Warning signs are already flashing that the reopening of Europe’s tourism industry may be short lived.
Before Covid-19 brought global travel to a virtual standstill, Europe was the undisputed heavyweight of international tourism. It attracted over 700 million inbound tourists in 2019, contributed an estimated €2.19 trillion to EU GDP and provided as many as 35 million jobs. But much of that money has disappeared and many of those jobs are on hold. Thousands of businesses, particularly small ones, have closed their doors. Many of those that haven’t are barely hanging on.
Between April 2020, when the whole region was in lockdown, and March 2021, when it began to slowly emerge after a long dark winter, the number of overnight stays in the EU slumped by 61% year over year, from 2.8 billion to 1.1 billion, according to figures released on Friday by Eurostat, the EU’s statistical office. The countries hit hardest include many of the southern European countries that were already sledgehammered by Europe’s sovereign debt crisis. Among the EU member states with available data, the sharpest falls were recorded in Malta, where overnight stays fell by a massive 80%; Spain (-78%); Greece (-74%) and Portugal (70%).
Before Covid struck, tourism provided 10% of GDP in France, 13% in Italy and Spain, almost 15% in Portugal and 20% in Greece. But tourism is also heavily localised. In some parts of Spain, such as the Balearic Islands or the Canary Islands, it accounts for roughly one out of every three euros generated in the local economy. The same goes for parts of Greece, Portugal and Italy. A huge chunk of that money disappeared last year, with brutal consequences for the local economy. In Greece GDP per capita lost another two percentage points and now amounts to just 64% of the EU average, having plunged from 95 percentage points since 2009.
The Reopening Begins
But there are hopes that this trend may be stalled, if not reversed, as Europe’s economy reopens. The continent is currently open for unrestricted travel to 15 “Covid-19 safe countries”: Albania, Australia, the Chinese regions of Hong Kong and Macao, Israel, Japan, Lebanon, New Zealand, Republic of North Macedonia, Rwanda, Serbia, Singapore, South Korea, Taiwan, Thailand and the United States. According to a new EU tourism tracker developed by Oxford Economics, the rebound in tourism is already gathering speed. Overall tourism is up 20% on 2020’s anaemic levels and in Europe’s tourism hotspots it’s up 36% on average since March.
But it’s still way down on the 2019 numbers. And warning signs are already flashing that the reopening of Europe’s tourism industry could be short lived.
On Monday, Portugal imposed new quarantine rules on unvaccinated British travellers, placing the UK in the same high-risk category as Brazil, South Africa, India and Nepal. It means that all visitors from the UK to mainland Portugal must now quarantine for 14 days “at home or at a location designated by health authorities” unless they can show that they have been fully vaccinated at least two weeks earlier. Those who haven’t now have to quarantine for 14 days on arrival in Portugal and another ten days on their return to the UK. The rules are set to last until at least July 11.
The tightening of rules on British travellers comes amid a surge in cases of the Delta variant first discovered in India. On Monday Britain reported another 22,868 coronavirus cases, the highest since the end of January, even though more than 60% of the population have received both doses of the vaccine. Covid-19 related hospitalisations and deaths remain extremely low.
The surging cases are largely the result of the Johnson government’s highly controversial decision not to ban flights from India even as the South Asian country experienced its biggest wave of infections. Johnson allegedly sought to curry favor with Indian PM Narenda Modi, whose government is in late-stage negotiations with the UK over a new trade deal. By the time the UK placed India on its red list, the damage had been done. The Delta variant now accounts for 90% of all covid cases in the UK.
Portugal, one of the first EU countries to welcome British tourists, has also seen a surge in Delta variant cases, which now represent half of all infections in the country. This has prompted Germany to place Portugal, alongside Russia, on its list of banned countries for the next two weeks, starting today (Tuesday), as Schengen Visa Info reports:
The move means that aside from citizens and residents of Germany, all other travel from both these countries will be prohibited.
German citizens and residents who reach Germany from June 29 and on will be subject to a fortnight of quarantine, regardless of whether they are vaccinated against the virus or have tested negatively. The option to end the quarantine early with a negative test is not available for these travellers.
According to the head of the RKI, Robert Wieler, the Delta variant is expected to become the dominant strain in Germany by the autumn.
Currently, Germany bans travel from the following countries, which are considered to have a high number of COVID-19 cases:
- Russian Federation
- South Africa
- The United Kingdom of Great Britain and Northern Ireland of the Isle of Man, including the Channel Islands and all British Overseas Territories
Another Ruinous Summer?
Portuguese tourism entities have described Germany’s decision to “red list” Portugal for safe travel as a “drama”. Millions of euros-worth of reservations are being cancelled and German holidaymakers already in the country are scrambling to get home before the Tuesday deadline. In light of the drama, millions of other people in Germany and other European countries who were considering holidaying abroad are now probably having second thoughts.
Fears are rising that this is the beginning of another ruinous summer for Portugal’s tourism industry. President of Turismo do Algarve João Fernandes told TSF radio:
“We know that Austria and Switzerland normally follow the measures of Germany, and that in following the United Kingdom, this position by Germany will have an impact on other markets”.
The decision, announced at the weekend, has already sparked a wave of cancellations which is causing even more pain for the local economy, said Pedro Costa Ferreira, president of APAVT (the Portuguese travel and tourism association):
“There are hotels in the Algarve that opened, hired workers, took workers out of lay-off, bought provisions, made-up beds to accommodate these tourists … and then suddenly someone says none of them are coming and the money has to be returned…”
Banning the Brits
Germany now hopes to persuade its EU partners to take a leaf out of its book and ban British travellers from the EU altogether regardless of whether or not they have had a vaccine. But while France and Italy are on board with the plan, with Macron calling for “coordinated decisions about the reopening of borders to third countries,” it’s meeting stiff resistance from other quarters.
Portugal and Malta have agreed to allow only fully vaccinated British travellers to enter the country without undergoing a two-week quarantine while Spain has demanded that non-vaccinated British travellers provide proof of a negative covid-19 test. But these countries are unlikely to go the full hog and back mandatory quarantine for unvaccinated British travellers. The same goes for Cyprus and Greece.
These countries cannot afford to write off such a vital source of tourist euros. In 2019, the UK ranked as the leading tourist market for Spain, accounting for almost one in every four visitors, as well as Cyprus and Malta. In Greece and Portugal it was the second largest.
That said, one can understand Germany’s reluctance to open the doors to British tourists, given how fast new cases, largely of the reportedly more contagious Delta variant, are rising in the UK. Lest we forget, travel and tourism are two of the most important vectors of contagion in this pandemic. Even widespread distribution and use of the vaccines may not significantly change this dynamic, given that the vaccines do not prevent infection or contagion.
Nor is it such a bad thing that unfettered mass tourism, with all its externalities (overcrowding, noise, environmental degradation, overstretched public services and infrastructure, sky-high rents etc.), should remain on hold for the foreseeable future (if not forever!). As someone who has spent most of his adult life living in one of Europe’s biggest tourist hotspots, Barcelona, I can attest to the fact that less tourism is not such a bad thing.
But for those whose jobs, businesses and rental income depend on tourism, the pain continues to grow. Another summer like the last one will tip many already heavily indebted businesses over the edge. And that will further weaken many of the eurozone’s weakest economies, which will make the eurozone itself even weaker. As such, if Germany and other northern European countries expect the economies of the South to jettison a major source of income and jobs in the midst of a once-in-a-lifetime economic crisis, they should at least be willing to cushion the blow.
Tourism as a whole will be fine, its the areas dependent on medium and long distance travellers that will suffer. Here in Ireland you can’t rent a cottage or guesthouse for any money over the summer months. People are staying locally and displacing foreign tourists (Ireland runs a net deficit on tourism so, like most northern European countries will benefit). The problems in Europe are mainly down to the self defeating stupidity of the northern European pro-austerity countries in their refusal to provide support to those southern regions that are dependent on summer travellers. Within cities and rural areas there will be a huge dichotomy between winners and losers. Hotels and shops that depend on coach parties and Chinese/US tourists will suffer if they don’t change, those that cater for families will have record sales.
Historians will of course scratch their heads in puzzlement at the desperation shown by so many countries to encourage people to travel and move, even in the face of Delta (which, btw, is surging in the UK at a terrifying rate right now). Why they couldn’t just have accepted that 2021 is the year to keep people at home, encourage outdoor dining and recreation in towns and cities, and just put in place a financial package for airlines and southern countries is…. well, just one more sign that we are lead by idiots. Attempting to ‘normalise’ things is costing far, far, more in the long term than a real, focused attempt at keeping Covid at bay. There is already chaos due to governments changing their minds weekly about which countries are quarantine free. Some people I know are flying on holidays – with one or two I’ve asked them what their plans are if they have to quarantine on return. From the look on their faces its been clear that his never occurred to them as a possibility.
I suspect that tourism will never quite recover. So many businesses and companies bet big on Chinese tourism. There is no way that the Chinese government will allow many travellers for several years. I think people are already rethinking their habits – the boom in bike purchases shows as one example that people are realising that there are plenty of great (and cheap) ways to have a fun time with their family without getting on a plane to Spain. I suspect it will be several years before people get the habit back of weekends in Paris or Rome, and by then the airline industry may well have changed radically, with super cheap flights a rarity (some are betting otherwise, including Ryanair which has ordered a lot more Boeings, but I’m not sure they have this right).
As to what happens with the hotel industry, I’ve no idea. As I’m typing this, I can hear the clattering from the construction site of a new cheap travellers hotel on my street, still at foundation level. What motivated the financiers to think this is a good idea (its one of at least half a dozen within a 20 minute walk of where I live) is a complete mystery to me. Not one single company has changed course – no alterations to design, no reconsideration of whether residential/office would be a better bet than a hotel. Maybe they know something the rest of us don’t. Or maybe they are just closing their eyes and taking a shot, hoping for the best that something turns up.
Re: your last paragraph about the hotel industry, I follow it very closely and have a UK based contact who’s as close to the global industry power brokers as close can be. Atop his perch as the founder of one of the world’s leading hospitality branding agencies, he had a unique “inside the eye of the storm” view into the unfolding industry response to the covid crisis and its impact on long term investment plans. Basically, from October 2020 consensus that the pandemic didn’t present a “secular risk” (i.e. a risk that changes e.g. industry structure and/or customer behaviour) to the industry started to be quietly but broadly embraced by hotel groups, and covid wasn’t seen as fundamentally disrupting any investment plans that were already on the table because the “old normal” would be fully restored.
I wonder if this is just wishful thinking on their parts. Nobody wants to be the first in a meeting to say ‘our industry is screwed’. I was really surprised when the hotel on my street broke ground last December as its in an area of high demand for housing, so I’m pretty sure the purchasers (a UK budget travel chain) could have sold it for a profit.
It is of course possible that things will return to normal in many sectors. While I think business hotels will suffer very badly, its possible that a surplus of cheap second hand aircraft on the market will mean even more competition for flights driving down prices. I certainly know a lot of people who say they can’t wait for a chance to have a foreign holiday (and many are doing it). But I find it very hard to see the long haul market return as it was, not least because flight prices are likely to go up substantially.
I’m guessing that hotels and office buidings have a many-year development cycle, and the buildings that are going up now were put in motion long before COVID arrived. Cancelling a project in progress presumably has big costs and downsides, too, so perhaps the best approach for already-committed projects is to forge ahead and hope for the best.
This is certainly true if the contracts are signed, but in this case it wasn’t, as it only got its full permits a few months before starting – there would be no final contract until all the details had been agreed with the local Council. So there was plenty of time for a cancellation.
I think many businesses, large and small, are expecting bailouts so they see no real reason to change their behaviors and habits. We live in the era of bailouts globally, so perhaps their thinking is correct.
Anecdotal evidence for US-EU travels. Our daughter lives in France and has a 21 month old son. We last saw them in February 2020. My wife made a reservation 3 weeks ago to visit for the grandson’s second birthday on American Airlines in mid-October. At the time the reservation was made, AA had flights to Paris from 5 hubs using 777s or 787s with good award availability. Now there are only 2 Paris flights carded from JFK & DFW all summer and into Fall. That is a 60% capacity cut. We wonder if this is reluctance of US travelers or a preemptive move by AA to cut capacity. Delta and United are also thinly scheduled.
Needless to say, KN95s will be worn for the entire trip.
Trips such as your wife has planned need to be consigned to the dustbin. While we all can understand the desire to spend time with family, no matter how far flung they are, we also need to recognize that mass global travel is untenable in a rapidly heating world. Entire ways of living must change, and that includes where we live, how and what we consume, and what are our expectations for living a good life. Jetting off to France to visit a grandchild might be something we should no longer expect to be part of a good life.
$600 round trip flight Memphis, TN to Athens, Greece. That’s early 1990’s plane ticket prices. I was tempted to visit my friend in Athens. I decided it isn’t worth the risk. International travel has been a driver of covid. Plus, I have been reading about the vaccines and flying not mixing well.
> International travel has been a driver of covid.
The fact that this isn’t “on the table”… is not so extraordinary, given who does the travel. It’s madness. IMNSHO all “inessential” travel should be shut down (and I would allow some business travel in “essential,” as well as health and science).
Was life before international air travel really so very, very bad?
there’s both a plane and pilot shortage right now..
This sounds like a disaster in the making. Had a thought though. Maybe, just maybe, lessons can be learned from the upcoming Tokyo Olympics in only 24 days time. You are going to have people flying in from all corners of the world into a relatively small area. Sure, they will take maximum precautions but I doubt that it will work. So about two weeks after all those athletes and tourists go back home, case rates in each country should be closely watched for any spikes but particularly the Japanese islands. Based on what happens under this ‘controlled’ experiment, health agencies should be able to get a handle on what happens with this virus spreading in what should be optimum circumstances & precautions and then apply those lessons to the tourist industry. But probably it would be too late to do much good for this year.
No big deal, they just need two weeks to flatten the curve.
And you got the European Footbal (soccer for the US) championships right now too. Which, due to the greatness of UEFA (European footbal ruling body) is spread across all the Europe, from London to Baku.
UEFA has got off lightly. With all the fuss over the Olympics nobody seems to have been paying attention to how idiotic it is to have a multi-country football tournament (albeit so far a very entertaining one). Dublin lost its games because the government, in a rare show of backbone, refused to rule out banning spectators.
there have of course been reports of cases being contracted at the football, including five fans in Copenhagen recently. Which is a concern because most of the mingling takes place outdoors.
The pan-European Euros seemed like a swell idea when they were announced, but it’s been astonishingly reckless to proceed with the tournament in that mode.
Humility and caution.
> Humility and caution
No, arrogance, greed, and impunity.
Indeed if AGW is our number one concern then shouldn’t mass tourism be on the way out and these countries find other props for their economies? Apparently Venice is so overwhelmed with tourists these days that many of the full time residents have moved away and rented out their properties. You wonder how many of the at least moderately well off who can afford European travel really appreciate what they are seeing or whether it’s just about the prestige of having been there. Admittedly it’s easy to make such an argument by those of us who toured these places long ago before things got so crazy.
WFH and staycations to save the planet work for me.
The Chicago Tribune had a big ‘back to the office article’ in their business section today featuring many corporate office examples, including Steelcase. Gee wiz, what do they make?
Talking their book, just like the Wall Street TBTF with massive CRE investments.
Most of European tourism is just Europeans moving around in their holidays – a lot of it to the mediterranean coasts. It’s not particularly prestigious, nor restricted to particularly well-off people. Americans going to Venice (etc) is only a small part.
Holidays are often the highlight of the year, especially for people who don’t like their job -which tends to be more common among people who are not well off.
AGW might mean that we have to give up a lot, including things that are highly valued. I just think it’s wise to assume that those are highly valued activities to give up, not just vanity efforts that can be cut with little real downside.
There is another angle to this: travel is the AGW problem of tourism. Once at a destination, tourism is not particularly XO2 intensive, compared to staying at home and spending money on other stuff. Or seen from the other side: if tourism heavy countries switch to other activities, will those activities produce less CO2?
Even worse: some of the tourists will work more (and buy more stuff), if they can’t spend their vacation time on tourism.
I’d would say that the focus must be on reducing long-distance travel, more than an across the board reduction of tourism. That might keep Venice quite busy still – there’s a massive number of people who live within train journey’s distance of the place.
Well, as I keep remarking, at least the English wish to be a worse shambles than the U S of A. Too bad that the Special Arrangement Twins want to foist their pathologies on the world.
I note that Portugal reports 902 cases yesterday, part of a week-long spike. The shame of it is that two or three weeks ago, Portugal was down to some 200 or so cases a day. (I have been using Portugal and Greece as comparisons to Illinois where I live, because all three have about 12 million in habitants.) Illinois reported about 275 cases yesterday, which isn’t exactly good news.
The incident that isn’t mentioned here but that may be a pothole that will lead to bringing the “normal summer” to a halt is that in Mallorca, a large group of end-of-year students traveling, who attended a concert, produced some 750 positives of COVID infection–and now have the Spanish authorities placing 3,000 in quarantine.
One cannot have another incident like that. Summer is over.
Portugal today reported 1746 new cases.
José: That’s another spike. Is it tied to the few weeks of reopened borders?
Lack of proper border controls may be a factor, yes. I’ve told by contacts there that, in practice, the Portuguese authorities are not even implementing the mandatory quarantine rules that (in theory) apply to travelers coming from high-risk areas such as Brazil, India, South Africa, Nepal and the U.K.
> in Mallorca, a large group of end-of-year students traveling, who attended a concert, produced some 750 positives of COVID infection–and now have the Spanish authorities placing 3,000 in quarantine.
Intra-European tourism is so not dead, anymore than intra-USA tourism is finished! There is crazy pent-up demand to fly around in the UK and I suspect it is the same in all the northern European countries. Everybody wants to see the sun and/or their families. The sun seeking is quite baffling but the working man is determined to have a package holiday in the sun and wealthy types have got ski chalets and beach villas gathering dust or just can’t wait to get on a cruise ship. I see it in my mother’s friends (average age c.80), many of whom have already managed a holiday in the UK lull between March and May.
As for Ireland, PK, tell me about it. We are spending July in NI with the in-laws. It was all carefully planned: external cabins on a night ferry – almost zero contact with other humans and 100% fresh air ventilation: just a stupid 30 minutes before docking where they still try to herd you all into the staterooms before disembarkation but we just sit in our cabin… We had booked Liverpool-Belfast deliberately to minimise the number of coronavirus rules governing the journey (The Republic, Wales, Scotland). In the middle we had a trip to Donegal. Now Ireland has changed the rules, requires 14 days presence since being overseas for visitors from NI to avoid quarantine. So we have had to change the cottage booking. I think I literally found the last cottage to rent in Donegal for the week after, at twice the price of the previous one (€1200 for a tiny 3 bed for a week!). We also had to change the ferry bookings but there is zero cabin availability so we had the change the route as well and we are now sailing out from Wales on Holyhead-Belfast, a temporary route that Stena has created but sadly so temporary it is not currently sailing when we need to come back. :-) We apparently have to ring back and see if they decide to extend it, as expected, or stay an extra week in Ireland.
However, I think long-haul travel is going to be slow coming back and I think the overall volume of foreign travel is going to be down and domestic travel up, given people have rediscovered holidays at home, the rigmarole of flying in pandemic times only adds to the security theatre and the dislocation in the industry means that capacity has been taken out permanently and therefore prices will be higher. There will be many families where one person is sick or elderly or unvaccinated or just refuses to travel abroad and risk being stranded so I think domestic tourism is going to be buoyant. We are looking at adding glamping to the farm as well as the holiday lets we already offer….
You are quite right about the family vs tourist sector. Seaside and rural locations and outdoor attractions are booming. Cities less so as most people in the UK do not need a city break or to buy a “my friend went to London and all I got was this lousy t-shirt” t-shirt or a souvenir teddy bear of Regency Bath or a Cambridge University tracksuit top. Still, I can see myself doing to tourist traps later this year if the cases and tourist numbers remain low. I’d never been to the Tower of London, for example….
Sorry to hear about this – any cross border travel has become very risky and costly.
> However, I think long-haul travel is going to be slow coming back and I think the overall volume of foreign travel is going to be down and domestic travel up, given people have rediscovered holidays at home, the rigmarole of flying in pandemic times only adds to the security theatre and the dislocation in the industry means that capacity has been taken out permanently and therefore prices will be higher.
I think this is sensible. But I would think domestic travel is only as safe as international travel (unless we eliminate the hub and spoke system, since the international airports/infection sinks tend to be hubs).
The little seaside village I occasionally live in quadruples or thereabouts it’s population during the Summer months, by way of static caravans ( trailers ) rented out by a horde mainly from East Belfast for whom it seems Covid is definitely past tense. Prices for the parks has risen about 10% according to a couple I spoke to while walking the little tinkers.
A big attraction on the glorious July 12th will be the lighting of the bonfire on the pier which fortunately isn’t made of wood, even though standing at about 30 ft high & made mainly from pallets, it is a miniature in comparison to those in the City.
Judging by it’s construction the locals are still part of the grant scheme which comes with rules that prevent the burning of all sorts of pollutants but mainly aimed at tractor, truck & any other tyres. However with around half of the major large events having pulled out of the schemes due to Bobby Storey’s funeral, the sea border & the usual stuff, it will likely be an interesting evening with lots of potential sparks.
I was intending to go & visit my 18 month long lost daughter in Blessington down in the Republic, but have likely due to overdoing things of late contracted a chest infection which today I discovered is not Covid – other than that I have no wish to travel which I can’t afford anyhow.
Thats such a pity – I think seaside villages will have their best summer since the 1960’s. That said, they’ve just extended the shut down on pubs and restaurants here, so they are praying for a good summer so at least people can have a pint in the open.
Blessington is a nice spot, I was there on Sunday, travelling back from Glendalough. The bus to Dublin is probably the only regular bus route in the world where seasickness is a hazard if you sit on the upper storey as it winds its way on those switchbacks down to Tallaght.
Well, I don’t think that the turmoil from Belfast & elsewhere will effect the Newtownards coastline very much as for the UVF bars near my little place, I don’t think they ever really shut down at all. It’s all very undeveloped, happily reminding me of seaside visits in England during the 60’s & 70’s. & most people including Summer visitors are friendly as I have also found in Catholic areas.
Many’s the time I have done each way on that road to Tallaght & I have a speeded up dashcam film of one such filmed on a golden Autumn day, but I don’t think for sheer terror the bus ride could match the one I experienced heading up to the Villa San Michelle in Capri.
Glendalough is simply magnificent.
I am DEEPLY OFFENDED by the use of the vile phrase “Dead Cat Bounce” – show some humanity.
I can’t tell if this is sarcasm or not but it’s comedy gold either way.
or at least a disclaimer: “no cats were harmed in the writing of this blog post”
Nikkikat and his cohorts are very offended as well. Of all the things that can bounce…..he’s not one of them. Lol