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Restaurants and Hotels Suffer Economic Losses After Outage

By on September 24, 2016

Despite the lengthy lines thousands of Puerto Ricans did on hotels and restaurants after the island remained partially dark for more than 40 hours, the final balance of the incident isn’t necessarily positive for Puerto Rico’s tourism industry, much less for the general economy.

While hundreds of hotels saw a significant increase in their occupancy since Wednesday, others have had to cancel reservations due to the outage or have had to send guests to a different accommodation because their electric plants didn’t work, exploded, or simply couldn’t tolerate the emergency usage, revealed economist Jorge Elguera to Caribbean Business.

Customers stand in line at one of the few open cafeterias on Roosevelt Avenue, in San Juan, Puerto Rico, Thursday, Sept. 22, 2016, after a massive blackout hit the island Wednesday afternoon, leaving at least 1.5 million people without power overnight and into the following day. (AP Photo/Carlos Giusti)

Customers stand in line at one of the few open cafeterias on Roosevelt Avenue, in San Juan, Puerto Rico, Thursday, Sept. 22, 2016, after a massive blackout hit the island Wednesday afternoon, leaving at least 1.5 million people without power overnight and into the following day. (AP Photo/Carlos Giusti)

Similar incidents occurred at some restaurants that didn’t have electric generators or hadn’t given them maintenance.

“Puerto Rico isn’t ready for an outage,” affirmed to this newspaper Ramón Leal, president of the P.R. Restaurants Association (Asore, by its Spanish initials), in reference to product distribution problems, such as diesel, in emergency situations.

“All restaurants that have a well-maintained generator and have diesel have been able to open and they have been doing well. Some have experimented a sales increase raging between 20 to 40 percent, depending on the restaurant’s size. But there are companies and restaurants that don’t have a generator and that means losses: you hinder the restaurant, send the employee [back home], you have to toss away food, and then deal with insurance,” expressed Leal.

Even the ice manufacturing industry has been affected by the outage. The president of the Ice Makers Association of Puerto Rico (AIHPR, by its Spanish acronym), Ángel Vázquez, explained to this newspaper that, contrary to a hurricane, which allows businessmen to take necessary precautions with anticipation, the energy collapse “took us by surprise.”

“It’s chaos. There were businessmen in the ice industry whose electric plant couldn’t turn on and they couldn’t operate. Chaos was aplenty. Those who have been able to operate have had earnings,” mentioned Vázquez.

Although many ice producers were prepared, the sudden demand resulted in hundreds of consumers unable to find the product on the first try.

Millionaire losses after the outage

According to economist José Alameda, losses caused by the outage may reach $800 million, if the island’s annual production numbers are taken into consideration. Although some hotels and restaurants have benefitted from the situation, “that is not a social benefit, it’s a private benefit,” which is why a cost is still considered, he explained to Caribbean Business.

Elguera asserted the outage’s effects in the economy will be noticeable during the following weeks, when citizens reduce their consumption after incurring in emergency spendings, or with the reflection of losses from labor-free days.

“Wealth hasn’t been created, it has shifted. This consumption in a determined restaurant or hotel ceased in another line. […] those losses are never recovered because it means time, days when people stopped working,” explained Elguera.

He added the situation also affected the banking industry due to transactions that couldn’t be made for lack of energy and, consequently, it also affected businesses that couldn’t make electronic transactions during that period.

Gas stations triple their earnings

On the other hand, Ricardo Román, former president of the Gasoline Retailers Association of Puerto Rico, speculated the earnings of that sector may have tripled after the mass outage.

“It benefitted us because we were the most agile sales point that could provide service to the people. Most gas stations have the infrastructure to operate under those conditions. These days we tripled our sales daily, taking care of consumers’ needs,” he disclosed to this newspaper.

The Puerto Rico Manufacturers Association (PRMA) is analyzing financial losses after the energetic collapse, which left practically 100% of 1.5 million subscribers of the Puerto Rico Electric Power Authority (Prepa) without electricity on Wednesday, Sept. 21.

Governor Alejandro García Padilla refused Thursday to calculate estimated losses because the emergency had not concluded.

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