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TOURISM SECTOR: NEW MEASURES FROM THE SPANISH GOVERNMENT (ANÁLISIS BANCO SABADELL)

In today’s Official State Bulletin, the Spanish Govt. announced two measures:
 A 14-day quarantine for all people entering Spain from abroad starting at 00:00 on 15 May and during the entire state of alarm period and any possible extensions.
 A temporary resumption of internal EU controls on air and sea (land controls were already in place) starting at 00:00 on 15 May and lasting until 00:00 on 24 May’20. Thus, only Spanish citizens and residents in Spain will be allowed to enter the country, although other groups are included, such as qualified workers, healthcare workers, etc.
These measures increase the uncertainties weighing on the tourism sector. With respect to the first one, we believe that its real impact will depend on how long the Alert state will last in Spain. In this regard, it will be fundamental that this measure does not remain in force after flights are resumed in late June and it does not affect the most relevant months of the high season, as this would in fact make tourist arrivals impossible. In this sense, after other countries (like the UK) announced similar measures, the airlines stated that they would not resume flights (IAG planned to resume 50% of its activity in 3Q’20 vs. 10% in 2Q’20; increasing capacity already in late June). In this regard, tomorrow the EU will release its guidelines on passenger rights regulations (tourism corridors, health measures, seating capacity, etc.), which will be key to a possible common response to Covid-19 (Italy has proposed to create a tourism corridor between Germany, France, Italy and Spain). As regards the second measure, its effect would be temporary and would have little impact, but it would contribute to increase the uncertainties weighing on the sector.