In Peru's tourist capital, protests leave small businesses reeling

• Huge job losses in Peru's tourist hotspot of Cusco
• Closure of Machu Picchu deals blow to local guides
• Small businesses struggle to pay debts as revenue sinks

For years, Juan Asin earned a decent living as a tour guide - trekking the ancient Inca trails and valleys around the Peruvian tourist hub of Cusco and the world-renowned archeological site of Machu Picchu.

But with the Andean country gripped by its worst social unrest in over 20 years, Asin and thousands of other guides in the highland region have been stuck at home for two months, struggling to make ends meet as tourists stay away.

"Tourism has stopped. If there are no tourists, there's no work, no income," Asin told Context by phone from his home city, where road blocks by protesters and the closure of Machu Picchu in January have crippled the local economy.

Dozens of people have been killed in clashes between demonstrators and security forces since anti-government street protests erupted after the Dec. 7 ousting of former left-wing President Pedro Castillo.

The political turmoil has been fueled by longstanding grievances about social inequality and discrimination felt by many of Peru's 34 million people, especially in poor rural Andean and Amazonian regions.

"We were expecting the protests to last just a few weeks but we've lost what's normally peak holiday and tourist season," said Asin, who is among some 9,000 Cusco-based guides, as well as hotel and restaurant workers, artisans and small tour operators that depend on tourism.

Like Asin, most tour guides are self-employed and work cash-in-hand, earning between $30 and $60 a day.

"We've no insurance, we're independent contractors with no stability. Guides, cooks, drivers, porters, no one has work," said the 58-year-old, who has worked as a guide for more than two decades.

Roads have been blocked by protesters in some regions, leading to shortages of petrol, cooking gas and food in Cusco and other areas, driving up already high prices.

Peru's inflation was nearly 8.5% in 2022 - the highest annual measurement in a quarter of a century - and economic analysts say many of the regions affected by protests are being hardest hit by rising prices.

Mass layoffs

The usually bustling colonial streets and squares of Cusco that normally receive more than 4,000 tourists daily are largely deserted, leaving thousands of street vendors and market traders to count their losses.

There have also been mass layoffs of restaurant and hotel staff in Cusco, with 40,000 jobs lost in the city, said Richard Velásquez, who heads the Cusco branch of the Peruvian Association of Tourism Businesspeople.

"The damage will be felt over the long-term as foreign tourists stay away and have canceled trips in February and March," Velásquez said.

The tourism sector, one of the main sources of jobs in Peru, has lost about $400 million since the protests erupted in early December, the National Chamber of Tourism (Canatur) estimates.

Peru expected about 3.5 million tourists this year, according to the Association of Hotels, Restaurants and Associates (AHORA PERU), a steep increase from last year as global tourism bounces back post-pandemic.

The country received 1.4 million tourists in 2022, according to government figures.

Joel Anchaya, manager of Cusco-based small travel agency BioPeru Travel, said he has had to let go four of his five staff. Five self-employed guides used by the company have not worked since early December.

"In the south, the country is sinking ... customers have canceled trips and are asking for refunds. Our freelance guides can't work. Tourism is practically dead," said Anchaya, a former guide who has worked in tourism for 10 years.

His friends and family are surviving on their savings, and those who have run out of money are borrowing either from friends or banks, he said.

"We're over our heads in debt," said Anchaya.

Pandemic hit

Carlos Polar, another small business owner in Cusco who runs the CuscoPeru travel agency, said the protests have brought fresh misery to an industry that was still reeling from the devastation caused by COVID-19.

"We were coming from another big hit that was the pandemic for two years and now this. Everything has collapsed. The city depends on tourism. This crisis leaves us nearly bankrupt," said Polar, who normally hires three drivers and four guides a day.

"I only have people working to deal with cancellations and refunds," he added.

In August, Polar began to pay off a low-interest government "Reactiva Perú," loan given to businesses to help them withstand the pandemic.

"I have no way of paying this month's payment. It's a critical situation. We're afraid."

A key demand of the protesters is for Congress to call early elections, but lawmakers rejected a proposal last week to move elections forward to December 2023, suggesting the political uncertainty could drag on.

Stuck at home, Asin said he sympathized with the protesters, but needed to get back to his job.

"We agree with the social demands being made by the protesters, but the people want to work," he said.

(Reporting by Anastasia Moloney in Bogota; Editing by Helen Popper)