Tourists stay home. Tourists have disappeared from Europe and are planning to stay away as the summer season begins. Valencia, Spain’s third largest city and a beachgoers’ mecca, saw 95 percent of its summer hotel bookings cancel between mid-March and mid-April.
Resorts are standing virtually empty across the Caribbean region, where tourism employs 2.5 million people and accounts for a third of GDP.
Casinos crap out. MGM Resorts International reported first-quarter revenues 29 percent below last year’s. The company also said it has seen large numbers of reservations canceled in the third quarter that have been tentatively moved into the last three months of the year. The company’s China operations lost 63 percent in 2020’s first three months compared to a year previous.
Revenues of resorts on the Las Vegas Strip gave up 21 percent of last year’s amount, bringing in $1.1 billion in the first quarter.
“Gap” doesn’t just mean jeans. Gap Inc. reported it has used up half its cash reserves, even after drawing down all of its credit lines and skipping $115 million in April rent payments.
The company shut all its North American stores last month and furloughed virtually of its workers.
Gap had $1.7 billion in ready assets on 1 February. It has told the U.S. Securities and Exchange Commission that it should have about $750 million on hand at the end of this month but that it might not be able to sustain operations much longer.
Gap’s share price has fallen from $18 on 1 January to about $7 now.
Start-ups slow down. During the week of 13 April, governments received 20 percent fewer applications to start new businesses, down to 56,550 from 70,820 a year previous. Since mid-March, applications by businesses that would hire workers in addition to the owner shrank 35 percent.
The loss of start-ups not only costs new jobs that might have been created but also may rob the economy of the next Apple or Amazon, analysts say.
DeBeers cuts diamond mining. DeBeers, the world’s second largest diamond miner, will cut production 20 percent this year, turning out between 25 and 27 million carats instead of the 32 to 34 million carats it had planned.
Factors forcing the decision include plummeting sales in the U.S. and China, the world’s leading retail markets; the economic shutdown in South Africa, which accounts for half of the company’s profits; and India’s draconian economic lockdown. Indian workers cut and polish about 90 percent of the world’s diamonds.
The global supply of rough diamonds could fall 40 percent this year, according to consulting firm Gemdax.
Anglo-American Diamond Holdings Ltd., DeBeers’ parent company, has announced a $1-billion cut to its capital spending this year and a $500-billion reduction in its operating costs.
Alrosa, the world’s largest diamond mining company, still plans to turn out 34.2 million carats this year.
TREND FORECAST: As we have been reporting in the Trends Journal, diamond sales were declining before the virus pandemonium struck. With marriage rates falling, along with millennials income, diamonds are no longer “A Girl’s Best Friend.”
To reinvigorate sales, particularly as the “Greatest Depression” worsens, “luxury” items must be repositioned to target new markets with new messages in an unprecedented world of change.
