The Recession, Austerity and Tourism

Hello everyone. I’ve just returned from Spain and I’d like to talk about how austerity is affecting tourism in countries like Spain and Greece. Now the Greeks have been headline news today with the far left anti-austerity party Syriza winning the general election and there is now talk of a ‘Grexit’ – Greece leaving the Eurozone and possibly even the European Union. Having visited both Greece and Spain within the last year, I would like to make a few observations with regards to how this deep recession in Europe as well as the austerity measures have affected the tourism industry and how it may impact on your holiday.

On the terrace of my AirBNB apartment in Granada, Andalucia

 

1. Weaker Euro = cheaper holidays

The Euro has reached a nine year low against the US dollar in January 2015 and is forecast to hit a 13-year low against the pound. Unsurprisingly, the Euro has weakened against the Singapore dollar in the last 12 months. Last March, you would need to spend S$1.76 to buy one Euro – as of today, you need to spend only S$1.51, that is a saving of 14.2%. Hence anyone coming from outside the Eurozone is probably going to get a pretty good bargain when they buy their Euros. This makes everything from hotels to excursions to meals to shopping significantly cheaper in 2015.

2. An increasing reliance on tourism and intense competition

Austerity has squeezed so many sectors of the economy in places like Spain and Greece. Let me give you an example of a story I was told. There was a cement factory in Spain that was employing about 100 before the recession hit. The construction industry was hit hard during the recession as people no longer had money for new construction projects, so the demand for cement dried up (pun intended) through no fault of the factory itself. The factory owners found it very hard to lay off staff who have really done nothing wrong because of the unions who were set up to protect the rights of the workers, but they were unable to keep producing huge volumes of cement that nobody would buy. As a result, the whole factory went bust and everyone who used to work for the factory from the boss to the janitor became unemployed.

That’s me in Kassiopi, Greece last summer

 

What did these people do? Many ended up working in the tourism industry as it was one area which was dependable. Millions of foreign tourists came each year, bringing much needed hard cash to an economy in crisis. However, this huge increase in the number of workers in the industry did not coincide with a huge increase in the number of tourists visiting. After all, many of the European countries where these tourists came from were also hit by the very same recession. Hence you have many more people competing for the same slice of the tourism market – times are hard even for those working in tourism in these countries. The only winners are the tourists themselves when hotels, resorts, restaurants and tour operators engage in a price war to try to get whatever business they can get – this means that if you willing to shop around as a tourist, you can get incredible bargains.

Let me give you a simple example. Far fewer tourists visit Spain in the winter than in the summer, but those working in the tourism industry still need to make money in January. I was in the beautiful town of Nerja in southern Spain when I wandered up this street with lots of restaurants. As I pondered over the menu of a restaurant, an enthusiastic waitress ran up to me and asked me (in perfect English) if I wanted to have lunch. I told her I was just having a look – she then began to bargain with me, “if you have a lunch here, I will give you a free drink.” Just as I felt somewhat tempted, the waitress from the restaurant next door shouted to me, “She only gives you a free drink, I will give you a free desert!” The first waitress then said, “I will give you a drink and a desert if you have lunch here.” The other woman then said, “I will give you that too and I’ll throw in a coffee!” The first waitress then said to me, “We have two set menus: one at 15 euros and one at 12 euros. You pay just 12 euros but you get to select from anything you want from the 15 euros menu.” Then they started shouting at each other in Spanish angrily, it was a rather unreal scene!

In Nerja, on the southern coast of Spain

 

Would this have happened in a place like Paris or London? No, definitely not. It is because there are plenty of locals in Paris and London who will work locally and they are the regulars who will eat at such restaurants during lunch times. So they will never need to fight for the passing tourist trade when they know they have a local clientele that they can rely on. In a place like Nerja however, many of these restaurants are almost completely reliant on the tourist trade and at 2:30 pm on a rather quiet Monday in January, they were clearly getting quite desperate for my business.

You get the idea – of course, the winners are the tourists who do visit places like Spain and Greece during the low season when there are far fewer tourists. At times, it felt like there were fewer tourists than locals working in the tourism industry – thankfully it didn’t feel predatory, the Spanish and the Greeks have enough pride not to beg the way I have seen people do in North Africa. Yet it is evident that times are hard and some of the locals are struggling. You will often see shop units that are empty, or where are shop used to be but has closed down and even the locals have no idea if and when this recession will ever end.

At Aqualand in Corfu, Greece last summer

 

3. An expansion of the low end of the market

Despite the recession, the tourists have not completely stopped coming to Greece or Spain, it is just that those who are coming are spending far less money. Not everyone in Europe have lost their jobs during the recession: there are many of us are simply tightening our belts and carrying on as normal. So instead of staying in a 4 star hotel, we may choose to stay in a 2 star hotel when on holiday. Instead of taking a taxi, we may choose to take the bus instead. Instead of going to a fine restaurant for lunch, we may buy sandwiches and pastries from the bakery instead. Certainly, it is still possible to go on holiday on a budget – the large number of budget airlines in Europe means that you can get a flight from London to another European city for as little as £20. There is intense competition between the budget airlines and that means there are often special offers and early bird deals which allows you to get some ridiculously cheap flights. Sometimes, I spend more traveling to the airport from my home than the flight itself.

So yes, actually many people are still visiting places like Spain and Greece, thanks to the budget airlines but they are not spending as much money on holiday as they used to. This has led to a huge expansion on the lower end of the market, catering for budget tourists who are hunting for bargains. Yes this does mean loads of lelong-lelong  super cheap bargains available, but be warned: instead of cheap & cheerful, you may end up with cheap & nasty. You often get what you pay for and if you pick the cheapest option, you may be in for a rude shock. Rather, the sensible thing to do is to avoid the bottom end of the market and go for something mid-priced, knowing that you are still getting a reasonably good bargain for it.

Just hanging out in Nerja on holiday

4. Law and order

Oh this was the one that shocked me when I was in Greece and Spain! I found out that the Greeks and the Spanish are extremely law abiding, especially when it comes to little things like littering, speeding and jaywalking. This respect for law and order has nothing to do with the culture, the way Singaporean and Japanese people are very law-abiding. In the words of a local, “the police have had their wages slashed a lot because of the tough austerity measures, so they are all always looking for ways and means to top up their income. So if they catch you doing something illegal like speeding, then they will issue you an on-the-spot fine. Does this money actually even make it back to the police station or does it end up in the policeman’s pocket? I don’t know – but people are just very careful now not to give the police any reason to stop them. We are cautious… even nervous, but as a result, we have all become so law abiding in a way that was unthinkable before the recession hit. Our financial situation is difficult enough already, I don’t want to have to pay a fine over some silly thing like jaywalking.”

Of course, I must clarify that not all the police in Spain and Greece are corrupt and looking for any reason to fine tourists. Nonetheless, the fact that because enough of them have clearly done so has resulted in a change in behaviour amongst the locals and there has definitely been a shift in attitude towards the police. When we were driving round the very narrow streets of the Albayzin quarter in Granada (see my vlog post here to get an idea of just how confusing the tiny little streets can be), our GPS tried to direct us down a very narrow pedestrianized alleyway – it was clear that we couldn’t rely on our GPS and had no idea how to get back to our AirBNB apartment in Albayzin. A police car appeared and I thought, oh no, this is when we are going to be issued with a fine for going the wrong way. Instead, the policemen couldn’t have been nicer – they just said, “okay, don’t worry, we drive in front, you just follow us.” We drove behind them and were escorted right back to where we needed to go. So please don’t be worried about the local police when visiting Spain and Greece, no doubt there are a few rotten apples in the barrel who are extracting bribes here and there, but otherwise my experience with them couldn’t have been better.

Austerity has had an impact on law & order!

 

5. The very high standard of English

The standard of English in both Spain and Greece is surprisingly high. Because I look Asian, I am surprised at the way most people just instantly switch to English for me despite the fact that I can speak Spanish and manage basic Greek. Given the way many businesses are so reliant on the hard cash that the tourists bring, they are happy to learn English to communicate with the English. A salesman in a travel agent or a gift shop is far more likely to make a sale if he can communicate effectively with the customer and English does seem to be the default international language in the tourism trade. Many are also speaking languages like German, French and Russian as well to try to woo the tourists. 

6. A lot more Russian and Chinese tourists 

I have observed a lot more Russian and Chinese tourists in Spain and Greece in the last 12 months – the Russian economy may have had their fair share of troubles given the very weak Ruble. Nonetheless, there are still plenty of Russians who can afford to take foreign holidays and have a good time in countries like Spain and Greece. And of course, the Chinese middle class are thirsty for adventure and are now making their presence felt in Europe given the strength of the booming Chinese economy which has not been affected by the recession the way Europe has. In the past, Chinese and Russian tourists used to stick to packaged tours that would take them around the major cities in Europe. Nowadays, there is also a new generation of younger, rich, English-speaking independent travelers from China and Russia who would shun the packaged tours. I have already seen some Greek and Spanish people in the tourism industry learn Russian to cash in on this – it may be a matter of time before they start learning Mandarin too (but for now, they mostly use English to communicate with the Chinese tourists). 

Exploring the delights of Greece.

 

So there you go, that’s six ways tourism has changed in Spain and Greece in the age of EU austerity. It is mostly good news for tourists: a weaker Euro and increased competition means a lot more bargains for tourists. The streets feel very safe given how law abiding everyone has become and practically everyone I have encountered speaks English pretty well (with the exception of some very old people). Whilst the locals are undoubtedly having a hard time and trying to make the best of the situation by relying so heavily on tourism, the tourists are the ones getting the best end of the deal. So please do come to Greece and Spain – the locals need your hard cash and you will have a wonderful holiday. If you have any other questions about Spain or Greece, please do leave me a comment below. Many thanks for reading.