Spain Announces €4.25bn Package To Revive The Country’s Ailing Tourism Industry

Tourists at Plaza Mayor in Madrid

Last week the Spanish government presented its Tourism Promotion Plan, to which over 4.250 billion euros will be assigned, mostly in the form of credits. Of the total amount of aid earmarked for the tourism sector, one of the most affected by the coronavirus pandemic, 93%, or almost 4 billion euros, will be granted via loans. A further some 275 million euros will be granted in the form of direct transfers.

The aid package has been created around employment measures, business support, competitiveness improvement or training programmes.

The majority of the plan consists of the ICO guarantee line, with a preferential tranche of 2.5 billion euros. This was already announced as part of the government’s agreement with opposition party Ciudadanos to obtain an extension of the state of alert. In addition, 731 million euros of financing and liquidity facilities will be organised, based mainly around the mortgage moratorium. Meanwhile 731 million euros of funds will be allocated to improve competitiveness and digitalisation, especially training courses for employees. Aena will provide 25 million euros of aid (0.1% of its market value) to the airlines to encourage the arrival of as many passengers as possible.

A 12-month moratorium will also be granted, both for mortgages and rentals, to tourist properties. There will be subsidised training programmes for hotel and catering employees, while incentives will be granted to airlines in the form of deductions from landing fees. A financing fund will also be set up to support, with loans, projects aimed at improving competitiveness. There will be funding for the creation of programmes to develop tourism intelligence, marketing and to promote the sector, both domestically and internationally.

In summary, the plan is not providing cash measures to overcome the crisis. It is only offering financing facilities. Uncertainty is still very high and tourism’s recovery will be very progressive. It is not expected to normalise until there is a vaccine, which can take 6-12 months, in a best case scenario.