Death in Venice? Italy's tourism on life-support

After a dramatic press conference followed by millions of Italians on Monday evening, Conte signed the decree called "Io Sto a Casa" [I Stay at Home], which forbids Italians to leave their home except for work, health and emergency reasons.

Italy's lockdown hit hard on some key sectors of the Italian economy, especially tourism: travel is forbidden to both foreign and Italian tourists until April 3.

Entrepreneurs in the tourism sector from the regions of Veneto and Lazio confirmed to EUobserver that the situation is dramatic for them: with almost no customers, their prospects are getting gloomier every day, as they continue to receive cancellations for Easter, summer and even September.

"For us, the drop in guests started long before this last decree. But today streets are so empty that we decided to close from tomorrow until April 3," says Arianna, who works in a restaurant in Venice.

"I've been receiving cancellations since the start of the year," says Marella, who runs a hotel very close to the iconic St Peter's Square in Vatican City, within the Italian capital Rome.

"My business has been at a standstill for a month and a half. It's not happening only to me, but to everyone: Rome is empty. There haven't been any tourists since mid-January".

According to a recent survey by the think tank of Confindustria (the main organisation of Italian employers), the coronavirus emergency has had a negative effect on fully 99 percent of entrepreneurs in the housing and catering sector.

A tragedy, considering that in 2018 tourists added over €41bn to the economy of the Mediterranean country.

Tourism is life ... and death

For some cities, both southern and northern, tourism is life: that is why yesterday the mayor of Bari, a large maritime city in southern Italy, did not hold back his tears on a live Facebook chat when he saw the empty old town.

"I see very few people around, maybe it has become clear that one has to stay at home, as they have been saying for several days now on the TV. There's only a few workers, someone walking their dog, but the city centre is empty," says Alvise Baldinato, owner of a bar in Vicenza, a rich industrial town halfway between Venice and Verona.

Baldinato says he is "worried but if these are the rules we have to respect them. We must do what the government says to resolve the situation. In China they seem to be solving the problem".

Retail in general is suffering heavily. "The situation is tragic today, there's no one on the street" says Valentina Traverso, who owns a bookshop in Vicenza's city centre.

"This morning two customers came in, bought five or six books and said 'see you next month'. Many shops around here are closed, but so far, there is still no directive to close all shops. We are working with gloves, cleaning where we lay our hands, staying as far away from customers as possible. We are trying to face all this with a smile and a bit of irony".

Manufacturing

The manufacturing sector, engine of the Italian economy, seems to be suffering less.

Many of the most dynamic manufacturing companies are export-driven, and look more at the German, French or American market than the domestic one; moreover, many small and medium companies are part of Italy's 'distretti industriali' (industrial clusters) where, within a few kilometres, there are many companies specialised in components for this or that niche market.

Some of the manufacturing entrepreneurs interviewed by EUobserver were less pessimistic.

The decree allows the movement for work and the transportation of raw materials and products.

"This crisis will certainly cause a slowdown. However it will be due to a contingent situation, the fundamentals are still there," says Carlo Valerio, president of the Padua section of the Confederation of Italian Small and Medium Industry. "If we manage to find the funds to overcome the contingent difficulties all together, also at the EU level, we will be able to resume as soon as it will be possible".

"We're still receiving orders and we're still working. Our problem right now is that some customers are delaying the delivery of finished machines because they don't want us there for the installation," says Davide Ceccarelli, the chief executive of Technowrapp, a company that manufactures automatic pallet wrapping machines, based in Belluno, in the north of Veneto region.

"And until the machines are delivered they are not paid for. Everything will be fine after this crisis for manufacturing companies; our concern is to keep the company's liquidity steady. Because the expenses remain."

According to Angelo Guerini, president of the Milan-based publishing house Guerini and Associates, the economic measures put in place by the government up to now are inadequate.

"Although economic measures may have less immediate impact than health measures, inadequate economic policies risk causing enormous social suffering" he says.

While manufacturing companies are holding up for the moment, the situation could change if the coronavirus emergency continues.

"It all depends on how long this emergency will last," says Giorgio Barba Navaretti, an influential economist and a professor at the University of Milan.

"If the spread of the virus slows down rapidly and we can return to a certain normality soon, economy may rebound. If we manage to guarantee liquidity for businesses and preserve employment, I believe that this will keep the productive system going".

According to Felice, "it is early to say what macroeconomic consequences this situation and the decree will have on Italian companies. It is necessary to see what will happen to the productive structures of manufacturing companies, that is if they recover or if they undergo a permanent stop. Tourism is flexible; after a collapse it will recover".

Smart working

There is no silver bullet for the Italian government.

However, there is a mantra: smart working.

Remote work should allow certain types of companies to keep working, but with employees staying at home. One example is Belka, a startup based in Trento, a university city in the Italian Alps famous for its high number of digital startups.

"It's a bit more complicated, but our business allows smart working" says Giulio Michelon, chief executive of Belka, a digital company that develops large-scale digital products for companies.

"A couple of years ago we had a project with Sweden and we never saw each other in person. As long as there is work, we are not stopping".

Michelon fears that his company will also suffer from the economic repercussions of the coronavirus emergency.

But he also thinks that this crisis will bring a change of mentality in a country "still reluctant to work remotely and organise through digital tools".

Both manufacturing and digital entrepreneurs agree on the vast consequences of this emergency.

"In my business I'm observing a standstill in editorial planning. It's hard to consider investments when faced with the uncertainty of developments," says Guerini. "I'm afraid that from the point of view of the economic impact and the transformation of the economic and social structure, comparing this situation to a war is not entirely excessive".

Ceccarelli calls for an orchestrated action from the European Union.

"Regrettably, there is no cohesion at the European level in dealing with the disease at the moment" he says. "I would like entrepreneurs from all over the EU to make an appeal to tackle together this emergency, which affects us all".