Greece enjoys increase in tourist arrivals however receipts drop according to the October 2016 Monthly Statistical Bulletin. International airport arrivals exhibited an increase of +12.9% at regional airports and +14.3% at the Athens International Airport, while for the period January-September, the changes were +7.6% and +7.6% respectively. In addition, road arrivals also rose by +14.4%, compared to last September, restricting the ytd drop to -1.3%.
Nevertheless, according to Bank of Greece data (up to August incl.), receipts lagged significantly behind: estimates for August show a rise in arrivals of +1.8%, but a drop in receipts of -9.2%. Similarly, August ytd BoG data show an increase in arrivals of +1.3% and a decrease in receipts of -7.1%.
The delayed entry of Greece, through last-minute offers, into the tourism market this year undoubtedly played a critical role in lower receipts despite the increase in arrivals. These last-minute offers in a climate of excessive taxation create a bleak business environment for many tourism enterprises.
However, data in the SETE Intelligence's October 2016 Monthly Statistical Bulletin on Greek Tourism also indicate a generalised reduction in the average per capita expenditure of visitors. Specifically, based on data through the end of July 2016, there has been an overall drop of -3% to -4% for all Mediterranean destinations (Greece, Spain, Italy, Croatia and Cyprus). In contrast to Greece, increased arrivals in the other countries were high enough so that receipts also rose despite the reduced average spend per capita expenditure.
It is also noteworthy that, according to the BoG, in August the number of visitors exceeded the 5 million mark for the first time. The number is equivalent to 50% of the Greek population and reflects the attractiveness of the Greek tourism product.
This attractiveness is indicated,
- on the one hand, by the potential of incoming tourism to record 35 million arrivals and €20 billion in receipts over the next five years assuming, of course, that the tax counter-incentives in the tourism sector are lifted and a suitable environment is developed for investment and business operations,
- and on the other, by the increased investment and business interest in hotels, particularly at the high-end categories mainly in Athens, but also at other destinations in Greece.
More broadly, the Greek economic figures indicate further improvement, to the extent that the IMF has changed its projection for 2016 from recession to stable. Specifically, the Budget is being executed much better than planned (a primary surplus of 1.8% is expected, compared to the target 0.5%)1; revenues from shipping -whose dramatic drop in 2015 caused the drop of GDP- were up +19.2% in July-August and compensate for the drop in tourism revenues; exports at stable prices continued their upwards rise (+2.4% in the first six months and at +7.0% in July and August); manufacturing was up +6.2% in July-August and +4.8% in January-August, while retail sales in July were up +9.7%. The Foundation for Economic and Industrial Research (IOBE) recorded an improvement in the Economic Sentiment Indicator (ESI), due mainly to the improvement in consumer confidence. Moreover, Foreign Direct Investments in the first eight months amounted to €1.37 billion and are expected to rise further with the privatisations currently under way.
Finally, ERGANI data show an increase in employment (+245,605 jobs) in the first nine months, which is the highest recorded increase for the period since 2001.
These developments point to the fact that the fiscal package of €5.4 billion which significantly hampered the competitiveness of Greek tourism enterprises and the disposable income of mid-level and senior executives and freelance professionals was in all probability unnecessary from a fiscal standpoint, while being extremely damaging to the competitiveness of the Greek economy and the retention of its executive and managerial human resources.
In conclusion, it appears that in a year which could have contributed to the steady upturn of tourism that begun in 2013, the delay of Greece's entry into the tourism market in the first half of the year, in large part due to the refugee and migrant problem, led to reduced receipts. Meanwhile, the pointless imposition of additional fiscal measures significantly burdened the operations of many businesses, particularly tourism-related ones, along with the middle and higher income classes. Nevertheless, the potential of the Greek tourism product as a key pillar of the Greek economy, and not just as an opportunistic contributor, is clear. Doing away with tax counter-incentives and the elimination of economic and entrepreneurial insecurity would provide great impetus to this potential with significant benefits for the entire economy and for employment.
