The effects of COVID -19 on Greek Tourism are examined by a new report by EY Greece, which concludes:
- The estimated loss of revenue of the tourism industry in 2020 is 10 billion
- The estimated damage for Greek hotels is 4.46 billion
- The report also includes an additional analysis of three possible scenarios for the impact of the crisis in the tourism sector, over a period of two years.
The report prepared by the Financial Advisory Services team of the Department of Financial Advisors and Transaction Support of EY Greece, records the pulse of the Greek tourism market, through a secondary research and analysis of published data and estimates by relevant agencies, as well as and important factors in the industry, regarding the estimated impact of the crisis.
The exhibition includes an extensive presentation of the tourism sector in Greece, analyzing its contribution to the country’s economic activity, the most important countries of origin of visitors and the course of their respective economies.
At the same time, it is examining the countries from which the main competition is expected to claim market share in the new environment created by the pandemic. It also includes an analysis of the tourism ecosystem, identifying the key complementary services affected (hospitality, transport, food and beverages, entertainment and culture, supply chain and wholesale / retail).
According to the World Travel & Tourism Council (WTTC), the pandemic is expected to lead to the loss of more than 100 million jobs in tourism worldwide, and a reduction in GDP of $ 2.7 trillion. . The impact of the pandemic on tourism is expected to be five times heavier than the 2008 economic crisis.
At the same time, according to data from the United Nations World Tourism Organization (UNWTO), tourist arrivals worldwide fell by 22% in the first quarter. For the whole of 2020, the Agency is considering three possible scenarios depending on the time it takes to lift travel restrictions: reducing arrivals worldwide by 58%, 70% or 78% if borders are gradually opened in July, September or December.
As the tourism sector is a key pillar of the Greek economy, the impact on our country, as well as on a number of related services, will be significant.
The tourism sector directly contributes 11.7% of GDP and indirectly between 25.7% and 30.9%. During the peak months, the direct contribution to employment reached 16.7% and the indirect 36.7% -44.2%, while in recent years, the sector has played a leading role in reducing unemployment. The annual investment in tourism reaches five billion euros, of which 1.9 billion is domestic value added.
According to STR data, the decrease in revenue per available room (Revenue Per Available Room – RevPAR) in March, reached 69.4% in Greece on an annual basis, a percentage lower than in Italy (92.8%), but higher from France (67.7%), Portugal (66%) and Turkey (57.5%). For the first quarter in total, the decrease in Athens amounted to 32.5%, in Thessaloniki to 15.6% and for tourist resorts to 40.9%.
At the same time, based on current data, it is estimated that the damage to Greek hotels will reach 4.46 billion euros , of which 3.26 billion concern seasonal hotels, and 1.2 billion from twelve-month operation.
According to the report, the decline in tourist traffic is due, on the one hand, to travel restrictions and the closure of borders, and, on the other hand, to reduced demand. The rapid spread of the virus to several of the most important countries of origin of visitors (France, Germany, the United Kingdom, the United States, Italy) is expected to lead to a significant reduction in revenue.
According to estimates by the Ministry of Tourism, even in the optimistic scenario, revenue losses in 2020 will approach almost 10 billion euros , maintaining only eight billion, from 18.2 billion euros in revenues in 2019. The possible extension of the period in September, will not be able to cover this loss. On the other hand, the country’s good performance in tackling the pandemic may allow it to claim a larger share of this shrinking market this year.
The analysis also includes a brief presentation of the European Commission’s guidelines on tourism and travel, national and European fiscal measures to support the economy, as well as measures recently introduced by the Greek government to restart tourism.
Additionally, the report includes an indicative assessment of the effects of the pandemic on Greece’s tourism sector over a two-year period, and the prospects for recovery by the end of 2022, based on three alternative scenarios – basic, optimistic and pessimistic.
The study part of the report estimates that in 2020, the Gross Value Added of the industry will shrink to 14 billion (basic scenario), 12 billion (pessimistic scenario) or 16 billion euros (optimistic scenario), respectively, from 22 billion in 2019. And In the three scenarios, the biggest decline is expected in the second quarter of 2020 and ranges between 41% and 53%, with the base scenario estimating the contraction at 49%.
The report concludes with a series of EU proposals to tourism businesses to address the effects of the pandemic and adapt them to the post-COVID era, including:
- Priority in health and safety issues
- Systematic monitoring of developments and maintaining close contact with suppliers, investors and regulators
- Emphasis on liquidity
- Dynamic management and management, as well as monitoring critical indicators for the development of the crisis
- Strategic contacts to approach new markets and create alliances with countries with similar epidemiological characteristics.
In this context, it is noted that EY Greece presented in a recent online discussion organized by money-tourism.gr, on Monday, June 15, a tool specifically designed for hoteliers, which aims to support them, so that the decision for the opening or not of their business, to be done in a rational way.
Commenting on the findings of the EY report on tourism, Mr. Tassos Iosisfidis, Partner and Head of the Department of Financial Advisors of EY Greece , stated:“Few European economies depend on tourism as much as the Greek one. It is therefore necessary to understand in depth how the international environment is shaped, the developments in the competing countries, but also the main countries of origin, and, above all, the ways in which our economy will be affected, and to focus on the sectors. , but also the geographical areas that are directly dependent on tourism. For their part, hoteliers and other professionals in the industry, while tackling today’s unprecedented challenges, will need to consider how to adapt their businesses to the next day, which will find the tourism sector as well as the economy. in general, in a different environment from what we have known so far. ”ey-greece-industry-pulse-report-for-tourism-june-2020