Italy’s hotel owners are angry about Mario Draghi’s reluctance to reopen to tourists. But he’s right to hold off until the vulnerable are vaccinated.
By Rachel Sanderson: Bloomberg April 15, 2021, 1:30 AM AST
Italy is lagging behind its Mediterranean rivals Greece and Spain in the dash to save the summer tourist season. Prime Minister Mario Draghi’s stick-and-carrot approach to get Italians to vaccinate the old and fragile before he agrees to open up the country to sunseekers is morally right, but it’s a risky strategy economically.
Talk to Italy’s hoteliers and their consternation is palpable. Take Rocco Forte, the British hotelier, who’s due to open his newest luxury Italian residence, Villa Igiea, in a 19th century fortress overlooking Sicily’s Gulf of Palermo on June 3. It’s the kind of exotic destination locked-down citizens of northern climes fantasize about. Yet Forte tells me the well-heeled Americans who typically make up about half of his clientele are reluctant to book, as they don’t know when Italy will reopen and whether it will be safe.
It’s all very different in Greece, which has started pilot breaks for foreign visitors as a test for opening this summer. At least 69 Greek islands will be fully vaccinated by the end of April. In Spain, the tourist cities Madrid and Barcelona have remained open throughout the pandemic. Rome’s and Milan’s hotels have been in and out of lockdown for months.
Draghi wants to use every tool available to force Italy’s pace of inoculations, including using the summer season as leverage. He’s fully justified to prioritize this way, though it’s quite a gamble. The prospect of the country missing out on lucrative tourists is already fanning social and political tension.
Restaurant owners in Rome clashed with police last week outside parliament over the lockdown. Meanwhile, Italy’s regional governors are threatening to ignore Rome’s demand to vaccinate older and vulnerable citizens first, and instead follow the Greek model by favoring the inhabitants of holiday islands such as Sicily, Capri, Stromboli and Panarea (a summer destination for Italy’s business elite). The business lobby group Confindustria has cut its forecast for Italian growth this year to 4.1% from 4.8%, and two-thirds of that depends on the summer season going well, according to Confindustria boss Carlo Bonomi.
Yet Draghi has remained steadfast on inoculating the neediest first. In taking a hardline approach with the powerful hospitality industry, the former European Central Bank president has given an intriguing indication of how he plans to force through change more broadly in the moribund Italian economy.
Draghi’s prime concern is clear: Italy’s chaotic vaccination program has highlighted some of the worst weaknesses of the “Bel Paese” (beautiful country). Bureaucrats bungled the roll out of shots to the elderly. And in some cases privileged groups have taken priority. I spoke to a 96-year old man in Friuli Venezia Giulia last month who’d still not been given a date for his shot, and a healthy 50-something director of a blue-chip company in Milan who’d just had theirs. For Italy to have any chance of reviving its economy post-pandemic, it must quash the bureaucracy and cronyism that strangles its economy. Where better to start than vaccinations?
The government is fully aware of tourism’s importance: In Italy, it accounts for 13% of GDP and nearly 15% of employment, according to the OECD. And while Italians can still holiday at home this summer, the economy needs the country open to higher-spending foreigners.
Ori Kafri, cofounder of the five-star JK Place hotel chain, tells me he has plenty of interest for his oceanside vacation spot in Capri from regular visitors who want to rebook postponed holidays. Yet even he is skeptical about the usefulness of prioritizing vaccines for tourist islands. “The whole country needs to be Covid free,” he says. “You need to look from the bigger perspective, the way foreign tourists do.”
A peculiarity of Italian tourism is that it’s the only European country with more than a million hotel rooms, and most establishments are run by small family businesses. Big chains account for only 5% of them. Draghi is betting the best family firms will have the flexibility to respond as soon as Italy reopens, even at short notice. It’s those kind of traits that have allowed decent businesses to thrive amid Rome’s chaotic politics for decades.
But there’s also a post-pandemic opportunity here. One of the stumbling blocks for Italy’s declining economy for the past 20 years has been the dominance of underperforming small family hotels. The country has long lacked the hospitality infrastructure that appeals to affluent U.S., northern European, Middle Eastern and Chinese tourists.
It pricks Italian pride that France draws 90 million foreign tourists a year and Spain about 83.5 million, while Italy pulls in about 60 million annually despite its natural, cultural and culinary riches. Revitalizing Italy’s tourism sector has long been considered a way to boost its hidebound economy, particularly in the poorer south.
Investors say the economic distress caused by Covid means the price is finally right for big groups to move into Italian tourism. Italo-French company Covivio, owned by billionaire Leonardo del Vecchio, in September finalized the 573 million-euro ($685 million) purchase of seven Italian hotels, including Rome’s Exedra. Luxury hotels Six Senses and Bulgari are preparing to open in Rome. Andrea Guerra, former boss of Luxottica, has joined LVMH SE to head up its five-star Belmond and Cheval Blanc hotels, a signal it plans to expand in Italy.
In the inevitable rewriting of Italian capitalism after the pandemic, building a tourism sector better suited to the tastes of today’s top-spending travelers would be a plus. Draghi’s immediate concern is the vaccine campaign, but if a pandemic shakeout leads to a more profitable holiday industry, he won’t complain.
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics.