A RECORD GROWTH
The Investor Greece 2019 I Tourism I Analysis
THE TOURISM SECTOR HAS GROWN 2.1 PERCENT IN 2018 AND IS EXPECTED TO GROW A FURTHER 2.5 PERCENT IN 2019, ITS HIGHEST RATE FOR 10 YEARS. SINCE THE START OF THE FINANCIAL CRISIS, TOURISM HAS GENERATED €125 BILLION TO THE ECONOMY, WHILE 230 MILLION PEOPLE HAVE TRAVELED TO THE COUNTRY.
A 365-DAY DESTINATION
According to SETE, since the start of the financial crisis in Greece, tourism has directly generated €125 billion to the economy, while 230 million people have traveled to the country. Greek tourism remained the primary sector of contribution to national GDP and a significant sector for jobs. Only in 2018, the sector directly contributed €22 billion to the economy. During Greece’s peak tourism season, the sector contributes almost 20 percent of the total employment of the country. The Government is working to further encourage and facilitate healthy entrepreneurship and attract foreign investment in the sector as the benefits are essential to the economy and the Greek society. Infrastructure remains a challenge and is also one of the main priorities of the Government in order to facilitate investments in the sector.
Prime Minister Alexis Tsipras has made a promise to to cut the value-added tax (VAT) rate charged on hotels in 2020 in an effort towards boosting the country’s competitiveness. The VAT on accommodation is expected to drop from 13 percent to 11 percent. The Government's efforts are bringing results as the previous goal set in 2013 to reach 21 million tourists by 2021 has been greatly exceeded with 33 million arriving already in 2018. This shows the dynamism in the sector and the strength of Greece's tourism brand. Tourism investment reached €5 billion in 2018 from €3.4 billion in 2017, an annual increase of 46 percent. Investments in new hotel units and the renovation of older units in Greece reached over €2.2 billion euros. As a result, the total contribution of tourism to the country’s GDP has reached 30 percent in 2018, with an critical multiplier effect generated by the sector in the economy.
According to the World Travel & Tourism Council (WTTC), the sector grew 6.9 percent in 2018 in Greece, compared to just two percent growth in the country’s wider national economy. Travel and tourism now represent 20.6 percent of the Greek GDP, a much stronger figure than the global average of 10.4 percent. The sector also outpaced the EU’s regional travel and tourism growth rate of 2.4 percent. One in every five Euros spent in the country last year came from the travel and tourism sector.
The sector is also transforming and focusing on upmarket tourism. In 2011, according to PwC, 108,000 of the country’s 763,000 visitor beds were graded as five-star. Today the country has just over 800,000 beds, with more than 150,000 of those graded five-star. Most of the net growth over the period has been at the top end of the market. Investment has been helped by the fact that the burden of non-performing loans in the tourist sector, while high, is lower than in the rest of the economy. According to the Ministry of Tourism, six out of 10 visitors can be classified as high-end tourists who spend freely. The sector still offers room to build on this trend by promoting investment in new hotels and integrated resorts, further raising the country's service standards.
Efforts are being made by the Government to extend the tourist season beyond the peak summer months. There are projects to increase the number of conference trade or selling experiences such as cultural, adventure, religious and health tourism as well as promoting the country's architectural heritage and gastronomic traditions. Greece has seen a 40 percent increase in winter tourism if compared with the previous four years. Since 2015, Greece began implementing a dynamic national tourism policy aiming for sustainable tourism growth, which included establishing the country as a 365-day destination globally and making central agreements with major tour operators and airlines. The Government continues to negotiate for new direct flights as connectivity is the key for tourism growth.
Another project by the Government is to diversify the destinations to spread visitors more evenly throughout the country. There is a concentration of destinations as five of its 13 regions receive over 80 percent of arrivals and almost 90 percent of revenue.
GLOBAL TOURISM TRENDS
According to the WTTC, Travel & Tourism generated 122,891,000 jobs directly in 2018 (3.8% of total employment) and this is forecast to grow by 2.2% in 2019 to 125,595,000 (3.9% of total employment). This includes employment by hotels, travel agents, airlines and other passenger transportation services. It also includes , for example, the activities of the restaurant and leisure industries directly supported by tourists. Over the next ten years, Travel & Tourism will account for 154,060,000 jobs directly, an increase of 2.1 percent per year.
Global contribution of Travel & Tourism in 2018 has reached €1.4 trillion. This figure is expected to grow by 4 percent as the world is expected to attract nearly 1.5 billion international tourist arrivals. The total capital investment in the sector has reached €830 billion in 2018 which should increase by 4.4 percent in 2019 and 4.2 percent pa over the next ten years to reach €1.4 trillion in 2029. The share of total national investment will rise from 4.4 percent in 2019 to 5 percent in 2029
Leisure travel spending, including inbound and domestic, generated 78.5 percent of direct Travel & Tourism GDP in 2018 reaching €4 trillion compared with 21.5 percent for business travel spending which reached €1.3 trillion. Leisure travel spending is expected to grow by 3.8 percent in 2019 to €4,1 trillion and rise by 3.9 percent pa to €6,2 trillion in 2029. Business travel spending is expected to grow by 3 percent in 2019 to €1.1 trillion and rise by 3.2% pa to €1.3 trillion in 2029.
Today’s fast-paced and interconnected environment makes it more challenging than ever before to anticipate the transformations ahead. The interplay of factors and drivers at the local, national, regional and global level are complex, requiring investments in analysis, planning and execution to successfully navigate. Tourism enables to create positive impact in local communities by demonstrating tangible efforts to improve the environment in the places of operation and affording key opportunities to mitigate business risk, secure customer loyalty and build resonant, authentic brand stories.
The Internet of Things (IoT) and machine learning will also deliver unprecedented ability to better understand and predict outcomes, becoming the lynchpin of new applications, strategies and business plans. These technologies offer tremendous opportunities for the Travel & Tourism sector to provide connected, personalised and integrated customer experiences.