Southern Europe Tourism Is Back With a 'Vengeance'

25.08.2023 - 13:35 / skift.com

After three years of pandemic travel restrictions and rocketing energy costs, tourism is back with a vengeance to boost the economies of southern Europe as sun-seekers make up for lost time.

Early bookings suggest Italy, Spain, Greece and Portugal could receive record tourism revenues this year, helping replenish state coffers depleted by rising debt interest payments and the cost of living crisis.

What’s more, there appears to be growing demand for the luxury end of the spectrum.

“Today in Italy, we have this boom in terms of tourism that is unbelievable,” Carlo Messina, CEO of Italy’s biggest bank Intesa San Paulo told investment analysts in a call.

“It is impossible to find a place in a 5-star hotel if you want to make a vacation.”

Tourism is vital to southern Europe’s economies.

The travel industry was worth 100 billion euros ($110.08 billion) or 6.2% of Italian output in 2019 before the COVID-19 pandemic brought the sector into its knees. Add the wider income generated by tourist-related business and the figure more than doubles to 13%.

In Greece, tourism accounts for no less than one-fifth of gross domestic product.

The number of foreign tourists visiting Italy was up 70.5% in the first two months of the year compared to the same period in 2022, according to the national statistics agency. It added that if the trend continues, Italy could match or surpass pre-pandemic levels.

In April, Greek Tourism Minister Vassilis Kikilias said summer bookings already pointed to a new record.

Portugal registered more than 2.8 million of foreign visitors from January to March, the best first quarter on record, according to official data.

In Spain, the flow of international tourists in the first quarter increased by 41.2% over the same period in 2022 and exceeded 13.7 million visitors, albeit still 3.5% below the same quarter in 2019.

The tourist industry is already benefiting. Airlines such as Lufthansa, easyJet and Ryanair have confirmed robust summer bookings while Ryanair, in anticipation of strong demand, has just ordered 150 new 737 Max-10s and optioned another 150.

German travel firm TUI expects strong revenue and higher profit in 2023. Italian travel and tourism company Alpitour forecasts turnover 30% higher this year.

“We already see a very strong demand to book Christmas holidays in 2023. We do 30 to 35,000 quotations a day, numbers never seen before,” Alpitour CEO Gabriele Burgio said.

Against a background of stubbornly high inflation and interest rate hikes from the European Central Bank, the tourism boom could not come at a better time.

While manufacturers are seeing demand declining, in Italy and Spain the service sectors grew respectively for the fourth and sixth month running in April driven