Insurance to Boost Tourism? Might as Well Try It

Portugal has unveiled a new insurance model in an effort to help increase tourism during the ongoing coronavirus pandemi

Portugal is determined to prove that the country is safe for travellers, and the country’s national tourism body, Turismo de Portugal, is betting they know how to prove it: with insurance.

The newly unveiled travel insurance for foreign tourists covers a range of expenses associated with beating and recovering from a COVID-19 infection – including medical, surgical, pharmaceutical, and hospital expenses associated with coronavirus, as well as expenses that may occur derived from cancellation, interruption, or the extension of trips. The bet, however, is that if you visit the country, you won’t need to cash in on it.

The insurance is designed to work hand-in-hand with the Portugal Health Passport, which includes COVID-19 testing available to all who visit the country.

Turismo de Portugal said in a recent statement that, “The objective is to guarantee that everyone who visits Portugal can travel around the country safely and with confidence.”

This new option may be successful in boosting consumer confidence in Portugal’s tourism brand, which has tanked due to the pandemic and the lockdown necessary to contain it. Meanwhile, the Portuguese government is engaged in talks with the UK to lift a current mandate that requires British citizens returning from vacationing in Portugal to self-isolate for 14 days upon their return. This particular rule is hitting Portugal hard, as travellers from the UK are normally a major source of tourism revenue for the country, making up the largest percentage of foreign visitors.

“We have been in contact with the UK, providing all of the information requested by the British government,” said Rita Marques, Portugal’s secretary of state for tourism in an interview with Bloomberg. “We are not sure when the decision will be revised but we are not going to retaliate. We do not believe that the quarantine is the real solution. People should be tested and if that’s not possible they should comply with the rules when they come to Portugal.”

“We believe August and September will be strong months and in October and December we will see how it goes,” added Marques. “The situation is under control.”

Last month, Portuguese Foreign Minister Augusto Santos Silva called the quarantine rule “absurd,” noting that the UK has 28 times more deaths from coronavirus than Portugal.

A Pandemic Reprieve?

Meanwhile, on Monday Portugal breathed a sigh of relief as the country reported no new coronavirus-related deaths for the first time since early spring. This was the first time Portugal hit this milestone since mid-March, when a lockdown was enacted to halt the spread of the virus.

Portugal has also logged its lowest rate of new infections in nearly three months, evidence that the lockdown put in place has worked, even after measures have been eased in stages since May 4.

“It has been very difficult in recent times – we are very happy this happened,” the Secretary of State for Health, Antonio Sales, said tearfully during a news conference. “I want to leave this message of hope to the Portuguese, but I want to ask them to help us maintain these numbers.” Any lapse in discipline could trigger a deadly second wave that Portugal could ill afford.

The relief was short lived, however, as two COVID fatalities have been reported since Tuesday.

In Madeira, another popular tourist destination, new cases are being kept low with a strict mask policy in enclosed spaces and public transport, as well as on the street. Any visitors from abroad, though they remain low in number, must provide proof they have tested negative for the virus.

“The use of the mask is exactly to show those who visit us the reason why we have these results,” said the region’s general health secretary, Pedro Ramos.

This is good news, even as 167 new confirmed cases were logged as of August 5; the majority occurring in and around Lisbon, which has continued to report localised outbreaks over the past two months. The government hopes to ease some of the restrictions in the area this week. A total of 1,740 people have died from the virus to date.

Portugal recently logged its lowest rate of new coronavirus infections in three months. “It has been very difficult in recent times – we are very happy this happened,” said Secretary of State for Health Antonio Sales. Copyright: Joana Silvestre Fontinha /

Economic Distress

Portugal is heavily reliant on tourism, which makes up more than 16 per cent of its GDP. But the coronavirus pandemic has put a heavy dent in the sector. Initially the government hoped to recoup some losses when restrictions were lifted in May. However, the ongoing outbreaks around Lisbon, the country’s capital, means that some restrictive measures have been re-instated, which in turn has affected the usually popular Algarve region.

This has also resulted in other nations – including the UK, Belgium, and Finland – imposing travel restrictions on Portugal, or the need for travellers to quarantine upon return to their home-country. Overnight stays by British citizens, which is a major market for Portugal, fell by 98 per cent in June as compared to the same month in 2019. Visits from Spain and Germany also decreased, by 95 and 93 per cent, respectively.

The numbers from June were particularly dismal. The National Statistics Institute (INE) said in its flash estimate that the number of overnight stays by foreign tourists dropped a staggering 96 per cent as compared to June 2019. Meanwhile the total number of guests inclusive of domestic travellers fell by nearly 82 per cent, which indicates that people haven’t been travelling far from home either. Still, it shows a modest improvement from the 94 per cent overall drop logged in May. Unemployment stands at 7 per cent, though the real number is likely to be much higher. Many workers stopped looking for jobs during lockdown, and thus have been left off the unemployment statistics.

Airlines are suffering too. National carrier TAP has incurred serious losses in recent months due to the pandemic cratering all travel demand, with the airline having reported a first-quarter net loss of 395 million euros. While TAP had initially hoped to scale up operations once lockdown restrictions were lifted, continued lack of demand has forced the airline to keep most of its plans on pause. However, the company said on Monday that it plans to resume 40 per cent of its pre-pandemic operations in September. For August, TAP has said it has about 500 weekly round-trip flights to various destinations scheduled and hopes to bump the total number up to 700 in September.

“The list of routes and flights may be adjusted whenever circumstances require due to the evolution of restrictions in various countries, the pandemic, as well as demand,” TAP said.

Overall, the pandemic has wreaked havoc on the Portuguese economy, with the country’s GDP shrinking 14.1 per cent in the second quarter of 2020 in its biggest contraction ever. The INE noted that between April and June, the GDP dropped 16.5 per cent compared to the same period in 2019. Portugal is also showing weak domestic demand, as customer inflation fell 13.1 per cent in July after growing 0.9 per cent in June.

“It is a number which will be remembered in the history of Portuguese economy, a consequence of strong confinement, particularly between mid-March and the end of April, which affected almost all economic sectors,” said Filipe Garcia, economist at Informacao de Mercados Financeiros, referencing the overall GDP contraction.

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B. Lana Guggenheim

Lana is a freelance journalist based in New York City. She has a M.Sc. in International Conflict from the London School of Economics and Political Science. She has worked as an analyst, reporter, and editor, covering extremism, culture, economics, and democracy.

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