COVID-19 Economic Impact and Silver Lining

Cancelled events. Restaurants shutting down. Closing schools (as of Monday, March 13). Dwindling supplies on shelves. A general standstill has settled across Mallorca. COVID-19 has come to our Island.

Impacts: Economy #

Some hotels have decided not to open until June, if at all. To make matters worse, Flybe, Thomas Cooke and WOW had stopped transit routes. The hospital system, always regarded as the best in Europe because of its extraordinary access and care, will soon be at capacity supporting the resident population.

It’s hard to calculate the exact toll COVID-19 will take on Mallorca’s economy and our residents’ physical, mental and emotional health. Tourism is the nervous system of our economy. Major cancelled and postponed events such as the Rally Clasico Isla Mallorca and Princess Sofia Iberostar Regatta Sailing Competition will likely be in the millions for the hosts and all the local business supporting the events.

Smaller businesses who rely on event tourism for a spike in sales/attendance, such as wine tastings, bike tours, or special brunches are at serious risk. Not to mention, brick and mortar businesses such as restaurants, hotels, shops, museums, who all depend on seasonal upticks in tourism to earn their keep for the year. Then there are the businesses that more specifically cater to locals – gyms, coffee shops – that are suddenly witnessing a down tick as people work remotely and avoid public spaces.

Smaller businesses who rely on event tourism for a spike in sales/attendance, such as wine tastings, bike tours, or special brunches are at serious risk. Not to mention, brick and mortar businesses such as restaurants, hotels, shops, museums, who all depend on seasonal upticks in tourism to earn their keep for the year. Then there are the businesses that more specifically cater to locals – gyms, coffee shops – that are suddenly witnessing a down tick as people work remotely and avoid public spaces.

Mallorca is not alone. Businesses across the world are experiencing this brutal COVID-19 economic shock. The March 9 collapse of stock and oil prices threatens to escalate into a much deeper economic crisis. What does this mean? Disruptions to supply chains, travel restrictions, and fear contagion could grow and far outpace this first phase of economic standstill. Latest projections forecast growth at .08-1.1%% in 2020, down from 2.9% in November, while noting that a continued COVID-19 outbreak could further reduce growth because of the spillover effects.

It sounds all doom and gloom because in many ways it will be in the near-term. Countries and tourist destinations with COVID-19 outbreaks will likely carry a stigma until the spread of infection tampers down. However, international and national authorities have an opportunity to swoop in and stave off complete economic downturn if they act fast. Discounted loans, waived fees (particularly for late payments), and tax cuts could help convince the global market to stabilize. A petition on Change.org, for instance, is circulating to push the government to reduce or eliminate autonomo fees for the next six months.

Silver Lining #1: Economic Ingenuity #

Mallorca is not the first or last country to experience an economic shock to its tourism industry. Of course, COVID-19 – it’s scale and alarming impact is unique and will likely manifest differently than previous isolated or international economic shocks. However, we have already seen major businesses, such as Facebook, AirBnB, EasyJet alter policies and suggest alternatives for vendors and consumers to avoid incurring fees and/or promote additional sources of income.

Here are a couple suggestions that could help your business develop flexible, creative solutions for new revenue streams and/or stay afloat with current ones:

• Online: Transition your events, product availability (been meaning to update your website to add online shopping? Here’s your chance.), communication capacity, etc. to online. Everyone is sitting at home glued to their electronic devices. Come up with a plan for your business to tap into this online vacuum.
• Discounts: Offer gift certificates, discounts, or other rewards to your consumers for whenever they might be able to use your product/service. Run an online campaign (see above) to promote this new offer.
• Communicate: Write that newsletter you have been putting off, update email lists, build your social media community, and engage, engage, engage. This is a time of extreme vulnerability across the world. Share your story, listen to your customers and move through this together while being honest about how COVID-19 will affect your business. Be specific. Tell customers how they can help.

Case in point: Affordable Mallorca’s Advertising Team is able to tailor a marketing program to your budget, pushing your business updates to a global audience through digital marketing. Our differentiator: We have always focused on the largest market segment of native born, frequent visitors and expats, those who are conscious of the practicalities of living on Mallorca.

Silver Lining #2: Human Resilience #

COVID-19 has illustrated our connectedness as a human species with an integrated, global economy. While not every country has recorded cases of COVID-19, most domestic economies will not go unscathed. Against this reality, Mallorquins and residents have already illustrated a critical element of human nature that will help us handle this virus – resilience of the human spirit.

Mallorca-centric Facebook groups are popping up to provide a safe space for support sharing. Strangers are offering to turn over their extra toilet paper to those without. Since grocery shelves are emptying as fast as they can be stocked, a local restaurant is offering to orderBy fresh and locally sourced meats from their distributor. This is the best of our community and why living here offers a great quality of life.

In the face of adversity, Mallorquins have drawn on their ancient roots and festive spirits to ride through waves of uncertainty. Following historical conquests and devastating civil war, Mallorca was able to transform itself into a bastion of tourism, new-found wealth and cosmopolitanism in the 1990s. Our ability to transcend challenging Island-wide circumstances into an economic advantage is proven. We must come together again to weather this very scary pandemic and patch our economy with the innovation and verve characteristic of the land.

Please share any stories of businesses, individuals, families, etc. who are paving the way for Mallorca to manoeuvre through COVID-19 with grace, responsibility and originality. Follow-us on Instagram, Facebook, LinkedIn and Twitter for our up-to-date information to stay connected.

Silver Lining #3: Community #

The real Mallorca off the tourist's beaten path offers a lifestyle like none other. Yes, the beaches are stunning and clean, when the stinging jellyfish are not visiting us. Along the coasts, Mallorca's sea breezes keep us cooler in the blazing heat of summer. Once you travel inland a few kilometers, you'll find a farming community, Agroturismo properties and hiking trails that date back to Roman times. We may not have the architecture of Italy but we do have the flora and fauna that is sustainable for the island's population, if managed appropriately. All the more reason to buy local.

The people who run these businesses are the same ones who are pulling together now to support one another. Yes, businesses worried about paying our contract workers and taxes. Workers are worried about paying rent, eating and paying autonomo fees. Pensioners are worried about the cost of living rising to more than they can afford. All these issues must be met together.

Our Founder remembers when Mallorca was less touristy and less populated. Those times may return for a while. If that is the new normal, time to return to a gentler time of local living.

Silver Lining #4: A Cleaner Environment #

Many of us have noticed the cruise ship and power plant emissions, the trash, graffiti, lack of sanitation in Palma and other effects of a crowded island. While tourism is important to paying for the improvements we've enjoyed - safer highways and roads with better sewer treatment in towns and cities, the reduction in activity will support a more sustainable island. For more on Sustainability, please read ULTIMATE GUIDE Sustainable Living. Our water reserves will not be as depleted during the annual droughts and will be cleaner.

For more on this and to read about the island initiatives that support healthy seas, reduction in plastics and more, please check out our Insights. Search for a topic. If we haven't covered it, let us know and we'll put that on our editorial calendar.

In the face of adversity, Mallorquins have drawn on their ancient roots and festive spirits to ride through waves of uncertainty. Following historical conquests and devastating civil war, Mallorca was able to transform itself into a bastion of tourism, new-found wealth and cosmopolitanism in the 1990s. Our ability to transcend challenging Island-wide circumstances into an economic advantage is proven. We must come together again to weather this very scary pandemic and patch our economy with the innovation and verve characteristic of the land.

Please share any stories of businesses, individuals, families, etc. who are paving the way for Mallorca to manoeuvre through COVID-19 with grace, responsibility and originality. Follow-us on Instagram, Facebook, LinkedIn and Twitter for our up-to-date information to stay connected.

Sources

• Personal experience
• Facebook
• BBC
• World Economic Forum
• Financial Times
• New York Times
• American Progress