Macro roundup: Tourism surges
Visitors to Greece and travel receipts are soaring, but average spend is falling
We are now getting near to the end of the Greek summer in real time, but in terms of data availability, the peak tourist season is only just starting to get into swing.
The Bank of Greece this week released data for June that showed that travel receipts increased 23.9 percent in the first half of the year to 6.17 billion euros. Compared with the first half of 2019 — which was a record year for revenue from tourism — receipts were 14.1 percent higher.
Tourism revenue collapsed in the two-year period of 2020 and 2021 as a result of the pandemic, but recovered impressively in 2022 to come close to its record high. While there was also a healthy recovery in the number of visitors last year, this was a smaller rebound than for receipts. Instead, those tourists that came spent more than they did three years previously, with the average spend per visitor per trip amounting to 608 euros in the first half of last year, compared with 558 euros in same period of 2019.
For the first half of this year, visitor numbers also shot past their 2019 level — the number of arrivals were 7 percent higher than four years ago.
What is surprising is that the average spend per visitor has fallen in the first half of this year to 594 euros. This is particularly remarkable since these are nominal figures that aren’t adjusted for inflation. And while the inflation rate has been decelerating this year, it remains substantially higher in the tourist sector.
For people living in Greece, it’s been obvious that prices for holiday accommodation have soared this year. Last month prices for accommodation services were 6.5 percent higher than the same month a year earlier — and in April this rate reached as high as 21.8 percent.
So this suggest that while the number of visitors to Greece is increasing, the profile is shifting towards travellers with tighter budgets. This is interesting because something that last year seemed like a statistical blip could in fact be a trend towards lower income segment of the market.
Average spend per visit plunged in 2020, the first year of the pandemic, but then surged to 681 euros in 2021. Given that Covid restrictions were still in place and visitor numbers were still extremely low that year, the obvious explanation was that those most able to take vacations abroad were affluent tourists who could spend more at their destinations. Last year’s drop from that elevated level seemed like it was just a normalisation of sector.
The fact that average spend continues falling this year — especially given rising prices — hints that either that normalisation is taking longer might be expected, or some kind of deeper shift is going on.
Greece’s current account deficit in June was 638.2 million euros, compared with 842.2 million euros in the same month of 2022.
The trade balance (goods and services) moved into a surplus of 326.8 million euros, compared with a deficit of 295.4 million euros in June 2022
In the first half of the year, the current account deficit narrowed to 7.86 billion euros from 11.6 billion euros a year earlier
Next week’s key releases
Monday, Aug. 28:
July bank lending and deposits (Bank of Greece)
May building activity (Elstat)
Wednesday, Aug. 30:
August economic sentiment indicator (European Commission)
July producer price index (Elstat)
Thursday, Aug. 31:
July unemployment (Elstat)
June retail sales (Elstat)
Friday, Sept. 1
August manufacturing PMI (S&P Global)