Recession-hit Europeans stay close to home

Europe Tourism Slump
Manolo Ortiz, owner of the Moby Dick and El Trebol restaurants stands by empty tables in Arona on the Canary island of Tenerife.Carlos Moreno / AP
/ Source: The Associated Press

To anyone crammed in a water taxi on a hot August day, Venice seems as full of tourists as ever. This year many of them are speaking Italian.

Summer in Europe is traditionally a time of holiday and travel — but the continent's famous tourist destinations have a decidedly more provincial air these days.

Increasingly, Europeans are taking their holidays in their home country, a result of the recession and a problem for industries that depend on international travel, such as airlines, whose woes could be deepened if fears of a wider swine flu outbreak materialize.

International tourism arrivals in Europe were down 10 percent in the first four months of the year. If early signs of economic recovery hold, the U.N. World Tourism Organization forecasts that to improve slightly to a drop of between 5 percent and 8 percent — reflecting drops in such top destinations as France, Spain and Greece.

France, the world's No. 1 tourist destination, saw a decrease of 4 percent in foreign visitors last month, and that is expected to rise to as much as 30 percent when July and August numbers are tallied. The hope for France's tourist industry, 6 percent of GDP, are French tourists, said secretary of state for tourism Henri Novelli, who believes that French demand will make up for foreign demand.

The last thing leisure-loving Europeans are going to let get in the way of their proverbial summer holidays is a little thing like the global economic crisis. And in such tourist-dependent countries as Italy and France, officials say homegrown tourism could be a hedge against a drop in international arrivals.

While many Europeans are getting the break they need, the fragmented industry that flies them to their destination, fuels their cars, books their hotels, drives them in taxis and prepares local fare in restaurants is not getting much of a break at all.

"We have some evidence that people are traveling less. That is a fact," said Geoffrey Lipman, deputy secretary-general of the UNWTO.

Experience the grand cities, amazing architecture and natural beauty of the Old Continent.

At the same time, "people have come to accept a holiday as part of their annual routine. They perhaps are staying closer to home. ... What they also are doing is trading down, not traveling business but economy, booking a three-star instead of a four-star package."

But even this pattern could change, the longer the downturn continues, or if there is an uptick in cases of swine flu, Lipman said.

And those uncertainties can mean tougher times ahead for the tourist industry, which still does not know how deep the hurt will be.

Italian hoteliers say already 20 percent of jobs have been lost in the sector in January. In Greece, officials forecast the loss of some 19,000 tourism-related jobs this year.

"We are not an industry asking for a bailout, in the same way as motorcars, manufacturing or banks," Lipman said. "What the tourist industry is going to do is say, 'There are many ways you can help us by doing intelligent things. By reducing taxes rather than raising them, encouraging people rather than discouraging them. If you are giving incentives for people, put tourism in there.' "

Lipman said stimulus packages in 60 countries worldwide include provisions that either aimed specifically at tourism or at sustaining small- and medium-sized enterprises that comprise some two-thirds of the tourism industry delivery chain.

If any one area may need help, Lipman said, it would be the airline industry, which is already suffering huge losses and keeping up passenger numbers with fare sales.

In Spain, which like Italy derives 11 percent of its GDP from tourism, the government last month approved a euro1 billion ($1.42 billion) aid plan to boost the tourism sector through the recession. It includes a euro500 million ($711 million) credit package to help make tourist venues more environmentally sustainable.

The Italian Tourism Industry estimates that the number of tourists in Italy will rise by 11 percent this summer albeit for shorter stays. But that figure is disputed by a national hotelier association which says the increase will be a more modest increase of 1.5 percent offset by an 18 percent decline in spending and a 17 percent decrease in duration.

Swedes, Austrians and Italians are among those staying close to home for their holidays.

The Italian Tourism Ministry says Sicily has usurped Spain as a destination for sun-seeking Italians. Tiny Montenegro also is benefiting by the tendency to vacation close to home: Visits are up 4 percent, mostly from neighboring countries.

But the situation is dire in Croatia.

Locals may relish the empty beaches, but the national economy, which takes 15 percent from tourism, is forecast to contract up to 4 percent this year. Tourist spending is needed more than ever, with even the World Bank noting that the "knockoff effect of the global crisis on the tourism season" would determine how much Croatia's economy will shrink.

Outlooks are hampered by last-minute bookings, especially prevalent among German travelers worried about their future. "They have to ask themselves, 'Do I have enough money? Will I have a job tomorrow?" said Christian Taenzler of the Berlin tourism office.

Among the most-missed European travelers: the Brits, who are staying at home, despite the soggy summer, due largely to the drop in value of their currency.

In Switzerland, the number of hotel nights by British tourists has dropped by 20 percent in the first half of the year. Arrivals by Britons in Spain are off by 16 percent.

"We cater to English tourists and residents, and can tell you the numbers are down and they don't have a lot of money," said Neil Manley, owner of Coral Bar and Restaurant, a traditional English fish-and-chips establishment on the Spanish resort island of Tenerife. "It's alarming because there doesn't seem to be an end to it."

Tourism officials, however, are optimistic that their sector will be the first to benefit from any sustained recovery.

"I think the tourism industry may come back before other industries," said Rob Franklin of the Brussels-based European Travel Commission. "There will be pent-up demand. There is no doubt about it. ... It is a resilient industry. You only need to look at the past to see how quickly tourism will bounce back."