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Greece’s tourism industry under threat

Road closures, strikes and blockades have horrified people in Greece's vital tourism industry as it struggles to emerge from a vicious debt crisis that brought it to the brink of bankruptcy.
Image: Tourists watch a performance of the Changing of the Guard Ceremony in front of the Greek Parliament Building in Athens
Tourists watch as presidential guards perform the Changing of the Guard Ceremony in front of the Greek Parliament Building in Athens. Greece's tourism revenues are likely to fall 7-9 percent this year, making it even harder for the debt-choked country to pull itself out of a crisis that has rocked markets worldwide, a senior industry official said.Pascal Rossignol / X00234
/ Source: The Associated Press

An angry tourist, sun hat on head and camera dangling from neck, stood in the middle of the open-top double-decker tour bus, hands outstretched in a 'thumbs down' sign.

About two dozen striking Greeks were blocking a main avenue in front of parliament, forcing the driver to maneuver awkwardly and deprive visitors of their drive-by photos.

It's scenes such as these — road closures, strikes shutting down archaeological sites, the blockading of the main port of Piraeus turning away thousands of cruise passengers — that have horrified people in Greece's vital tourism industry as the country struggles to emerge from a vicious debt crisis that brought it to the brink of bankruptcy.

"It's like we're poking out our own eyes. These things get around, they create a bad image," said Anna Anifanti, director of the Hellenic Association of Travel and Tourist Agencies, or HATTA.

Greek workers have responded to government-imposed austerity measures that cut salaries and pensions with repeated strikes and sometimes violent demonstrations. With the summer season barely under way, images of flaming buildings and riots in Athens — where three people died trapped in a burning bank in May — took an early toll, leading to the cancellation of about 20,000 overnight hotel stays in the capital and nearby resorts.

Tourism industry experts say they are currently seeing a drop of about 10-12 percent in bookings compared to 2009, which was itself a poor year. With tourism accounting for about 15.5 percent of gross domestic product, Greece can ill afford to see a prolonged downturn in an industry that provides about one in every five jobs.

With its heady mix of sparkling beaches, warm weather and rich antiquities, Greece is one of Europe's top five summer holiday destinations along with Spain, Italy, France and Turkey. The Greek tourism industry's share of GDP is comparable to Spain's 15.3 percent and Portugal's 14.4 percent, but higher than those of Italy's 9.3 percent or France's 9.7 percent.

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The government austerity measures target massive public debts that grew from years of overspending. Balancing books, however, could come at the expense of economic growth, making traditionally easy cash cows such as beach resort revenue all the more essential.

But amid widespread economic gloom, many would-be holidaymakers worldwide have less disposable income and are waiting until the last minute before arranging vacations, whether their destination is Greece or elsewhere — fueling uncertainty.

Greece's two main sources of clients are Germany and Britain, with about 2.3 million Germans and 2.1 million Britons visiting the country last year — and it is these countries that the industry is most concerned about.

Britons have been suffering their own recession, while Germans have been put off by the negative publicity surrounding Greece's debt crisis, said Giorgos Tsakiris of the Hellenic Chamber of Hotels.

Athens is receiving a euro110 billion package of rescue loans to which Berlin was the largest — and most reluctant — contributor. Germans were fiercely opposed what they saw as a bailout to a profligate country that caused its own problems.

Greece has faced fierce competition for the past decade from cheaper sun-and-sea destinations such as neighboring Turkey. The Mediterranean overall, including southern Europe, North Africa and Turkey, is a highly competitive area with about 20 destinations vying to attract visitors.

Fearing a dramatic downturn, some hotels and tour operators dropped their prices in an effort to attract more customers.

"The unfavorable predictions led tour businesses to a timely reduction of their prices by up to 30 percent in order to become more competitive," said Konstantinos Brentanos, head of Greece's federation of rented room and apartment businesses.

Brentanos said the price cuts should work in attracting visitors — but there are fears the government may push through further increases in consumption taxes to fight the deficit, which would eat into profit margins.

Despite concerns, there is room for hope: mass cancellations appear to have stopped, leading many to hope the season will likely not be catastrophic. Part of the possible upswing is a result of one outcome of the wider crisis sparked by Greece: a weaker euro means fewer Europeans can afford faraway vacations and so come to Greece, and those outside the 16 nations that use the euro — including Americans, Britons and Russians — find Greek vacations cheaper.

"I don't consider that it'll be a disastrous year. In tourism, there's always a curve," said HATTA's Anifanti.

Some experts have a positive longterm outlook for tourism in Greece — saying the industry is expected to grow by an average of about 3 percent a year for the next decade.

John Kester, manager of tourism trends and marketing strategies for the Madrid-based UN World Tourism Organization, said tourism has shown it is a fairly resilient industry even after being hit by crises such as the SARS outbreak in 2003 or the Sept. 11 attacks in 2001.

"What we generally see is quite a rebound after a period with slow or negative growth," said Kester.

Nicholas Paphitis in Athens contributed to this report.