The Institute of Economics in Zagreb has published a Sector Analysis for the tourism sector, and we enclose a brief overview of the analysis.
After the excellent results of the Croatian tourism sector achieved in 2019 and earlier periods, 2020 was marked by a sharp decline in tourism activity due to the COVID-19 pandemic and measures introduced to prevent further spread of the disease.
In the period from January to September this year, 6,7 million tourist arrivals were recorded in Croatia, with 39,7 million overnight stays. Compared to the same period in 2019, the number of tourist arrivals decreased by 62,4 percent and the number of overnight stays by 54,1 percent.
Foreign exchange revenues from tourism in the first two quarters of 2020 recorded a strong year-on-year decline of 61,7 percent. A stronger decline in the number of arrivals was recorded among foreign tourists. While domestic tourists recorded a year-on-year decline in the number of arrivals of 28,7 percent, foreign tourist arrivals decreased by 66,1 percent on an annual basis. The structure of tourist demand is still dominated by foreign guests with 81,1 percent of total tourist arrivals.
The best tourist results this year were achieved in August, when overnight stays of foreign tourists were at the level of 65,4 percent of overnight stays in 2019, while domestic tourists recorded as many as 16,3 percent more overnight stays than in August last year. Following the worsening of the epidemiological situation and the further spread of the pandemic, there was a stronger decline in tourist traffic in September, with 69,8 percent fewer tourist nights than in the same month last year.
This season is also specific in that guests stay longer in one destination, with the most desirable types of accommodation being rooms, apartments, holiday homes and camps. “This trend can certainly be explained by the fact that when planning tourist trips, safety has become a priority, with preference given to longer stays in one destination and safer and quieter environments where there are no large gatherings. If the pandemic does not end, it is to be expected that this trend will continue in the future. " the authors of the analysis from the Institute of Economics in Zagreb point out.
Tourists who visited Croatian destinations this year, on average, stayed longer than in previous periods. For example, while in 2019 in Croatian tourist destinations foreign tourists stayed on average 4,8 nights, and domestic 3,2 nights, in the first nine months of this year, foreign tourists stayed on average 5,9 nights, and domestic 4 nights . The data for July and August are even more favorable, so that in those two months, foreign tourists spent an average of 6,7 nights in Croatia, and domestic 5,1 nights. Although all types of accommodation recorded a decline in both arrivals and overnight stays of tourists compared to the same period last year, the largest decline was recorded in hotel accommodation. Due to the new circumstances caused by the COVID-19 disease pandemic, safety becomes a priority when planning tourist trips, and preference is given to a longer stay in one destination and safer and more peaceful environments where there are no large gatherings. If the pandemic does not end, it is to be expected is that this trend will continue in the future. Taking into account that during the first nine months of this year, a drop in tourist arrivals of 62,4 percent was recorded in Croatia, it is to be expected that the annual decline in tourist traffic will be between 60 and 70 percent.”Is stated in the analysis.
The importance of tourism for the Croatian economy, but also the sensitivity of the Croatian economy to trends in the tourism sector, is indicated by the fact that the share of the tourism sector in Croatia's GDP in 2016 was 11,4 percent, while foreign exchange earnings from tourism amounted to 19,4, 37,3 percent of Croatian GDP and 2019 percent of total Croatian exports in XNUMX. The companies of the tourism sector make up a fifth (22,2 percent) of the total number of companies in Croatia 2018, and on them waste 13,9 percent of total employment entrepreneurial sector.
Given that by August this year, world tourism had seen a 70 percent annual decline in international arrivals and an estimated 75 percent decline in September, the UNWTO expects international tourist arrivals to fall by 2020 percent for the full year 70.
Despite optimistic announcements from pharmaceutical companies Pfizer and BioNTech, as well as AstraZenece and Oxford University, that their coronavirus vaccine could soon be on the market, the prospects for international tourism recovery are still very uncertain and volatile as new cases continue to occur worldwide. COVID-19 disease (62,2 million cases have been confirmed so far, according to WHO data13). Furthermore, many destinations have reintroduced travel restrictions following the resurgence of the COVID-19 pandemic, particularly in Europe. Some countries have returned to partial blockades and curfews, borders are still closed in many countries and some of the major outgoing markets like the United States and China are still at a standstill, all in the context of the 2020 economic recession.
According to the International Monetary Fund (IMF), the world economy is expected to decline by 4,4 percent this year, while growth of 2021 percent is forecast for 5,2. Confidence in global tourism continued to record record lows between May and August 2020, according to the latest UNWTO confidence index survey, and expectations for the year-end are pessimistic. “Some destinations are trying to compensate for the decline in international demand by encouraging domestic tourism. However, domestic tourism is not strong enough to encourage recovery in destinations that rely heavily on inbound tourism, and in addition, the pandemic has severely disrupted domestic travel in some countries, due to local closures.”Point out the authors of the analysis.
The UNWTO sees travel restrictions as a major obstacle to the recovery of international tourism, along with slow virus containment and low consumer confidence. Furthermore, he sees obstacles to recovery in the lack of a coordinated response among countries to ensure harmonized protocols and coordinated constraints, and in the deteriorating economic environment. According to the European Commission, good is needed to prevent the spread of the virus coordinated approach to adaptation restrictions on freedom of movement. In this regard, on 13 October, EU ministers reached an agreement that will ensure greater clarity and predictability of measures restricting free movement due to the coronavirus pandemic. The UNWTO calls for the need to reopen tourism in a responsible, safe, coordinated and unhindered way in which travel restrictions are lifted. Divination trust in the sector is still crucial.
As already mentioned, optimism is being infused by promising announcements by pharmaceutical companies about a potential coronavirus vaccine. According to the latest press releases, their experimental coronavirus vaccine is 90 percent effective in preventing COVID-19 disease. Pfizer and BioNTech are currently working to apply for emergency vaccine approval in the U.S., which is the responsibility of the Food and Drug Administration (FDA) there, so a decision on vaccine approval could be made in December. If the vaccine is approved, the two companies are expected to be able to deliver up to 50 million doses of the vaccine worldwide by the end of the year and up to 1,3 billion doses in 2021. The European Medicines Agency, the EU regulator, has prepared accelerated approval procedures. for the candidate vaccine from Pfizer and BioNTech, as well as for the vaccine developed by AstraZeneca and Oxford University. On October 11, the European Commission reached an agreement with Pfizer and BioNTech to procure 200 million doses of the vaccine with the possibility of procuring an additional 100 million doses immediately after the vaccine is verified and verified.
Read the full analysis in the attachment.
Side dish: EIZG / SECTORAL ANALYSIS: TOURISM