Tuesday, 27 June 2017

Why is Greek tourism stagnating ?

Greek tourism is, at best, stagnating right now. The sector managed not to attract even a slither of the flows that turned away from Turkey during 2016. But what is the reason for the stagnation this past year and a half?

source: Bank of Greece, own calculations


I had written in the past about the subject and for what is worth I still think that the answer to the question posed above lies there. Perhaps the chart below will convince you as well.

source: Bank of Greece, Eurostat, own calculations


The inverse relationship between prices charged by the tourism sector and travel exports is more or less obvious I think, so here we have the reason that travel exports' growth slowed to a halt. Price hikes.

Another factor that one has to take into account here is tax evasion (something the sector is notorious for) but isn't this, indirectly, again due to tax hikes/price hikes? 

This year we keep hearing that things will pick up and that, earnings-wise, the tourist season will be phenomenal. Given that prices charged by the sector, at least for the time being, show no sign of reversing or pausing I am a bit sceptical. Of course in April travel exports grew by about 11% YoY, so let's hope that I'll be proven wrong and that this will indeed be a hell of a season for Greek tourism. (the planned increase in tax inspections from authorities might just make it appear a bit better even if it actually isn't) The country needs it badly in any case. 

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