Tourism is an important economic activity in the eurozone periphery. The sector accounts for roughly 17 percent of gross domestic product in Greece, 10 percent in Spain and 9 percent in Portugal. This is well above the average of 4.2 percent for members of the Organization for Economic Cooperation and Development. The sector provides an important source of employment in both the formal and informal economies. This is especially true during the summer, when most tourism-related seasonal jobs are created.
Internal devaluation, by which countries try to increase their competitiveness mainly by reducing labor costs, has brought prices down and made Spain and Portugal more attractive for tourists. As a result, both Iberian countries found temporary relief for their unemployment crises during the summer months in 2012, a trend that will recur this year.
Greece, where the permanent threat of protests and strikes depressed the sector in recent years, was different. The 2013 season, however, will probably see a stronger performance, since the country has more or less stabilized.
Spain and Portugal
Spain is the world's fourth-largest tourism destination. The sector generates some 11 percent of formal employment in Spain, giving work to roughly 2 million people, and is also a significant source of informal employment.
According to Spain's Institute of Tourism Studies, 57.7 million foreign tourists visited Spain in 2012, a 2.7 percent increase from 2011. These tourists spent about 43 billion euros ($57.22 billion) the highest figure on record. The boom in foreign tourism was offset by a substantial decline in domestic tourism, which fell 8.8 percent in 2012. According to tourism industry association Exceltur, the overall sector contracted by 1.6 percent in 2012.
This year, the tourism sector will offer some temporary relief for Spain's unemployment crisis. According to the Spanish Ministry of Labor, May saw a 2.9 percent year-on-year increase in new job contracts. Half the employment contracts that month were in the hotel sector, and most new jobs were created in popular tourist destinations like the Balearic Islands. May and June generally are good months for job creation in Spain, as spring marks the beginning of the tourism season. Still, the vast majority of these jobs are temporary; only 7.5 percent of all the job contracts created this May were permanent.
Tourism is also very important for Portugal, where the sector accounts for roughly 8 percent of total regular employment. Similar to Spain, Portugal saw a 5 percent increase in foreign tourism in 2012 offset by a 7.2 percent decline in domestic tourism. Despite the decline in domestic travel, Portugal recorded 8.6 billion euros in tourism revenue in 2012, an increase of 5.6 percent over the previous year.
The tourism season also will bring some economic relief for Portugal. The number of overnight stays in hotels by foreign tourists already has grown by 11 percent in the first quarter of 2013 compared to the first quarter of 2012, though overnight stays by Portuguese nationals fell by 3.7 percent during the same period. Portugal has felt the crisis in Spain in the form of declining visits by Spanish tourists since the European crisis became acute in 2009. The Portuguese government has sought to attract visitors from elsewhere to make up for that loss, and the first quarter of the year saw a 16 percent increase in the arrival of tourists from Brazil, which shares deep cultural and linguistic ties with Portugal.
Greece
The European crisis severely affected the tourism sector in Greece, with constant protests and strikes harming the country's image as a modern tourist destination. Between 2008 and 2010, Greece fell from 12th to 21st in the U.N. ranking of most-visited countries. Tourist arrivals fell from a peak of 18.8 million in 2007 to 15.5 million in 2012.
The situation has stabilized to some extent since the 2012 elections, which led to the formation of a relatively stable government, and protests have become less frequent. Moreover, hotel prices have dropped an average of 45 percent over the past three years, and the Greek government has increased efforts to attract more tourists, especially from countries such as Russia and China. Industry groups recently said hotel bookings from the United Kingdom and Germany were also increasing.
In May, Greek Prime Minister Antonis Samaras announced that the country expects some 17 million tourists this year, which would be the highest number since the crisis began. Even if that statement were to prove overly optimistic, Greek authorities expect to benefit from political and social instability in competitor destinations in the Eastern Mediterranean such as Turkey and Egypt.
Though gains in foreign tourism have been offset by declines in domestic tourism in Spain, Portugal and Greece, the sector is one of the few to remain relatively vital despite the crisis. Still, the highly seasonal characteristic of the tourism industry dictates that most of the jobs created will be short-term, meaning none of these countries is closer to solving its long-term unemployment crisis.
