Higher Euro Equals Lower Tourism Arrivals

With the recent rally in the euro, which has pushed the currency close to historic highs against the dollar, professionals in the tourism sector begin to doubt expectations expressed by officials for a substantial increase in tourism arrivals this year. They say the rising euro may help contain the cost of dollar-priced imports, like oil, but it may also send tourists to cheaper destinations.

George Drakopoulos, president of the Association of Greek Tourism Enterprises, says that  “when the euro gets more expensive, it means tourists outside the euro zone decide not to come to Europe and it makes non-European destinations cheaper.”

He says the stronger euro could make other Mediterranean countries – like Egypt, Morocco or Tunisia – more attractive to holidaymakers seeking sun and sea.

About 45 percent of tourists visiting Greece are from countries outside the euro zone.

Greece’s services-oriented economy relies heavily on its two biggest foreign exchange earners, tourism and shipping. Sources in both industries say the recent rise in the euro would have a negative impact on their sector. Greece’s service exports total more than 23 billion euros a year.

As well, Greek shipping companies will feel the pinch, industry sources said in recent press reports. Over 80 percent of world shipping contracts are denominated in dollars, but running costs like office staff and administration are denominated in euros. This means that at least 50 percent of running costs for a Greek shipping company are in euros.

Greek industrialists said they expect a strong euro to have only a slight impact on exports, but other key sectors like tourism and shipping would experience a more negative effect. Greek industry accounts for roughly 12 percent of gross domestic product, while tourism accounts for an estimated 16 percent of the economy.