Covid

The recent consecutive boom years of Europe’s tourism industry suffered a major blip in 2020, when pandemic travel restrictions left an otherwise rapidly growing sector suddenly gasping for government support.

Recent growth peaked in 2018, when the industry generated 10 per cent of the continent’s economic output and 11 per cent of all employment, More than half of global tourism took place in Europe that year, the European Travel Commission (ETC) said in its annual report.

Growth continued in 2019, albeit at a slower pace, ETC said, citing a “wobbly world economy,” “US-China trade disputes” and “fears around a make-or-break Brexit.”

Then came the pandemic, upending all certainties. Beyond the health sector, its devastating effects were felt nowhere as sorely as in the travel and tourism industry.

The ETC 2020 third quarter report projected that tourist arrivals in Europe would be down by 1 billion, or a 61-per-cent decline Europe-wide.

While each country on the continent lost income, the loss was felt most keenly by those most dependent on the tourism cash injection. Croatia and Greece, the two European Union countries most dependent on tourists, suffered the worst.

Tourism generates more than one-fifth of both countries’ economic output and both have reported a dizzying drop in tourism revenue.

In Croatia, there had already been calls before the pandemic for a restructuring of the economy to lessen its dependency on tourism.

However, those operating in the industry say the anti-tourism camp had missed the point.
Consultant Nedeljko Pinezic, who owns a hotel on the Croatian island of Krk, has been through a roller-coaster year of closings, reopenings and reclosings.

Hopes generated by a brief opening up of the travel industry in July were quickly scuppered by a resurgent infection rate. Overall, the country saw half of the 2019 volume of visitors, the vast majority Croatia’s traditional guests – Germans, Czechs and Poles.

The collapse in visitor numbers, Pinezic told dpa, “came amid calls for broad restructuring and warnings that the country relies on the volatile tourism industry too much.”

In Croatia, where mass tourism has in recent years overwhelmed a number of coastal hotspots, the industry is at risk of becoming a victim of its own success.

“As late as February, the 2020 season was expected to be the best ever, better even than the already exceptionally good 2019,” Pinezic said.

“That provoked a ‘tourism phobia’ and calls for measures to effectively limit the growth of the sector,” he added.

The proposals include higher taxes on small businesses, including the family hotels which form the backbone of Croatian tourism, restrictive licensing and quotas on cruisers, particularly in the southern hotspot of Dubrovnik.
Pinezic fears the proposed changes amount to Croatia shooting itself in the foot. Or, to put it another way, shooting dead your own cash cow.

“Tourism is always expected to deliver its part to all levels of administration and never more than this year,” he said. “But this year there was none and everybody was shocked.”

Croatian hotel operators and other tourism-related businesses now look to the government for continued assistance. However, most emergency support measures are expiring at the end of the year.

Croatia has already received the first half of a 1.02-billion-euro (1.23-billion-dollar) EU package intended to save jobs across all sectors.

However, the government has not yet signalled how it plans to continue supporting tourism, or presented any plans to reduce the country’s dependency on the sector in light of the pandemic.

Elsewhere, in Greece, the government’s response appears more agile.

After seeing visitor numbers plummet by 70 per cent this year, the country is signalling moves to attract other sources of financing.

Conservative Prime Minister Kyriakos Mitsotakis has said his Cabinet will propose a law early next year offering a seven-year, 50-per-cent tax break to businesses that register in Greece to perform remote work, even if that work is not done for Greek clients.

Another law, due to be presented to parliament in December, will offer a massive, 40-per-cent rebate to big film companies, wooing them to shoot – and bring their money – to Greece.

It’s possible that after a decade of almost constant financial crisis, Greece may have learned that leaving it too late to act can result in brutal reforms simply being imposed from above.

During the early years of the financial crisis, a whole new sector emerged of fast-moving, digital enterprises. If the pandemic prompts Greece to pull off a similar feat, the rest of Europe might do well to follow its lead.

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