COVID-19 Economic Impacts on Mallorca

25 March 2020

Life doesn’t get easier or more forgiving, we get stronger and more resilient.”
― Steve Maraboli, Life, the Truth, and Being Free

COVID-19 has already impacted Mallorquin businesses and individuals. And yet, the human spirit and ingenuity remains inspiring. Cancelled events, closed schools, hotels, restaurants, bars… Dwindling supplies on shelves. A general standstill has settled across Mallorca. COVID-19 has come to our Island.

Empty Born Palma de Mallorca coronavirus lockdown min

Adèle Chrétien

Impacts: Economy #

Before the global pandemic hit, we lost Flybe, Thomas Cook and WOW airlines serving the island which meant fewer seats for passengers. Winter schedules had reduced flights further but we were all gearing up for the upcoming season. Then, COVID-19 struck the island. We've had it better than the mainland.

However, major events have been cancelled and postponed, such as the Rally Clasico Isla Mallorca and Princess Sofia Iberostar Regatta Sailing Competition, with financial losses likely be in the millions of euros for the hosts and all the local business supporting the events. Some hotels have decided not to open until June, if at all. Major hotel chains are laying workers off and reducing pay for others. Fortunately, the Spanish Government has created financial supports with access to low interest loans and grants for companies and independent workers.

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 with tourist activities accounting for more than 44% of regional GDP in the Balearic Islands and generates almost 31% of total direct employment on the islands (employing currently more than 130.000 people), that is three out of ten jobs.

Public transport mallorca 2

Smaller businesses that 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 local – gyms, coffee shops – that are suddenly witnessing a downtick as people work remotely and avoid public spaces.

Cyclists bike mallorca

The unprecedented COVID-19 pandemic is a powerful reminder of our interconnectedness and vulnerabilities. The virus respects no borders. Combatting this pandemic calls for a transparent, robust, co-ordinated, large-scale and science-based global response in the spirit of solidarity. We are strongly committed to presenting a united front against this common threat. - G20 Summit Statement.

Deserted streets Mallorca COVID 19 min

Mallorca is not alone. Businesses across the world are experiencing this brutal COVID-19 economic shock. The March 9th collapse of the stock market and drop in oil prices threaten 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.

Coronavirus stock impact min

BBC

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 local and global audience through digital marketing. Please sign-up to be in our COVID19 DIRECTORY Mallorca Home Deliveries and Services. To be added, fill out this form. Once received, we'll put your business online for free.

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.

Digital nomad girl making billions on her laptop

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, Mallorquin residents and expats have already illustrated a critical element of human nature that will help us handle this virus – resilience of the human spirit. We have heard of restaurant owners offering to order wholesale meat for families in need.

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 order 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.

Much will be written in the coming months about resilience. We're seeing our own brand of resilience on the island with the hundreds of social media accounts set up to support each other while remaining quarantined. One such group gathered 1,300 followers in one week. One of their strengths is a schedule of events so that people can 'check in' and meet together online to play music, paint, cook and take a yoga class. Other groups have members who are translating and posting the updates by the government for expats.

What we need is a way forward. Since we are gathering in our small groups, we need to find ways to continue to stay connected and committed to one another. Since large groups may have a problem gathering for sometime, look for social media - Facebook, Zoom and other video conferencing services to become an even bigger venue for large groups to meet. No one need feel alone after this latest crisis.

Silver Lining #3: EU Community and Semana Santa #

Many borders are closed within the Schengen Area 25 years to the day the common market opened on March 25th, 1995.


Mallorca has always been a destination and the season begins in Spring with Easter. "Semana Santa" is normally a vibrant time on the island for locals and tourists. While this season will not be celebrated with its normal processionals, look online for reminders that we are celebrating this important holiday in our homes. Churches are finding ways to connect. Instead of this holiday launching the Booze Tourism season, people will be offered a time to reflect on the real purpose of rituals. The "reason for the season."

We will keep you informed via Instagram, Twitter and Facebook about happenings for the upcoming holiday season. Even in quarantine, rituals must be honored. Affordable Mallorca will be here to help support you during this important season.

From Pope Francis:

The Prefecture of the Pontifical Household announces that, because of the current global public health emergency, all the Liturgical Celebrations of Holy Week will take place without the physical presence of the faithful,” reads the statement that was originally posted only in Italian, but later, also in English.

This means that the Palm Sunday Mass; the Chrism Mass on Thursday; the Mass of the Lord’s Supper on Thursday, which Pope Francis has always held in detention centers or with asylum seekers; Good Friday’s commemoration of the Lord’s Passion; and the Easter Vigil on Saturday, will all be celebrated by the Argentine pontiff without the faithful.

The notice also says that, at least until Sunday, April 12 - Easter Sunday - all of Pope Francis’ Wednesday general audiences and the Sunday Angelus prayer will be streamed online, with no faithful present in the square, as has been the case in recent weeks."

Girl Smiles Bicycle Flowers In Basket

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.

Our Editor offered an in-depth perspective here >> COVID-19 A New Beginning

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.

Long-term Good News #

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.

From El Pais: "Spanish Prime Minister Pedro Sánchez on Tuesday afternoon announced a relief package of €200 billion to fight the economic fallout of the coronavirus crisis. The amount of this package, which comprises public and private funds, is the equivalent of 20% of Spain’s gross domestic product (GDP). “These are extraordinary times that require extraordinary measures,” said Sánchez, of the Socialist Party (PSOE), after the Cabinet meeting that greenlighted the financial assistance against the effects of the new coronavirus, which has already infected more than 11,000 people in Spain and caused close to 500 deaths.

Of the €200 billion fund, half of the money is tied to a public guarantee scheme to ensure liquidity for struggling businesses. Another €17 billion is being earmarked to support the groups most likely to suffer from the effects of the pandemic. “The rest will be private resources. It will be the greatest mobilization of resources in Spain’s entire democratic history,” said the Spanish leader."

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 and friends 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.

Don't forget to check out our Events Calendar for changes and updates. As we all navigate through this time, let's remember to help each other.

Kids embracing Alcudia COVID article min

Sources

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

25 March, 2020

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