Southern Europe grapples with changing tourism

CORFU, Greece — It took just one electricity bill to crush Dimitris Diavatis’s hopes that his Greek resort could return to pre-pandemic health this year, even with bookings pouring in.

The amount was more than double what he had paid this time last year when the hotel wasn’t even open. After two lackluster summers, the irony didn’t escape him: “We won’t make a profit in a good year,” he said. “It will be eaten away by inflation.”

Greece – like other tourism-dependent economies on the Mediterranean fringe of the eurozone – is seeing signs of a much-needed recovery in visitor numbers in 2022 after two largely lost years. As in Spain, Portugal and Italy, the sector is a huge employer and contributor to state revenue.

But across the region, the pandemic has changed the face of tourism. Hotels were already struggling with higher fuel bills and inflation that another spike in energy prices following Russia’s invasion of Ukraine will only make worse.

The dislocation of labor markets caused by COVID-19 has left entrenched staff shortages, while Italian tourism officials admit that holidays in the age of the pandemic – with the emphasis on hygiene, cleanliness and space – are a big challenge for its aging infrastructure.

At the same time, a more modest and small-scale holiday market is opening up: in Spain and Portugal, the reluctance of many tourists to travel far is accentuating the tendency to stay in rural areas in tents, camper vans or camper vans. Greek industry and government officials expect revenues to reach 80% to 90% of the record set in 2019, when 33 million tourists brought in 18 billion euros in revenue, a fifth of national output.

Still, a bumper season is unlikely to offer much relief for struggling businesses that emerged from a decade-long financial crisis in 2018 only to have the pandemic halt global travel two years later.

The problem of soaring oil, gas and electricity prices is so acute that the president of the Greek tourism confederation SETE, Yiannis Retsos, wrote to ministers in January urging them to provide financial support, saying that it was “objectively impossible” for the year-around hotels to cover their costs, especially after the quieter winter months.

Heavily indebted countries in southern Europe were also bracing for the European Central Bank to scrap stimulus measures that have kept their borrowing costs low.

Although the war in Ukraine has left the interest rate outlook uncertain, the southern fringe still badly needs its tourism sectors to get back to work given the economic blow the conflict is about to inflict.

Speaking a day after the invasion, which Russia calls a “special operation”, Greek Retsos said it was too early to assess its impact on the tourism sector.

More than a week into the conflict, there has been no noticeable increase in cancellations in the region.

Russian tourists make up a very small proportion of the sector in southern Europe – 2% of revenue in Greece in 2019 and around 1% of nightly hotel bookings in Portugal. Turkey – outside the European Union – is a more popular destination.

But with European gas prices already at record highs, and this set to fuel global inflation, the concern in countries like Greece is that the conflict will only worsen an already bleak outlook, further reducing the power of customer purchases and increasing supplier costs.

No end to costs

Even hotels that have been closed over the winter fear they will not be able to bear the extra burden, having already agreed prices with tour operators last summer, said Babbis Voulgaris, head of Corfu’s hoteliers’ association.

Resort owner Diavatis, who also owns a year-round boutique hotel and water park resort on the island, agreed.

“It will be a real crisis for us, he said. “I won’t say it’s worse than the pandemic because at least we’re open. But we didn’t lose money then. Now we’re heading towards losing money.

The Greek government has spent more than 42 billion euros on pandemic support measures since 2020 to keep businesses and households afloat and around 2 billion euros since September to subsidize electricity bills until March . For hoteliers, support does not go far enough.

“In summer, with the air conditioners working, the fridges, the kitchen, everything – I don’t know when it will end,” said Costas Merianos, owner of a small family hotel on the Ionian coast of Corfu.

Across the sea in Italy, lockdowns and energy prices have forced many hotels to close permanently, said Marina Lalli, president of industry association Federturismo.

And while Lalli hoped tourism could approach 2019 levels this year, Italy faces the additional problem of being “a mature tourist destination with mature hotel structures that need to be renewed”, she said. declared.

“In the post-COVID era, tourists are even more concerned about quality, they want a guarantee of cleanliness and want to feel safe.”

Something different

Greece has said it is opening its tourist season as early as March 1 this year to meet demand but, like Italy, Spain and Portugal, the season will not start in earnest until the Easter holidays in April, a litmus test before the vital summer. month.

Greece and Italy are rushing to fill job shortages as the pandemic has forced workers abroad for better-paying jobs or in different sectors with less uncertain prospects.

In Greece, the Minister of Tourism has even launched an appeal to refugees fleeing Ukraine, offering them residence and work permits to fill 50,000 vacancies in the hotel industry.

Demand for Spanish holidays seemed very strong this year, according to vice president of trade association Exceltur, Jose Luis Zoreda, thanks to high vaccination rates in Spain and the easing of pandemic restrictions in its major markets, the Kingdom. United and Germany.

“There is a strong appetite for travel built up in Europe,” Zoreda said, predicting an “explosion” in tourism from Easter, but also falling profit margins due to inflation and energy prices. .

Exceltur, however, also found that tourists were looking for a different experience. In 2021, campsite rentals increased by 19.2%, apartment rentals by 16%, rural houses by 11%. Hotel occupancy fell by 8%, a decline also due to the decrease in business travel.

In January, sales of new motorhomes and motorhomes increased by 34.1% on an annual basis, according to the Spanish Association of Caravanning Industry and Trade (ASEICAR).

“The ‘all-in-one’ holiday model has been discontinued,” Yescapa, an online motorhome and motorhome rental company, told Reuters.

Nico Aro, who rents a motorhome on the island of Tenerife, says he hasn’t been able to use it himself since buying it last March as requests pour in from Italy, France and Belgium. His biggest problem is that he can’t find another one to buy because they’re in high demand.

“I took advantage of the pandemic,” he said.

Appetite for ‘slower’ tourism has also grown in Portugal, where the sector played a crucial role in its recovery from the 2010 debt crisis. Tourism accounted for around 15% of gross domestic product in 2019 but fell to 8% in 2020.

“There are a growing number of people looking for places with fewer crowds,” said Helder Martins, president of the main hotel association in the Algarve. “I don’t believe they will go back to just wanting the sun and the beach.”

Century-old “shale villages,” built from stone from a pine-clad mountain region, are springing back to life after being abandoned over the years by young Portuguese people seeking work elsewhere.

“This summer is filling up fast,” said Sonia Cortes, owner of a small five-room hotel in the shale village of Janeiro de Cima, where construction workers are rebuilding traditional homes.

“The start of the pandemic was really difficult for those who made a living from tourism,” she said. “[But then] those in big cities sought out villages like this where they could feel safe.

There has been a 30% increase in overnight stays at shale villages from 2019 to 2020-21, said Bruno Ramos, who works for a tourism promotion agency there.

However, back in Greece, Merianos, the Corfu hotelier, has a more sober view of the months to come.

“I will be happy if at the end of the season I don’t owe my staff, I don’t owe the state, I don’t owe the energy supplier – even if I have 10 euros left in my wallet, ” he said. – Rappler.com

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