ATHENS – Greece’s nascent rebound from a near decade-long economic and austerity crisis is rapidly losing its biggest revenue engine – tourism – with the bottom falling out of bookings, travel restrictions, and border shutdowns over the dreaded COVID-19 virus.
Tourism makes up as much as one-fourth of the country’s annual Gross Domestic Product (GDP) of 181.51 billion euros ($200.3 billion,) bringing up to to 45.37 billion euros ($50.07) in critical revenues and as Greece is facing strong challenges from rival tourism countries.
In January, Tourism Minister Harry Theocharis – before news broke about the breakout of the then-called Coronavirus in China that spread around the globe – said Greece was counting on another big bump in tourism for 2020 after forging ahead with plans to make the country a year-round destination and not just a summer fun playplace.
That’s now as old as Ancient Greek History.
Tourism employs about 20 percent of the workforce of about 4.32 million people, with some 1.08 million working in the sector that has enjoyed a string of record seasons that was a critical buffer for the economic and austerity crisis.
The industry is expected to suffer a critical blow with airlines cutting back flights around the world and people concentrating on surviving, not travel and bookings for hotels and short-term rentals through platforms such as Airbnb have fallen as much as 70 percent.
“Just as Greeks are emerging from a decade-long crisis that cost the country a quarter of its output, the impact of the coronavirus on the vital tourism sector threatens to deprive them of the fruits of recovery,” the financial news agency Bloomberg reported in a feature.
Tourism makes Greece the European Union’s second-most exposed country to the sector after Cyprus with the loss of revenue a crippling blow to both countries with Greece’s New Democracy already ordering the closing of seasonal accommodation, which includes over half of hotels. And after people flocked to coastal areas in unseasonably warm weather, organized beaches were also shut down.
“We were fully booked, but half of the reservations never showed and it’s going to get worse from here,” Helen Michael, owner of a 25-room hotel near the central Syntagma Square in Athens. “People are afraid,” she told the news agency.
They’re afraid of other people, being advised to stay six feet away and to avoid touching door knobs, bank notes, ATM machines, public transportation doors and straps, every surface now seen as potentially a virus trap they could catch.
Greece has 352 confirmed virus cases and four reported deaths and the government, after shutting schools, announced a partial lockdown except for essential businesses such as banks, supermarkets and pharmacies and Church services, although people will still be allowed to enter churches to pray and attend Sunday morning liturgy services.
That comes only a few weeks before the April 19 Easter celebration that would be the advent of spring and a pickup in tourism after the country’s travel authority had pushed Greece as a year-round destination and spring especially desirable.
THE LOST WAGES OF FEAR
“We’re monitoring reservations and cancellations hour to hour,” Alexandros Vassilikos, president of the Hellenic Chamber of Hotels (HCH) told the news agency.
Michael, who runs one of Greece’s almost 10,000 hotels, said cancellations are coming in at the rate of 20 percent, with fears it could soar off the charts and see hotels and the country’s noted Five-Star luxury resorts empty.
“We had lots of reservations through to the end of April, including for Easter, but now the situation is a disaster and it’s likely to continue through May,” she said. “Right now, the last thing people are thinking about is summer holidays.”
Greek hotels generated revenue of 8.7 billion euros ($9.8 billion) in 2019, a rise of more than 7% compared with 2018, according to HCH data. The number of tourists visiting from abroad reached 31.3 million people in 2019, almost triple the country’s population, and they spent 18.2 billion euros ($20.06 billion.)
That’s a big chunk of the country’s Gross Domestic Product (GDP) of 181.75 billion euros ($200.3 billion,) an amount that can’t afford to be lost and with expectations of a shortfall driving the government to curtail plans for pension hikes and to return benefits stripped from workers, pensioners and poor during an economic crisis.
There was no word on whether it would also affect Greece’s ability to repay 326 billion euros ($359.6 billion) in three international bailouts that began in 2010 and ended on Aug. 20, 2018 but with Greece still struggling to return fully to the markets.
Tourism won’t be the only sector to suffer, Vassilikos predicted, but urged the government to prioritize the industry because if it collapses “the consequences will be felt from the accountant in Rhodes to the plumber in Athens.”
It could bring another near-economic collapse rivaling what happened in 2010 when then-Premier and PASOK Socialist leader George Papandreou asked for the first of the bailouts after generations of wild government spending and political patronage brought the country to the edge of ruin.
With the shoots of spring approaching, Greece had seen a resurgence in new hotels and small businesses popping up, people coming out to enjoy the buzz of Athens, a hint of optimism finally in the air. That’s all gone for now.
The government banned cruise ships just as the Chinese company COSCO that operates the port of Piraeus was planning a major overhaul to improve facilities to bring in larger ships, which are now seen as breeding grounds for the disease that people are urged to avoid.
The government had forecast a growth rate of 2.8% for 2020, but economists now put it at 2 percent, said Bloomberg, with worry it could fall to 0.9 percent, depending on the length of the epidemic, analysts at Athens-based Alpha Bank said in a report.
Greece’s economy is still being monitored by envoys from its lenders, the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) as well as the Washington-based International Monetary Fund (IMF) that took part in the first two bailouts that totaled 240 billion euros ($264.49 billion.)
That requires the government to hit an annual primary surplus target of 3.5 percent of GDP until 2022, which now seems unattainable with the vicious economic effects of COVID-19 and the boomerang effect down the line.
“For the moment we want measures to maintain our cash flow and to help us protect jobs,” Vassilikos said, adding the sector could collapse otherwise and doom future tourism seasons. If there are any.