In Greece, authorities are examining a series of measures to give the tourism sector a boost once the coronavirus pandemic subsides. According to news from GTP, the measures include the reduction of VAT on transport and accommodation as well as lower hospitality fee. But, the larger question looms large; “Where will the tourists come from?” Economies will sag under the weight of COVID-19, and pie in the sky optimism cannot help Greek businesses prepare appropriately. Here’s a dissenter’s look at the situation.
Half Measures Won’t Do
According to the reports, Greek officials are looking at a reduction of VAT on transport, including ferry and air transport, to 13 percent from the current 24 percent as one remedy. Another VAT on accommodation and F&B to 13 percent, is one measure officials think will spur tourism in the second half of this year. Cutting airport charges and other forms of relief are also in the mix of proposed remedies. There are drastically needed efforts, but there is a missing reality and strategy at hand.
American President Donald Trump just backtracked on his earlier positive track on coronavirus saying his country is now in a dire and tough situation. Experts are predicting as many as 240,000 deaths in the U.S. on account of COVID-19. The economic impacts are impossible to calculate since the pandemic is still ongoing. But for the case of Greek tourism bouncing back, we have to look at other countries and the effects of the pandemic.
Italy is ruined for tourism for the foreseeable future. This statement from the President of the Venice Hotel Association, Bernabò Bocca tells of an unmanageable situation for Greece:
“A temporary ban on arrivals is manageable,” said Bernabò Bocca, the president of the Venice hotel association. “But if coronavirus discourages the Americans from travelling, it would mean trouble for Italy. The potential damage from a prolonged crisis could reach €4.5bn.”
The Tourism Engine Stopped
The Guardian reports Thailand, Japan, and other Asian destinations as some of the destinations which will be hit hardest in the months to come. This is mostly on account of the high numbers of Chinese visitors these markets get. However, destination preparation through incentives and prices are not the problem, outbound tourist variables are. In addition, price-cutting and further weakening revenues may even produce negative effects.
This transcript from a White House discussion between President Trump and America’s top travel and hospitality executives gives us fair warning of the situation to come. At a point, Chris Nassetta, who’s CEO of Hilton Worldwide, told the American president that occupancy for the world’s most famous hotel brand is at only 10-15 percent globally. This was two weeks ago before President Trump acquiesced over the severity of COVID-19. The head of Hilton went on to point out:
“Hilton has been around 100 years — we’ve never closed a hotel that wasn’t going to be demolished for rebuilding. The bulk of our hotels in the major cities are closing, as we speak.”
At the meeting, some of the biggest hotel brands in the world chimed in. Best Western’s CEO, David Kong, Arne Sorenson, CEO of Marriot, Intercontinental, Choice Hotels, Hyatt, Wyndham Destinations, and others mirrored the same dire situation at the meetup.
Most national tourism portals, ministries, and key industry players are trying to sugarcoat the situation. Short to mid-term recovery is the motif from market reporting to governmental press releases, but the reality is better reflected if we consider “how” losing huge swaths of travelers is going to end up positively. Can anyone envision Italians or even German travelers flocking to Greece’s shores this season? And when a quarter of a million Americans are being mourned and unemployment reaches 15 – 20%, how many U.S. visitors will arrive in Athens?
Bad News Keeps Flowing
This South EU Summit report warns of Southern European nations “bearing the brunt as travel slows to a trickle.” Tax cuts and monetary easing for industry workers and businesses are the ONLY efforts that will help. Making a budget destination an ever greater cheap thrill will eke out pennies for those in need of thousands. Italy, France, Spain, Portugal, Malta, Greece, and Cyprus all facing record losses this year.
Some economic experts say that even though the COVID-19 shock is severe in the near term, we think it will be temporary.” This Morningstar report relies on data from past epidemics to show how the industry may recover in the mid-term. But past epidemics like the 2003 SARS outbreak did not cause every Hilton hotel to close, nor was every destination literally closed. Experts cited in this story talk about airlines and “pent up demand,” as mitigating factors for a quick recovery. Clearly, there is no contingency and scenario planning for a case where half the airlines are no longer in business.
Furthermore, the projections of many experts rely on Asian travelers to boost the tourism industry back into shape by early 2021. This is fantasy considering that the EU is predicting a deeper recession than in 2009. EU GDP fell by 4.3% in 2009. Also in 2009, Greece’s tourism revenues nosedived with revenues sinking more than 15% on a 24.2 percent year-on-year drop in non-residents travel spending in May of that year. And in 2009, a resilient killer virus was not being transported across borders.
The World Travel and Tourism Council has warned the COVID-19 pandemic will probably cause the loss of 50 million jobs worldwide in the travel and tourism industry. The council goes on to say that when the outbreak is over, it could take up to 10 months for the industry to recover. The European Travel Commission’s CEO and Executive Director Eduardo Santander just told CNBC:
“The impact of the coronavirus on European tourism will be massive — we’re talking about big losses. We’re trying to persuade people not to cancel but to postpone their trips.”
A New Market in Sight
Meanwhile, the optimists keep hoping for an outcome in line with America’s President Trump’s “Easter” declaration. The same CNBC story tell of David Goodger, managing director at Tourism Economics clinging to hopes of a peak summer season. Goodger had this to say to the news network:
“Right now I don’t see any major impact on summer travel. If the virus does continue spreading to other places over the next weeks or months, it could have some impact.”
Amid all the uncertainty, the fantasy optimism and the gloom and doom, there is some good news out there. Tom Marchant, co-founder of luxury travel operator Black Tomato, was quoted at the New York Post:
“Wherever people go, there is sure to be a sense of “mindfulness and appreciation for the local people and vibrant tapestries of cultures for the destinations we visit. After weeks and perhaps months staying home, this longing for authentic human connection and togetherness will be stronger than ever … but there will be less of a cookie-cutter travel mentality.”
In these ideas, Greece tourism businesses can take solace and insight. We need to consider the tourist anew once this crisis is over. Trying to transform Greece into an even cheaper destination will only put the industry on the same footing that has caused so many hoteliers and transportation businesses to be at greater risk now. Some out of the box thinking is required by officials and the private sector here. What I am suggesting is that the market has already shifted away from budget travel.
Not only has the destination market been altered by COVID-19, but the traveler has, as well. This report from Alistair Williams at the University of Wales bears striking indicators for what Greek tourism should look like in 2021. The author references several key concepts associated with alternative tourism and sculpting experiences for travelers. One indicator is cited below:
“The tourism sector is at the forefront of the sectors where customers’ feelings can be provoked; memorable experiences can be designed and customer’s behaviors can be driven.”
The author goes on to describe how emotion is what drives people to travel to a particular destination. With this in mind, does anyone at the Tourism Ministry of Greece think that budget travel will be the emotional hook that snags Greece’s share of 2021 travelers? My point is, after COVID-19, and I mean all the resurgences of the virus, the tourism market in Greece not only “should be” different, it certainly will be. The destination has been undervalued for over a decade now. Who remains solvent and the ideas that survive remains to be seen. In Greece, the people need to offer their legendary hospitality and culture for what Greeks think it is worth, not TUI or some other corporate entity. I’ll be offering some suggestions in a later report.
In the meantime, President Trump has just announced there will probably be more travel bans to Europe and Asia destinations coming.