Record tourism is keeping the economy alive

“Record-breaking tourism keeps the Italian economy alive,” highlights a “focal point” from the study center Confindustria, which underlines that the sector now appears to be “crucial for the dynamics of the GDP in 2023”. With an increase of 4.1% in service exports in the first nine months of the year, “expenditure by foreign tourists has never been higher”.

“Arrivals can still grow.” But the “prospects remain uncertain.” The revival of tourism – warn the economists on Via dell’Astronomia – is complete in terms of levels, but the return to the pre-pandemic growth path could be due to the stagnation phase of the Italian economy will be delayed and worldwide”.

Getty Images

Shopping streets in Rome

“Among the components of Italian GDP (only +0.1% trend in Q3 2023) there is an item that has done very well in the first nine months of this year and supports the overall dynamics: it is part of exports of services (+4.1%) and represents the expenditure of foreigners traveling to Italy, therefore a large part of the direct economic value of tourism in the country,” emphasize the economists of the study center headed by Alessandro Fontana in Via dell’Astronomia.

“The contribution of foreigners to the tourism boom has been decisive: in September 2023 the expansion of spending by foreign travelers in Italy continued: +11.8% compared to 2022 (at current prices); the record was achieved in July. This spending, when compared with pre-pandemic levels, is +24.5% compared to 2019. This is only partly due to the increase in the price of tourist services (approximately +6.0% in 2023). In total, the revenue from foreign tourism will be over 50 billion euros at the end of 2023, far more than the 30 billion earmarked for Italian tourism abroad.”

It is a “crucial” factor for both the Italian and Spanish economies. “The recovery in travel, starting from 2021 and then with greater force in 2022 and 2023, has had a particularly positive impact in countries where the (total) weight of tourism relative to GDP is greater, such as Spain and Italy (approx. 11% of value added). The restart of tourism has actually been reflected in very positive dynamics of consumption and employment in these countries, as highlighted in the latest IMF forecast report (WEO of October 2023).

The additional savings increase the consumption of services. “The reduction of additional savings set aside during the pandemic played a crucial role in the recovery of tourism in 2023. In Italy, families’ propensity to save this year was well below pre-Covid levels and was in Q1 at 6.7% and in the 1st quarter at 6.3%% in the 2nd (versus an average of 8.2% in the period 2015-2019).

Even abroad, families have accumulated savings that they spend on travel and tourist trips at home, but also in Italy and elsewhere. Excess savings, both in Italy and abroad, have thus fueled spending on services in Italy, which increased in all three quarters of 2023: +0.4% in 1st, +2.4% in 2nd and + 1.4% in Q3.

In particular, this expansion appears to be due to more consistent support from wealthier families, who appear to have increased their marginal propensity to consume because they are better able to finance their leisure spending, having accumulated more “extra” resources during the pandemic (Bank of Italy data) .

The accommodation services are “at their best”. The excellent tourism performance “was reflected in the Italian hotel industry, which benefited from a real boom. The turnover of accommodation services, which performed better than total services, was already above pre-pandemic levels in 2022 and has registered sustained growth this year: + 28.8% in the 3rd quarter compared to the same period of 2019, of which +7.1% compared to Q3 2022. Optimism therefore seems to have returned among companies in the hospitality sector: according to Booking Barometer, 41% of Italian hoteliers expect “2023 will be the year with the highest sales ever. Arrivals can still grow.”

In the analysis of the study center Confindustria, “despite the recent records, there is still room for growth in the accommodation sector in Italy: bed occupancy in hotel establishments increased to 48.3% in 2022, compared to 49.0% in 2019 and is expected in 2023 have grown again, but in any case to values ​​that can continue to rise. Non-hotel structures can also continue to make an important contribution: by 2022, presences in these structures have grown more than those in hotels “.

But the prospects are still “uncertain”. “The revival of tourism is complete in terms of levels, but the return to the pre-pandemic growth path may be delayed by the period of stagnation in the Italian and global economy. It will be crucial to understand the changes in the industry that Italian companies seem to have recognized well: travelers’ preferences more focused on luxury experiences (+57% in the last decade in the number of 5-star hotels) ; new travel destinations and climate change; new “virtual” technologies to prepare for (replace? ) “in-person” travel.

Leave a Reply

Your email address will not be published. Required fields are marked *