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Southern Europe Tourism: Late Summer Catch Up, But Omicron Brings Seasonal Uncertainties

This commentary analyses the performance of the travel and tourism sectors (T&T) in Southern European countries in 2021. In a previous commentary we assessed the impact of the COVID-19 pandemic on the Southern European travel and tourism market in 2020 when there was an absence of vaccines and travel harmonization processes. Following a challenging year in 2021, but with the vaccination rollout and the relaxation of travel bans until the last few days, international tourism in Southern Europe showed signs of recovery. This was especially evident during the Summer, as the effects of the emergence of the Delta variant at the beginning of the year passed and travel opened up from late May. Early data point to a strong performance also in October. The recent surge in COVID-19 cases around Europe and the emergence of the Omicron variant pose challenges and bring uncertainties for tourism in the upcoming holiday period.

Key highlights include:
• Travel and Tourism in Southern Europe showed encouraging signs of recovery in Summer 2021. Despite the slow start to the Summer holiday season, the vaccination rollout, the harmonisation of travel rules in Europe and a relatively good epidemiological situation domestically and in the main tourist source markets led to a longer season and helped the sector recover from 2020 lows.
• Foreign tourism recovered most rapidly in Greece and Cyprus this year, especially during late Summer, when compared to Spain, Portugal and Malta.
• The resurgence of COVID-19 cases in Europe and the new Omicron variant pose risks to the ongoing recovery of the tourism sector, especially in countries with lower vaccination rates like Greece and Cyprus. The high vaccination rates in Spain, Malta and Portugal could act as mitigant.

“DBRS Morningstar expects the tourism sector to continue on a recovery path in 2022, with the epidemiological situation not only in Europe but also globally playing an important role. The emergence of the Omicron variant has raised concerns and shows clearly that the virus will continue to pose risks to international tourism unless a high rate of effective vaccination globally is reached,” said Spyridoula Tzima, Assistant Vice President at DBRS Morningstar. “Perceptions of a threat of wider restrictions on travel between EU and non-EU markets could stall the recovery for the remainder of the year, but this is mitigated by the fact that the majority of tourism flows are intra-European,” added Spyridoula Tzima. “With the Summer season behind us, the better-than-expected recovery in foreign tourism to Greece and Cyprus should help them recover part of the lost ground due to the pandemic,” said Javier Rouillet, Vice President at DBRS Morningstar.