However, the Russian invasion of Ukraine is driving up fuel prices and inflation in Greece, Italy, Spain, and Portugal as a result of the conflict in the Ukraine.
One electrical bill was all it took to dash Dimitris Diavatis’ dreams of seeing his Greek summer resort return to its pre-pandemic state this year, despite the flood of bookings that had poured in since the outbreak.
The price he paid was more than double what he had paid at this time last year, when the hotel was still in the process of being built. His sense of irony was not lost on him after two disappointing summers: “Even in a good year, we won’t make a profit,” he predicted. “It’ll be eaten up by inflation,” says the author.
At the same time, Greece, along with the other tourism-dependent nations on the euro zone’s Mediterranean border, is beginning to show signs of a much-needed recovery in visitor numbers for 2022, following two years of essentially negative growth.
A big employment and provider of state income in countries like as Spain, Portugal and Italy, the sector is huge in the United States.
However, the epidemic has altered the landscape of tourism throughout the region. Increased fuel costs and inflation were already causing problems for hotels, and an increase in energy prices as a result of Russia’s invasion of Ukraine will only exacerbate the situation further.
Labor market disruptions caused by Covid-19 have resulted in persistent staffing shortages, while Italian tourism officials acknowledge that pandemic-era vacationing – with its emphasis on hygiene, cleanliness, and space – poses a significant challenge to the country’s aging infrastructure and infrastructure.
A market for more modest, small-scale vacations is developing at the same time. Tents, campers, and motorhomes are becoming increasingly popular in rural parts of Spain and Portugal as a result of a general aversion to long distance travel among many tourists.
Industry and government leaders in Greece predict that tourism sales will approach 80-90 percent of the all-time high set in 2019, when 33 million visitors generated €18 billion in income, accounting for a fifth of the country’s total production.
An exceptionally good season, however, is unlikely to provide much respite to suffering enterprises, which emerged from a decade-long financial crisis in 2018, only to have the pandemic bring global travel to an abrupt halt two years later.
Increased heating oil, natural gas and electricity prices have become so severe in Greece that the president of the Greek tourism confederation SETE, Yiannis Retsos, wrote to government officials in January asking for financial assistance, noting that it was “objectively impossible” for year-round hotels to cover their costs, particularly after the busier winter months.
European countries with large levels of debt, particularly in the south of Europe, were bracing for the European Central Bank to withdraw the stimulus that had kept their borrowing prices low.
Despite the fact that the Ukraine war has made the forecast for interest rates uncertain, the southern edge still desperately needs its tourism industries to go back to work, given the economic blow that the conflict is expected to provide in the future.
Speaking a day after the invasion, which Russia describes as a “special operation,” Greece’s Retsos said it was too soon to assess the impact of the assault on the country’s tourism industry.
Despite the fact that the war has been ongoing for more than a week, there has been no discernible uptick in cancellations across the region.
Russian tourists account for a very modest share of the tourism industry in southern Europe, accounting for only 2 percent of sales in Greece in 2019 and approximately 1 percent of nightly hotel bookings in Portugal. Turkey, which is located outside of the European Union, is a more popular tourist destination.
However, with European gas prices already at record highs, and with this expected to feed into worldwide inflation, the risk in countries such as Greece is that the conflict would simply aggravate an already grim picture, further restricting guests’ purchasing power and driving up provider costs even higher.
Hoteliers in Corfu, even those that were closed throughout the winter, are concerned that they would not be able to bear the additional expense because they had already agreed on prices with tour operators last summer, according to Babbis Voulgaris, president of the Corfu Hoteliers’ Association.
Diavatis, the resort’s owner, who also owns a year-round boutique hotel and a waterpark complex on the island, agreed with the proposal.
“This is going to be a major crisis for us,” he predicted. “I won’t say it’s worse than the pandemic because, at the very least, we’re not closed for business. However, we did not suffer a financial loss at that time. We’re now on the verge of incurring financial losses.”
Since 2020, the Greek government has spent more than €42 billion on pandemic-related assistance measures to keep businesses and households afloat. Since September, the government has spent over €2 billion to subsidize electricity bills through March. The assistance provided to hoteliers falls short of expectations.
When it’s hot outside, and the air conditioners are running and everything is working – I’m not sure when this will come to an end,” Costas Merianos says of his tiny family-run hotel on Corfu’s Ionian shore. “I don’t know when this will come to an end,” he adds.
Lockdowns and high energy prices have pushed numerous hotels across the sea in Italy to close their doors permanently, according to Marina Lalli, president of the Federturismo industry association.
As for Italy, while Lalli expressed optimism that tourism would increase slightly this year, she pointed out that the country faces the extra challenge of being “an established tourist destination with established hotel structures that need to be renovated.”
In the post-Covid age, travelers are especially more concerned with quality; they want assurances of cleanliness and a sense of security, among other things.
However, unlike Italy, Spain, and Portugal, Greece has stated that it will begin its tourism season as early as March 1 this year in order to satisfy demand. However, the season will not begin in earnest until the Easter break in April, a litmus test prior to the crucial summer months.
In the wake of the pandemic, people have fled to better-paying employment abroad or into new industries with less uncertain futures. As a result, both Greece and Italy are scrambling to fill job gaps.
Even the tourism minister in Greece reached out to refugees from Ukraine, giving them residence and work permits in order to fill 50,000 vacant positions in the hospitality industry.
According to Jose Luis Zoreda, vice-president of industry association Exceltur, demand for Spanish vacations is expected to be particularly strong this year, thanks to the country’s high vaccination rates and the relaxation of pandemic restrictions in its two largest markets, the United Kingdom and Germany.
As a result of rising inflation and energy prices, Zoreda predicts a “explosion” in tourism from Easter onwards, as well as weaker profit margins.
Tourists, on the other hand, according to Exceltur, were looking for a new experience. In 2021, camping rents increased by 19.2 percent, flat rentals increased by 16 percent, and country dwellings increased by 11 percent. The number of nights spent in hotels decreased by 8%, a decrease that was mostly driven by fewer business visits.
According to the Spanish Association of the Caravanning Industry and Trade, sales of new motorhomes and camper vans increased 34.1 percent year on year in January, compared to the same month the previous year (ASEICAR).
The ‘all-in-one’ holiday paradigm, according to Yescapa, an online motorhome and camper van rental provider, has “been left in the dust.”
Nico Aro, who owns a camper van on the Canary Island of Tenerife and rents it out, says he hasn’t been able to use it himself since he purchased it in March because he has been inundated with requests from Italy, France, and Belgium, among other countries. As a result of the high demand for these vehicles, he has the most difficult time finding another to purchase.
According to him, “the epidemic has been beneficial to me.”
In Portugal, where the tourism industry played a critical part in the country’s recovery from the 2010 debt crisis, there has also been an increase in demand for “slower” tourism. Tourism contributed approximately 15 percent of GDP in 2019, but this figure will drop to 8 percent in 2020.
In the Algarve, according to Helder Martins, head of the largest hotel organization, “an increasing number of tourists are looking for regions where there are fewer people.” “I don’t believe they will go back to merely wanting the sun and the beach,” says the author.
A resurgence of life is sweeping through centuries-old “schist villages,” which were constructed of stone from a mountainous region covered in pine trees and abandoned by young Portuguese seeking work in other parts of the country over the years.
In the schist settlement of Janeiro de Cima, where construction workers are repairing historic cottages, Sonia Cortes manages a small five-room hotel. “This summer is filling up quickly,” she said.
According to her, “the beginning of the pandemic was extremely tough for people who relied on tourists for their livelihood.” “(However,) individuals living in larger cities looked for communities like this one where they could feel safe,” the author writes.
According to Bruno Ramos, who works for a tourism promotion organization in the schist villages, there has been a 30 percent increase in the number of night stays in the villages from 2019 to 2020-21.
Merianos, the proprietor of a Corfu hotel, has a more realistic outlook on the months ahead, despite being back in his own Greece.
‘I’ll be satisfied if, at the end of the season, I don’t owe any money to my employees, I don’t owe any money to the government, and I don’t owe any money to my energy provider – even if I’m left with €10 in my wallet,’ he says. Corina Rodriguez in Madrid, Catarina Demony in Janeiro de Cima, Giselda Vagnoni in Rome, and Adonis Skordilis on the Greek island of Corfu contributed additional reporting.
