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Greece Makes Fast Recovery in Tourism

Greece Makes Fast Recovery in Tourism

ATHENS—Tourists are returning to Greece in big numbers, easing fears that capital controls and antiausterity protests would undermine one of the cash-strapped country’s few successful industries in the middle of the summer season.

Hotel bookings, which suffered early this summer as the country teetered on the brink of bankruptcy, have recovered since the Greek government reached a tentative bailout deal with creditors on July 13. Tour operators and airlines meanwhile say their reservations are showing renewed vigor.

“We are weathering the crisis reasonably well,” said Aris Ikkos, research director at the Institute of Greek Tourism Confederation (SETE), that groups the country’s hoteliers, travel agents and independent firms across the broader tourism sector.

In the last days of June and early July, hotel bookings were down 20% on year, he said, “but since then there are strong indications of an increase and we estimate we are at par or slightly up from levels last year.”

Tourism is one of the main sources of earnings in Greece’s depression-ravaged economy. Last year, it directly contributed €17 billion (about $19 billion), or 9.5% of gross domestic product, and as much as €45 billion in indirect benefits from spending in shops, restaurants, tourist sites and elsewhere, according to SETE.

Hopes that Greece could have another bumper tourist year were dashed when the Greek debt crisis escalated in June. After weeks of tension with creditors, the government called a snap referendum on whether it should accept tough austerity reforms in return for fresh financial aid.

The referendum brought bailout talks with the country’s creditors to a temporary halt, forcing the government to impose capital controls that have been in place since June 29. But the €60-euro daily limit on cash withdrawals from ATMs doesn’t affect foreign bank card holders, leaving tourists largely unscathed by the continuing restrictions on bank transactions that Greeks face.

Though travelers held back in late June amid uncertainty about access to cash, their concerns appear to have abated since the bailout accord.

“We are hoping that we won’t go through another round of political drama for the rest of the summer season,” Mr. Ikkos said. “We had 22 million arrivals for the whole of last year and if calm prevails we may even slightly surpass that level.”

SETE will issue official July figures at the end of the month.

While making life difficult for most Greeks, the crisis is a boon for thousands of travelers seeking a luxury holiday experience in Athens or the popular Greek islands: Prices for high-end accommodation have fallen as much as 15% year on year, according to international travel operators.

“For June, luxury travel accommodation in Greece was up 22.4% on year,” said Daniel Farrar, CEO of U.S.-based Switchfly Inc., a technology firm that provides global booking platforms for airlines and hotels around the world for upmarket travelers. “We expect a similar on-year increase for July.”

“Every year economic, social, and political events affect travel trends, and this year we’ve seen a rise in travel to Greece as the country’s economic crisis had made travel more affordable,” Mr. Farrar said. “Greece is the only country with three destinations among the top 15 luxury venues around the world this summer.”

High-end hotels in Athens, Mykonos and Crete are fully booked to the end of September.

Aegean Airlines, the country’s biggest aircarrier, has increased flights to Athens from the rest of Europe by 30% for the summer months, and 10 new global airlines have started daily flights in and out of Athens this year.

“It’s a first upmarket holiday travel and everything went very well,” said Susan Millford, a 32-year-old lawyer from Denver who spent 10 days at a suite at the Grande Bretagne luxury hotel in central Athens with her husband and three children. “We were a bit concerned before we flew but there were no problems. Our credit cards worked and the hospitality was great. I only wish we had more time to stay.”

ABTA, Britain’s biggest travel association, which represents 90% of tour operators in the U.K. and 80% of travel agents, said Greek bookings in July are up 2% on year.

“Greece now offers incredible value for money,” said Sean Tipton, an ABTA spokesman. “Prices have dropped as a result of the crisis and the pound is strong against the euro. Customers called us up for advice, but we had no cancellations.”

However, hotel operators are struggling to cope with the capital controls.

“I politely ask guests that haven’t pre-booked if they can pay as much as possible of their stay in cash,” said Manolis Kraounakis, who runs six villas in Crete. “Those who have the cash are very accommodative because they’ve heard of the 60-euro withdrawal limit for Greeks. We’ve had problems with suppliers of linen sheets and gourmet foods as they want the money for any orders upfront and capital controls makes this very difficult.”

As part of a new financing deal being negotiated with international creditors, Greece has agreed to double the value-added tax rate for hotels to 16% starting in September; a 10 percentage point VAT increase at restaurants is already in place.

source: Wall street journal, By COSTAS PARIS