Surfing Costa Rica - ¿Cómo se han visto afectados los hoteles en zonas costeras por la crisis que afronta el país?

Surfing Costa Rica - How have hotels in coastal areas been affected by the crisis facing the country?

May 16, 2020

Hotels in coastal areas have had to take drastic measures to mitigate the economic impact of the pandemic.

It has been two months and eleven days since the first case of COVID-19 was discovered in the country, leading the Government to declare a National State of Emergency, bringing with it various measures to safeguard the health of Costa Ricans.

These measures impacted the country's overall economic activity, resulting in a production growth of only 0.9% compared to the same month of the previous year, representing a year-on-year slowdown of 0.5 percentage points (pp). This growth is the lowest since November 2009. Furthermore, the annualized quarterly change was negative.

In other words, and leaving aside some of the economic technicalities that make our heads spin, this basically means that, as a consequence of the health crisis, the recovery process that the economy showed until February 2020 was reversed in March.

The economic impact has been significant regardless of the type of industry; however, one sector that has been particularly strong and directly affected by the health crisis has undoubtedly been tourism, with a 51.4% reduction in income for the month of March, according to data provided by the Costa Rican Tourism Institute (ICT).

In clearer terms and for greater understanding, we will cite three factors that have been categorized by economic studies as causing the deficit in the income of the hotel industry:

- Cancellation of reservations.
- Temporary closures.
- Impact on tourism based on COVID-19.

Based on a study conducted by the Central Bank of Costa Rica, we present the following image to help you better understand the economic impact on the hotel sector. It should be noted that the study is based on data up to March, and the percentages for April and the first part of May may be even more alarming.

We wanted to learn more about the economic impact on the coastal hotel sector, and setting aside the numbers for a moment and focusing more on the social aspect, we consulted several hotels in different coastal regions of the country about the impact they have experienced and some measures they have been forced to take to mitigate the current financial impact. Here is the data by sector:

North Pacific - Hotel Gilded Iguana (Nosara Beach) - Óscar Díaz: The COVID-19 situation has affected us 100% in Nosara because we are a community that lives entirely off tourism. We have tried to help the community by delivering food supplies to the neediest families. Despite the difficult situation, or new reality, we have kept our staff; no one was laid off because for us, our human resources are our most important asset. However, it has been very difficult in the area; many hotels have had to send their employees home. At our hotel, we have strictly followed the Ministry's guidelines, and thank God, we have not had any cases of COVID-19 in the community. Our restaurant is open at 50% capacity, but the hotel is currently closed. We have plans to offer discounts of 50% and 75% for Panamanian nationals once things improve and we are authorized to reopen in June.

Central Pacific - Hotel Boca Barranca (Puntarenas) - Diego Calvo: The situation is very difficult. The economic impact we've received has been enormous, as we depend directly on tourism. Boca Barranca is constantly visited by both foreigners and locals, but this pandemic forced us to close the hotel. Even though it's closed, there are bills to pay, and that's money we have to dip into our savings and use. The problem is, once we use it, we can't replace it. The situation in Puntarenas has been the same. For example, the Fiesta Hotel, which is nearby, laid off all its staff two months ago, leaving only a few security personnel. The restaurants and all the businesses are closed, and this is hitting hard; it's a chain reaction. In my personal opinion, I think that until the airports reopen and tourism starts flowing again, things might gradually improve. Investing in local tourism is good, but it doesn't generate much revenue because of Puntarenas' proximity to the capital, and it's mostly day trips. But it has hit all the inhabitants of Puntarenas very hard in general.

Central Pacific - Hotel Ola Bonita (Jacó Beach - Hermosa Beach) - Johanna Roque: This has been a turning point; the blow came without warning, and it has been very hard. Without tourism, there's practically no food. We have two people who help us with cleaning and maintenance, and we haven't been able to count on them because we don't have the money to pay them. We've had expenses like all hotels; we've had to pay the electricity bill, and we owe for water, which they have helped us with by not cutting it off. And on top of that, there have been increases in electricity rates, and many of us have been affected. It's a great relief that we can open the beach for at least three hours, but they should also help the hotels. Even if they can use the pool or facilities while following health guidelines, it would be a huge financial help. In my personal opinion, I don't think many people will come together, as many believe, since there's no money, but perhaps one or two families will come, and that would help us a lot.

Central Pacific - Hotel Tramonto (Jacó - Playa Hermosa) - Adriana Quesada: We closed completely two months ago because we had many international reservations canceled. During March through July, we have a student season, mostly with American students, who also canceled their trips to Costa Rica. In addition, most Costa Ricans with reservations canceled or postponed their dates. Following the Ministry of Health's guidelines, we also closed our pool, and Playa Hermosa was closed from the beginning because it's part of the Wildlife Refuge, so there was no way we could continue operating. Knowing we would be closed for at least three months, we laid off all our employees to try to help them with some money despite the difficult situation. We have employees who have been part of our team for four years, so we tried to find a way not to abandon them and ensure they received a couple of months' pay. We made a plan to cut costs: slowing down the internet speed, unplugging all electrical appliances, using water from our well, and adopting some of the government's guidelines to survive with zero income for three or four months. However, we're very optimistic and ready to reopen as soon as the Ministry of Health gives the go-ahead. We know we can count on domestic tourism, which has been, is, and always will be our biggest source of income. We've grown and thrived for six years thanks to the fact that we're full of locals every weekend, and we hope it stays that way.

South Pacific - Hotel Riviera Surf Pavones (Pavones Beach) - Jamie McGonagle: The reality here is that there's no tourism, the beaches are closed, and most of the tourists who come here are there to enjoy the beaches and surf. We've been closed for two months, and most businesses are closed. There's a café here called Café de la Suerte, and very few people come in because there's no tourism, and most of the people who live in the area don't have money to go out and eat. We're staying home, and thank God we have a garden with plenty of fruit, so we can eat. We hope that now that they're allowing beach access for a few hours, tourism will start to pick up a bit, but the situation has been quite tough. For example, the woman who helps me with cleaning isn't working now, and we're the only ones doing the cleaning.

Caribbean - Hotel Maritza (Puerto Viejo) - Christian Brayant: Everything has been very uncertain for the residents, the merchants, and everyone from micro-entrepreneurs to large corporations, who have been greatly affected. We're at the hotel, and today, Saturday or Sunday, we have no one here. We know the economic impact will be very hard, and even though the weather is beautiful, the atmosphere is quite worrying. There are many bills to pay, and all of this fills us with uncertainty and great concern. We're waiting anxiously to see what will happen in the coming months.

However, it's not all bad news, and our country has benefited to some extent from a slight decrease in COVID-19 cases, bringing with it a slight easing of measures that have been in place, including the partial reopening of the hotel sector (hotels with a capacity for 20 people). This situation, along with the return of surfing due to the opening of beaches in the morning, is gradually mitigating the impact on domestic tourism, while we await the full return of activities.