The Greece Tourism Report considers the prospects for the tourism sector over the longer term but focuses heavily on major short-term issues affecting the sector. In 2011, there was a strong rebound for inbound tourism to Greece, despite strikes and protests against government austerity measures eroding Greeces risk profile. Hospitality sector prices in key tourist locations have reportedly fallen sharply in an effective internal devaluation, illustrating one underlying issue behind this uptick in inbound tourism.
Political unrest in North Africa was another reason, as it resulted in a shift in tourism demand, providing a short-term boost to Greek tourism. Despite this, analysts believe that a grim outlook for the eurozone - the countrys key source region - will undermine prospects for Greek tourism in 2012 but recovery is expected from 2013. A full-blown economic depression in Greece will also ensure domestic tourism remains extremely weak.
Using official data on the number of foreign visitors to Greece, the report also analyses the changing dynamics of major source markets, with Russia, for example, becoming increasingly important in the context of inbound tourism to Greece, though still not rivalling Germany and the UK, which are two of the most important source markets.
Latest figures on non-resident arrivals in H112 show the extent of the downturn in the tourism sector, with visitors numbers down 9% year-on-year (y-o-y). This was a slight improvement though on a 12% yo- y fall in Q112. After a considerable increase in Russian tourism to Greece in the previous two years, the number of tourists grew a more moderate 8% y-o-y in H112. A number of key source markets, such as France, Bulgaria, Cyprus, Italy and the Netherlands, all recorded significant y-o-y falls in arrivals. One relatively important source market that stands out against these negative trends is the UK, with the number of arrivals up a sizeable 16% y-o-y in H112. More recent data on the number of international tourist arrivals at the largest 15 airports during the period January-September 2012 underline weakness in the tourism sector, with visitors down by 2.5% y-o-y, but this is a slight improvement on the decline in H112.
Over the last quarter we have revised the following forecasts and views:
- we have revised down its growth forecast for foreign visitor arrivals to Greece in 2012 to -5.5 %from -1.5% previously. A modest recovery in foreign tourism is expected from 2013, although growth has also been edged down slightly.
- Our real GDP growth forecasts for the eurozone have been lowered marginally for 2012 to -0.7% from -0.6%, rising to only 0.6% growth (down from 0.9% previously) in 2013. This will hit inbound tourism, but this could recover as eurozone growth picks up to 1.4% in the following year.
- Ongoing unrest in the capital continues to hit tourism badly, with foreign arrivals at the countrys largest airport, Athens International Airport (AIA), down markedly y-o-y in the first three quarters of 2012. There are signs of an improving trend, however.
- The likelihood that the takeover of Olympic Air by Aegean Airlines - announced in October - will get the green light from the competition authorities has increased.