An Ernst & Young report this week estimates that the Greek tourism sector will lose €10 billion euros in 2020 on account of the COVID-19 pandemic. Some €4.46 billion of those losses will hit Greek hoteliers, according to the figures.
The report, which is based on World Travel & Tourism Council (WTTC) data, reveals that the coronavirus pandemic’s effect on the Greek tourism sector will be five times worse than the effects of the 2008 crisis at its peak. The news is devastating when Greece’s suffering from austerity due to the great recession is considered.
According to EY, the value of tourism goods and services (GVA) will drop from €22 billion euros for 2019, to €14 billion euros. This number is in a moderate scenario, according to the report. Just one look at the RevPAR figures from STR and EY is cause for hotelier alarm.
The most devastating part of the report refers to Greek island tourism, where EY predicts the biggest shortfalls will occur. On many of the Greek isles tourism 90% of their economy. The report also hints at tour operators trying to take advantage of the situation and demanding huge discounts for providing tourists. EY also cites Greek Prime Minister Kyriakos Mitsotakis talking about the future complexion of the Greece market:
“We need to change our tourism model and focus on sustainability.
For us, sustainability in the broadest sense is the way forward,
making Greece a pioneer.”
The firm’s report goes on to predict the biggest decline is expected in the second quarter of 2020 and will range between 41 percent and 53 percent, with the base case scenario estimating contraction at 49 percent. Tassos Iossiphides, EY Greece partner, head of Transaction Advisory Services was quoted at GTP saying:
“Few European economies depend on tourism as much as Greece. It is, therefore, necessary to understand in-depth how the international environment is shaped, the developments in rival countries and main source markets, and above all, the impact on our economy.”
The executive went on to say hoteliers and tourism stakeholders will have to adapt their business models to “a different environment from what we have known so far”.
EY Greece made the assessment of the impact of the COVID-19 pandemic on Greece’s tourism sector based on three scenarios; Optimistic, Base Case, and Pessimistic. The impact is measured in terms of Gross Value
Added (GVA). Readers can see the detailed figures for each scenario in the original study.