Crimea crisis poses a threat to tourism in Spain, Greece

April 2, 2014: 11:38Russia's annexation of the region has weakened the ruble and may mean fewer Russians visit southern Europe this summer.

By Ian Mount

The annexation of Crimea has led to Russia becoming an international pariah and weakened the ruble. It may also mean further economic woe for Spain and Greece.

FORTUNE -- You don't need a master's degree in international relations to understand why Russia's annexation of Crimea worries many Ukrainians. It's a little less obvious why it's so perturbing to Greek hoteliers and boutique owners on Spain's Costa Brava, but they have good reason to worry.
International condemnation of Russia's actions has hit the already weakening Russian ruble, driving it down 11% for the year in March to record lows against the U.S. dollar and euro. This, in turn, has made European summer vacations more expensive -- and less attractive -- to Russians, who in recent years have discovered a love for warm European beaches.
"The exchange rate is fundamental for tourism," said Ramón Estalella, CEO of the Spanish hotel trade association Confederación Española de Hoteles y Alojamientos Turísticos, or CEHAT. "If the ruble keeps devaluating, we'll have a problem," he noted.
This is an especially sensitive issue for the troubled economies in southern Europe, where tourism has been one of the few shining lights and where Russian tourists have been a driving force behind the boom. Almost 1.6 million Russians visited Spain in 2013, up 31.6% over 2012, according to the Spanish ministry of industry, energy, and tourism.