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Greece: Travel and tourism 911

© Dr. Elinor Garely, Editor in Chief, (a division of eTN Publishing)  Jan 28, 2016

At a recent New York Invest in Greece Forum, segments of the Greek economy seeking financial investments were discussed by international c-suite executives in banking/investments, real estate, shipping, power and travel/tourism. Except for tourism and shipping, the country is dialing 911 – the number to call for any situation that requires immediate assistance.

Venue Choice

The event was held at the very private, high-profile Metropolitan Club noted for celebrity and millionaire weddings and exclusive occasions. Brenden Gallagher ( noted the Metropolitan Club as one of “25 Outrageously Expensive Social Clubs in America” (2014). It is difficult to reconcile the élite venue for the event with a country in debt at over 240 billion euros (since 2010). The money spent to hold a full-day event for almost 1000 participants at this locale could have fed some of the starving Greek citizens or provided shelter for the homeless.

Human Wrongs and Rights

Ivana Kottasova of CNN Money (July 12, 2015) found that, “Greece now has the highest poverty rate in the European Union” and “The Greek government estimates there are now 20,000 homeless people in Athens- among a population of 660,000.”

According to Anemona Hartocollis (NY Times July 11, 2015), several organizations and the city government of Athens are making fund-raising plans. A prominent group, the Stavros Niarchos Foundation, has allocated 20 million euros (US$22 million) toward the municipal governments of Athens and Thessaloniki “to cover the immediate needs of citizens in the large urban centers, who are experiencing the consequences of the deepening crisis more severely.”

She also found that the Venetis group of 80 bakeries gives away 10,000 loaves of bread each day (a third of the total population) to destitute and families with many children, the unemployed and retirees. Mayor George Kaminis of Athens in cooperation with the Greek Orthodox Archdiocese of Athens, helps support 20,000 people a day with groceries, hot meals and other basics.

Real Estate, Delinquent Loans and Tax Evasion

At the Capital Link forum, representatives from Grivalia Properties and Credit Suisse reviewed the current real estate situation in Greece and were not optimistic about the residential or commercial market. A survey conducted by E-Real Estates (1st quarter, 2015), found that only 750 mortgage loans were approved compared to 2,500 mortgage loans in 2014, 75000 (2009) and 120,000 (2006). During this same period 1,800 properties were sold compared to 15,000 in 2014 and 165,000+ in 2004.

At this time there are at least 250,000 real estate properties not being sold. Real estate prices have tanked by 17 percent in 2014 compared to 2013 and there is weak demand with reasons that include the decline in Greek households’ disposable income, escalating unemployment and real estate taxes. Private investment in housing across Greece was 9.8 percent of GDP (2007), falling to 2.2 percent (2013) and 1.3 percent (2014).

Approximately 50 percent of Greek bank loans are in arrears (U.S. is 2 percent) making it one of the highest rates on the world. It is estimated that 40 percent of the outstanding loans belong to small business owners and although they are important sources of employment and entrepreneurs have sought to refinance, the banks have not been receptive. It is a conundrum – why interest rates for small and mid-size business are available at 18 percent while the banks are borrowing from the European Central Bank at approximately 1 percent?

In an attempt to eliminate (or at least reduce) tax evasion, the government has attached property taxes to utility bills and non-payment ends in “no power.” As consumers realign expenditures and retail spending declines the net result is a disaster - the closing of retail stores and entrepreneurial bankruptcy.

To further root out tax evaders, “Greek financial prosecutors…raided a UBS office in Athens seizing records as part of an investigation into possible tax evasion by holders of large bank deposits abroad…” (Reuters, December 12, 2015).

Greek Tourism

One of the few bright sectors of the Greek economy is tourism. The World Travel Tourism Council (WTTC) determined that this sector represents 17.3 percent of GDP for Greece (2014). Tourism support 340,000 jobs or 9.4 percent of total employment and by 2025 this number is expected to increase to 446,000 jobs or 10.4 percent of total employment.

Approximately 22 million visitors selected Greece as their destination and spent 14+ billion euros (2014). Most of the visitors to Greece arrive from France (1.5 million) but the UK and U.S. travelers are also represented - selecting this destination because of the fall of the euro versus the pound and dollar. In previous years, this market segment headed to cheaper non-euro destinations such as Israel and Turkey.

A certain degree of uncertainty continues to exist with respect to two issues: The increase in VAT on lodgings from 6.5% to 13% which could jeopardize investments and growth in 2016, and possible repercussions in connection with political developments.

Go Greece

While there are many cultural and geographical rewards for tourists heading to Greece for a holiday, Greek tourism is seasonal and the four months (June, July, August, September) account for almost 70 percent of total visitors while the three months of July, August and September) represent 56 percent. Visitors select this destination because of the warm and sunny weather along with clean beaches.

Challenges. Where/What is the Plan

While 75 percent of visitors arrive by air, once visitors arrive ground transportation at the destination may be limited. Other infrastructure weaknesses include telecommunications, health services, water supply and sewage systems that are under pressure in the summer peak months.

Professor Marios Sotiriadis in his study of Greek tourism (2015) found that additional weaknesses include dependence upon tour operators, lack of economies of scale, financial constraints, human resource management, lack of quality standards, policy rules and regulations, and environmental sustainability. Sotiriadis also commented upon global competition and the changes in tourism behavior, the lack of managerial skills among Greek tourism entrepreneurs and the absence of a development plan by the public sector…. and these are but a few of the many trials facing this economic sector.
Sotiriadis’s research noted that in spite of tourisms achievements in quantitative terms it could have been improved if there was a tourism plan and rational policy. He has found that there is a gap…” between political speeches and action plans, between planning and implementation of development plans.” He has determined that, “…anarchic tourism development exclusively based upon the market forces (laissez-faire) without any serious regulating and coordinating functions, caused serious structural problems that must be surmounted.”

The Crystal Ball

United States Senator, Charles E. Schumer, US Senator, in his open letter to Capital Link on their 17th Annual Investor Forum refers to, “…the resiliency of Greece’s economy,” and Gus M. Bilirakis, a Member of the US Congress (Florida) and Co-Chair of the bi-partisan Congressional Caucus on Hellenic Issues, finds “it has been a labor of love for me to help strengthen U.S. – Greece relations.”

While most political, business and legal advisors consider the risks and challenges facing the investment climate in Greece, Aravella Simotas, a member of the New York State Assembly and Chair of the Task Force on Women’s Issues and serves on the banking and small business committees has a different perception of the situation. In her letter of December 14, 2015 to Capital Link she finds that even in this challenging times Greece has “economic growth and stability.”

Kostas Skrekas, the former Minister of Development and Competitiveness and currently a member of the Hellenic Parliament/New Democracy Party, is optimistic about the future for the Greek economy. He anticipates that by the second half of 2016, as the new government agrees on reforms, meets fiscal targets and receives new bank financing while strengthening tax administration and combating tax evasion, the time for investments will be opportune. He suggests investors consider real estate, energy, acquisition of promising companies or Greenfield investments as well as Greek bonds and entrepreneurial ventures.

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Greece: Travel and tourism 911

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