in

Delta variant leaves southern Europe struggling to save summer tourism

Southern European countries are in the unenviable position of having to restrict foreign tourism or risk the rapid spread of the Delta coronavirus variant, as economists warn of another disappointing season either way.

Tourism-dependent countries such as Spain have pushed back against German chancellor Angela Merkel’s call for a co-ordinated EU response for travellers from countries with high levels of the variant first detected in India.

But economists say they must still balance welcoming tourists from countries such as the UK and Russia, where the variant has spread, against the risk of the variant taking off in their own countries.

“The trade-off is in evidence already, with the likes of Greece and Spain saying they are open to everyone, while the cost-benefit equation is clearly viewed very differently in northern European countries,” said Jessica Hinds, economist at Capital Economics.

This week, Spain, Portugal and Malta tightened restrictions for UK tourists. Earlier this month, Italy required UK travellers to quarantine for five days. But following a drop of up to 80 per cent in foreign tourism revenues last year, such countries are seeking to regain lost ground.

Column chart of overnight stays in EU tourist accommodation (m) showing tourism remains in the doldrums

Inbound tourism accounted for 10 per cent of gross domestic product in Portugal and Greece and almost 6 per cent in Spain in the year before the pandemic, according to the OECD.

Illustrating their desire to attract tourists, Spain and Portugal in May lifted most testing and quarantine restrictions on arrivals from countries such as the UK. Greece did the same for vaccinated arrivals from 53 countries, including Russia. Since then, both the UK and Russia have had sharply rising Delta variant infections.

Overnight stays in the EU were down 55 per cent in June from pre-pandemic levels, according to Oxford Economics, but it predicts the decline could be only 25-15 per cent in August. Searches on Google for accommodation in Spain have rebounded to 2019 levels.

McKinsey, the consultancy, is gloomier. It forecasts overall tourism revenues in Spain and Portugal will be half of pre-pandemic levels this year and only fully recover by 2024.

Line chart of Spanish inbound tourist expenditure (€bn) showing a brighter summer expected in Spain

The EU is due to launch its digital vaccination certificate on Thursday to make it smoother for residents who are fully vaccinated, have a negative test result or have recovered from Covid-19 to travel within the 27-country bloc.

However, countries such as Spain also want to host non-EU tourists, in particular from Britain. Normally, the UK is Spain’s biggest source of visitors, accounting for 18m in 2019, compared with 11m each from Germany and France, the second and third-ranked countries.

The fast-changing situation is complicating matters. The UK last week gave Spain a boost by including the Balearic archipelago on its “green list” for quarantine-free travel. But Spain’s prime minister Pedro Sánchez then reintroduced restrictions on British tourists, requiring them to be fully vaccinated against Covid-19 or show a negative PCR test. The move hit the share prices of airline companies including Ryanair and easyJet.

Infection rates on the Balearic Islands have already risen since thousands of Spanish students travelled there to celebrate the end of exams two weeks ago. At least 850 of them have since tested positive for Covid-19.

Tom Jenkins, chief executive of the European Tour Operators Association, said uncertainty would deter many in the UK from travelling this summer. “The volatility both in terms of the epidemiological and political risk means that any booking is fraught,” he said.

One example of how quickly things can change came after Portugal lifted restrictions on British tourists on May 17 shortly before the UK government added the country to its “green list”. 

But three weeks later, the UK removed Portugal from the list, prompting many tourists to return early to avoid quarantining. Since then, a surge in infections has given Portugal one of Europe’s highest Covid-19 levels, prompting it to impose weekend bans on travel to and from Lisbon. 

A week later, Germany dealt Portugal another blow, adding the country to its list of “coronavirus variant countries” and banning most travellers from the country except German residents, who must quarantine for two weeks on return. Portugal has now imposed similar quarantine rules for non-vaccinated arrivals from the UK.

Merkel told a news conference last week that “we have a situation in Portugal that perhaps could have been avoided” if EU countries had adopted a uniform approach to travellers from higher risk areas. A few days later, Malta said it would only accept fully vaccinated travellers from the UK.

The German chancellor also chided Greece for accepting visitors inoculated with Chinese and Russian vaccines that have not been approved by EU authorities. Greece this week said it would require a negative coronavirus test from all passengers arriving from Russia, even if they were vaccinated.

Economists say the EU vaccination programme is a race to save the region’s tourist season from the Delta variant. Rafael Doménech, head of economic analysis at the Spanish bank BBVA, said: “The best response to this threat is to accelerate the vaccination campaign.”

Additional reporting by Eleni Varvitsioti in Athens and Peter Wise in Lisbon

What do you think?

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Loading…

0