Economy & Trade, Europe, Headlines

TOURISM: Southern Europe Loses Its Edge

Mario de Queiroz

LISBON, Aug 20 2004 (IPS) - Tempting and affordable offers of vacations in "paradise" settings in developing countries are causing serious harm to the powerful tourism industries of southern Europe.

The growing preference for North Africa and Latin America among better-off Europeans is having a growing impact on the traditional tourism markets of Greece, Italy, Portugal and Spain.

According to the World Tourism Organisation, the hardest-hit is Portugal, which has lost nearly half a million visitors in the past three years, most of them vacationers who used to faithfully visit southern Portugal’s Algarve region.

The decline could be even greater this year due to last year’s massive forest fires and the fires currently burning in the south – an environmental catastrophe that keeps away tourists.

Last year’s forest fires in Portugal were the biggest to hit Europe in half a century, and destroyed 434,000 hectares of woodland.

And according to statistics recently released by the Portuguese government, the flames have devoured 108,000 hectares this year, mainly in the hills of the Algarve region.

By the end of the first month of the summer high-season – which stretches from Jul. 10 to Sep. 10- the worst fears of tourism businesses were confirmed: the number of visitors from Europe who flood southern Portugal every year was down 15 percent this year.

In late July, hotels in the Algarve region began to take desperate measures aimed at salvaging the season, including price reductions of up to 25 percent.

But after two weeks of advertising "clearance sale" vacation deals, with offers of five-star hotel rooms for the price of a three-star stay, with lunch and dinner included and discounts on bar tabs, there is no indication that this summer will be anything but a disaster.

Portugal, Greece and Spain are losing ground in tourism, a key source of income for their respective economies, as millions of Europeans are choosing alternative destinations like Brazil, Cuba, the Dominican Republic, Egypt, Kenya, Morocco, Tunisia or Turkey, which offer prices that can’t be beat.

Italy is also feeling the effects, although the decline in tourism flows has not had the same impact on its economy due to the country’s high level of development, which makes it a leading industrial power that vies with Britain every year for the fifth spot in the global ranking, after the United States, Japan, Germany and France.

For Portugal, by contrast, tourism is the biggest single source of revenues, accounting for nearly 7.6 billion dollars out of a total Gross Domestic Product (GDP) of 160 billion dollars in 2001, according to official figures.

To help weather the storm, Spain and Greece – which in any case is benefiting from the Olympic Games it is currently hosting – have developed policies based on more competitive prices, while offering high-quality "alternative" tourism, with a strong focus on cultural attractions.

The two nations have also avoided a phenomenon frequently seen in Portugal: the destruction of traditional villages replaced by large modern buildings of questionable architectural taste that end up turning off tourists in search of good beaches, but in a quaint Portuguese setting.

Even the Portuguese have begun to avoid the expensive Algarve region, which has increasingly lost its unique cultural flavour.

And as the director of a Lisbon travel agency told IPS, "it ends up to be cheaper for a (Portuguese) couple with one child to spend two weeks in Brazil than in Portugal, even including the air fare, and there is the additional advantage of the excitement of visiting a huge exotic country where people speak the same language we do."

The search for less costly vacation spots also has other causes. Despite the optimistic European Union (EU) forecasts in 2003, the "eurozone" – made up of Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain, the 12 countries that have accepted the common European currency – has not yet taken off in economic terms.

At the same time, Britain, Denmark, Sweden, Switzerland, Norway and the former socialist countries of central and eastern Europe are hurt by an overvalued euro, while they benefit from the weak U.S. dollar – the currency most widely used in the tourism industry outside of Europe.

The "sun and sand" tourism offered by Greece, Portugal and Spain is also feeling the competition from Croatia, whose Dalmatian coast offers rugged mountains and countless islands set in a clear-blue sea, at prices that are impossible for the countries of western Europe to compete with.

In the area of cultural tourism, Budapest and Prague are the obligatory complement to Paris, Rome, Florence, Venice and Vienna, which have traditionally drawn more visitors than Madrid and Lisbon.

The Jun. 12 to Jul. 4 2004 European football cup in Portugal was another factor that led to a decline in traditional summer visitors to the Algarve region, say analysts.

Businesses in the area opted for quick, easy profits, hiking prices in hotels and restaurants way up in defiance of the recommendations put out by the Portuguese Institute of Foreign Trade (ICEP), which counselled moderation in order to promote the country as an affordable tourist destination.

ICEP warned that it could be fatal for the Portuguese economy if the country gained a reputation as an expensive vacation spot.

During the football championship, a room in a pension cost as much as a stay in a luxury hotel, which hurt the image that foreigners took home.

According to Vitor Filipe with the Portuguese Association of Travel and Tourism Agencies, the price factor is decisive for summer vacationers, and it is not enough to merely increase quality in order to compete with Spain, the most direct rival.

"In times of crisis, the most important thing is to review our policies, and perhaps what is happening is that Spain has beat us in terms of the cost-price relationship," said Filipe.