Tourism sector remains $700 million in debt

Preliminary data for the last quarter of 2022 offer a ray of hope for Panamanian tourism, reporting a hotel occupancy of 59% in the capital city and 47% in the rest of the country.

The tourisms sector is confident that by the end of 2023 it will be close to the numbers of three years ago, which were not the best but  first the sector must face up to the debt with local banks, which exceeds $700 million.

On December 31, 2022, the figure of credits modified during the pandemic ceased to exist, for which reason the loans included in this portfolio are now considered regular loans.

It will up to each bank to measure the risk of these loans, according to the delinquency registered by the clients, to execute actions such as guarantee procedures.

This implies that clients with more than 181 days of arrears in payments will be considered “doubtful” and those with more than 360 days of arrears are “irrecoverable” and, their guarantees will be foreclosed.

Raúl Jiménez, president of the Panamanian Association of Hotels (Apatel), commented that of the total debt of tourism companies, about $610 million correspond to hotels.

“We must recognize the support that the banking sector gave during the pandemic, by allowing the modification of the terms of the credits, but now we must face this new reality,” Jiménez commented.

The Panama Tourism Authority (ATP) and the Tourism Promotion Fund had projected the arrival of 1.8 million visitors in 2022.

The latest official data is from last September when the arrival of one million 310 thousand visitors was reported in the first nine months of 2022, of which one million 59 thousand were tourists.

Jiménez points out that visitors and tourists are not the same. The visitor can stay less than 24 hours in the country, as is the case of cruise ship passengers, while the tourist stays overnight and, therefore, their impact on the economy is greater by consuming more goods and services.

“Everyone is welcome, but we must encourage the arrival of more tourists if we want the sector to return to pre-pandemic numbers and achieve a true recovery,” he explained.

He adds that, during the first quarter of 2023, the reopening of some of the hotels that closed in the pandemic is expected, everything will depend on whether the demand justifies the investment to open the premises.

Hotels such as Melia, in the province of Colón, and others located in the Calidonia sector remain for sale.

The president of Apatel states that Panama has many attractions, but it lacks tourist products where the traveler can easily reach, have access to public services and, most importantly, have information in their language.