Tourism bosses on the island said La Palma is a “safe, attractive destination” despite the volcano’s destruction. As the lava overflowed the volcano, 981 buildings were damaged although there were no fatalities.
La Palma tourist representatives said the island has experienced “massive cancellations” in bookings since the eruption.
The volcano erupted on September 19 but has continued to wreak havoc since then as it has journeyed slowly to the sea.
Hotels on the island are now just 15 percent full as many tourists cancelled upcoming trips due to the volcano.
Before the eruption, occupancy was at 70 percent and experts were forecasting a good winter season for La Palma.
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In a statement, the Insular Centre for Tourism Initiatives said: “We are being forced to react. There is going to be a clear downward trend in the coming months.
“The looming panorama is of layoffs, the end of furlough for dozens of workers and even the possibility of closing hotel and non-hotel accommodation.”
The Centre said that many families and local people relied on the tourism industry and would be hard hit if tourists stayed away.
They said “tourism is key” in the areas of Los Llanos de Aridane, El Paso and in Tazacorte on the island.
The volcano’s lava has created a new inlet of land in its first eruption in fifty years. Some air quality stations near the La Palma volcano have also reported an increase in sulfur dioxide in the air.
The Department of Homeland Security said the sulfur levels do not yet pose a health risk to people.
The hotel association for the islands, Ashotel, said La Palma is “going to need a specific plan for economic recovery and tourism promotion”.
Spain’s tourism minister provoked outrage recently when she suggested the island could be used to promote volcano tourism and called the eruption a “great show”.
Volcano tourists have travelled to the island, with many people eager to get a sight of the bright red lava on its way to the sea.
Young people have reportedly been taking tourist ferries from Tenerife to witness the eruption.
More than 6,000 islanders and tourists had to be evacuated as the volcano engulfed the island’s buildings.
Tourists on the island at the time of the eruption have reported being rushed out of their accommodation and housed at disused military barracks before escaping by boat.
Experts have said a change in the winds could provoke an explosion by the sea and carry toxic clouds across vast distances.
It is not thought any acid rain caused would be dangerous for tourists as it would be so high up in the atmosphere.
The UK Government advice said: “If you are in an affected area you should follow the advice of local authorities.
“This includes social media updates from Cabildo de La Palma. If you are planning to travel to the island imminently you are encouraged to contact your tour operators/airlines.”
Additional reporting by Rita Sobot