By NEIL HARTNELL
Tribune Business Editor
A Cabinet minister yesterday said he was “not yet prepared to reach the conclusion” that the coronavirus outbreak may match the 2008-2009 recession and 9/11 attacks in its impact on The Bahamas.
Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business it was “too early to tell” how the Covid-19 virus will ultimately impact the Bahamian economy and its tourism industry given that it continues to spread across the globe.
While the immediate effects appear minimal given that visitors continue to “follow through” on already-booked Bahamas vacation plans, Mr D’Aguilar said the virus’ ability to deter persons from travelling was likely to impact this nation’s forward bookings data at some point.
Acknowledging that tourism was extremely vulnerable to pandemic-type shocks and other external events, the minister voiced his faith in the industry’s ability to swiftly bounce back given how it had rebounded from both the September 11 attacks and the post-financial crisis recession, but added: “We just need to get to the end of this as quickly as possible.”
With round-the-clock media reporting on Covid-19’s spread increasingly persuading persons to “remain in their safety zone”, Mr D’Aguilar said the uncertainty surrounding the virus was likely to impact the travel and tourism industry for some time to come.
“It’s too early to tell where this is going to go,” he told this newspaper. “It has to play out. Certainly the rate of growth and number of cases has seemingly slowed, although the number of countries has seemingly grown. Until there’s some sort of cure and medical solution to this problem people are going to be worried.”
Asked whether the Covid-19 virus’s impact on tourism will match that of the two previous external shocks to strike the industry this century, Mr D’Aguilar replied: “I’m not prepared to jump to that conclusion yet. It’s too early to tell. There are 7.6bn people on this planet and only 100,000 that are affected. But it’s all a little unsettling, let’s put it that way.
“The quicker we can get to the summer months, the better. The warmer weather seems to weaken this virus. We just need to get to the end of this as quickly as possible, and God knows when that will be.”
Mr D’Aguilar was backed by Jeffrey Beckles, the Bahamas Chamber of Commerce’s chief executive, who yesterday argued that it was “premature” to compare Covid-19’s potential impact to either the September 11 attacks or the 2008-2009 recession.
“I don’t think it’s fair in the short-term to make that comparison,” he told Tribune Business. “Using that comparison at this point could be using an analogy we do not need. Until we’re in this for much longer without a solution I wouldn’t get involved in that discussion. It’s premature.”
The United Nations’ World Tourism Organisation (WTO) at the weekend estimated that Covid-19 to-date will cause between a 1-3 percent drop in international tourism in 2020, equivalent to a $50bn loss, with the worst impacts presently in the Asia-Pacific region.
Applying its 1-3 percent range to The Bahamas, and taking last year’s 7.2m visitors, implies that this nation could lose anywhere from 72,000 to 216,000 visitors if this prediction comes true. Taking a $70 per person yield for cruise passenger spending, and $1,500 for their stopover counterparts, implies that The Bahamas could lose anywhere from $5.04m to $324m in economic impact.
The September 11 attacks delivered a short, sharp shock to the Bahamian tourism industry and wider economy after air travel from the US was shut down for several days following the strikes on the World Trade Centre and the Pentagon. Air travel, though, steadily recovered in the following months and The Bahamas’ proximity to the US - and distance from major world trouble spots - helped pull it through.
However, the 2007 financial crisis, and subsequent 2008-2009 recession that followed Lehman Brothers’ collapse, saw a significant drop-off in tourist volumes and spending that resulted in mass lay-offs across the hotel industry and affiliated sectors. While the nation’s largest industry and private sector employer ultimately rebounded, many observers believe this took at least a decade.
The Bahamas, once rated as the world’s fourth most vulnerable economy to external shocks by the Organisation for Economic Co-Operation and Development (OECD), is especially susceptible to the Covid-19 outbreak due to its status as a small, open economy reliant on factors beyond its control.
A major drop-off in air and cruise traffic would have potentially devastating effects that would ripple throughout the economy, including impacts on The Bahamas’ external reserves and the Government’s already-weakened fiscal position. Product shortages and supply chain disruptions are other potentially critical impacts for a nation that imports all it consumes.
And The Bahamas is in a far weaker position to deal with Covid-19’s economic impact than when it faced the challenges created by the September 11 attacks and the 2009-2009. For it is already grappling with the $3.4bn in damages and losses caused by Hurricane Dorian, while the Government’s growing $8bn-plus debt burden has left it in a much less robust state to respond.
Mr D’Aguilar yesterday acknowledged that the US government’s warning to elderly persons to think carefully before they go on a cruise, given that this population segment has been deemed most vulnerable to Covid-19 together with those with pre-existing medical conditions, impacted a significant chunk of the cruise industry demographic.
The media coverage of the coronavirus-hit cruise ships in Japan, and off the California coast, had created substantial “negative public relations” for a sector that brought the majority of The Bahamas’ record 7.2m visitors in 2019.
“There is no doubt that everybody is thinking about their travel plans if they have made any: Should I go? Should I not go? It’s no secret that every Bahamian is deciding whether to take a vacation, whether they go to that conference, whether to have a pop over to Miami,” Mr D’Aguilar told Tribune Business.
“Is this prudent? Is this wise? In some cases where people are questioning if they have to go they will cancel. We cannot run away from the fact this is impacting travel worldwide.”
Mr D’Aguilar suggested there will likely be a time lag before the Covid-19 fall-out hits The Bahamas, and explained: “If people have made vacation plans, they’re continuing to follow through on those plans to visit The Bahamas from what I can tell.
“As it pertains to future plans, people are probably thinking they will not go on vacation and will stay closer to home. I’m sure it’s going to impact forward bookings when those statistics are revealed.”