Foreign tourist arrivals to Greece rose by 8.5%
Friday, January 09, 2009
Recently released official data show that foreign tourist arrivals to Greece rose by 8.5% year-on-year (y-o-y) in 2007 – slightly stronger than we had previously forecast – which represents three years of steady growth in the tourism sector. The number of cruise passenger arrivals (included in these data) declined slightly y-o-y. As in 2006, the UK and Germany were the key source markets, accounting for around 15% and 13% respectively of total arrivals (down on a year earlier). Arrivals from the UK were largely unchanged, compared with 2006, while the number from Germany declined marginally. However, the number of EU visitors rose a buoyant 20% y-o-y in 2007, while the relative proportion of arrivals from the EU also increased relatively sharply, from nearly 66% in 2006 to almost 73%. Of particular note was the strong growth in arrivals from a number of Eastern European countries, including Bulgaria, Romania, Hungary and Poland.

Greece’s economy performed better than expected in Q108, due primarily to strong export growth, which helped offset the effects of waning domestic demand. However, with the country’s main trading partners directly affected by the ongoing US slowdown, such support is unsustainable. Consequently, it's expected GDP growth to slide to 3.3% in 2008, closer to its trend growth rate of 3.0%. BMI expects growth in foreign tourist arrivals to Greece to slow noticeably in 2008. This is largely due to economic conditions in Greece’s main source markets in the UK and the eurozone. Indeed, in line with further downward revisions to BMI’s 2009 eurozone real GDP growth, has revised down its forecast for tourist arrivals next year. The strength of the euro has also made non-eurozone countries and traditional rivals to Greece more attractive.

Although no new aggregate data on tourist arrivals/nights and occupancy rates in the hospitality sector are available this quarter, recent data referring specifically to hotels in Athens show average occupancy rates fell by 1% in the first five months of 2008, compared with the corresponding period a year earlier.

Reflecting an anticipated weakening in the tourism sector this year, growth in total and international passenger numbers at Athens International Airport (AIA) appears to be slowing quite sharply. The most recent traffic data for the first seven months of 2008 show total passenger numbers increased a low 1.1% y-o-y, with international passenger numbers up a slightly stronger 2.6% y-o-y to around 6mn. Domestic passenger traffic, meanwhile, declined slightly y-o-y.

State-owned Olympic Airlines carried a total of almost 6.0mn passengers in 2007, compared with some 5.5mn passengers a year earlier, a favourable increase of some 9% y-o-y. Domestic passenger numbers grew about 7.8% y-o-y to over 3.1mn, while international traffic was up 2.7%, compared with 2006, at 2.7mn passengers.

Aegean Airlines’ financial results for Q108 reveal revenues up a healthy 23% y-o-y to EUR98.8mn, but the airline reported a net loss after tax of EUR4.4mn (US$6.86mn), compared with a EUR2.6mn loss in the same period in 2007. The increased loss was mainly attributed to the sharp rise in fuel costs. Although domestic passenger traffic increased slightly y-o-y, international passenger numbers were up a considerable 35% on Q107.