Economic Impact of COVID-19 on the European Tourism Sector with Special View on Croatian Tourism

Abstract

From the mid-twentieth century, the share of service sector increased from 60% to 80% and amongst service, tourism is fast-growing industry. Globally, tourism is an important component of the service economy, representing one-third of international trade in services. This sector is the import engine of economic growth in many charts as globally, and it is a very dynamic and growing sector in the last decades. Europe is the world’s most visited destination with more than 700 million arrivals, representing 51% of the all arrivals. Amongst EU Members, the most attractive destinations are France, Spain, Italy, Germany, Greece; but nevertheless, Croatia recorded a remarkable increase in tourist arrivals. Tourism sector has experienced a major growth in recent years. However, this sector is very vulnerable because tourist products represent luxury goods depending on many economic and social factors. Besides the fact mentioned above, the latest trends about coronavirus will set out many tourism companies in an unenviable situation, dropping revenues among the lowest level in history. In this paper, author estimate potential losses in European tourism sector under circumstances of closed borders. In addition, less pessimistic scenario has been forecasted, achieving the level of 30% of the previous year.