Tourism Industry in Southern Europe Benefits From Unrest

By RAPHAEL MINDER

ANDORRA — As political turmoil continues to spread across North Africa and other parts of the Arab world, countries in Southern Europe are drawing more visitors and witnessing a rebound in tourism.

That recovery is particularly welcome for Spain, Portugal and Greece, three of the European countries whose economies are most dependent on tourism but have also suffered most since the onset of the world financial crisis. In Greece, the travel sector was also hit last year by strikes that crippled transportation and other labor protests against austerity measures that the government introduced in return for a €110 billion, or $153 billion, international bailout.

An early beneficiary of the North Africa upheaval has been the Canary Islands, the Spanish archipelago off West Africa. Last month, the hotel occupancy rate there reached 90 percent, about 12 percentage points of which came from vacationers who had initially planned to travel to countries like Egypt and Tunisia to escape the winter cold, said Sebastián Escarrer, vice chairman of Sol Meliá, the largest hotel operator in Spain.

Diverted travel from North Africa amounts to “fresh air for us, but certainly no reason to get complacent or believe that nothing more needs to be done to reposition our tourism product,” he said.

Still, Mr. Escarrer and others attending a conference this week in Andorra organized by the United Nations World Tourism Organization warned that the windfall benefits from political instability in North Africa could prove short-lived.

“We should not consider this period of improvement as evidence of what the future will look like, because when countries become more democratic, they tend to get more tourist-friendly,” said Miguel Perestrello, a director at Turismo de Portugal, the national tourism agency. “Next year could in fact see a reversal, when Egypt and others will bounce back with a very aggressive approach on pricing, and we could then lose out.”

Tourism accounts for about 11 percent of gross domestic product in both Spain and Portugal. In Greece, it represents about 20 percent. In the longer term, argued Taleb D. Rifai, the secretary general of the U.N. tourism organization, political change should benefit the entire Mediterranean. The region accounted for about a third of tourist arrivals worldwide last year.

“I think it’s a big mistake to even describe this momentary diversion of tourism from North Africa to Southern Europe as a gain for some at the expense of others,” he said. “I see a win-win situation, in which the Arab side of the Mediterranean can emerge as strong as any European destination and that will be good for the whole Mediterranean brand.”

In the near future, however, said Jürgen Ringbeck, head of the transport, tourism and travel practice at the consulting firm Booz & Co., the shift from North Africa could mean an improvement not only in the number of tourists in Southern Europe, but the profit realized from each. “If hotels smell that demand is coming back, they tend to adjust their pricing very fast,” he said.

Mr. Ringbeck noted that German tour operators had announced the cancellation of about 50 percent of their summer bookings for Egypt. Turespaña, the Spanish tourism agency, recently estimated that 600,000 to 650,000 trips had been rebooked to Spain since the start of the protests in North Africa. That includes about 400,000 bookings from Britain that were initially made for Tunisia and Egypt.

Manny Fontenla-Novoa, the chief executive of Thomas Cook, the second-largest European tour operator, after TUI, told Reuters last week that South European countries like Greece and Spain were “clear winners” as customers sought to avoid North Africa. Tourism in Greece was enjoying a “real comeback, especially after all the problems there last year,” Mr. Fontenla-Novoa said.

But Thomas Cook estimated that the cost of canceled trips and repatriating customers from North Africa was likely to cut its second-quarter profit by about £20 million, or $32.3 million.

Reflecting in part the winter appeal of the Canary Islands, Spain could benefit most from this year’s diverted tourism flow from North Africa, executives suggested. Meanwhile, “the really huge question mark is what this will mean for Turkey,” said Mr. Escarrer, the Sol Meliá executive.

For Americans, Egypt’s recent upheaval is likely to result in more African safari bookings or travel to Asia rather than more vacations in Southern Europe, according to Paul Cohen, president of Partner Concepts, a marketing firm in Annapolis, Maryland.

“Americans haven’t really been going to North Africa for its sun and beaches but to experience a different culture and history,” he said. “So the North American search for alternatives isn’t the same as that of Northern Europeans.”

Mr. Cohen also warned that Egypt and others risked soon “shutting themselves out of the 2012 market” unless political stability was re-established quickly, because Americans plan their more limited vacation time further in advance than Europeans, and “are right now booking already their holiday for next fall.”

After two years of declining arrivals, Spain welcomed 2.66 million international tourists in January, an increase of 4.7 percent from the period a year earlier, according to Frontur, an institute that surveys tourism. The North African turmoil has followed steep price reductions by hotel chains and other tourism operators in Spain and elsewhere in Southern Europe to revive demand.

“The events in North Africa will accelerate a recovery that was already underway thanks to price cuts,” Simón Pedro Barceló, president of Barceló Hotels, one of the biggest Spanish hotel operators, said last week by telephone. “The impact has so far been most clearly seen in the Canary Islands, but I certainly expect it to spread to coastal Spain and the Balearic Islands over the coming months.”