Holiday industry on path to recovery as tourists return to southern Europe

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The busy skies above Spain’s Balearic Islands spell good economic news for southern Europe — after a disastrous 2020 season, its tourist industry is on the path to recovery.

July’s tally of 2.4m air passengers to and from Mallorca, the biggest of the island chain, was more than double the number in the same month in 2020, although it was still more than 40 per cent down on pre-pandemic 2019.

In the old town of Ciutadella in neighbouring Menorca, tourists queued for tables at dozens of restaurants every night as they waited to dine on local delicacies such as stuffed aubergine and lobster stew.

The influx of visitors is a huge relief for the archipelago, which suffered a 24 per cent slump in GDP last year as coronavirus restrictions prevented holidaymakers from travelling.

“Things have gone much better than we expected five months ago,” said Maria Frontera, head of the Mallorca hotel association, adding that about 90 per cent of her members were open for business in August, more than double the proportion in May.

Southern Europe’s tourist industry feared it would lose a second consecutive summer. Instead, it has avoided repeating the nightmare of 2020 even if returning to the pre-pandemic level remains some way off.

“2020 was a disaster,” said Pepe Díaz, who runs three Menorca hotels. “But this year we have gone from a mediocre May to an extraordinary July-August period and by 2022 we expect our hotels to do better than they did in 2019.”

The mix is different from previous years. UK tourists have been outnumbered by those from both France and Germany, even in Spain, traditionally a British favourite. Beaches have outperformed city-break locations, while the upper end of the market has recovered more strongly than budget or family destinations. 

Overall, millions who stayed at home last year have travelled this summer, as pent-up savings and the yearning to go abroad have been unleashed by widespread vaccinations and looser restrictions.

“People are either wanting to get away right now or planning ahead for next summer, and they’re still looking to splash out and treat themselves,” said Alan French, chief executive of Thomas Cook, reinvented as an online company after its 2019 collapse. “Greece continues to be our most sought-after destination, followed by the Canary Islands and Balearics and Mallorca in particular.” He added that 80 per cent of bookings were for four star accommodation and above.

Indeed, luxury travel is booming. Private jet passengers to and from Mallorca in July were up more than two-thirds on the same month in 2019, with an average of 83 private jets arriving or departing a day. Pepe García-Aubert, who runs MB92, the world’s biggest superyacht refit group, also said it is now practically impossible to charter a yacht.

Mallorca bounces back

2.4m

Air passengers in July, more than double the same month in 2020

90%

Proportion of hotel association members open in August

83

Daily number of private jets arriving and departing in July

The uneven recovery translated into a fillip for the economy. Maria Jesús Fernández, an economist at Spain’s savings banks foundation, said the better than expected tourist season was likely to add up to 0.2 per cent to the country’s overall growth this year, which she now forecasts at about 6.5 per cent.

The economic dividends are likely to be felt even more in Greece, which reported GDP growth of 3.4 per cent for the second quarter and expects to do better in the third, despite having had to contend with devastating forest fires as well as the pandemic. 

“In May we were saying that if we managed to reach 40 per cent of 2019 bookings we would be very lucky. As of today’s data and after September bookings, we will exceed 50 or even 60 per cent if there isn’t an unexpected development with the pandemic,” said Yannis Retsos, head of the Greek Tourism Federation.

In prime destinations such as Corfu, hotels have been running at 80-90 per cent occupancy and charging higher prices than 2019, according to the island’s hotel association. Greek air traffic in August was about 90 per cent of the level for the same month in 2019, data from Eurocontrol showed, although the cumulative total for the year is still well below two years ago.

But elsewhere, the economic benefits have been far from overwhelming. A survey by French National Federation of Tourism Organisations suggested an improved picture across most of the mainland.

“But that optimism must be tempered by the fact that numbers are still down on 2019,” it concluded. “The very good numbers of French customers . . . did not completely make up for the decline in the number of foreigners in most areas of France.” 

There are also enduring concerns about the pandemic.

The contagiousness of the Delta variant, together with colder weather and the return to school, has stoked concerns about the coming winter.

Philip Meeson, executive chair of tour operator Jet2, added the UK’s traffic light system for determining whether travellers have to isolate on return had caused “continuing short term uncertainty”. Customers were booking “significantly closer to departure”, making it more difficult for travel companies to gauge demand, he added. The system is due to be reviewed on October 1.

Meanwhile bookings for next summer have already started, as consumers bet on a return to a more normal holiday season. Jet2 and Tui both say reservations for the next year are running ahead of where they had been in 2019.

But the holiday industry cautioned that, with reservations now easy to cancel and the pandemic far from over, there was a growing need to be more flexible. 

“The rules of the game have changed,” said Frontera of Mallorca’s hotel association. “We need to find a balance — more sustainable tourism and value not volume. Because in the short or medium term this pandemic doesn’t look like it is going to disappear.”

Additional reporting by Victor Mallet in Paris and Miles Johnson in Rome