7,700 jobs lost as hotel industry reels

TIMES  ARE  good for visitors to Panama as hotel prices plunge, but bad for the industry and its workers.

Some  6,500 hospitality industry jobs and another 1,200 in  associated casinos,  have been  lost as Panama hotel bookings plummet

The overbuilt  industry, has been plagued by empty rooms, prompting layoffs and a decrease in the purchase of supplies. It has also meant a price war between providers that has cut rates dramatically.

The oversupply of rooms is due to the uncontrolled growth recorded between 2008 and 2014, coupled with the lack of a promotional plan. That has led to the hotels trimming payrolls between 15 percent and 20 percent.

This means that more than 6,500 people have lost their jobs in the hospitality industry, and 1,200 who have been dismissed from the casinos that operate in the city.

The crisis has  a domino effect on suppliers of commodities to the industry.

Last year hotel occupancy was officially recorded at 50 percent, but industry data indicates that the real figure was 60 percent, but that was in a year when  visitor arrivals were on the upswing and  2.5 million  people poured into the country.

Arrivals this year were  down four percent in the first month, compared with 2015.

The fall off is blamed on the strong US dollar and the devaluation of the currency in markets like Colombia and Brazil, which significantly affects Panama.

There are 20,000 hotel rooms, 5,000 of which were built between 2010 and 2014. Another 12,000 rooms are available in the rest of the country

Sara Pardo, president of the Panamanian Association of Hotels (Apatel), said the crisis being experienced not only affects hotels, but other sectors of the economy.

“Hotels will buy supplies from local producers also tourists shop and eat in restaurants, and all this is affected as fewer tourists enter the country,” she said.

It is estimated that in the capital city hotelsin 2015 hotels spent bought in  $104.5 million The transactions included $14.8 million in seafood; $12.4 million of chicken meat; $4.2 million pork; and $12 million beef.

Additionally, they consumed $20.8 million in fruits and vegetables; $18.8 million in dairy products; $2 million in sugar and the like; $3.5 million in disposable paper; and $3.2 million in plastic and aluminum.

To put into perspective the changes that are occurring in the industry, two years ago the purchase of these inputs was $136.6 million dollars and this year is expected to fall to $83.6 million, says a La Prensa study.