EY: Greece Tourism Must Adapt to ‘New Normal’ After Covid-19

Source: EY

Greece will need to redesign its tourism strategy in order to address the impact of the coronavirus (Covid-19) pandemic and the subsequent new trends in travel, lifestyle and consumer behavior, according to the latest study released by Ernst & Young (EY).

According to the “Covid-19 Industry Pulse Report: Tourism”, emerging trends in the aftermath of the pandemic are expected to affect the global tourism market as well as activity in Greece.

The EY report findings indicate a focus by consumers on the environment, with 64 percent saying they will pay more attention to the environment, in the long term.

The study also highlights the need to expand e-commerce capabilities. Based on Institute of Retail Consumer Goods (IELKA), the customer base of online shoppers in Greece corresponds to 50 percent of all internet users.

Priority is also placed on tourism employee reskilling. The report found that 68 percent of the travel and tourism workforce requires reskilling. Indicatively, 89 percent of sector companies said the skills gap in local labor markets was a barrier to the adoption of new technologies.

And lastly, emphasis is now more on affordability and quality of the tourism product. According to an IELKA August 2020 survey, for Greek consumers, product affordability (28 percent) is now the most important factor followed by quality (25 percent). In 2019, quality was first (33 percent).

Additionally, the report goes on to note that sectors such as hospitality, retail and office, are “likely to suffer, as social distancing has led to behavioral shifts”. The resulting changes for both property owners and tourists are also expected to affect commercial and hospitality real estate values.

“These shifts indicate a rapid and sudden disruption of economic and social activities, however, some of those could also indicate untapped opportunities and changes that were long overdue,” said the report.

In numbers, the impact of Covid-19 on tourism in Greece:

• tourism-related revenues dropped by 78.2 percent in the first nine months of the year to 3.5 billion euros against 16.1 billion euros in the corresponding period of 2019
• international passenger air traffic decreased by 72 percent between January and October 2020, compared to the same period in 2019
• the number of international flights to Greek airports fell to 116,000 from 300,000 in 2019, and passenger arrivals dropped to 6.2 million from 22.2 million
• with regard to Greece’s key source markets: the number of arrivals from the US dropped by (92.9 percent) – the largest decline – followed by the UK down by 73.9 percent, Germany by 69.4 percent, and France by 68.9 percent

• the Greek hotel sector’s performance recorded a significant drop in all key performance indicators

• average occupancy over the July -September period came to 23 percent against 71 percent in 2019 with August rates not exceeding 30 percent
• the average daily rate was estimated at 86 euros, which – combined with the occupancy rate mentioned above – resulted in 20 euros revenue per available room
• the employment index in the tourism sector dropped by 39.5 percent in Q2 2020, working hours decreased by 78.5 percent, and salaries and hourly wages by 69.7 percent against Q2 2019.

Looking at Greece’s holiday home market, the EY study found vacation home sales rates continuing their upward trend in 2020 with asking prices recording a 1.6 percent rise in H1 2020 at major tourist destinations, such as Mykonos, Paros, and Santorini.

“The tourism industry worldwide will continue to suffer the effects of the pandemic in the foreseeable future. Given the importance of tourism for the Greek economy, our country must redefine its tourism product, extend the tourist season and strengthen the its profile as a safe travel destination, while maintaining and strengthening the protection and support measures of the industry and its employees,” said Tassos Iossiphides, EY Greece partner, head of Strategy and Transactions.

“At the same time, tourism businesses need to focus on solving their structural problems and taking advantage of new opportunities, such as alternative and green tourism, in order to fuel their sustainable recovery and growth and increase their resilience to future challenges.”