Spanish hoteliers, already devastated by plunging occupancy triggered by COVID-19 restrictions on both foreign and domestic travel, are now reeling from a government move to cancel this season’s program for subsidized stays for the country’s retirees, according to sources.

“It would be absurd for the government to facilitate travel by thousands of elderly people during this pandemic,” said Nacho Álvarez, Spain’s secretary of state for social rights, in an announcement of the program’s cancellation.

IMSERSO, known by its Spanish acronym for the Institute for the Elderly and Social Services, has been in operation for 35 years. Annually it hosts around 1 million retirees at hundreds of midlevel and high-end hotels, both independent and chain properties.

“This is going to have a tremendously negative effect on the sector as some 350 hotels participate in the program,” said Ramón Estalella, secretary general of the Spanish Confederation of Hotels & Tourist Accommodation (CEHAT).

An estimated 12,000 jobs could disappear because of the government’s decision to suspend the program for the upcoming season, which runs from October to June, sources said.

“Besides the hotels closing, all these workers won’t be paying into the social security system, and then there are the taxes not being paid by the impacted businesses, so the government will also suffer,” Estalella said. “And it’s not just the hotels that will be hit but the entire tourism business, which the program’s guests use: restaurants, tour operators, bus companies, local attractions.”

The subsidised vacations are available to any resident in Spain over the age of 65, pensioned widows over 55, or persons aged 60 or older who receive a government disability or early retirement pension.

IMSERSO vacation packages include transportation costs, full board in a double or single room in a midlevel to high-end hotel, travel insurance and nightly entertainment.
Each guest pays approximately 80% of the package’s cost with the government covering the rest.

“Many of our hotels would have relied on IMSERSO business to get through the low season, especially these days,” Estalella said. “So many will probably close until the spring.”

Spain’s hotel industry went into freefall when the virus began circulating in March.

First, domestic travel was restricted by a national three-month lockdown that included the vital Holy Week travel period when many Spaniards head for the beaches. In a bid to cut down on the spread of imported cases, Spanish officials banned travel from many foreign countries with high contagion rates, such as the U.S. and China.

After the virus seemed to subside in June, a new spike forced governments in major northern European demand-generator markets, such as the United Kingdom, Germany and the Netherlands, to require their nationals to quarantine on their return from Spanish holidays, leading to another wave of hotel cancellations.

“We’d already been hit by the travel restrictions,” said John Galiana, sales director of Hoteles Poseidon, a hotel operator with eight hotels and approximately 2,000 rooms in eastern Spain.

“Usually at this time we have high occupancy rates with 35% of our guests coming from Britain, Portugal, Germany and the Scandinavian countries. But now occupancy is around 75%, and it’s all Spaniards,” he said. “So the cancellation of the IMSERSO program will be a hard blow as it provided a financial cushion, and now we’ll lose that security. We’ve already closed down one of our properties, the 510-room Hotel Playas de Guardamar with its 200 employees laid off.”

In the Canary Islands, a popular destination with both foreign winter visitors and IMSERSO guests, hotel owners are complaining the government has gone too far.

“The government’s move should have been a temporary suspension, not a cancellation of the entire season,” said Fernando Cejas, director of the 220-room Hotel Panorámica Gardens on the island of Tenerife.

After the northern European restrictions on travel to Spain, Cejas closed his hotel in September and furloughed its 48 employees.

“This cancellation is another blow and a hard one as in a normal year between 50% and 60% of our guests are from IMSERSO. Now without it, we stand to lose around €900,000 ($1.1 million) in revenue,” Cejas said.

Antonio Mayor, owner of the 13-property Port Hotels chain and president of HOSBEC, a regional hotel association that covers the Mediterranean provinces of Valencia, Castellón and Alicante, argued the government needs to come up with an alternative to the cancellation.

“Tourism demand still exists even though it is certainly lower than in previous years,” Mayor said. “But we’ve accumulated a lot of experience over the summer on how to manage destinations and hotels from a safety point of view to keep our guests out of danger. So we’d like the government to reconsider its decision and come up with some scheme to keep the hotels open during the next several months.”

Mayor suggested a nationwide expansion of a program by the Valencian regional authorities patterned on IMSERSO in which residents of any age are given government vouchers to use at local hotels.

Meanwhile, the Spanish government is negotiating with officials in leading winter season-generating markets to establish so-called “safety corridors” in which visitors coming to and from Spain would be tested for the virus before and after traveling and closely monitored during their stays.

“These corridors,” said CEHAT’s Estalella, “would be part of wider cooperation among European governments on testing and other measures so we can get people traveling again.”