Competitive advantages in European tourism: Spain versus Greece

Competitive Advantage

Both Greece and Spain are major tourist draws in Europe. According to the latest figures, Greece attracts 13.3 million visitors annually while Spain attracts 52.4 million visitors annually. Spain was #2 in the world for tourist arrivals, while Greece was #17 (WTO, 2005). Both nations attracted more tourist visits than they have citizens. Spain even ranked on the WTO chart of fastest-growing tourist industries, a list that holds few tourism heavyweights (WTO, 2005).

Competitive and Comparative Advantages

In terms of absolute advantages, Spain has many. It is the larger of the two countries, and thus has greater capacity. Greece has hotel capacity estimated at 700,000, while Spain has the world's largest hotel capacity.

In general, Spain has absolute advantages in tourism infrastructure. This includes international airports and train capacity in addition to hotels. Other advantages are its rental car system and ATM network, both well-suited for tourism (World Economic Forum, 2005) it is unknown which of the two countries has the greater cruise ship capacity, however, due to Greece's large number of islands.

There are several other areas where Spain has an absolute competitive advantage over Greece. The nation has more UNESCO World Heritage Sites. Greece has 17, but Spain has 40. Spain has more tourist-draw cities, such as Madrid, Seville, Barcelona and Cordoba. Spain has more museums, and more famous ones. Spanish food is more renowned. The Spanish language is understood by more people than is the Greek language, and the alphabet is more familiar.

That said, Spaniards are not much more likely than Greeks to speak English or other Germanic languages, which would be attractive to both countries' target markets.

Greece has absolute competitive advantage in terms of the number of diversity of islands. Where Spain has party islands, Greece has hundreds of islands catering to all tastes. The two countries both have a high amount of sunshine and warm weather, a key tourist draw.

In terms of comparative advantages, many of Spain's absolute advantages translate to comparative advantages. However, Greece has a few comparative advantages. The first one is with respect to the islands and sunshine. Greece specializes in this type of vacation. Not only does Greece have hundreds of islands, but they are sun-drenched and diverse. Spain is strong in this area as well, and their party islands attract more visitors than do Greece's, but Greece is relatively strong in this sphere.

Another area where Greece can claim a comparative advantage is on history. Spain has some excellent history, but the history of Greece is both older and more well-known. Greece ruins are ancient. They represent the foundation of Western civilization, which makes them more important, in general, than Spanish monuments, which are more regionally important. The Greek history is also more well-known. This gives Greece's history more context for tourists than the historic monuments of Spain. Again, this lends Greece a comparative advantage. Despite having fewer monuments, the quality of their monuments, and thus their tourist-drawing capabilities, is greater.

Greece also has a comparative advantage in conference tourism. This subset of the tourist market has been actively courted by the Greek government, whereas Spain focuses on sun-worshipping package holidayers. This has resulted in an increase in business travel to Greece.

Spain enjoys many other comparative advantages. Its infrastructure is among the best-developed in the world (World Economic Forum, 2005). Greece, on the other hand, has limited infrastructure relative to its tourist-draw capacity. The country is attempting to rectify this situation, but as yet progress is slow. Spain also enjoys comparative advantage with respect to art and food. Greece can claim a solid art history and decent food, but Spain is a world leader in both fields. Spanish output of artistic masterworks is among the best in the world and Spanish food is renowned as one of the world's great cuisines.

Therefore, we can see that many of Spain's key advantages are both absolute and comparative. Yet, the gap between Greece and Spain is not as great with respect to some traits of the tourism industry as it is with others. In these areas - history, islands, and conference tourism - Greece has a comparative advantage.

Economic Impact

For Greece, the economic impact of tourism is essential to the country's economy. Approximately 15% of Greece's GDP is attributable to the tourism industry. The conference business has until recent years made up very little of that. However, if Greece can capture a greater share of Europe's conference trade, it can expect to add $1 billion dollars to its tourism intake. This would represent an increase of 7.3% over tourism receipts in 2005, on top of the natural increase in receipts (WTO, 2005). Conceivably, Greece could add $5 billion in additional receipts just from new conference business.

For Spain, a new resort could have significant impact. At present, the bulk of the country's tourist infrastructure focuses on four main areas - Costa Brava (Catalonia), Costa del Azahar (Valencia), Andalucia and the Balearic Islands. Tourism presently contributes $47.8 billion to the Spanish economy. The development of another resort area, by adding onto a strong secondary tourism region, could conceivably add another $5 billion within a few years, and upwards of $10 billion by the end of the next decade.

Conclusion

In comparing the tourism industries of Greece and Spain, we can see that Spain has absolute competitive advantages in almost every facet of the tourist business. The result is the world's second-largest tourist industry. Yet, there are areas where Greece has a comparative advantage, where it is almost as good as Spain. For Greece, the key to maintaining competitiveness is to find ways to leverage those comparative advantages. If they focus on a market that they have traditionally ignored, such as the conference business, they gain bring new customers to Greece. The conference business helps Greece get around their competitive disadvantages by attracting tourists that Spain is not courting. This allows Greece the opportunity to exploit its comparative advantages.

For Spain, the development of a new tourism region, in particular by enhancing an existing region with further development, will give the country the opportunity to leverage its considerable competitive advantages. Spain does not need to develop new advantages, it just needs to build out more capacity to help make the most efficient use of those advantages.