The real dynamics of tourism income stronger than the official figures show because the rapid changes in the composition of the tourism market make it difficult to measure, with the underestimation approaching 0.5% of GDP in 2024, i.e. about € 1 billion, -says a National Bank report (Directorate of Economic Analysis).
Difficulty recording income
The report says that the rapid growth of tourism activity in Greece – which led to reaching a series of historical highs in the past years and continues in 2024 – is accompanied by structural changes of tourist arrivals from abroad, the way they stay and the type. in their spending, which makes it difficult to fully capture the performance of tourism, especially in terms of income (which is accessed through the border survey).
The trends above have ramifications regarding, primarily, the measurement of the total contribution of future tourism to economic activity, but also its impact on the country’s external balance.
The decline in average spending is inconsistent with other data
Inevitably, attention is focused on the recent release of travel balance figures for July, which recorded the first annual decline (-5.4%) in tourism receipts since March 2021, a month in which total arrivals from abroad increased by 4.1% annually.
The differences between the rates of change in receipts and arrivals from eurozone countries are particularly significant – given their high share of the total – and explain most of the weakness in July ( +5.7% yoy in arrivals compared to -8.3% year-on-year in collections from eurozone countries.
The development of the balance of travel in Greece for July shows a significant decrease in spending per arrival which is not consistent with other relevant indicators.
The counterpoint is also great in relation to the available tourist revenue figures for Portugal, which show an annual increase of 9.1% in July and 11.1% in 7 months, while for Italy and Spain the increase is also higher than in Greece, at 7.9% and 17.3% y/y in June (+ 12.5%​​​​​​​​​​​​​​​​​​and + 20.0% y/y in six months, respectively). Temporary travel receipts for Spain also showed an annual increase of 8.2% in July.
According to our preliminary estimate, the increase in July shows more clearly the increasing difficulty of fully recording tourist flows, mostly in terms of income, due to the significant changes that have occurred in the structure to the needs of tourists.
These changes, as well as the peak of tourist traffic in just a few months, weigh on the accuracy of the sampling (sampling bias), where the data is taken from the border surveys – which is the main method internationally for the collection of data related to tourist spending. .
Some countries enrich the border investigation information by adding or cross-referencing information from travel agencies, data from the transport industry, but also data from electronic payments, but it has limitations too.
The emergence of systemic divergences began to become more noticeable in the last three years, and was also observed in other countries of the eurozone – especially those with extensive common land borders and free movement of citizens, such as country in central and western Europe.
Research underestimates income
In particular, regarding Greece, we have seen that the border survey in recent years has lowered the flow of income, while the corresponding figures for arrivals are more accurate, because they can be cross -reference with more reliable quantitative data about air, sea. and road transport (corresponding differences are also found in many eurozone countries).
In the context of checking the consistency of income data, a common method of comparison is to compare the data of receipts coming from a country or region, as recorded in the Greek statistical records of incoming tourism , with corresponding data from said. countries for the tourism expenditure of their citizens in Greece (mirroring). The data is available with a time lag, but it gives some clues about the limited ability of the border survey to capture, completely, the final expenditure of tourists in Greece.
In particular, by comparing the total estimated receipts from EU countries, as recorded in Greece, with the corresponding consolidated recording of expenses made by EU residents in our country, it appears that in the last decade – almost systematically – the domestic estimate exceeded that. data results for EU countries.
However, after the pandemic the picture has changed, with an increase in the negative deviation of Greek income estimates against Europeans in the two years 2021-22 (latest data available for most EU countries), amounting to €0.8 billion in 2022.
A similar trend can be seen in the bilateral comparison of these figures with the corresponding ones from Germany (i.e. the expenditure of German tourists in Greece recorded in the Greek travel balance against the German authorities’ estimate of German expenditure who are citizens of Greece), where the Greek figures are short of the said record of € 0.2 billion in 2022.
The difference is even more apparent regarding the revenues from Italy, which is also one of the leading tourist markets for our country, with available data for 2023 showing a negative difference of € 0.4 billion.
On the contrary, in the bilateral data of France, Greece continues to declare more income compared to declared expenses on the French side.
Why there are income discrepancies
The above differences in the case of travel receipts, according to our analysis, can be attributed to:
· Inevitable distortions in sampling (sampling bias), due to significant changes that have occurred in the nature of spending by tourists and in the representation of participation in the border survey of different categories of visitors in our countries with a different mix of costs and different rates of response/participation in border surveys (eg access to luxury accommodation, foreign property owners).
· On the difficulty of recording the more heterogeneous spending, which is exacerbated by the very high proportion of arrivals that occur only for a few months each year – unlike other EU countries – with 76.6% of overnight stays stay that took place between June and September, showing more challenges for the correct and comprehensive capture of the relevant flows.
· Similar challenges arise from the growing role of short-term rentals, which show a higher seasonality (in the summer months 85.7% of overnight stays take place) combined with a relatively a different spending structure compared to the norm (for example a higher percentage of consumption of basic goods and non-tourist services) as well as a tendency to understate expenses.
· On the difficulty of estimating the payment of travel service providers abroad regarding trips to Greece, as well as companies that own hotel units in the country, as well as international airlines and agencies, based abroad with related cash flows excluded from tourist revenues if paid to a business entity outside Greece.
Considering the above factors, the developments in the 7th month of 2024, the significant evaluation recorded in tourist services until August, but also the looming trend of negative deviating from the recording of previous years’ revenues, we estimate the actual final expenditure. of tourists is likely to exceed the last official record of all in 2024 by almost €1bn, based on the current approach, with the largest part of the estimated difference affecting the July-September period.
This difference corresponds to 0.8% of GDP in the 3rd quarter, while for 2024 we estimate that it will reach a total of almost 0.5% of GDP, widening the current account deficit accordingly.
Tourism revenues are expected to increase by approximately 3.0% per year in 2024 to nearly 9% of GDP, while including the upward adjustment will increase by approximately 8% per year (without adjusted for income figures for 2023), which is equivalent to 9.5% of GDP (new record high).