In the following editions of Aruba Today we will publish an opinion article by James Hepple, today we share Part I.
As of April 1 2020, Aruba’s tourism industry has shut down as the Government attempts to slow the rate of infections from the COVID19 virus.
By way of background: –
- On March 15th regulations were put in place regulating the entry of visitors.
- On March 21st the Aruban border was closed indefinitely to incoming visitors and returning residents. On the same date a curfew from 9 pm until 6 am was implemented.
- On Sunday March 29th a Shelter in Place order was implemented whereby the population was confined to their homes. No date was given when this order would be lifted. All bars, restaurants, nightclubs, casinos, stores, malls, and other related facilities were deemed non-essential and were closed.
- The airline industry responded to these regulations, and to other similar regulations being implemented elsewhere, by almost immediately suspending air service to Aruba.
- According to the Official Airline Guide (OAG), between March 16th and March 30th Aruba lost 84% of its air seats, falling from 33,338 seats for the week of March 16th to 5,266 seats for the week of March 30th, a drop of 28,072 seats, with further cuts to come.
More than 90% of airline capacity will be lost.
No cruise calls until 12th May at the earliest
- Many airlines have indicated they will not be flying to Aruba during the month of April with indications that the suspension of these flights could well continue through May.
- Many cruise lines suspended operations on March 13th and have stated they do not plan to recommence their cruises again until at least May 11th.
- As of Wednesday April 1st, Aruba has reported it had 55 positive cases of COVID 19, which is 487 cases per one million persons. The USA reported 207,637 positive cases on the same date, which is 628 cases per one million persons. In both instances the number of cases is growing significantly on a daily basis.
Aruba and its Economy
Aruba has an official population of 113,000 persons. Of these, 24.3% are between o and 19 years old, 61.6% are between 20 and 64 years old, and 14.1% are 65 years old or older.
The Aruban economy is almost completely dependent upon its tourism industry. According to the World Travel and Tourism Council in 2019 tourism accounted for 98.3% of Aruba’s GDP of US$ 2,876 billion and generated 47,000 jobs, that is 99% of all employment. WTTC estimated that visitors spent US$1.876 billion in Aruba in 2019.
47,000 jobs are at severe risk
98% of GDP Impacted
$1.86 Billion income exposure
In 2019 75% of Aruba’s visitors came from the USA, with 4% coming from Canada and 4% from the Netherlands, with the balance coming from the rest of the world.
Again in 2019, 52% of Aruba’s visitors from the USA came from the five states of New York, New Jersey, Massachusetts, Connecticut and Pennsylvania. New York was by far the most important state generating 20% of all visitors from the USA.
20% of US visitors originate in New York state – the global epicentre of COVID-19
The recovery of the tourism industry will depend upon two things – recovery of demand and the situation in Aruba.
Demand
As has been indicated the USA is by far the primary source of visitors to Aruba. It could be argued that visitors from the USA generate 74% of Aruba’s GDP, while visitors from New York State alone generate 15% of the country’s GDP.
So, following the existing business model, the recovery of Aruba’s tourism industry will be heavily dependent upon recovery in demand from the USA and from the north-east USA.
It might be possible to diversify our source markets, but this will take aggressive marketing and having enough airlift in place and could take a considerable amount of time.
As of April 1st, what do we know (and what don’t we know) about COVID 19 and the situation in the USA?
We know: –
- COVID 19 is a novel (new) virus for which there is no effective vaccine.
- The virus is mutating which is not unexpected and is not necessarily a bad thing.
- It will take 12 to 18 months to develop an effective vaccine. It will take a further amount of time to produce the vaccine in large quantities and to administer doses.
- It is highly contagious.
- It can take a number of days before infected persons display symptoms.
- That the USA currently has the largest number of positive cases in the world. As of April 1, it has reported 207,637 cases, a rate of 628 per one million persons.
- That China has probably significantly under-reported the number of cases and deaths.
- According to the World Health Organization the global mortality rate of those infected is 3.4% but this varies very much from country to country. In Italy the mortality rate is 11%, in Spain 9%.
- The overall global policy response has been to “flatten the curve”, that is to try and slow the increase in the rate of infections to prevent health care facilities becoming overwhelmed and thus mitigating the number of deaths.
- To achieve this many countries have implemented “social distancing” policies, that is minimizing contact between members of the resident population and in implementing Shelter at Home policies.
- The most effective long-term policy is “test and trace”. This requires thorough effective testing of as many people as possible, isolating those who have been infected and tracing those with whom they have been in contact. This also requires significantly expanding the health care facilities especially hospital facilities and having enough supplies such as masks and ventilators, to deal with the rise in the number of patients.
- That South Korea has probably managed the crisis better than any other nation.
- In some countries, where local transmission has been significantly slowed (China and South Korea), new infections are being caused by visitors from outside resulting in such countries closing their borders to foreigners.
- It is highly probable that the virus will become endemic, like flu, and will reappear again and again in the future.
Part II of this column is to be continued in Aruba Today’s edition of Tuesday April 14.
