Italy's tourism industry is losing ground and losing out to other European countries and new global destinations like China. In 2004, 75 million people from around the world chose France for a holiday or business trip, 53 million Spain, 43 million the USA, and 41 million China.

Last year, only 37 million people visited Italy - compared to 41 million the year before, causing the country to drop from fourth to fifth in the world's most popular tourist destinations. And though figures for France and Spain have also tailed off in terms of percentage of world tourism over the last 20 years, from 11.2% to 11.1% and 7.6% to 5.5% respectively, Italy has been harder hit, dropping from 7.6% to 5.5%.

This is all the more significant because "tourism is Italy's most important industry, employing two million people, with a turnover equal to 12% of national GDP," says Bernabò Bocca, President of Italian hotel association Federalberghi, quoted in Italy's Il Venerdi magazine.

There's no easy excuse for the Italian malaise. China's meteoric rise in tourism is, of course, linked to its economic boom, bringing literally millions of businessmen to its shores every year. But the "China" effect is the same for all of Europe, so why is Italy fairing so much worse than its European neighbours?

Promotion is a key factor: this year France earmarked ?105 million for its own "self-advancement". Italy, on the other hand, is spending just ?25 million. Bocca also cites the high VAT rate for hotels in Italy, 10%, compared to 7% in Spain and 5.5% in France. But lack of investment and higher tax rates are compounded by other internal issues.

According to economist and president of Touring Club Italiano, Roberto Ruozi, "The main reasons for our decline in tourism, amid widespread economic crisis, are twofold: prices and quality of what is being offered. There are so many good things about Italy, its culture, the sea, and for many years these factors gave us a kind of monopoly. Clearly, no more."

And more than in other Eurozone countries, the introduction of the euro in 2002 has led to massive price rises without any improvement in quality. Ruozi adds: "More often than not, hotel and restaurant owners have reacted to the crisis by further raising prices, to make up for fewer customers". This was confirmed in a recent study by Italian consumer association Codacons, which showed that the cost of a holiday had increased by at least 10% between 2004 and 2005 (comparing the same hotels in the same places one year apart).

So the jury's out for Italian tourism. As competition from China grows, and as other European countries shore up their tourism industries, Italy has a choice. Putting a hand in its pocket to better promote its tourism industry, or putting a hand in the Bocca della Verità and hoping for the best?

Some things just shouldn't be left to chance.

Howard Hudson
7 June 2005