March 10, 2020 / 1:34 PM / 20 days ago

Coronavirus fears pressure Portugal's tourism-dependent economy

LISBON (Reuters) - Portugal’s tourism industry is already feeling the impact of coronavirus even though it still has few local cases, with 60% of hotels in the southern Algarve region reporting cancellations and employers across Portugal fearing the worst is yet to come.

FILE PHOTO: A tourist rests at Comercio square in downtown Lisbon, Portugal April 11, 2019. Picture taken April 11, 2019. REUTERS/Rafael Marchante/File Photo

Heavily dependent on tourism, Portugal attracted more than 16.3 million foreign visitors last year, up from about 10 million in 2014, when the economy slowly started to recover from the country’s debt crisis. The sector contributed 14.6% to gross domestic product in 2018, according to latest official data.

The Portuguese Hotels Association (AHP) said its establishments were “already experiencing major cancellations” of bookings, without specifying further.

Algarve’s AHETA hotel association said 60% of the 411 hotels in the region, famous for its beaches and golf courses popular with tourists especially from Britain, have already seen cancellations.

“Tourism is resistant to many things but not viruses ... A tourism slowdown means a severe slowdown in our economic growth,” AHP chief Cristina Siza Vieira told Reuters, explaining that the most profitable summer months were the biggest concern as overall bookings were slowing sharply.

Viegas said if summer bookings do not pick up pace, hotels will be left with no option but to hire fewer workers during the high season. “Many of the seasonal jobs won’t be needed,” he said.

Portugal has reported 41 confirmed cases of the coronavirus, far fewer than over 1,200 in neighboring Spain, but the growing fear of contagion during travel is scaring holidaymakers away.

“People are scared of traveling, they are scared of contamination at airports,” said AHETA’s head Eliderico Viegas.

Portugal’s flag carrier TAP has already suspended 3,500 flights scheduled between this month and May, and several large events across the country have been canceled or postponed, including Lisbon’s biggest tourism fair.

In central Portugal, hotels in and around the Fatima sanctuary, a major Catholic pilgrimage site, have also experienced a 15% drop in reservations in the first quarter due to the coronavirus.

Alexandre Marto, a spokesman for a group of 10 hotels in the town of Fatima, said hotels there were counting on the government to help them maintain current levels of employment.

“I believe the government will be attentive and take urgent measures to protect these jobs,” Marto said. “There is no other way.”

Among other measures announced on Monday, the government earmarked 200 million euros in loans to help small and medium-sized companies cope with the outbreak.

Reporting by Catarina Demony, Editing by Andrei Khalip, William Maclean

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