Staying home will, we hope, slow down coronavirus, but it couldn’t be worse for the economy, particularly Vienna’s tourism and hospitality sector. It’s a reversal of fortune for the city, last year Vienna’s Tourism Board reported a record-breaking net revenue from overnight stays, 904 million Euro for the period from January to November. Flights, fairs, trips have been cancelled to prevent public health crisis, while introducing the risk of an economic downturn.
Since the Covid-19 outbreak in China in January, the normal flow of public life has been disrupted. The decisions of Asian governments to restrict movement had already severely affected the Austrian economy, where Asian tourists have long been a mainstay. “Tourism suffers from coronavirus,” reported the Austrian daily, Die Presse already February 15.
“We view the absence of Chinese guests as a major challenge,” Andrea Hansal, press speaker for the Verkehrsbüro Group said in the article. It has meant a sharp drop in turnover, as “one in three Chinese who comes to Vienna stays in a four- or five-star hotel,” and “on average, spends €942 per purchase in Vienna,” says Andrea Zefferer of Wien Tourismus.
Hotels also struggle
And it’s not just the tourists: Hotels struggle with cancellations from business travelers, as conferences and business events, such as ViennaUp’20, are all either called off and postponed. Other restrictions are paralysing cultural life, often the basis of international tourism. Sights such as St. Stephen’s Cathedral have been provisionally closed to visitors, at the direction of Chancellor Sebastian Kurz, as well as museums, theaters and concert halls.
The government promised a stimulus package in early March. “Tourism is the industry most affected by the consequences of the coronavirus”, acknowledged Tourism Minister Elisabeth Köstinger (ÖVP). “[The government] will assume liability for up to €100 million in loans for tourism businesses that are particularly hard hit by outbreak,” the Ministry said in a statement.
A lack of information
The disruption is set to drag on, thus to maintain liquidity and safeguard existing jobs in the industry despite sales losses, the liability framework for bridge loans will be increased from €100 million to up to €1 billion, the Ministry of Tourism announced on March 27. In addition, the Austrian Hotel and Tourism Bank is offering to defer loan repayments for 2020 to avoid insolvencies.
However, on March 30, the communication agency Danberg&danberg issued a statement on behalf of thousands of companies, such as the restaurant chain Centimeter and the club Prater Dome, to complain of a lack of information about exactly how this promised „quick and unbureaucratic” emergency aid will work. Crucially, how hotels and restaurants the salaries in the catering industry in particular will be paid when they are due today, March 31. The government asked the business community to introduce Kurzarbeit (a shorter work week) for its employees, and entrepreneurs complied.
Nonetheless, without the confirmation by the Public Employment Service (AMS), no money can be requested from the banks for the interim financing of salaries, and most gastronomy companies are still waiting for the needed approval. Similarly uncertain is the payment of rent and lease, these must also be made in the next few days, or not.
(Foto: Flickr/ Marco Verch)