Southern Europe’s Tourism Sector Faces Commercial Wipeout

The tourism industry enters 2020 in unwelcome and uncharted waters due to the coronavirus, with Southern European nations expected to bear the brunt as travel slows to a trickle.

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As the world plunges deeper into crisis and isolation from the scale and swiftness of the Covid-19 onslaught, Europe’s tourism sector is bracing itself for the worst and expects visitor numbers to plummet in unprecedented figures. Thierry Breton, the EU’s internal market commissioner, said last week that the continent’s tourism industry is expected to suffer losses of roughly 1 billion euros per month.

Italy

As the new centre of Covid-19, Prime Minister Giuseppe Conte has tightened his country’s lockdown. On March 22, Conte declared the pandemic the worst emergency to hit Italy since World War II, and ordered the closure of all non-essential businesses, including those in the tourism sector. Hotels or guesthouses that had remained open are now being forced to close their doors. And many countries in Europe, as well as major sources of tourism from the U.S. and Australia, have advised their citizens against travel to the Mediterranean country.

Photos of some of the world’s most iconic tourist attractions in Venice, Florence, Milan, and Rome show landscapes devoid of tourists and travelers – a grim emblem of this crisis. Almost all flights to and from the country have been halted, as has internal travel.

In February, tourism authorities feared a 200 million euro hit to the sector as a result of the pandemic, but the number now seems conservative less than a month later. Instead, that figure is likely to climb drastically as the impending prospect of no tourist season at all looms into view, depending on how effective the lockdown and quarantine measures are in halting the spread of the virus.

Earlier this month, Italy’s Economy Minister Roberto Gualtieri announced that the government would be pumping 3.6 billion euros into the economy to help sectors such as tourism, as well as logistics and transport, which have all been badly impacted by the virus. The measures include tax cuts and credits for companies that have reported a 25 per cent drop in revenue. In 2019, the tourism sector’s contribution to the Italian gross domestic product amounted to 237.8 billion euros, representing 13 per cent of the country’s GDP.

Spain

As the second most popular tourist destination in the world, Spain now finds itself on lockdown as it battles a massive outbreak of Covid-19, and the accompanying death toll and strain on the medical system. After Italy, Spain now finds itself as the new frontline in Europe’s battle with the pandemic, and like its Mediterranean cousin, its tourism industry could be looking at 2020 as a write-off with regard to tourism numbers.

The country has declared a state of emergency. President Pedro Sanchez recently ordered the closure of all hotels and other tourist accommodation for a minimum of one week, but the shutdown is likely to go much longer than that. Restaurants and bars lie silent, beaches are fenced off, and the country’s myriad of cultural treasures have closed their doors. A growing number of airlines have ceased flights to and from the country in response to national directives, as well as a collapse in demand.

The government has unveiled a 200 billion euro bailout package to aid Spanish businesses during the crisis. But when considering the size and the scale of the sector, the shortfalls for those working within it will be critical in scale. The tourism industry is the number one driver of growth in the country, contributing approximately 159 million euros per year and standing at over 16 per cent of GDP. Approximately 400,000 companies are active in the sector, which employs over 2.5 million people.

France

As France moves ahead with its second week of lockdown with Europe’s fourth highest cases of Covid-19, the Health Ministry in Paris has declared the country to be in a state of health emergency.

France has been on lockdown since March 17, with its population of 67 million people confined to their homes apart from emergencies, medical reasons, or grocery-shopping trips. Police are deploying drones and aircraft to monitor adherence to the directive, which has led the streets and grand squares of many cities to quickly become desolate and empty.

The country’s 80 billion euro tourism industry has been severely affected, with cultural attractions, bars, cafes, and restaurants compelled to close. Though hotels are allowed to remain open, it remains to be seen how long operations will be feasible as tourist numbers plummet. Even still, hospitality companies have altered processes in an effort to help stem the spread. Louvre Hotels sent a memo to staff about breakfast service that all hotels should stop serving the meal as a buffet and instead offer it in-room. If the meal must be served in the breakfast room, dishes must be prepared individually and staff must comply to strict security rules.

The French government has put together a 45 billion euros aid package to assist its aviation, tourism, and affected business sectors. But with the scale of this crisis growing and no end yet in site, the country’s reputation as one of the world’s prime tourist attractions may be forced into an indefinite hold.

Portugal

Like its Iberian neighbour, Portugal has also declared a state of emergency due to the pandemic, with a growing number of cases being confirmed throughout the country and its offshore territories, Madeira and the Azores.

The country has closed its eastern border with Spain in an unprecedented – but understandable – move considering the scale of the outbreak. On the Algarve, approximately 50 per cent of hotels there traditionally close for the winter and open again around Easter, but most of them are choosing to stay closed for now. Elidérico Viegas, president of the Algarve’s hotelier association (AHETA), announced that “this is an ongoing situation, which is constantly evolving”, but stated that most hotels now see no reason to reopen or stay open in the current situation.

And with most flights into the country now cancelled, the shortfall for Portugal – whose economy is dominated by tourism – will become critical if the pandemic continues into summer. It is estimated that the country’s hotel industry could lose around 800 million euros and 7.3 million overnight stays in the next three to four months due to cancellations. The tourism sector generates 16 billion euros in revenue for Portugal each year, supporting over 400,000 jobs directly and 16 per cent of the country’s GDP in 2018.

Meanwhile, the government has acted by extending a 3 billion euro package to sectors most heavily affected by the crisis. Approximately 900 million euros will be pumped into the tourism sector, and 300 million euros of this is reserved for micro and small to medium sized enterprises. A further 200 million euros will be channelled into companies such as travel agents and event organisers, and the restaurant sector will be receiving 600 million euros in support, with a significant proportion reserved for smaller operators in the market.

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Airlines across Europe have grounded commercial flights in and out of the countries in a dire attempt to stop the spread of the coronavirus. Some companies, such as Air Malta, as continuing to operate flights for purposes related to humanitarian aid and crisis, as well as the repatriation of citizens back to their homes. Copyright by Irina VIV / Shutterstock.com

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Malta

The Mediterranean archipelago has benefited from ten years of sustained tourism growth, with the industry contributing over 2 billion euros to the Maltese economy and accounting for approximately 27 per cent of GDP.

In 2018, over 2.6 million tourists flocked to the sun-drenched island, which has a population of just over half a million people. The exposure of the island’s economy to the Covid-19 pandemic is therefore severe, with Deloitte financial advisor Raphael Aloisio noting the real possibility of a “wipeout” of the island’s tourist revenues this year. Malta Business Bureau president, Simon De Cesare stated earlier this month that the European Central Bank must lend support to small economies like Malta to ensure they can weather the gathering storm of the pandemic.

“It is encouraging that the EU’s effort is about to be coupled with added measures by the government. These measures must be introduced swiftly so as to relieve some of the pressure from crucial sectors such as tourism and aviation, which are being stressed to the maximum in the crucial months leading up to summer; manufacturers whose supply chains and production is being disrupted and their exports dwindling; as well as financial services impacted by the uncertainty in financial markets and gaming companies with sporting events being cancelled worldwide”, De Cesare said.

All visitors to the island are currently subject to quarantine, and major international aviation and maritime links have been cut entirely or severely reduced.

Greece

The combination of an ageing population and an economy that is only just emerging from a decade-long crisis means that Greece must weather the Covid-19 crisis at an extremely difficult juncture. The country has grounded all flights as of March 22, with Prime Minister Kyriakos Mitsotakis deeming the move a necessary addition to the already existing quarantine measures announced for arrivals into the country, as well as the decision to close all schools, non-essential shops, bars, restaurants, shopping centres, cinemas, and theatres.

On March19, the government announced that all hotels and resorts must close until the end of April, an understandable measure meant to restrict the spread of the virus, but a hammering blow to the tourism industry – especially since the restrictions are likely to last longer. In one announcement regarding restrictive measures Mitsotakis said that “the enemy is invisible but not invincible, if we curb the spread of the virus, we give time to the health system to address urgent cases”, noting that “our first priority is to save lives”.

The value of tourism to Greece is fundamental to the survival of its economy, representing almost 21 per cent of GDP and dwarfing the global average of just over 10 per cent. One in every five euros spent in the country last year came from travel and tourism, which is an industry worth almost 41 billion euros. The sector also accounts for almost 10 per cent of the workforce in a country of almost 11 million people. One positive takeaway for the country is the agreement between the European Central Bank and Athens that Greece will be able to participate in the recently announced stimulus programme, created to offset the economic damage of Covid-19. Over 12 billion euros in Greek bonds are eligible for the programme.

Cyprus

As the number of confirmed coronavirus cases on the island of Cyprus surpasses 100, the tourism industry on the hugely popular Mediterranean island is bracing itself for the worst, with cancelled flights and bookings – and general restrictions on travel amidst the pandemic – leading the industry to predict a severe contraction for 2020.

The Association of Cyprus Tourist Enterprises (STEK) has advised that its members close their hotels for the coming months, rather than come to a point where limited bookings could force them to close for an even longer period. “If things worsen then hotels will have to close down with their accounts in red for months”, said an industry source. Travel and tourism on the island is worth well over 2 billion euros and accounts for approximately 14 per cent of GDP.

The Cypriot government has agreed on a stimulus package for affected business sectors, with Finance Minister Constantinos Petrides saying that they would act, alongside ECB measures, to protect the economy. “But I reiterate that regardless of any European measures, the government will support the economy, support the workers, and support the businesses with concrete and practical measures to be announced in the coming days”, Petrides said.

Europe is the most visited region across the globe, and in this unprecedented time the challenges faced by the tourism industry are acute. The European Central Bank’s stimulus package will be sorely needed, alongside separate national efforts, if countries have any hope of mitigating against what are sure to be record losses in this calendar year.

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Ruairi Kavanagh

Ruairi is an Irish writer, editor and author with 25 years of experience across national and specialist media. He specialises in reporting on matters relating to education, development,emergency services, international affairs, defence and security with particular interest in European affairs, the Balkan region, the Middle East and Africa.

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