Greece’s association of tourism enterprises was the latest group this week to broach the question of how tourism-related revenue appears to have fallen in 2016 when arrivals reached near record-breaking levels.
The association’s (SETE) October 2016 bulletin refers to a reduction in European holiday-makers’ purchasing power and a still anemic, in terms of growth, European economy.
Additionally, SETE’s analysts cited a delayed entry by Greek tourism into the so-called “last-minute” holiday packages sector. Another factor cited, although not linked directly to falling revenues juxtaposed with increased arrivals, is a trend to raise taxes on business profits in the country, which the leftist government did in 2016.
According to the trade association, per capita spending by visitors through July 2016 is estimated to have dropped by 3 to 4 percent, yoy, in all European Mediterranean destinations – Greece, Spain, Italy, Croatia and Cyprus.
Nevertheless, tourist arrivals in the aforementioned countries, sans Greece, increased significantly, offsetting lower per visitor spending. Although arrivals were up in Greece, the figure was not large enough to offset the reduction in tourism receipts.
On the other side of the spectrum, arrivals to Turkey and corresponding tourism revenue dropped by 29.1 percent and 30.1 percent, respectively.
For Greece, a very modest 1.1-percent increase in arrivals for 2016 is overshadowed by a 4.9-percent drop in tourism revenue, based on initial assessments by the Bank of Greece.
A couple of reasons were aired last week, but not cited in the current SETE bulletin. One reason holds that many tourism enterprises, mostly hotels, used overseas bank accounts to handle payments, either directly by tourists or tour agencies, or through electronic transactions onsite but with the payment again flowing to overseas bank accounts.
While legal receipts were issued to customers and tour agencies, this method of payment was used to circumvent still imposed capital controls in the country – a “legacy” from 2015 disastrous negotiations between the Tsipras government and institutional creditors.
Another reason cited is the fact that many tourism professionals are turning to “under-the-table” transactions, without receipts, in order to avoid paying higher taxes on profits or making their services costlier with increased VAT rates.
