ECONOMY

Internal unrest and volcanic ash have cost country’s tourism sector over 200 mln euros

The impact of the volcanic ash cloud that hovered over Europe in the spring and of the internal unrest following the government’s austerity measures is expected to run up losses of 276 million euros’ worth of revenues and cost the country 378,000 visitors this year, a report by the Academy of Tourism Research and Surveys has shown. Although at the start of the year, tourism prospects were favorable for 2010, these incidents in April and May have since reduced expectations. According to the chief scientist of the report, Grigoris Papanikos, there have been three factors affecting Greek tourism: First, Greece’s fiscal condition has created a series of negative reports in the international press – mostly in the countries that are the main markets for Greek tourism, such as Germany and the UK. Second, the volcanic ash cloud from Iceland grounded airplanes from northern and central Europe for more than a week in April and for a few days in May. Third, the dramatic incidents of May 5 in Athens, in which three people died at the end of a demonstration when protesters set a bank alight, boosted negative publicity about Greece that is still being fed by the ongoing industrial action at ports. «Demonstrations do not drive tourism away. It is the way that these demonstrations are conducted that drives tourists away,» says Papanikos. The report suggests that the above incidents have deprived Greece of 284,600 arrivals, amounting to 1.83 percent of the entire year’s arrivals. Given that the average visitor generates revenues of 730 euros, then the direct impact of the incidents in April and May totals as much as 208 million euros. Nevertheless, the report argues that the extent of consequences on Greek tourism will be even heavier, as the incidents and negative publicity will continue to affect the number of arrivals for the whole year. This two-month crisis and the possibility of similar incidents in the coming months have forced the academy to revise its forecast for 2010 regarding the future of tourism. The adjustment estimates that, provided there is similar unrest in Greece in July, August and September – which account for 42 percent of incoming tourism to the country – this would mean an overall drop in tourism arrivals this year compared with 2009. Should there be no further unforeseeable incidents, and with the spring crisis factored in, the academy expects incoming tourism to rise annually by 6.3 percent, while in January it had forecast an 8.6 percent yearly rise. This scenario is based on a mean price of oil at $80 per barrel and on an average euro/dollar exchange rate at 1.45 for the entire year. Any shifts in those factors could see arrivals grow by between 5.5 percent and 8.9 percent, the report suggests. Positive outlook In the long term, though, the prospects are far better for Greece, as, according to data from the World Travel and Tourism Council and the calculations by the academy, tourism arrivals to the country will soar by 46.2 percent in 2020 compared with this year. Estimates put arrivals at 20.6 million in 10 years’ time, which is 6.5 million more than those projected this year. Growth in Turkey will come to 42.3 percent in 2020, and to 47.1 percent in Egypt. Arrivals in Cyprus and Bulgaria will grow by 19.8 percent, in Albania by 33.2 percent but Croatia will reach 16.5 million with a projected staggering 72.2 percent growth. These forecasts do not take into account any short-term factors that could affect arrivals nor any shifts in any country’s tourism policy that may apply. «A serious country with an efficient policy would have to consider these estimates as the minimum and try to surpass them with its policies. A successful policy would be one that increases a country’s share of international arrivals,» Papanikos suggests. He goes on to stress the huge potential of the cruise industry for Greece, and requests implementation of an effective legal framework. «Effectiveness is not only judged by the revenues that will stem from the increase in cruise passengers but also from the way these revenues are distributed to all those with a direct interest, such as the sector’s entrepreneurs, the state and mainly Greek workers,» he argues. Up until 2000, cruise ship tourism to Greece did not account for more than 600,000 arrivals, while over the last decade that figure has almost doubled. The average annual growth from 1970 to 2007 was 6.8 percent. In the last decade alone, the annual growth rate has soared to 14.1 percent, more than twice as high as that of the global rate. In the early 1970s, arrivals by cruise ship had a 10 percent share of all incoming tourism, which then fell to 4 percent in the early 1990s to rebound to 8 percent over the last decade. All-inclusive packages A growing trend for Greece the last couple of years has been the all-inclusive package, as more and more hotels opt for deals that include accommodation, all meals and drinks as well as other services. Major hotel chains, such as Louis, Iberostar, Aquis and the Mitsis Group, are offering all-inclusive packages at their top-category units. Tourism professionals suggest that the number of Greeks choosing such packages has grown over the last two years, particularly from the middle-income bracket.