Hotels in crisis as occupancy and rates plummet

PANAMA hotel owners,  facing a  crisis with occupancy rates heading down to 40% and potential closures looming, are calling  for fast  government action with a  an international tourism  campaign after the number  tourists entering the country fell in January for the first time in a decade.

Led by Herman Bern and former finance minister Alberto Vallarino, they  are asking for the activation of the the National Tourism Fund, which after eight years has never been implemented. It is estimated that hotel occupancy in the capital city will end the year at 40%, with   the closure of hotels and a wave of massive layoffs before the end of the year if  current trends continue.

The occupancy rate in the capital city closed last year at 52% and rates have fallen 30% due to the oversupply of rooms.

“With such low occupancy, there are hotels that will not be able to continue operating,” said Herman Bern, President of Bern Hotels & Resorts Panama chain.

A  group of 17 owners and investors in the hotel industry want the  National Tourism Fund implemented for tourism tourism promotion campaigns. The application is a desperate cry, because the entry of visitors fell 4% in January, report La Prensa.

Bern said it is urgent to implement a strategy of international promotion, considering factors playing against the country.  Moses Hasky, of  Sortis Hotel, said hotels that opened in recent years are under pressure to repay the financing used to build their projects.

The  devaluation of Latin American currencies, he strength of the US dollar  coupled with the spread of the Zika virus, has hit the country’s competitiveness.

“We need the background is activated and the board that allows the money to run that by law must be allocated to establish international promotion” said the businessman.

The latest advertising contract for the international promotion expired in 2012 and was administered by the BB & M agency. Since then, the Tourism Authority of Panama has made sporadic developments in markets like Brazil, Mexico, Colombia and the United States.

Bern said that it is impossible to overcome the current crisis mechanism using the delayed tender for advertising abroad, and there is an urgent need  for  fast  urgent decisions are needed

In addition to the fall of regional currencies, entrepreneurs point out that the proliferation of illegal accommodation is affecting the industry.

Between 10% and 20% of tourists staying in apartments that do not have permission to provide the service and pay the statutory ITBM taxes.

Law 8 of 2012 states that every tourist rentals lasting less than 45 days will be classified as illegal.

Vallarino, the Green ecommended  copying  the model used in the Savings Fund of Panama, which has an independent policy capable of making decisions that go beyond presidential terms .

The hotel owners, are meeting  with the Minister of Finance , Dulcidio De La Guardia, and the manager of the Tourism Authority of Panama, Gustavo Him and in the next two weeks are expected to meet with President Varela, who will be asked to authorize the creation of the board of the fund.