Without Tourism, Italy’s Economy Faces Disaster

MILAN, Italy—On Feb. 16, twenty-year-old Linda Pani launched herself from St. Mark’s bell tower, hooked to a metal cable, and descended to the center of the square. It was the kickoff ceremony of Venice’s Carnival.

For the city’s economy, the weeklong Carnival is the most important event of the year, attracting up to 3 million visitors, filling hotels and Airbnbs, and bringing approximately 3 billion euros ($3.3 billion) in revenue each year. But three days later the celebrations were canceled due to the coronavirus pandemic sweeping the country.

For Venice, it was the beginning of an economic crisis.

Tourism is “Italy’s oil,” so goes a popular saying, a mantra that Italian politicians tend to repeat quite often, including League secretary Matteo Salvini and Luigi Di Maio, the former leader of the Five Star Movement.

Tourism in Italy today amounts to 13 percent of the country’s GDP. It has created jobs, spurred development, and injected cash flow into the national economy.

But Italy isn’t exactly the tourist version of a petrostate. Unlike the Gulf kingdoms whose whole economies rest on a single product, Italy has a diversified, if embattled, economy: It has the second largest manufacturing output in the European Union, largely concentrated in the wealthy northern regions, and it’s well known for its export of wine, food, and luxury goods including designer clothes and high-end cars.

When people say tourism is Italy’s oil, they’re thinking more of Texas than Saudi Arabia. Tourism is a major source of income and has energized a broader economy with a trickle-down effect. Four million Italians are currently working in tourism or tourism-related activities, a significant portion of the country’s overall 23 million workforce.

It’s not that tourism is all that Italy has got. It’s that tourism is what is keeping Italy’s economy afloat. Last year, for instance, Italy’s industrial output shrank by 2.4 percent while tourism grew by 2.8 percent.

Italy has been a tourist destination for centuries, but the industry’s central role in the economy is a more recent phenomenon. Especially since Italy’s economy has stagnated for decades, and was particularly hit by the 2011 European financial crisis, tourism has provided a much-needed lifeline.

In a country plagued by unemployment, tourism offered jobs for guides, restaurateurs, waiters, cooks, and cleaners. The fact that Italy has a high percentage of home ownership allowed many families to turn their apartments or weekend houses into bed-and-breakfasts or Airbnbs. In the aftermath of the crisis, tourism provided a social safety net.

But the coronavirus lockdown changed all that—in Venice and across the country. For the first time in recent history, the city that was most ravaged by overtourism found itself with no tourists at all. And since Venice’s whole economy revolves around mass tourism, the sudden transition has already resulted in a massive employment crisis: 20,000 jobs have been lost in the area.

But Venice is far from being an isolated case in Italy. Florence and Rome are facing similar situations. In fact, Florence’s mayor said he’s thinking of mortgaging some of the city’s historical monuments—effectively telling banks, if the city can’t pay its debt, take the Uffizi Gallery.

The crisis is real in Florence; the Tuscan city used to draw $52 million in tourism taxes each year (that hotels or Airbnb hosts pay for each day a guest stays), but this year there will be almost no tourism tax revenue, so the city has no way to pay its bills.

Other tourist hot spots, like Cinque Terre, the five picturesque villages in the Ligurian Riviera, and Sicily’s islands, are now deserted as well. In order to attract foreign tourists, Sicily has vowed to help pay for their flights and offer a free night for every two nights after Italy reopens for visitors in June.

More recently, in the mid-1900s, Italy was a major international destination, much before mass global tourism became the norm.

For the first time in recent history, the city that was most ravaged by overtourism found itself with no tourists at all.

But during the 1990s, tourism surged. The internet and low-cost flights revolutionized international travel, allowing a growing number of people to move at an affordable price across the world, and Italy’s heritage-rich cities saw it as an opportunity. “Italian cities heavily invested in tourism. Their historical centers were redeveloped as consumer objects,” said Alessandro Coppola, an urban sociologist at the Polytechnic University of Milan.

The fact that, around the same time, the country’s economy began stagnating made mass tourism particularly attractive to otherwise impoverished Italians. Some Italians, including many political leaders, convinced themselves that Italy could simply live off tourism. “Southern Italy could live off tourism 11 months each year,” a prominent League politician once said. The country’s natural and artistic beauty, so went their reasoning, would always be there as a safety net. But they were lulling themselves into a false sense of security.

To be fair, the illusion was a convincing one. “Tourism is like a heavy industry,” said Marco d’Eramo, the author of Il selfie del mondo, a book on mass tourism that will soon be published in English. “It’s that kind of industry that kicks off other industries, such as commercial aviation.”

Of course, mass tourism has its downsides: It has a negative impact on the environment and on quality of life, for instance by raising rental prices and pushing out residents who can no longer afford them. (In Rome, for instance, the historical center has lost about 20,000 residents.) But in Italy, and especially in certain areas, the main problem is that mass tourism has become the only source of income.

Venice, for instance, used to be an industrial hub: Port Marghera, on the mainland but within the city’s limits, hosted major chemical and metal industries, employing 30,000 workers at its peak in the 1970s, but has been in steady decline since the late 1980s. Today, only 5,000 people work in the local industries.

D’Eramo compares it to a “monoculture,” or the practice of growing a single crop on a mass scale, which has historically exposed those who practiced it to the risks of famine when that crop is endangered.

For decades, Italy’s leaders convinced themselves that international travelers could keep the economy afloat; now, with the economy in freefall—and its GDP still below its pre-2008 level—they will have to navigate without them.

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As other European cities plagued by overtourism, such as Barcelona and Amsterdam, were trying to curb it and rely on other industries, Italian authorities either encouraged it or did very little to discourage it. For instance, in Venice, where some residents were protesting the presence of massive cruise ships in the city’s lagoon, Mayor Luigi Brugnaro attacked the protesters, calling them “cheesy.”

Magda Antonioli Corigliano, who heads the master’s program in tourism economics at Milan’s Bocconi University, notes that the industry is now heavily dependent on foreign visitors. “At the end of 2019, international tourism in Italy has surpassed national tourism,” she said.

Some Italians, including many political leaders, convinced themselves that Italy could simply live off tourism. But they were lulling themselves into a false sense of security.

That is now making the country’s economy particularly vulnerable to the consequences of the pandemic. Italy is one of the nations most severely hit by the virus. And while the government has announced a plan to have national tourism partially restarted in the summer of 2020, the return of large numbers of international visitors seems unlikely in the short term.

“Tourism works well for a country when it’s a secondary activity, but for Italy it wasn’t a secondary activity, and now the country doesn’t have a plan B,” argued Claudio Visentin, a historian at the University of Lugano. International tourism in Italy had been steadily growing for a decade, but with the pandemic its collapse was sudden. “It was like a speeding car crashing into a wall, with no airbag,” Visentin said.

The IUAV University of Venice has recently brokered an agreement to convert empty B&Bs into student apartments. Before the pandemic, landlords preferred to rent to tourists because it was more profitable, forcing university students to commute from nearby towns. Now, they hope to bring more students to live, and thus consume, in the city—partially replacing the void left by international visitors.

For decades, Italy’s leaders convinced themselves that international travelers could keep the economy afloat; now, with the economy in freefall, they will have to navigate without them.

In Florence, a citizen’s association urged authorities to focus investments in industry and craftsmanship, rather than in trying to lure back mass tourism. In Rome, two famous urbanists, Vezio De Lucia and Enzo Scandurra, suggested that the city seize the opportunity to bring working-class families back to the historical center, converting some empty publicly-owned apartments into subsidized housing.

There’s a feeling that cities plagued by overtourism are finally realizing they need to rethink themselves. The crisis has spurred some creative thinking, but so far most of the ideas are either vague or small-scale solutions. No one seems to have a clear, and ambitious enough, plan B. Until Italy finds one, the tourism crisis risks bringing down the country’s economy.