotspots in states poised to lift restrictions
—The coronavirus brought China’s travel industry to a standstill. Now it’s showing signs of life
—Work-from-home tips from the executive team that brought you Zoom
—PODCAST: COVID-19 might have upended the concept of the best companies of the year
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Subscribe to Outbreak, a daily roundup of stories on the coronavirus pandemic and its impact on global business, delivered free to your inbox.