Tourism will Have to Reinvent Itself to Move Forward
Horacio Estribi
The country’s economy is experiencing a “shock” with the mobility restrictions that have been imposed on citizens as a measure to stop the Covid-19 pandemic. One of the industries hardest hit is tourism, which necessarily requires the reception of people both at destinations and infrastructure to host Visitors who require all kinds of services. In this Special Report, Horacio Estribí, Advisor to the Ministry of Economy and Finance guides us on his analysis of the current economic situation of tourism in the country and a forecast.
Numbers Before and During the Pandemic
Tourism played a fundamental role in the export of global services, representing 20% of the export of services worldwide and 10% of Panama’s GDP; including the capture of currencies, job creation and aggregate values. In turn, it represented almost 28% of Panama’s service exports.
Horacio Estribi begins by commenting that the tourism industry was already facing certain challenges, the occupancy rate had been decreasing, as a consequence of the progressive fall in demand, and an oversupply in hotel capacity (especially Panama City), these two elements combined were already pushing a complicated situation.
These numbers and background give an idea of the magnitude and impact to tourism by the Covid-19. Once the pandemic began to affect life in the country, on April, tourism had already fallen 94% in the region. An almost total stoppage, which makes the situation the greatest challenge of all time.
Tourism After Covid-19
For Estribi, tourism will be the most difficult sector for him to get out of the crisis, but it will not be impossible, since it has the opportunity to reinvent itself, and it is viable. He comments that we are only in the first learning curve, the recent findings will affect the protocols that will be implemented in restaurants, bars and hotels. They are being established, hotels are going to have to impose social distancing between rooms or between floors, that is a possibility. This means that even ventilation systems and Air Conditioning will have to be adapted to offer Visitors a safe and clean environment. Activities such as national and international transportations, restaurants, night activities, and related activities: who will take you, how do you move etc. Estribi thinks that as long as there is no vaccine, the reality is going to be very difficult for the sector.
Opportunities
Despite the challenges, the outlook is looming with opportunities. Estribi comments that Panama came with a pending tourism agenda that can be resumed. It includes improving the competitiveness of the sector, promoting more competition at the national and international transport level, the vehicles that are required, air channels should be subject to greater free supply and demand, opening up the sector more, mainly from transport.
An element that is going to prevail in consumers is that the virus can be spread for a long time, which means that there will be a “time frame” of two to three years. Estribi calculates that in that time it will take off another type of tourism, a more natural, more open, less-density tourism, and this is precisely what should be promoted. He continues commenting that this segment of tourism could become an important element of social inclusion for small and medium-sized businesses, that would begin to develop a more boutique-type tourism.
New Policies for Tourism
Horacio Estribi, thinks that in Panama a new policy approach should be created regarding tourism. Beginning with a decentralization process to formulate simple and practical solutions that stimulate tourist sectors. This analysis would help to strengthen the decision-making capacity of provinces, which implies empowering tourism unions in the country area, as well as local governments. Estribi believes in decentralization of the system, that will help search for different tourist programs that respond to the particularities of each town and region.
Another part of the solution for tourism is also to develop infrastructures that do not exist, such as ecological electricity generation, drinking water and sewage systems, that go along well with rural tourism. Also take advantage of the rescue program for small and medium-sized businesses in the tourism sector, to encourage innovation, especially digital.
Encouraging Forecasts
Initial forecasts seemed a little optimistic. Panama’s growth rate is probably going to have to be revised. Everything indicates that Panama is one of the countries that will be least affected and a recovery is expected for 2021, that does not mean that it will return to be like in 2019.
In context, Estribi concludes that the country continues to be one of the best prognoses in the region, commenting that the good news is that Panama will be one of the least impacted and that it will recover for next year. Panama being one of the countries that manages the dollar, and having no central bank that eliminates currency risks, has a solid and stable banking sector, and all these elements combine to make it more resilient than others.
