Covid-19: three out of four hotels, bars and restaurants are close to going bankrupt

A new study on the impact of Covid-19 on the activity of hotels and restaurants, prepared by the Gastronomic Hotel Business Federation of the Argentine Republic (Fehgra), shows that the situation in the sector is extremely critical and is aggravated with the passage of the weeks.

Due to the isolation measures that prevent the movement of people in the country, the tourist sector is the one that is in an almost terminal situation.

According to Fehgra’s survey, the average drop in economic activity in June was 94.9 percent in accommodation services, a rate higher than the 79.6 percent that the previous report had shown.

The report affirms that this perceived fall was worse than what was expected at the beginning of the month and that the perspectives do not improve for July, since the operators of the sector estimate that the collapse of the activity will remain at 94 percent.

For bars and restaurants, the flexibility measures taken in the interior provinces allowed the recession to be severe, but less than that of hotels.

Fehgra measured a drop of 80.2 percent which, in any case, is above 73.4 percent in the previous month, although for July expectations improve as businessmen in the industry are expecting a decrease of 75.7 percent .

In bankrupt

One of the inquiries made by Fehgra to its associates was whether this scenario of extended quarantine in the Buenos Aires Metropolitan Area (Amba) and of greater or lesser rigidity in the interior, could lead them to bankruptcy.

In the case of hotels, 75 percent warned that, in a weighted average period of 2.9 months, this context will lead to bankruptcy. This proportion is higher than 64 percent a month ago.

In bars and restaurants, although they have a slightly better level of activity, the picture is almost the same: 74 percent fear that they will go bankrupt in 2.5 months if the isolation measures are not made more flexible.

The only change from the previous survey is that the period in which bankruptcy was feared was slightly less: 2.3 months.

Payments

Another symptom of the critical moment that the actors in this sector are going through is that only 23 percent of accommodation establishments were able to pay June wages in full, while in gastronomy the proportion was only 21 percent.

The bonuses are another red dot: in the hotels, 40 percent indicated that they could pay it in installments, while 39 percent considered that they cannot afford it; in bars and restaurants, 46 percent would pay it doubled and 42 percent do not think they will ever cancel it.