Hotel bookings have fallen by as much as 40% in some areas of Spain, the country’s hotel federation said and flagged an overwhelming impact for the eurozone’s fourth largest economy as anxiety about the coronavirus outbreak takes hold.

Tourism accounts for 12% of Spain’s Gross Domestic Product (GDP) and is especially important during next month’s Easter holiday period.

Hotel bookings were around 20%-30% lower at the start of March compared to the same period a year ago and the drop is as steep as 40% in some areas, the country’s hotel federation said.

“The impact is overwhelming,” said Jorge Marichal, the president of Spain’s hotels and tourist accommodations federation CEHAT.

“The (sales) figures are decreasing a lot. We are talking about a percentage between 20 and 30 percent, in some places up to 40. It depends also on each type of installation,” he said.

Concerns over the impact of coronavirus on the sector has been exemplified by a hotel in Tenerife, under lockdown with hundreds of tourists inside since Feb. 25 after several cases of coronavirus were reported there.

The Canary Islands, where Tenerife is located, is one of the hardest-hit tourists spots, another CEHAT official said. Spain’s tourism ministry is in contact with the tourism industry and monitoring the situation to assess whether it will need help, a ministry source said, asking not to be named.

Economy Minister Nadia Calvino said she did not expect a significant economic impact from the coronavirus in the country for now while some hotel chains announced discounts and offers to lure wary travellers.

“The estimates currently being made of the possible impact on our country’s economy point to an impact that would not be significant,” Calvino told reporters.

“It is important to take this forecast with caution as we are in a phase hard to anticipate.”

The disease has killed so far five people and infected 365 in Spain.

Some businesses, such as the production of face masks, are seeing an upsurge in demand.

“The requests are by minute, we are contacted by people from around the world,” the manager of Spanish mask manufacturer Climax told Reuters, declining to give his name.

He mentioned pharmacies, distributors and individuals as the main groups contacting him.

The Barcelona-based company is one of the main European paper mask manufacturers, selling them in over 70 countries.

Despite the increasing demand, he said the company does not have the capacity to go beyond its current maximum production of around 20,000 masks a day.

Tourism accounts for 12% of Spain’s GDP and hotel chains including Melia announced discounts and offers with free and easy cancellation to counter the impact of the coronavirus.

“In times of uncertainty and risk of industry paralysis, companies must respond with more flexibility ... providing above all peace of mind and giving (clients) time to assess the evolution of a crisis that can change from one day to another,” said Melia Hotels International CEO Gabriel Escarrer.

On the ground in Tenerife, where a large hotel is under lockdown after several cases of coronavirus were detected there, nearby shops were closed or empty, Reuters reporters saw.

“My business has been massively affected this week, to the point we’ve made zero trade,” said Beverley Veness, in her empty hair salon. “This is high season for us, but right now there is just nobody passing by ... it’s had a massive impact on business all around.”

The Health Ministry ordered sporting events expected to draw crowds from high-risk areas, such as northern Italy, to be held behind closed doors after health authorities identified as many as 193 cases in Spain, including three children.

Spain reported its first death from the virus on Tuesday.

The central bank on Wednesday postponed a conference scheduled to be held on Friday as many participants were finding it hard to travel to Madrid due to the coronavirus. (Reporting by Emma Pinedo, Inti Landauro and Belen Carreno in Madrid and Guillermo Martinez, Marco Trujillo in Tenerife; Writing by Ingrid Melander; Editing by Kevin Liffey and Alex Richardson)

Spain’s manufacturing sector returned to growth in February, breaking an eight-month contraction thanks to slight gains in output and orders, while employment slipped at the slowest pace since last May, a survey showed on Monday. IHS Markit’s Purchasing Managers’ Index (PMI) of manufacturing companies rose to 50.4 last month from 48.5 in January, marking the first reading above the 50 line separating growth from contraction since May.

Reuters