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Greece tourism, with 10bn in losses in 2020, defines a new strategy

Greece tourism, with 10bn in losses in 2020, defines a new strategy

The Greek tourism sector is forecast to have lost about €10 billion in 2020, according to a report released on December 12 by EY. Greek hoteliers are expected to have lost about €4.46 billion.

Employment in tourism is down by nearly half, and salaries and wages have been reduced by almost 70 per cent in the sector.

Overall, the pandemic crisis has been five time worse for Greek tourism than was the 2008-2009 financial crisis.

“During the pandemic, tourism businesses have been facing issues that require governmental intervention or support, such as delays on payments owed by tour operators, or the increased bookings cancelation rates and payment defaults,” the report said.

The result has been a major change in strategy, in an effort to evolve business models.

“However, in order to recover and evolve, the sector itself has to focus on addressing its key structural deficiencies and harnessing untapped opportunities. To this end, the Ministry of Tourism’s 2021 strategy focuses on alternative tourism initiatives (nature, wellness and culinary tourism), while also highlighting lesser-known natural beauty areas (Mani / Peloponnese, Pelion / Magnesia, Andros-Syros-Tinos, PrevezaParga-Sivota), thus disengaging Greek tourism from the “Sun and Sea” model, and simultaneously extending the tourism season. In addition, measures to enhance Greece’s profile as a safe destination are in effect.”

There will also be alternative tourism promotion initiatives in Chalkidiki, Central Greece and Western Macedonia, by the Hellenic Tourism Organization (EOT), the report continued.

In addition, about 70 per cent of the travel and tourism workforce requires reskilling, as 89 per cent of the sectors’ companies state that the skill gap in local labour markets is a barrier to the adoption of new technologies.

The Institute of the Association of Greek Tourism Enterprises (INSETE) organised an 80-hour training and certification program for 1,200 employees from companies operating in the tourism sector, co-financed by the ECB and the state.

Heavy impact on the Greek economy

Greek tourism, in terms of gross value added, is estimated to have dropped from €22 billion in 2019 to €14 billion this year.

International air traffic to/from Greece recorded a 72 per cent drop during January–October 2020, compared with the same period in 2019. Tourist receipts recorded a 78.2 per cent drop in January-September 2020, compared with the same period in 2019 (2019: €16.1 billon – 2020: €3.5 billion). Travel surplus (Receipts – Payments) for January-August 2020 recorded an 80 per cent drop, compared with 2019 (2019: €14.1 billion – 2020: €2.8 billion), according to the report.

As a consequence, major international organisations have been revising their estimates regarding the impact of tourism on the Greek economy during the pandemic crisis, the report said. As the dependence of the Greek economy on tourism is very high (making up 20.8 per cent of the country’s GDP, according to the Institute of the Association of Greek Tourism Enterprises (INSETE), the Covid-19 pandemic’s blow to the sector, is expected to have a significant impact on Greece’s 2020 macroeconomic performance.

In fact, the Greek economy contracted 9.5 per cent in 2020, and the trade of goods and services contracted by 32 per cent in the second quarter of this year from the same period in 2019, while total employment declined by approximately 3 per cent.

Recovery is expected to begin only in 2022, according to the report. Based on Oxford Economics’ latest forecasts, Greece’s overall economic recovery will be achieved between 2022 and 2023; an estimation similar to the ones by major international institutions, such as the IMF,” the report noted.

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