Greek tourism will continue to play a leading role in the country’s economy, but the industry must adapt to increased competition in the Mediterranean as well as to travelers’ different destination selection criteria that has been shaped by the “pandemic experience”, according to the Bank of Greece Governor’s Annual Report 2020.
Providing an objective and comprehensive analysis of developments and prospects of the Greek economy, the report makes special reference to Greece’s tourism industry; to the country’s performance as a Mediterranean tourism destination amid the pandemic; and to steps the industry should take in the post-coronavirus era.
Among the report’s highlights on tourism is the need for Greece to show more focus on its alternative tourism products to combat seasonality.
Covid-19 vaccinations will boost external demand
“The Greek economy, as an economy highly dependent on services with a high share of tourism and retail trade in its GDP, was hit harder than other EU countries by the shocks to external and domestic demand,” the Governor’s Annual Report 2020 says.
In general, according to the report, the speed with which the Greek economy will recover depends, among other things, on the acceleration of Covid-19 vaccine rollout schemes, not only in Greece but also on a global level.
“A widespread immunisation of the population would boost public confidence in an eventual resolution of the health crisis and make a return to normality possible, through a lifting of travel and other restrictions, thereby contributing to a recovery of external demand, mainly for services. At the same time, it will enable an increase in domestic consumption and investment,” the report says.
Alternative forms of tourism are key
However, the report highlights that Greece must strengthen its position in the tourism market by further improving the quality of its offered product and, consequently, improving the sector’s competitiveness, as well as its brand name abroad. Such improvements, according to the report, would help the country stabilize its position in the Mediterranean market and also contribute to achieving the goal of opening up to new markets beyond maintaining its traditional ones.
The report goes on to underline that it is of great importance for Greece to focus more on its alternative forms of tourism in order for the industry to be less impacted by seasonality and be able to attract more arrivals during the off season and especially travelers of higher income.
Italy performed better in 2020 due to longer tourism season
Due to developments caused by the pandemic (uncertainty, travel restrictions, etc), Greece in 2020 lost market share in the Mediterranean, despite the fact that it was promoted as a safe destination for potential travelers following the very good reputation it had gained with regard to managing the pandemic’s first wave.
The report highlights that although most countries – like Greece – lost market share, Italy emerged as the most lucrative destination, despite the dramatic development of the pandemic in that country. Comparing the data for the first and third quarters of 2020, the report finds that Italy in the third quarter had a larger share of arrivals and revenues in the Mediterranean market than it did in the first quarter.
“This shows that its better performance is due to its longer tourism season compared to Greece; to alternative forms of tourism beyond the ‘sun and sea’ product; and its ability to meet a wider range of traveler preferences, possibly more demanding,” the report says.
In conclusion, the report noted that tourism to date plays a leading role, directly and indirectly, in the development effort of the Greek economy, with positive prospects.
“Vaccination of the population against Covid-19 will provide significant support in the effort to return to normalcy, even with some changes from pre-pandemic data. Tourism activity can maintain its position in the Greek economy, but it will have to adapt to increasingly competitive conditions and to different destination selection criteria of travelers, as shaped by the pandemic experience (health safety and quality services),” the report adds, adding that the available EU emergency funds can significantly contribute towards that direction for Greece to create the ideal infrastructure for a circular economy in accordance with European standards.