Why Greece really wishes you were there

Tourism is at the core of the country's plan to beat its crisis, but it's a tough fight, says Lucy Tobin in Athens
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'Wish you were here" isn't a slogan that can be spotted amid the racks of postcards spilling into the streets in Athens' tourist traps, but the sentiment is visible everywhere. It's in the eyes of every bored-looking hotel receptionist and overstocked ice-cream vendor.

It's the reason waiters in restaurants eagerly pounce on every street-stroller, and why it's no trouble at all to hail a cab. Greece wishes you were here.

It's not just a glib hope – tourism is at the centre of the country's recovery plan. We all know Greece's economy is in strife, not just up Styx creek without a paddle but drowning in debt with no life-saving ring in sight.

But away from the eurozone, political wrangling, and far from the economic catastrophe that caretaker prime minister Panagiotis Pikramenos is struggling to contain, nearly a fifth of Greece's 11 million population is trying to make a living through tourism.

The sector accounts for 18 per cent of Greece's GDP, and employs more than 900,000 people. The country hosts 9,600 hotels, 764,000 beds ready for tourist heads, 2,300 car hire firms, and 500 yacht companies. Yet where visitor numbers rose nearly 10 per cent to 16.4 million last year, bookings were down 20 per cent up until the recent election, and plunged 50 per cent in the week after the vote that saw 7 per cent of Greek citizens backing the neo-Nazi Golden Dawn party. That's why Greece is wishing you were here.

Still, it's one helluva PR job to stop tourists from associating Greece with riots, strikes and shortages and get them again to view it as a top holiday destination.

According to SETE, Greece's tourism trade body, the collapse in numbers is not just due to the economic crisis: last year's record visitor figures were flattered by tourists steering clear of countries affected by the Arab Spring. Over the past week, bookings have improved, slightly: they're now only 25 per cent behind day-to-day bookings of this time a year ago. That's not enough to rescue Greece.

Evidence of the bloodshed from that stuttering tourism is all over Athens. Shops are shuttered, cafes closed and vandalised. VAT on restaurant meals rose from 13 per cent to 23 per cent last September. The boarded-up Athenian cafes were clearly a victim, but so too was the government.

While the VAT almost doubled, tax receipts from restaurants are down over the past six months. "When a small taverna has to pay VAT at 23 per cent plus all the other taxes and can't raise prices because demand is already down, they either don't survive, or they cheat," says Andreas Andreadis, SETE's chairman. "The tax hike is ridiculous. It destroyed 50,000 jobs of young, non-educated kids who were working in bars and cafes in Athens alone. This is what happens when you're bean-counting and don't look at growth."

The outlook might seem gloomy but a band of Greek travel entrepreneurs are beaming out big plans to boost tourism and in doing so, save the nation. "At the moment, we're offering deals that are at rock-bottom prices," says Panos Paleologos, who runs HotelBrain, a hotel management firm and its portfolio of 52 luxury and four-star properties in Greece.

"Now is the very best time for tourists, because hotels' products haven't been affected, they still have full staffing and all the facilities are open. If the political situation continues, that will change, we will start to see cutbacks."

Hotel prices are about 15 per cent down on last year, and the exchange rate boost in the UK from the strengthening pound makes a Grecian break more than 20 per cent cheaper.

"It's not just prices, we're giving away free stays for children, upgrades on meals, we're doing everything we can to bring people to Greece," adds Agapi Sbokou, of luxury chain Sbokou hotel. "We're also shifting our focus. Traditionally it's been all about a European markets, mainly the UK and Germany, and we've only recently expanded to Russia, Ukraine, newer markets like India, the Arab world, China and south America."

Yet most of her hotels are in Crete, where the impact has been far less than in the capital. "Athens has suffered from its bad image in the news since 2008, and has been putting down prices since then," says Alexandros Vassilikos, whose Airotel group owns five hotels around the country. "In Athens, we're at the lowest prices for years and years. One of our four-star hotels had a corporate rate of €144 in 2004. Now it's under €€100."

"Every day," says Mr Andreadis, "people ask us three things: are there strikes, demonstrations or bombs in Greece? What happens if you go into the drachma? And will Greece descend into chaos after 17 June, when the next election takes place?" Unsurprisingly, his response to all three questions is "no". He says even if a "Grexit" occurs "it's impossible for it to happen this summer", and he points out that during April and May last year, Greece was hit by 56 big strikes. This year, it's seen four in the same period.

"Now, people have voted, they've got their anger out," he claims. "There will be no more big strikes this summer."

Alongside the VAT hike, aviation taxes in the country are far higher than the rest of southern Europe. "Athens airport is the most expensive in the region," says Eftichios Vassilakis, the vice-chairman of Aegean Airlines, the country's biggest carrier. "We're lobbying to make it more reasonable." But the government is not looking to cut taxes in any area.

Athens airport saw passenger numbers drop 12 per cent to 564,000 in the four months to May. "We also need to improve airports elsewhere in Greece," Mr Vassilakis adds. "The infrastructure in places like Rhodes and Heraklion airports is not what we need them to be to market luxury holidays." Yet nor is the government looking to splurge on spending sprees.

Another headache is accessibility. Heathrow might be moaning about its inability to put on extra routes to China and other emerging markets because of a lack of runway capacity, but Greece has bigger problems. "Because of the state of the economy airlines have not been able to provide direct, long-haul connections," Mr Vassilakis says. "we're losing carriers. United Airlines, US Airways, Singapore Airlines, and Delta have all cut routes. Greece needs to strengthen its aviation market to reconnect long-haul areas to Athens to access the new markets of India and China."

Aegean is doing its best: it's expanding to 17 international routes, connecting Greek islands to Israel, Cyprus, Ukraine, the Czech Republic, Hungary and elsewhere. The airline's president Theodoros Vassilakis says: "we offer our full support to anything that can promote the fact that Greece is changing in a positive direction."

"Positive" is a buzzword for these tourism executives. "I have to be optimistic about Greece, because what is the alternative?" says Andreas Stylianopoulos, the chief executive of Navigator Travel which runs Greek sales for cruise lines including Royal Caribbean. "Don't let the pre-election flatulence fool you – every Greek knows that tourism will come back to its previous levels. New legislation and tax reforms coupled with the privatisation of highly-attractive assets will eventually transform Greece into an attractive investment opportunity for tourism.

"What you are seeing is an ugly grub struggling in a tight cocoon, but no change is without pain. And change is inevitable as the country's survival now depends on it."

Timeline of a Greek tragedy

2009 December Credit ratings agencies downgrade Greece's debt

2010 April Debt hits €350bn and Athens seeks international help

May The EU and IMF agree a €110bn bail-out package in exchange for harsh austerity measures.

2011 July Eurozone leaders offer a second Greek bailout.

October As new cuts pass through parliament, thousands of protesters riot on the streets.

November PM George Papandreou announces a referendum on the new bailout, then renounces it, after Germany and France intervene. He resigns, to be replaced by former European Central Bank executive Lucas Papademos. Through the year, tourism levels rise 10 per cent to a record high of 16.4 million

2012 With banks still not reaching agreement on writing-off part of Greek debt, the country begins talks over another EU loan.

February Amid violent protests, politicians pass €3.2bn in new cuts. The eurozone approves a second bail-out package worth €237bn.

April PM steps down after agreeing the debt deal. Tourist bookings fall 20 per cent.

May The two main parties suffer major losses as voters back anti-austerity parties including the neo-Nazi Golden Dawn. The New Democracy party fails to form a coalition and a second election date of 17 June is called. Traveller bookings fall 50 per cent year-on-year. They are now down 25 per cent on 2011 figures.