The crisis in the Greek hotels will cause heavy losses, according to estimates by a special report by Ernst & Young, which predicts that seasonal hotels will suffer losses of 3.26 billion eurs and hotels that operate the whole year round 1.2 billion euro. That is, the total damage from the pandemic for the industry will reach 4.46 billion euro, as the country’s tourism is estimated to lose 10 billion euro from the 18.2 billion euro of revenue it had attracted in 2019.
As the tourism sector is a key pillar of the Greek economy, the impact on the 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. Annual investment in tourism reaches 5 billion euro, of which 1.9 billion is domestic added value.
The report includes an indicative estimate of the effects of the pandemic on Greece’s tourism sector over a two-year period, and recovery prospects by the end of 2022, based on three alternative scenarios – basic, optimistic and pessimistic. In 2020, the Gross Value Added Value of the sector will shrink to 14 billion euro (basic scenario), 12 billion euro (pessimistic scenario) or 16 billion euro (optimistic scenario), from 22 billion in 2019. That is, the reduction will range between 27% and 36%.
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 than France (67.7%), Portugal (66%) and Turkey (57.5%). For the first quarter, the decrease in Athens amounted to 32.5%, in Thessaloniki to 15.6% and for tourist resorts to 40.9%.
The reasons for the decline
According to the report, the fall 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 euro, retaining only eight billion, from 18.2 billion euro in revenues in 2019. The possible extension of the tourist season until September will not be able to cover this losses.
On the other hand, the country’s good performance in dealing with the pandemic may allow it to claim a larger share of this year’s shrinking market./ibna