30% lower tourism cost forecast this year

Tourist spending in Finland will decrease by 30–40% in 2021, according to an estimate regarding the development of tourism demand published in Business Finland at seminar on Monday.

If demand picks up in November–December, total spending is estimated to shrink by around 30%, or more than EUR 5 billion, said the Ministry of Economic Affairs and Employment in a press release referring to the estimation.

If, however, demand starts to recover only in spring 2022, total spending will decrease by about 40%, or over EUR 6 billion.

The Ministry of Economic Affairs and Employment, in cooperation with Visit Finland, Statistics Finland, the Finnish Hospitality Association MaRa, and the Association of Finnish Travel Agents SMAL has prepared the estimate using figures from 2019 for purposes of comparison.

The estimates on how much spending would fall have turned more optimistic compared with early spring, driven by the growth in domestic tourism this summer. However, the pre-pandemic level in the sector’s overall demand cannot be reached without cross-border travel.

According to preliminary estimates, tourism demand (the amount of money spent by Finnish and foreign tourists in Finland) was EUR 16.3 billion in 2019. Demand is not expected to reach this level before 2023.

The recovery of tourism demand, particularly inbound and outbound tourism, will be significantly slower than the demand for domestic tourism. The tourism sector must also prepare for a scenario where demand will remain subdued for a longer period.

The huge decline in international tourism will continue. The coronavirus crisis will cut spending by foreign tourists by 70–80%, or EUR 3.8–4.3 billion, this year.

This represents a significant proportion of Finland’s service exports, of which tourism accounted for 16 per cent in previous years, making tourism the third most important sector of service exports. Finnish tourist spending in Finland on services related to foreign travel will decrease 76–86%, or EUR 1.7–2.0 billion.

Before the coronavirus crisis, travel abroad accounted for about 15% of the total travel and tourism demand, but fell to just 5% this year. This consists largely of services provided by domestic airline and shipping companies, and travel agencies.

It is estimated that domestic tourism spending will remain close to the 2019 level. Before the crisis, domestic tourism accounted for nearly 55% of Finland’s total demand for tourism; this year the percentage will rise to 82–87%.