Greece Bets on Tourism Turnaround
Assistant News Editor, CNBC.com
Greece's tourism industry has suffered a serious decline in revenue over the past year as political instability and questions over whether the country would exit the euro saw holiday makers opt for other destinations instead, but with a new coalition government in place, the industry is fighting back.
Greek Tourism Minister Olga Kefalogianni told CNBC’s “Squawk Box Europe” that the formation of a coalition government after the June elections headed by pro-austerity Antonis Samaras has helped bring in reservations back to normal for June, and that there was cause for optimism in the tourism industry.
Figures from the Association for Greek Tourism Enterprises (SETE) show international arrivals to Athens fell nearly 15 percent as holiday makers worried their holiday would be disrupted by the effects of political, societal and financial instability in the country.
“We are quite positive that we will have a relatively good year,” Kefalogianni said. “Relatively to what’s going on in Greece.”
According to SETE, the tourism industry employs up to 768,000 people and the sharp decline in bookings in the first half of 2012 saw average daily hotel rates drop by 16 percent. Many restaurants and hotels have gone out of business. Kefalogianni said that the country’s privatization program of public assets (including land) could offer an investment opportunity.
“I think that there is really, really good value [in Greece right now]. We are under this privatization scheme, there is a whole fund dealing with these kinds of investment. There is a lot of potential and opportunity for investment in tourism and it’s very attractive to investors.”
Kefalogianni said that the political and economic stability that the coalition was aiming at provided “another incentive” to invest and that the country was already experiencing a particular focus on “high-end” tourism investment.
Far from the sunny seaside resorts, however, Greece’s financial situation remains at crisis level. Samaras and his coalition partners met on Wednesday to identify a further 8 billion euros ($9.8 billion) worth of cutbacks in order to reach 11.5 billion euro ($14.1 billion) spending cuts demanded by the troika— the ECB, IMF and European Commission.
However, the country is worryingly near to running out of money and has asked for a bridging loan to keep the public finances going until September.
Kefalogianni remained optimistic, however, saying that Greece was committed to the euro zone, despite some economists believing that a euro exit would allow Greece to regain its competitiveness and attractiveness as an investment opportunity.
“We are really working very hard to stick to the euro zone. We are working out how the euro can help out economy stabilize so I think [leaving the euro] is not the case for us, right now,” she said, adding that tourism was an important part of saving Greece’s economy.
“I’m very positive that this coalition government will succeed in its efforts to cut down spending and actually boost the economy and tourism is one of the most dynamic sectors of the economy and we believe we can help.”