- Will surging travel prices wash out Southern Europe’s all-important summer season? Beach holidays are the top choice for leisure trips (30.3%) but 41% of European travelers expect to spend more than EUR1,500 on their holidays this summer, up from 33% last year. Nevertheless, we find that an average one-week beach holiday in Southern Europe is still far cheaper than the Caribbean, Australia and the US, and on par with many premium destinations in Latin America, Africa and South-East Asia. And higher prices do not seem to be deterring holiday plans: Revenue per passenger kilometer (RPK) for trips within Europe already reached 92% of the 2019 level during the first quarter of 2023, while air-ticket sales volumes for the May-to-September have also reached 91% of the 2019 summer level.
- Yet, Southern Europe is caught between the devil and the deep blue sea. Tourism accounts for the largest share in total gross value added in Croatia (11.3%), closely followed by Portugal (8.1%), Greece (7.7%), Spain (6.9%) and Italy (6.2%). This results in a bad equilibrium of strong structural dependence on foreign tourists and an increasing vulnerability to exogenous shocks (such as the pandemic). It also risks perpetuating the region’s inherent structural problems of low-skilled jobs and low productivity.
- Southern Europe needs to invest in sustainable tourism practices to ensure the preservation of natural environments and cultural heritage for future generations. Enhancing infrastructure, including transportation networks and accommodation, can also improve accessibility and cater to diverse traveler preferences. And promoting off-season tourism and diversifying offerings beyond traditional beach holidays can also help attract visitors throughout the year.
Back to the beach: Tourism rebound in Southern Europe?
A day in the sun?
Southern Europe is caught between the devil and the deep blue sea
Southern Europe needs to make strategic efforts in several key areas to enhance its standing as a premier beach holiday destination in light of strong competition from other regions. Less expensive beach holiday destinations in many developing economies are easily reachable. Some of these countries have comparable natural and cultural riches but at lower prices (albeit due to lower labor standards), which could eat into the attractiveness of Southern Europe’s tourism industry. Investing in sustainable tourism practices can ensure the preservation of natural environments and cultural heritage for future generations. Furthermore, enhancing infrastructure, including transportation networks and accommodations, can improve accessibility and cater to diverse traveler preferences. Promoting off-season tourism and diversifying offerings beyond traditional beach holidays can also help attract visitors throughout the year.
However, heavy reliance on tourism traps Southern Europe in a bad equilibrium of a strong structural dependency on foreign tourists and an increasing vulnerability to exogenous shocks (such as the pandemic). It also risks perpetuating the inherent structural problems the region faces in today’s globalized knowledge economy, such as a prevalence of low-skilled jobs and low productivity. With other parts of Europe increasingly shifting towards high-skilled, high-value-added manufacturing and high-end services, this could create a growing divergence across Europe.