The Greek tourism industry, which was hoped to contribute to the country’s recovery, is in crisis. Hundreds of hotels are for sale, and visitor numbers are in sharp decline. The cash-strapped government is hardly in a position to help.
The season got off to a late start this year. It is mid-May, there is bright sunshine in the skies over Greece, and Dimitris Fassoulakis is standing on the abandoned terrace of his hotel on the southern coast of Crete. The lobby and the restaurant are empty, and there is no one in the pool. “Pick a spot,” says the manager, spreading his arms widely.
Fassoulakis’s bungalows complex Valley Village, which is located on the green outskirts of Matala, a former hippie bastion, has 70 rooms and more than 200 beds, only eight of which are occupied at the moment. The vacation season in Crete normally begins in early April, sometimes even at the end of March. But this year the hotelier has only just opened his doors, with 50 of the 210 days in the season already gone before it has even begun.
“Owning a hotel is no longer a good business,” says Fassoulakis. He is now 41, his father Manolis built the complex and his two brothers are also involved in the business. If this weren’t the case, he would have sold it a long time ago.
Only last year, Fassoulakis began renovation work, hired architects and obtained building permits. But now he lacks the funds to proceed, and loans are no longer being approved. “How are we supposed to continue?” he asks. The coming high season doesn’t bode well, either, with only 50 percent of rooms already booked — in the middle of the summer vacation period.
“You see the crisis and you hear it,” says another hotelier. “Normally there’s a lot of activity and noise on the street at this time of day.” Instead, one can hear the birds singing. It’s summer in Greece, and the tourists are staying away.
Reservations are down by an average of about 30 percent nationwide since last summer, and experts expect a large number of cancellations. The Association of Greek Tourism Enterprises (SETE) reported that in the first 24 hours after the general strike in early May, more than 5,800 reservations were cancelled in 28 Athens hotels. According to SETE calculations, at least 300,000 Germans will decide not to make their usual trips to Greece this year.
Dozens of conferences and major events have been cancelled in the country’s two largest cities, Athens and Thessaloniki, as well as in Crete and the northern Greek beach resort area of Chalkidiki. After the riots in the capital, some countries, like Romania, issued travel warnings for Athens.
More than 400 hotels are now officially for sale: 81 on the Ionian Islands, 48 on Rhodes, 50 on the Cyclades and 44 on Crete. The Greek vacation atlas, with names like Paros, Naxos, Andros, Milos, Santorini, Corfu and Kos, reads like one big bargain-basement sale. The Athens daily newspaper Kathimerini estimates the value of all properties currently on the market at more than €5 billion ($6.2 billion). They also include luxury hotels, the names of which have been concealed from the public.
Dependent on Tourism
Marred by general strikes, mass protests, burning banks and deaths, the vacation paradise hasn’t looked like one for weeks, at least not in the news. The Greeks themselves have less money to spend on vacation, while tourists have other options.
And then there are the ongoing stories of corruption, sleaze and fraud, like the massive tax debt of pop singer and actor Tolis Voskopoulos. Using tricks and deception, he managed to avoid paying €5.5 million on back taxes for 17 years. Until last week, the singer’s wife was the deputy minister for tourism in the administration of Prime Minister George Papandreou. She resigned because of her husband.
One in five jobs depends directly or indirectly on tourism, as does — or did, at least — 18 percent of the country’s gross domestic product. Some 850,000 people work in the tourism industry in Greece.
Hall Full or Half Empty?
“Tourism is our heavy industry,” says hotel manager Andreas Metaxas. “It’s a key economic sector next to agriculture and shipping.” The latter is also suffering as a result of the global crisis.
Metaxas, 49, is sitting in the garden of his five-star, 285-room hotel near Heraklion on Crete. “Our hotel is half-booked — half full, not half empty,” he says. This distinction is important to him, because “cancellations sound like an eternal alarm signal, one that says: Do not visit Greece under any circumstances.”
As vice president of the Greek hotel association, Metaxas is familiar with the problems in his industry, and unlike others, he also talks about them. He talks about the air traffic controllers who keep shutting down air traffic. Or the sailors’ union, which went on strike on May 1 and shut down all ferry traffic to the Greek islands, and, at the end of April, refused to allow about 1,000 passengers on a cruise ship in the port of Piraeus to board their luxury liner.
Metaxas invested €2.5 million in his extensive complex last winter and €5 million during the previous winter — for new bathrooms, a new swimming pool, more landscaping and better recreational options. “You need money to guarantee quality and a range of services. At the same time, you have to cut costs and reduce prices to keep old customers and gain new ones,” he says. “That borders on magic.”
He knows that the two things are incompatible, and that the crisis is still far from its peak in Crete. This spells disaster for the island, which derives 43 percent of its total economic output from tourism.
The industry is now hoping for assistance from the already overwhelmed government, as well as for new ideas from the government tourism organization, EOT, which has set up its own crisis team. An image campaign abroad could help, one that presents images of the other, hospitable side of Greece, the home of the sirtaki dance and tzatziki.
Even the campaign requires a budget, which could be a problem. The EOT already owes Greek and foreign media organizations about €100 million for past ad campaigns.