The resurgence of Covid-19 cases in Europe and the new Omicron variant pose risks to the ongoing recovery of the tourism sector, especially in countries with lower vaccination rates, like Greece and Cyprus, DBRS Morningstar warned in a report on Thursday.
The Canada-based rating agency noted that travel and tourism in Southern Europe showed encouraging signs of recovery in summer 2021. Despite the slow start to the summer holiday season, the vaccination rollout, the harmonization of travel rules in Europe and a relatively good epidemiological situation domestically and in the main tourist source markets led to a longer season and helped the sector recover from 2020 lows. Foreign tourism recovered most rapidly in Greece and Cyprus this year, especially during late summer, when compared to Spain, Portugal and Malta, the report pointed out. Early data point to a strong performance also in October.
In the case of Greece, arrivals from Germany, one of its main source markets, reached 95% of 2019 levels from July to September, while arrivals from France marginally surpassed 2019 arrivals. Cyprus’ tourism market has benefited significantly this year by the return of the Russian market, which was the second largest market in 2019.
However, the recent surge in Covid-19 cases around Europe and the emergence of Omicron pose challenges and bring uncertainties for tourism in the upcoming holiday period.
“DBRS Morningstar expects the tourism sector to continue on a recovery path in 2022, with the epidemiological situation not only in Europe but also globally playing an important role. The emergence of the Omicron variant has raised concerns and shows clearly that the virus will continue to pose risks to international tourism unless a high rate of effective vaccination globally is reached,” said Spyridoula Tzima, assistant vice president at DBRS Morningstar.
“Perceptions of a threat of wider restrictions on travel between EU and non-EU markets could stall the recovery for the remainder of the year, but this is mitigated by the fact that the majority of tourism flows are intra-European,” added Tzima.
“With the summer season behind us, the better-than-expected recovery in tourism to Greece and Cyprus should help them recover part of the lost ground,” said DBRS Morningstar Vice President Javier Rouillet.