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How Covid-19 Has Impacted the Travel life in Europe

EU ECO-TANDEM PROGRAMME | Oct. 29, 2020

People across the globe will have to deal with the challenges posed by climate change. It affects in different ways and with different strengths, but common everywhere is that an effective preventive effort is needed, based on new knowledge, technological effort and good planning. All in which is implemented in the EU ECO-TANDEM programme - an initiative focusing on changing the tourism sector to a greener and more sustainable one, making a difference on our unique planet! 
Interested to know how the COVID-19 has impacted the EU and in particular Italy, Germany, Austria, Slovakia and Greece? Then check it out!

We need to protect our tourism sector by implementing more sustainable solutions. Covid-19 is an excellent example of how wrong it can go if no drastic measures are changed. 

Starting from 18 May 2020, all destinations around the world are observing travel restrictions for international tourism. The latest data from the UNWTO (World Tourism Organization) have a world balance in May 2020 of -55.9% of international arrivals in the world equal to a loss of 300 million international arrivals and 320 billion US $. In this scenario, Europe marks the pace with -58% of foreign arrivals. The pandemic that has hit the world has left the tourism sector stripped of its certainties. The growth trends recorded up to 2019 all over the world, and in particular in the main European destinations, thanks to the incidence with double-digit growth of the Asian and US markets, are today already a vague memory.
The difficulty for airlines to implement social distancing on aircraft is the impact on their finances. For example, IATA reports that if aircraft capacity is reduced to 62% to allow for social distancing, there are only 4 airlines (out of a sample of 122) that could break even; the other 118 airlines would lose money with load factors of less than 62%.
The international comparison shows different positions: as an example, for international arrivals of overnight tourists, Italy with an expected drop in 2020 of -58% is less competitive than Spain and the average of Western Europe (-55%) and also from Greece (-55%) and France (-54%). Compared to the Mediterranean countries, however, it is more competitive than Croatia (-68%), while it is in line with Turkey (-58% like Italy).

  • Germany
In Germany, as in other countries, the tourism sector suffered heavy losses due to the consequences of the Covid-19 pandemic. In the first six months of 2020 alone, German hotels registered more than 100 million fewer overnight stays than in the same period in 2019. With the easing of containment measures in Germany and Europe, the sector was able to benefit from a brief recovery in the summer months. However, the turnover recorded by hotels remains significantly lower than in previous years. In July 2019, German hotels recorded -22.8% compared to July 2019.  
The lack of foreign tourists, whose presence in Germany is 57% lower than in the same month of the previous year, weighed heavily.

According to estimates by the Forschungsgemeinschaft für Urlaub und Reisen (German association conducting surveys on travel behaviour), Germans generally went less on holiday this year. While usually 80% of Germans plan trips of at least one week, this year only 60-65% went on holiday for more than one weekend.
The blame lies with the insecurity dictated by the coronavirus containment measures and less money is available because of the Kurzarbeit (short-time work allowance). A survey conducted by the Meinungsforschungsinstitut Civey in July 2020 showed that the proportion of those who decided to spend their holidays within national borders has increased: 36%, up 10 percentage points compared to 2019. 26% planned a holiday in another European country and only 3% in a non-European country. According to the YouGov platform, the under24s in particular decided to cross national borders.

The German travel association (Deutscher Tourismusverband) informs that particularly popular with German tourists this summer were the seaside destinations on the Baltic Sea and the North Sea, as well as the Bavarian pre-Alps. Other regions that benefited from the boom in national tourism include the Thüringer Wald, Harz, Brandenburger Seeplatte, Eifel, Tanaus and Sauerland. 

This led to a 10% increase in the prices of tourist facilities in some places. Despite this, the boom in domestic tourists is not enough to compensate for the losses suffered during the months of lockdown. In fact, hotel and gastronomy facilities have had to significantly reduce their capacity in order to ensure social distancing. Among the destinations chosen by foreign tourists in Germany are amusement parks (Miniaturland in Hamburg and Europapark in Baden Württemberg) as well as well-known cultural sites (Neuschwanstein Castle). Other places that have benefited from the arrival of foreign tourists include the city of Dresden, the Black Forest, the island of Rügen and the Romantic Road. The pandemic also affected the habits of German tourists. 
According to Civey, the fear of contagion has led to an increase in the demand for holiday homes and camping, which are considered safer: 40% of those interviewed in July 2020 said they were planning to rent a holiday home, only 25% will spend their holidays in hotels and 11% have chosen camping. The preferred means of travel seems to be the car. According to a survey carried out by the Bayerische Zentrum für Tourismus (the Bavarian Tourism Institute) in July 2020, 80% of those who spend their holidays in Germany and 59% of those who travel in Europe chose to travel by car.

Despite the partial recovery in the summer months and state aid, the tourism sector in Germany will take a long time to return to pre-Covid turnover levels.

  • Greece
Tourism in Greece accounts for a significant percentage of the GDP, nearly 20% in recent years1. Consequently, the effects of the Covid-19 pandemic are expected to be severe and reverberate for years to come, putting a strain in Greece’s efforts to recover from a long period of economic recession. One of the three main months for tourism in Greece, July saw the number of inbound arrivals plunge by 85.4 percent to 828 thousand impacted by the outbreak of the coronavirus pandemic, according to provisional data released by the Bank of Greece. Overall, in the January-July 2020 period, the number incoming holidaymakers shrunk by 80.1 percent to 3,006 thousand against 15,080 thousand in the same period last year. As a result, travel receipts for the seven-month period dropped by 86.3 percent to 1.255 billion euros compared to 9.16 billion euros in the corresponding period of 20192. According to the Greek Tourism Confederation (SETE) President, Greece’s travel receipts from abroad are expected to reach only 3 billion euros in 2020 due to the impact of Covid-19.

Greece’s accommodation and food services activities in July suffered the biggest blow to turnover, down by 71.4 percent as a result of the coronavirus (Covid-19) pandemic, according to data released by the Hellenic Statistical Authority (ELSTAT). Overall, in the accommodation sector, Q2 turnover came to 104,682,448 euros plummeting by 94.3 percent against the same period in 2019 from 1,846,435,467 euros. Overall, businesses offering F&B services recorded 592,729,473 euros in Q2 turnover down by 59 percent against the same trimester in 2019 from 1,446,782,662 euros4. ELSTAT’s previous report also covered data on turnover for enterprises that suspended operations as a result of the Covid-19 crisis. Of the 205,984 enterprises that suspended operations, turnover in Q2 2020 came to 3,232,618 thousand euros, a 55.9 percent decline against Q2 2019 from 7,329,184 thousand euros. In this time, services providers in accommodation and entertainment (motion picture, video and television program production, sound recording and music publishing) recorded the largest decrease in turnover in Q2 down by 94.7 percent and 88.4 percent, respectively.

Overall year on year, Greek enterprises recorded approximately 4.2 billion euros in losses from 24,026,048 thousand euros to 19,832,471 thousand or down by 17.5 percent over a year (from July 2019 to July 2020) due to the outbreak of Covid-19. The smallest decrease in turnover in Q2 2020 against Q2 2019 was seen in public administration and defence; social security (0.5 percent) and agriculture, forestry and fishing (3.4 percent).
Some of the measures undertaken by the Greek government to help in the coming months include a series of tax breaks, the launch of a 600-million-euro “Save for Tourism” programme aimed at supporting the sector and developing sustainable hotels; a second round of grants; the extension of VAT tax cuts in transport and F&B, as well as reductions in social security contributions; a two-month extension of unemployment benefits; the reduction in social security contributions required for seasonal staff to be eligible for unemployment benefits; extending the contract suspension period to October to avoid dismissals; as well as additional time for the deferment of tax payments5. Finally, the residents of 28 small and remote Greek islands are now exempt from paying the unified property tax (ENFIA) from 2020 onwards.
  • Italy
In the weekly monitoring of Italy, in the twenty-fourth week of observation on the trend of airport arrivals in 2020, the losses indicate an overall figure of -83% from 1 January to 23 August compared to the same period in 2019, due to the continuation of closures to and from numerous foreign countries.

Due to the prolonged restrictions, the most evident decreases remain those from China which fell by -90.9% (maximum value) and from the USA (-89.5%). France is still the market with the lowest overall decline, which stands at -70.9%. The decline in bookings does not stop, equal to -92.5% from 24 August to 4 October, with the exception of the French market which drops only -75%, the Netherlands to -80% and Germany to - 81.5% while the UK are still at -87.1%. These decreases are now correlated with the situation of the tourism-issuing country and much less with the Italian situation. Worse, therefore, China (-99.2%), Russia (-98%) and the US market which falls by -96.1% followed by Spain which collapsed to -94%.

The negative impacts on arrivals with international overnight stays in 2020 are confirmed, with a decrease of -58%, equal to 37 million visitors. Also in terms of the economic impact on tourism expenditure incoming from abroad, the expected decline is confirmed at -24.6 billion euros in 2020 compared to the level of 2019. The downward trend of -31% (16 million visitors) is also confirmed on the domestic market; domestic overnight stays are expected to be lower by 46 million in 2020 compared to 2019. There is a recovery on domestic holidays of 40% of Italians who were previously outgoing.

The impact on the flow of tourism spending by internal visitors is confirmed in decline by almost 44 billion euros in 2020 compared to the level of 2019.

In an international comparison between individual tourist destinations, the strong internationalization rate of our art cities is defined as leading them to negative rates - Florence -63.9% of international arrivals, Naples -61.5%, Venice -60 , 7%, Rome -60.5% - comparable with those of Nice-Cannes (-61.8%), Barcelona (-59.2%) and Paris (-57.9%). In 2020 Italy will have a slightly more negative impact on flows than Spain and Western Europe in total, and a comparable impact with France, a trend that could continue in the years immediately following.
In economic terms, keeping the total national GDP of the economy in 2019 steady, the comparison indicates that the direct contribution of tourism to the Italian economy will decrease by -2.6 percentage points in 2020 (3.2% of GDP) compared to 2019 (5,7% of GDP). Although significant, this decline is lower than that of many other countries: -4.5% in France, -3.1% in Spain. In fact, the direct contribution of tourism in Italy to the economy in general is reduced by just under half, compared to more than half for all the other selected countries. The total contribution (which includes indirect and induced effects as well as direct impact) of the sector is therefore expected to decrease by -5.8 percentage points, from 13% of GDP in 2019 to 7.2% of GDP in 2020. As for direct impacts, the expected reduction for Italy (to less than half) is lower than for the other selected countries (-7.4% Spain).
  • Slovakia
The percentage share of tourism in Slovakia's GDP has been around 2.6 percent in recent years. Even during the pandemic, the Slovak Business Agency have actively monitored changes in the business environment and its development. One of the most affected sectors of the economy is tourism and in Slovakia it has seen a drop in sales of up to 50% compared to the last year. As part of measures to prevent the spread of coronavirus, selected retail and service facilities were closed in Slovakia. Quarantine measures significantly affected small and medium-sized enterprises (SMEs), which have problems with cash flow and maintaining employment due to the economic downturn. According to the SBA´s survey, 53 243 SMEs have terminated their activities (it is 8.9% of all active SMEs in the Slovak Republic). The highest share of entrepreneurs experiencing a decrease in sales are from the food and beverage sector (97.2%) and accommodation services (92.3%), followed by those in educational and health services (84.7%), arts, leisure and entertainment (82%), and personal services (80.9%).

On 25 June 2020, the Slovak government approved a package of 114 measures called “Lex corona”. It is the largest package in Slovakia’s modern history intended for improving the business environment and reducing administrative burdens. However, results of a survey on state aid, which was attended by 1 043 respondents from the sector of small and medium-sized enterprises and self-employed persons showed, that the state support for entrepreneurs needs to be simplified. The most critical perception of the measures reported businesses from the foodservice sector (76.1%), accommodation (69.2%) and arts, entertainment and recreation (63.9%), which includes sport activities or organization of events.

One of the reasons is, that the measures to help entrepreneurs and employers are general and non-addressed so a large part of tourism establishments were unable to utilize this assistance. Although the interest of Slovaks to stay in Slovakia and spend their holiday here has increased, the situation is still critical.

The summer season was positive especially for the owners of small cottages, because people have changed their preferences and they are looking for accommodation in solitude. After the partial freeing of measures and the reopening of establishments in June 2020, the interest in holidays in cottages, apartments, or smaller boarding houses was the first to be renewed. However, Slovakia lacks foreign tourists. As of 15th of September 2020, 20,000 people working in the tourism sector had been made redundant as a result of the Corona crisis, and further redundancies are foreseen. This is also due to the fact, that in Slovakia we record several tourism establishments where traffic did not increase during the summer months, and which are in the worst economic situation, especially city hotels, congress hotels, spas, which are also the largest employers. Travel agencies lost almost all clients overnight. 160 000 people currently work in Slovak hotels and restaurants. The general manager of the Association of Hotels and Restaurants, Marek Harbulak, asked the government and the representatives of political parties to start preparing measures to mitigate the negative impacts on tourism, which are currently impacting mostly small and medium-sized enterprises. Association of Hotels and Restaurants has concrete suggestions on how to support Slovak tourism. They want to negotiate with the government and come up with solutions together. To be heard, they organized a protest in front of the government office and initiates a Petition for the support of the tourism sector mostly affected by measures against the spreading of COVID-19. Read more about the situation in tourism caused by COVID-19 at the European level: Global Entrepreneurship Monitor: Diagnosing COVID-19 Impacts on Entrepreneurship; European Parliamentary Research Service: COVID-19 and the tourism sector.

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