Under a late September sun that blisters white northern European skin with ease, Playa de las Américas offers its visitors a bounteous blend of the familiar and the exotic.
On the palm-lined main thoroughfare of the Tenerife resort town, tourists have an array of choice, from buying a pint for €1.50 (£1.33) to watching football matches, taking jetski trips and even Harley-Davidson tours of the island.
Altogether less abundant is any clarity as to what the collapse of Thomas Cook could mean for the town, the Canary Islands and the wider Spanish tourist industry.
Brexit
“There is now little doubt that the Brexit process has led many UK customers to delay their holiday plans for this summer,” said the chief executive, Peter Fankhauser, in May. But it cannot be the whole story – arch-rival Tui has coped because its finances are healthier.
Weather
The summer heatwave of 2018 encouraged would-be holidaymakers to stay at home, undermining prices in the “lates” market where operators try to clear unsold holidays. There seems to have been a hangover into 2019, with customers calculating that waiting to book is a productive strategy.
Competition
A pincer movement of Airbnb and budget holidays has changed consumer behaviour, though Thomas Cook still managed to sell 11m package holidays last year.
Banks and debt
The tour operator has been attempting to shoulder a huge pile of debt for the past decade – £1.7bn worth at the last count. Successive managements failed to remove meaningful chunks. The banks argue they have supported an overstretched company for years and the details of why it could not be saved may have to await the report from the Insolvency Service.
Bad management
Thomas Cook’s borrowings were too high. The moral of the tale is that tour operators should fund themselves conservatively. If your balance sheet is fragile, you are at the mercy of events in an industry where most of the cash arrives in the summer and then flows out in the winter.
Nils Pratley, financial editor
While much of this week’s news has focused on tired, patient Brits queuing in airports to clamber on to planes carrying out the UK’s biggest peacetime repatriation, worry has been growing over what the tour giant’s demise will mean for the thousands of men and women it employed, directly or indirectly.
Tourism accounts for almost 12% of Spain’s GDP; in the Canaries, that figure rises to more than 35%. Until this week, a quarter of all the tourists coming to the islands came with Thomas Cook. Spain’s general union of workers (UGT) has warned that the fallout could affect the jobs of 10% of hospitality workers in the Canaries.
As the islands gear up for the usually lucrative winter season, some hotels are wondering how to fill their rooms – or whether they can be filled at all.
“We’re up against one of the biggest economic crises that the Canaries have faced,” says Melisa Rodríguez, a Tenerife MP for the centre-right Citizens party. “Sixty percent of the tourist places we offer are contracted through tour operators, and Thomas Cook is the second biggest tour operator. We could be talking about an 8% drop in GDP, which would be a very heavy economic blow.”
Rodríguez points to one hotel chain that has lost 10,000 of the 14,000 bookings it had for December, adding that up to 12,000 jobs could be lost across the Canaries.
“This could hit the Canaries harder than other Spanish regions not just because of our reliance on tour operator business but also because the high season in the Balearics and elsewhere is over,” she says.
“They can negotiate when it comes to debts and pursue them but the high season in the Canaries is beginning now.”
Staff – including waiters, cleaners, chambermaids, cooks, coach drivers and maintenance workers – are still waiting to see how Thomas Cook’s disappearance will affect them.
Jesús Miguel Delgado del Rosario has worked as a pool maintenance man at the Gran Hotel Turquesa Playa in the north of Tenerife for the past 13 years. Like many of his colleagues, he can do little but watch and wait.
“They’re tallying up all the winter reservations at the moment,” he says. “There’s a lot of worry because Thomas Cook was a big company that had a number of subsidiaries. There’s uncertainty: we’re just waiting to see what happens with all the winter reservations. Yesterday they said that bookings from Germany will be down, too, so it was a bit of a bombshell.”
If new guests can’t be found to make up the shortfall, says the 47-year-old worker, staff cuts look all but certain. “But we don’t know what’s going to happen. We just want more information.”
Even if, as many have argued, Thomas Cook’s fall was inevitable, no one seems to have warned the islanders, who are already dealing with high unemployment rates and the appalling uncertainty over Brexit.
Ignacio López, the secretary general of the services federation of the giant workers commissions union, is blunt: “This is all new to us. We’ve never seen anything like this before, never seen the fall of a tour operator as big as Thomas Cook.”
He says Thomas Cook was the only operator with which a lot of hotels worked – not least because it could give them a guaranteed occupancy rate of 70%. As Thomas Cook pays hotels three months on, debt has been added to uncertainty.
“The consequences for the sector are going to be dramatic but we think business leaders here will be able to weather them,” says López.
Gladys Medina, a chambermaid who also works for the union’s services federation in Tenerife, says that although figures remain elusive, the collapse is already starting to bite.
“We can’t quantify the losses or damages when it comes to people’s jobs because it’s still all very recent, she says. “But we know that people are already having their contracts ended or frozen and we also know that measures are being taken to get rid of department heads or those in higher salaries to reduce labour costs.”
The Canaries are not the only region feeling the pressure: authorities in Mallorca are expecting to lose 25,000 tourists in October and there is also uncertainty in Greece, Cyprus, Turkey and Tunisia.
Spain’s acting government – which is currently gearing up for the country’s fourth election in as many years while also preparing for a no-deal Brexit – has set up an inter-ministerial committee to respond to the situation and to try to minimise Spain’s exposure.
But whatever happens, it needs to happen soon. Many of those who wash towels, clean rooms and cook enormous full English breakfasts in Tenerife and beyond are doing so in a state of increasing anxiety.
“People are really worried about what could happen and are thinking about who’s going to get fired,” says Mónica García, the local president of Kellys union, which campaigns to improve chambermaids’ rights.
“They’re just waiting. And it’s not just chambermaids: everyone depends on tourism and everyone’s going to be affected. This is one of the poorest bits of Spain and a lot of the people who work as chambermaids are single parents and sole breadwinners. People aren’t a bit worried; they’re really worried.”
