Southern Europe tourism destinations benefit from North African unrest

Like Malta, the recovery is good news for Spain, Portugal and Greece - all European countries whose economies are most dependent on tourism but who have also suffered since the onset of the world financial crisis.

Locally, tourism generates around 35% of the gross domestic product while it accounts for about 11% of GDP in both Spain and Portugal. In Greece, it represents about 2%.

The New York Times reports that UN tourism organization Secretary General welcomed the trend, saying that the political change should benefit the entire Mediterranean in the longer term, as the region accounted for about a third of tourist arrivals worldwide last year.

“I think it’s a big mistake to even describe this momentary diversion of tourism from North Africa to Southern Europe as a gain for some at the expense of others,” he said. “I see a win-win situation, in which the Arab side of the Mediterranean can emerge as strong as any European destination and that will be good for the whole Mediterranean brand.”

The New York Times also reported that last month, Greece’s hotel occupancy rate reached 90%. Of these, as many as 12% points of which came from vacationers who had initially planned to travel to countries like Egypt and Tunisia to escape the winter cold.

The general feedback is however that this is no reason for countries or tourism operators to become complacent, as the windfall stemming from North Africa’s political instability could prove short lived.

“We should not consider this period of improvement as evidence of what the future will look like, because when countries become more democratic, they tend to get more tourist-friendly,” Miguel Perestrello, national tourism agency director at Turismo de Portugal was reported as saying.

“Next year could in fact see a reversal, when Egypt and others will bounce back with a very aggressive approach on pricing, and we could then lose out.”

In the near future, however, Jürgen Ringbeck was reported as saying, head of the transport, tourism and travel practice at the consulting firm Booz & Co., the shift from North Africa could mean an improvement not only in the number of tourists in Southern Europe, but the profit realized from each. “If hotels smell that demand is coming back, they tend to adjust their pricing very fast,” he said.

Ringbeck also noted that German tour operators had announced the cancellation of as many as 50% of their summer bookings for Egypt. Turespaña, the Spanish tourism agency, recently estimated that 600,000 to 650,000 trips had been rebooked to Spain since the start of the protests in North Africa. That includes about 400,000 bookings from Britain that were initially made for Tunisia and Egypt.

Manny Fontenla-Novoa, the chief executive of Thomas Cook, the second-largest European tour operator, after TUI, told Reuters last week that South European countries like Greece and Spain were “clear winners” as customers sought to avoid North Africa. Tourism in Greece was enjoying a “real comeback, especially after all the problems there last year,” Fontenla-Novoa said.

But Thomas Cook also estimated that the cost of cancelled trips and repatriating customers from North Africa was likely to cut its second-quarter profit by about £20 million, or $32.3 million.