Demand in the entire tourism sector evaporated at dazzling speed. On March 15th, 2020 it was decided that resort hotels were not allowed to open until the end of April (which was later extended) and on March 19th, 2020 it was ordered that ail hotels across the country should close as from March 22nd, 2020. Only 3 hotels in Athens and Thessaloniki and one hotel per regional unit could remain in operation.
- During the three weeks of March, occupancy of the Athenian hotels dropped by 63% y-o-y to a level of around 27%, while in Thessaloniki an occupancy of 24% was recorded, a drop of 62% y-o-y. The few resort hotels in operation during March achieved an occupancy of nearly 22%, representing a drop of 52% y-o-y.
- RevPAR of hotels in Rome declined 40% y-o-y during Q1 2020 recording a single digit number for occupancy in March 2020. In Madrid RevPAR dropped by 26% during the first quarter of this year.
Impact on the economy
- With much of the global economy now in some form of lockdown due to the corona virus pandemic, the world GDP is expected to contract by 7% in HI 2020 in the baseline scenario of Oxford Economics. Activity is expected to rebound sharply in H2, but even so the world GDP is expected to shrink 2.8% in 2020 overall. By comparison, in 2009 the global GDP fall was 1.1%.
- However, if stringent lockdowns or widespread disruption is extended into Q3 2020, perhaps due to renewed outbreaks of the virus, global GDP could fall by as much as 8% this year. Given the deeper contraction, a much weaker bounce back is forecasted. A deeper recession is associated with more lasting risk aversion among households and business.
- Estimates on the effect on the Greek economy are rapidly adjusted. At the beginning of March, the Bank of Greece expected growth to drop to 2%, while on March 20th the baseline scenario of the central bank had been adjusted to zero growth. On April 21st the Central Bank estimated that the economy would shrink by no more than 4%, while their most extreme scenario is based on a recession of max 8%. Most analysts are estimating the impact at between 5% and 10%.
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