After decades of steady growth, the tourism sector has taken a substantial hit from lockdown and quarantine measures imposed in the global fight to stem the coronavirus, with the Southern European economies bearing the brunt in the euro area.
According to analysis from ratings agency DBRS Morningstar, Greece, Cyprus, Malta, Portugal, Spain and Italy are the most vulnerable to the downturn in tourism. Faring only marginly better are Germany, Belgium, Finland, France and Slovakia.
Even after travel restrictions are lifted across the continent, the fear of travel may linger, the agency predicts, which bodes ill for the sector.
“The high reliance on the travel and tourism sector, and the spillover to the broader economies of the Southern European countries can contribute to an unequal recovery in the euro area even as economies continue to open up," says vice-president at DBRS Morningstar, Javier Rouillet.
The recent rise in the number of virus cases in Europe has cast more doubt for fourth quarter prospects.
“Depending on the evolution of the virus, prospects for next year may also be severely affected. Factors such as the business environment, transport and tourist service infrastructure, natural and cultural offerings, safety and security and price competitiveness could be important in facilitating the recovery in the tourism industry," the agency's Spyridoula Tzima explains.
The evolution of the pandemic itself, as well as ongoing measures and policies will all contribute to the outcome for the sector in the medium term. Longer-term, however, the sector may be facing lasting damage through business closures and job losses.
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