Holiday industry on course for recovery as tourists return to southern Europe

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Travel and leisure industry updates

The heavy skies over Spain’s Balearic Islands herald good economic news for southern Europe – after a dire 2020 season, its tourism industry is on the road to recovery.

The July tally of 2.4 million air passengers to and from Mallorca, the largest in the chain of islands, was over double the number in the same month in 2020, although it is still more than 40% lower than before the 2019 pandemic.

In the old town of Ciutadella in neighboring Menorca, tourists lined up for tables at dozens of restaurants every evening while waiting to sample local specialties such as stuffed eggplant and lobster stew.

The influx of visitors is a huge relief for the archipelago, which suffered a 24% drop in GDP last year, with coronavirus restrictions preventing vacationers from traveling.

“Things turned out much better than expected five months ago,” said Maria Frontera, director of the Mallorca Hotel Association, adding that around 90% of its members were open in August, more than double the number. the proportion in May.

Holidaymakers in Thessaloniki, Greece, who have felt the economic dividends of a tourist resurgence © Konstantinos Tsakalidis / Bloomberg

The tourism industry in southern Europe feared it would lose a second consecutive summer. Instead, he avoided repeating the nightmare of 2020 even though the return to the pre-pandemic level is still a long way off.

“2020 has been a disaster,” said Pepe Díaz, who manages three hotels in Menorca. “But this year we have gone from a mediocre May to an extraordinary July-August period and by 2022 we expect our hotels to do better than in 2019.”

The mix is ​​different from previous years. British tourists were outnumbered by those in France and Germany, even in Spain, traditionally a British favorite. Beaches outperformed urban destinations, while the upper end of the market recovered more strongly than economy or family destinations.

Overall, millions of people who stayed at home last year traveled this summer, as accumulated savings and the desire to go abroad were triggered by widespread vaccinations and looser restrictions.

“People want to either get away from it all right now or plan ahead for next summer, and they’re always looking to work out and have some fun,” said Alan French, Managing Director of Thomas Cook, Reinvented as an online business after its collapse in 2019.. “Greece continues to be our most popular destination, followed by the Canary Islands and the Balearic Islands and Mallorca in particular.” He added that 80% of bookings were for four-star and above accommodation.

Indeed, luxury travel is booming. Private jet passengers to and from Mallorca in July increased by more than two-thirds compared to the same month in 2019, with an average of 83 private jets arriving or departing per day. Pepe García-Aubert, who runs MB92, the world’s largest superyacht refit group, also said it was now virtually impossible to charter a yacht.

Mallorca bounces back

2.4 m

Air passengers in July, more than double the same month in 2020

90%

Proportion of hotel association members open in August

83

Daily number of private jets arriving and departing in July

The uneven recovery has boosted the economy. Maria Jesús Fernández, economist at the foundation of Spain’s Savings Banks, said the better-than-expected tourist season is expected to account for 0.2% of the country’s overall growth this year, which she now forecasts at around 6.5% .

The economic dividends are expected to be felt even more in Greece, which recorded GDP growth of 3.4% for the second quarter and expects to do better in the third, despite having to deal with devastating forest fires as well as the pandemic.

“In May, we were saying that if we managed to reach 40% of bookings in 2019, we would be very lucky. From today’s data and after the September bookings, we will exceed 50, even 60% if there is no unexpected development with the pandemic, ”said Yannis Retsos, head of the Greek Federation of tourism.

In prime destinations such as Corfu, hotels operated at 80-90% occupancy and were charging higher prices than in 2019, according to the island’s hotel association. Greek air traffic in August was around 90 percent of the same month’s level in 2019, data from Eurocontrol shown, although the running total for the year is still much lower than two years ago.

But elsewhere, the economic benefits have been far from overwhelming. A survey by the French National Federation of Tourism Organizations suggested an improvement in the situation in most of the continent.

“But this optimism must be tempered by the fact that the numbers are still down compared to 2019,” he concluded. “The very good number of French customers. . . did not fully compensate for the drop in the number of foreigners in most regions of France.

The pandemic also raises lingering concerns.

The contagiousness of the Delta variant, along with the colder weather and the return to school, fueled concerns about the coming winter.

Philip Meeson, executive chairman of tour operator Jet2, added that the UK’s traffic light system to determine whether travelers should self-isolate on return had caused “continued uncertainty in the short term”. Customers were booking “much closer to departure,” making it more difficult for travel agencies to assess demand, he added. The system is due to be reviewed on October 1.

Meanwhile, reservations for next summer have already started, with consumers betting on a return to a more normal holiday season. Jet2 and Tui both say bookings for next year are ahead of what they were in 2019.

But the vacation industry has warned that with reservations now easy to cancel and the pandemic far from over, there was a growing need to be more flexible.

“The rules of the game have changed,” said Frontera of the Mallorca Hotel Association. “We need to find a balance – more sustainable tourism and value rather than volume. Because in the short or medium term, this pandemic does not seem to want to disappear. “

Additional reporting by Victor Mallet in Paris and Miles Johnson in Rome



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