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A woman sits outside her tavern in the medieval castle of Monemvasia May 29, 2012. Greece's sandy resorts, azure waters and ancient temples remain popular, but will not, it seems, be enough to pull it out of a fifth year of recession. The pain is already being felt - tourist receipts for the first quarter tumbled by 15.1 percent to 396.3 million euros from 466.7 million euros, the Bank of Greece said.


Entries for the summer are sparse in the old-fashioned ledger Spyros Mourelatos uses to record bookings at his family-run hotel on the island of Kefalonia.

"It's the elections," he says. "A lot of foreigners, even regulars who come every year, are not going to make up their minds until after the vote on June 17."

Only a handful of tables are occupied on the hotel's vine-shaded terrace overlooking the sparkling Argostoli gulf. Greek music plays to empty sun-loungers around the swimming pool.

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Tourism on Kefalonia is usually sustained by U.K. visitors drawn to the island by Louis de Bernières' classic best-seller Captain Corelli's Mandolin, set during the Italian occupation in the second world war. But bookings by U.K., Dutch and Czech travel agents have fallen by 25-30 per cent since the inconclusive May 6 election, amid fears that political upheaval could drive Greece out of the euro within weeks.

German bookings for other popular Greek island destinations have plunged by 50 per cent, according to Greek hoteliers, though some say there has since been a partial recovery.

"Political instability is poised to upset a season of strong consolidation after last year's record performance," says George Drakopoulos, director of SETE, an association of Greek hoteliers and tour operators. Arrivals over the year could fall by 10 per cent and income by 15 per cent, he warns.

Even a comparatively small decline in visitor numbers has a significant impact on Greece's economy, since tourism makes the biggest single contribution to national output - 16.5 per cent of GDP last year. The broader hospitality industry accounts for one in five jobs.

Last year Greece benefited from a shift away from north African and Egyptian resorts triggered by fall-out from the Arab spring. Foreign tourists numbered 16.4 million in 2011 - almost 10 per cent up on 2010. For the first time in years Greek hoteliers were able to offer packages to big European tour operators, thanks also to a 40 per cent cut in value added tax on tourist accommodation.

But now the country has joined the same high-risk category as north Africa, complains Alexis Stamatopoulos, owner of a boutique island hotel.

"How do I convince clients nothing has changed in the Cyclades, that ferries are running normally and the ATMs still have cash in them?" he asks.

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George Tsakiris, president of the Greek hoteliers' chamber, estimates 600,000 last-minute summer bookings normally made in early June have been lost because of the second election campaign. "We are offering a lot of special deals but north Europeans don't seem interested."

After visa procedures were eased last year in a bid to boost tourism, the number of Russian visitors soared by 63 per cent, and will be up again this year. "But unfortunately that won't be enough to offset losses in the much bigger U.K. and German markets," Mr. Drakopoulos says.

Large hotels on the islands of Rhodes and Kos in the east Aegean are likely to close at the end of September, a month earlier than expected, after the no-frills carrier Ryanair said it would cancel all direct flights from the U.K. in October, claiming local officials had reneged on a marketing deal.

The outlook is so gloomy that the SETE has been lobbying Greek political leaders to scale back highly charged "euro-or-drachma" rhetoric seen as scaring off visitors.

Evangelos Venizelos, leader of the PanHellenic Socialist Movement (Pasok), has complied, telling interviewers: "We are feeding recession further when we frighten tourists away with talk of uncertainty and a possible breakdown in public order."

But the centre-right New Democracy and radical left Syriza coalition, battling for first place in the tightest electoral contest in a generation, have other priorities.

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Antonis Samaras, the conservative leader, has played up law and order issues, while Alexis Tsipras of Syriza pledged that, if elected, his party would abandon a €6-billion scheme to develop the coastal site of the former Athens international airport as a new tourism and leisure hub.

The airport site "will become a park for the people", Mr Tsipras has promised.

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