Travel News
Papandreou Steps Down but Greek Tourism Stays Steady
Greek Prime Minister George A. Papandreou announced on Sunday that he will resign once an interim government is in place, leaving many to wonder if the country’s growing political and economic instability will damage its robust tourism industry.
Greek leaders have been struggling to comply with the European Union ‘s EU) debt-relief deal from October 26. Papandreou failed to garner the necessary support in Parliament to pass the austerity measures that are required to receive €130 billion in emergency funding.
With Papandreou stepping down, an interim government will be set up and will be led by a non-politician for several months, so that the country can carry out the debt deal and pass a budget.
It remains to be seen whether or not an interim government will be more successful in complying with the EU’s requirement, but rumblings are starting about Greece’s withdraw from the eurozone.
Those rumors have spread to the tourism industry, but German tour operator TUI may have jumped the gun last week when they sent letters to their Greek hotel partners demanding that they agree to renegotiate their contracts in terms of drachmas. Greek tourism minister, Giogos Nikitiades, contacted TUI to indicate that hoteliers are standing together and none will agree to their terms.
Tourism remains one of the most active parts of Greece’s economy. Almost 20 percent of the country’s GDP comes from tourism with one in five Greeks working in the industry. There are about 700,000 residents who work permanently in the industry with an additional 200,000 working seasonally or part-time.
In order to stay competitive, hotels and restaurants have lowered prices. These prices are part of the government incentives to grown the tourism industry. One significant measure was the the reduction of the value-added tax (VAT) on hotels, which was lowered in January to 6.5 percent from 13 percent, and which allowed hoteliers to reduce their prices to attract more customers.
Chris Petsilas of the Greek Tourism Organization confirmed that there has been a rise in tourism in the last year. There were approximately 16.5 million visitors to the country up to the end of August, which is up 12 percent from the previous year. Additionally, 4.5 percent more Americans traveled to Greece in the first half of this this year.
Kelly Shea, a travel specialist who focuses on trips to Greece, has seen a 5 percent increase in travelers to Greece in the last year. While there have been a drop in some restaurant prices and select hotel’s rates, the majority of hotel rates have remained consistent between 2010 and 2011. Greek hotel rates were just announced for 2012 and are consistent with 2011 prices.
By Lily J. Kosner for PeterGreenberg.com
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