REPORT FROM ITALY—Hoteliers, who in the spring of 2009 opened their doors to the Abruzzo’s earthquake homeless, are struggling to overcome a deep crisis.
An agreement signed by the Italian Department of Civil Protection and the hoteliers’ representative establishes monthly repayments for companies that hosted the displaced people. But the last time Abruzzo hoteliers saw money was at the end of 2009.
According to the operators, this delay is seriously impacting hotels’ performances and if protracted, it could put the enterprises at risk.
Last week, quake victims demonstrated in Rome, complaining about the slowness of the reconstruction and clashed with riot police. During the protest Massimo Cialente, the mayor of L’Aquila, said: “There are more than 4,000 people in the hotels; hoteliers must have 70 million of Euros (US$90.7 million). They went to the banks for factoring contracts (receiving) an interest rate of approximately 7 percent. Now, the banks say: That’s enough! We don’t believe anymore the State will pay you”.
The Department of Civil Protection replied that this is just a question of bureaucracy and hoteliers will be paid. Rather, the agreement helped the Abruzzo’s hotel companies to face the harsh tourism crisis in the region.
Hanging on
After more than one year after the earthquake, there are almost 4,000 homeless in Abruzzo’s hotels. Approximately 1,000 homeless are in properties along the cost.
“It is hard to forecast when they will be able to go back home, but according to a survey we carried out in April, people are just waiting for the scaffoldings’ removal. It is a question of weeks, in the worse cases months”, said Lorenzo Alessandrini, officer of the Department of the Civil Protection, who was the coordinator of the homeless hospitality program.
The number of homeless in the local hotels has decreased, but hotels are still waiting for the compensation.
August has been totally paid and the hoteliers received a down-payment for the following months until November (December for the L’Aquila’s hotels).
“Down-payment means that (the hoteliers) received the 75 percent of the expenses upon trust, waiting for administrative and accounting verifications (that must be carried out by the Guardia di Finanza Corps). So, the down-payment is already a pretty penny”, Alessandrini said.
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| The Hotel Zunica. |
The agreement establishes that the remaining 25 percent will be delivered only after the accounting checks. According to Alessandrini, on €250 million due (US$324 million), hoteliers received €180 million (US$233.3 million).
“(It is) a considerable amount of money if you (consider) that the verification is a long process and sometimes requires interviews and head-to-head talks with the operators”, he said.
But for the hoteliers, €180 million is just enough to cover costs. If the remaining part doesn’t come on time, the future of the Abruzzo’s hotel companies could be dark.
“We, (Assoturismo)), together with the Confidustria (association), (immediately) urged the payments because (the delay) is putting the enterprises on the spot, especially in this specific moment of credit crunch”, Daniele Zunica, owner of the Hotel Zunica 1880 and president of Abruzzo Assoturismo.
“It is clear that the big part is done, but it is also clear that we incurred considerable expenditures for (the followings months). Now, we (have to pay taxes) and many hoteliers are in trouble”, said Emilio Schirato, owner of Schirato Hotels and head of Federalberghi’s Abruzzo chapter.
The agreement doesn’t provide any tax break—with the exception of the hotels close to L’Aquila—and the hotels must pay taxes on the repayments. According to the hoteliers, this represents a heavy burden because the repayments cover just the costs and generate no or very low earnings.
Moreover, the hoteliers must deliver the 2009 income tax including money they have not yet received.
“We pay taxes (on the repayments) and also the VAT. The 50 percent of what (we receive) will return to the government (because of the taxes). This is the reason why (Giulio Tremonti, Minister of Economy and Finance) preferred to shelter the homeless in the hotels instead of in the tents”, Schirato said.
The hoteliers also emphasized the banks’ reluctance to confirm the lines of credit. According to Zunica, Abruzzo’s hotels have significant bank overdrafts and loans.
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| Daniele Zunica, owner of the Hotel Zunica. |
“It is hard for some of them to go ahead because the work (they have done after the earthquake) has been an exceptional work, beyond any standard. (It needed) huge investments”, Zunica said. After the earthquake, the hotels that usually closed during the winter opened their doors.
“The day after, the hoteliers opened their properties calling housekeeping companies, making renovations, putting the hotels at the Civil Protecion Department disposal without knowing if any refund would be provided. We called and (hired) workers”, Zunica explained.
Costs and benefits
How long can Abruzzo’s businesses hold out?
“A little, very little”, Zunica said. “Also because there is the economic crisis that worsens the situation”.
Alessandrini believes that compensation has been useful to cope with the crisis: “No risk of shutdown. In some cases, the contrary happened. On the coast, (the homeless) saved at least 20 hoteliers from sure and imminent bankruptcy due to the global economic downturn”.
Alessandrini, officer of the Department of the Civil Protection, said the agreement assured overbooking everywhere, from April to October.
“The price (paid to the hotels) turned up to be absolutely remunerative for the operators. We registered less winter closing than usual for the seasonal properties”, he said.
Hoteliers emphasized that 2009 wasn’t a year of profits, but they admit that in some cases repayments helped to combat the tourism slowdown. However, the current payment delay risks nullifying any benefit.
“The occupancy rates have been definitely higher than those we could have had relying only on tourists. In 2009, a loss of 13 percent has been balanced by the homeless. Now, this 13 percent is becoming 30 percent and it is difficult to start again”, Schirato said.
“We consciously gave our consent to an agreement that wasn’t a ‘fat-cow’s agreement’. … Nobody thinks to get rich off of others’ misfortunes. But it is important that we are able to maintain our companies on their feet. This, absolutely yes! So, it is OK to have low or no profits, as long as we are paid”, he said.
Responsibilities
The management of the emergency and the L’Aquila reconstruction produced critics among citizens, local administrators and businesses.
The head of the Department, Guido Bertolaso, is under investigation for suspected corruption for the G-8 summit’s works. He denies any allegation.
The Department of Civil Protection, which handled the post-earthquake emergency until February, has been charged by Mayor Cialente to have left the region as an “insolvent debtor”.
“Insolvent debtor? This is an assertion without foundation”, Alessandrini said.
Protests broke out against the Government’s response to the earthquake. Hoteliers’ associations weren’t directly involved in the protests, even if some entrepreneurs of Confindustria took part in last week’s demonstration.
Abruzzo’s hoteliers still insist that something went wrong. They are now asking for an open dialogue with the Italian institutions to understand if and when they will receive the repayments.
About the reason why hoteliers are waiting, many factors are playing a role: The handover between the central administration and regional administration, the length of controls, the length and complexity of the Italian bureaucracy, and more.
“I don’t know. I don’t know (why they don’t pay). Don’t they have money?”, Zunica said.
“Government didn’t transfer the money from Rome to L’Aquila. So, at the moment, there aren’t the resources to pay the hotels. They say that money are arriving, that they will arrive, but we have asked for a meeting to make clear the times and the means of these future allocations”, Schirato said.
Alessandrini doesn’t agree with the scaremongering of the hoteliers. “There are the funds, there have always been. In the last week payment mandates have been issued again. … It is well known that the State pays. Always. The Public Administration can’t not pay”, he said.
Responsibilities also are not clear. According some hoteliers problems begun when the Department of Civil Protection left Abruzzo and the management of the reconstruction passed in the hands of a local Commission.
“We are facing these problems now that the Civil Protection went away. We can’t stigmatize the Department of Civil Protection … There is a technical problem and we ask for a solution. We believe that (the) money will come. The problem is when”, Schirato said.
Beyond the earthquake
The roots of the struggle are not only in the delay of the repayments.
“The companies that worked with (the earthquake’s homeless) are in difficulty because of the repayment delay. But also because, this is not a brilliant season. We are losing the 20, the 25, and the 30 percent”, Zunica said.
“The forecasts for 2010 are not good: A loss of 30 or 40 percent compared to the last year. The problem is that in Abruzzo the foreign tourists are on average less than in the other Italian regions. Foreign tourists represent 12 percent, against a national average of 30 percent”, Schirato said.
According to Schirato, Abruzzo’s hotels must address the markets of the North of Europe and push for the development of the Pescara International Airport.
“The problem of Abruzzo’s tourism is old. There is a heavy historical legacy. Abruzzo must make up for the lost time. The matter is that there aren’t resources. The Region has debts for 4 billion of euros (US$5.2 billion), the 85 percent of its resources goes for health assistance. The next budget law is going to cut approximately €320 million (US$414.5 million) … Abruzzo currently has €500 million (US$647.7 million) for promotion (of tourism). This means zero. Zero resources”, Zunica said.
“The serious question is that the investment in promotion must be constant and focused. The first thing is the resources”, he stressed
In the future of the Abruzzo’s hotel industry there is also a new threat: The oil.
“This is probably the biggest problem because this means a political choice”, Zunica said.
Like many other hoteliers, he is concerned about plans for offshore drilling.
Zunica said an oil platform could be erected not far from the Abruzzo coast.
“It seems that this platform will be built five kilometres from the most beautiful stretch of Abruzzo’s coast”, Zunica said. “The risk is frightening. We can talk about any project, we can also find the resources (for tourism and hotels), but what is important is the basic choice. (The point is): If the Abruzzo future is the oil, we’ll not invest anymore on our hotels. If the Abruzzo’s future is tourism, stop oil and we’ll continue to invest in our enterprises”.