Greece needs a long-term tourism strategy, destination management, an economic policy with lower taxes and an investment-friendly environment in order to protect its tourism competitiveness from the worsening global economic climate that is taking shape, according to INSETE, the research department of the Greek Tourism Confederation (SETE).
Underlining that the demand for leisure travel – to a large extent – depends on the income of holidaymakers, INSETE on Tuesday warned that the expected slowdown in the world economy (see below) will create uncertainty and negatively affect both international growth expectations as well as consumer confidence.
According to an announcement by INSETE, if the consumer confidence of holidaymakers from Greece’s main inbound tourism source markets begins to decline, their holiday spending will drop and they may also even switch their choice of destination altogether.
“In such a climate, it would not be a surprise if the growth of inbound tourism to Greece slows down or is even reversed,” INSETE said.
Taking the UK market as an example, INSETE noted that the decline in arrivals (-2 percent), average expenditure per person (-4.3 percent) and travel receipts (-6.2 percent) from Britain in 2018 may be a first indication of how the economic uncertainty, in this case, BREXIT, coupled with the weaker economic potential (depreciation of the British pound) may lead to a reduction in tourism traffic and revenue.
How to protect Greece’s tourism competitiveness
“In an international environment where competition will intensify, maintaining and enhancing the competitiveness of the Greek tourism product must be a constant goal so that it can continue to contribute to the economy and society,” INSETE said.
INSETE underlined that a long-term national strategy must be established to upgrade the country’s tourism product. Also significant for the country’s tourism sector is destination management, an economic policy that will not burden competitiveness with high taxation on prices and an investment-friendly environment.
“Improving the competitiveness of the Greek tourism product through coordinated actions will not only help minimize the impact of a potentially worse global economic environment but will also allow the country to be in a stronger position when the economyrecovers,” INSETE said.
Moreover, INSETE noted that the favorable economic environment of the countries of travelers that visited Greece in 2012 had contributed significantly to the development of incoming tourism as of that year and onwards (+94 percent boost in arrivals, +56 percent boost in revenue).
Forecast of the course of the world economy and the Eurozone
According to forecasts made by economists earlier this year, the world economy is expected to experience a moderate slowdown.
INSETE underlined that growth is expected to slow down further to 3.3 percent and 3.4 percent respectively in 2019.
“This slowdown is largely due to advanced economies and lower growth rates in the EU-27 and in particular in the Eurozone, as well as in the United Kingdom, Japan, China and Canada,” INSETE said, adding that prospects are not good for the Eurozone, the world’s largest economy, as it is forecast to grow only by 1.2 percent this year.
An analysis (in Greek) on the above data can be found in the study “Developments in the World Economy in the Countries of Origin of Incoming Tourists to Greece” by INSETE.