Opinion: When will Aruba’s tourism industry recover?

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By James Hepple, BA, PhD, Assistant Professor, FHTMS, University of Aruba

In today’s edition of Aruba Today we publish an opinion article by James Hepple, Part IV which is the last in the series. Part I, II and III were published Thursday April 9, Tuesday April 14 and Wednesday April 15. All editions can be read on our website.

Three Scenarios.

Three possible scenarios are suggested:-

• Optimistic
• Likely
• Pessimistic

These scenarios reflect the worst possible outcome, a base case of what is considered to be the most likely outcome, and the best-case scenario. It is important to note that all scenarios herein reflect our opinion, based on our assumptions, assessments, and currently available data to date, and are likely to change as the situation continues to unfold.

Optimistic:

This assumes the following

• That the USA manages to substantially slow the rate of infections during the month of April and that the social distancing regulations are relaxed, if not removed, by May 1^st.
• That the US government removes all restrictions on entry to the USA from foreign countries by foreigners and returning residents.
• That unemployment peaks in late April at about 25% – 30% of the workforce.
• However, people start going back to work in May and the economy begins to recover.
• That as a result of the workforce having income, that demand for discretionary purchases begins to grow.
• That similar success is achieved in major source markets in Europe, particularly the Netherlands.
• That the airline industry responds positively to this demand for travel and flights are reinstated.
• That the cruise lines also respond positively to this demand and reinstate cruises.
• That the hotel industry and related tourist inventory within Aruba is not badly impacted by the suspension of traffic during March and April.
• That social distancing and related policies implemented within Aruba are successful and that the infection rate is minimized.
• That the Aruban Government opens its orders to foreign visitors sometime in May 2020 without requiring mandatory testing at a port of entry.

Likely Scenario:

• That the USA manages to slow the rate of infections during the month of April, but the infection rate continues to grow at an unacceptably high level and that the social distancing regulations continue through the month of May and possibly into June.
• That the US government keeps all restrictions on entry to the USA from foreign countries by foreigners and returning residents in place through May and into June.
• That unemployment peaks in May/June at about 30% – 35% of the workforce.
• That people slowly go back to work with most not re-entering the workforce until July/August
• That as a result the workforce has a substantially less income and that demand for discretionary purchases only comes from a small affluent cohort of the population.
• That a similar pattern is demonstrated in major source markets in Europe, particularly the Netherlands.
• That the airline industry responds to this demand for travel and flights are reinstated but not until August/September
• That the cruise lines also respond to this demand and reinstate cruises but do not reach a significant number of cruises until October/November.
• That the hotel industry and related tourist inventory within Aruba is impacted by the suspension of traffic during March through June but is not fatally damaged.
• That social distancing and related policies implemented within Aruba are reasonably successful and that the infection rate is minimized.
• That the Aruban Government opens its orders to foreign visitors sometime in June 2020 but with mandatory testing of all visitors at the airport and presentation of clear evidence by all cruise lines that all passengers are virus free.

Pessimistic:

• That the USA manages to slow the rate of infections during the months of April and May, but the infection rate continues to grow at unacceptably high levels and that the social distancing regulations continue through the months of June and July and possibly into August.
• That the US government keeps all restrictions on entry to the USA from foreign countries by foreigners and returning residents in place indefinitely.
• That unemployment peaks in July/August at about 40%% of the workforce.
• That people slowly go back to work with many not reentering the workforce until September/October although the economy will be substantially smaller by then
• That as a result the workforce has a substantially less income and that demand for discretionary purposes only comes from a small affluent cohort of the population.
• That a similar pattern is demonstrated in major source markets in Europe, particularly the Netherlands.
• That the airline industry responds to this demand for travel and flights are reinstated but not until the fourth quarter of 2020 but only in limited numbers. The airline industry is substantially smaller than in 2019 and has limited capacity.
• That the cruise lines also respond to this demand and reinstate cruises but do not reach a significant number of cruises until the fourth quarter. The cruise industry finds strong resistance from Aruba and all Caribbean countries to receiving their visitors without clear evidence that all cruise passengers are virus free.
• That the hotel industry and related tourist inventory within Aruba is severely impacted by the suspension of traffic during March through September and is substantially reduced in size.
• That social distancing and related policies implemented within Aruba are moderately successful and that the infection rate is minimized but is still at a relatively high level.
• That the Aruban Government opens its orders to foreign visitors sometime in June 2020 but with rigorous testing of every arriving visitor.

Scenarios: Volume of Tourist Arrivals