Sta­bil­ity, VAT, air seats to af­fect 2016 tourism

Kathimerini English - - Front Page - BY STATHIS KOUSOUNIS

Greek tourism is brac­ing for a test of strength next year as the num­ber of cri­te­ria that will de­ter­mine its per­for­mance in 2016 – and there­fore its con­tri­bu­tion to the na­tional econ­omy – is the high­est ob­served in the last decade.

The head of the Hel­lenic Cham­ber of Ho­tels, Yian­nis Ret­sos, says that the po­lit­i­cal and eco­nomic en­vi­ron­ment in the coun­try will be one of the most sig­nif­i­cant cri­te­ria in the com­ing year. There­fore, sta­bil­ity will have to be safe­guarded to main­tain Greece’s im­age as a safe des­ti­na­tion for in­ter­na­tional mar­kets, a char­ac­ter­is­tic that has been par­tic­u­larly ap­pre­ci­ated in re­cent years.

It is key to en­sure that the coun­try re­mains a mem­ber of the eu­ro­zone. Ret­sos stresses that the char­ac­ter­is­tics of the Greek tourism prod­uct should be pre­served, some­thing that can only take place within the eu­ro­zone. He notes that for­eign visi­tors have grown used to com­ing to con­tact with the lo­cal com­mu­ni­ties of the ar­eas they visit across the coun­try and that an exit from the euro would dis­tort the Greek des­ti­na­tion’s fea­tures.

Another fac­tor is the value-added tax in­creases that will af­fect the mar­ket con­sid­er­ably as of this fall: The rise in the VAT rate for ho­tel ac­com­mo­da­tion to 13 per­cent from Oc­to­ber and for food ser­vice to 23 per­cent will ef­fec­tively dou­ble the tax on the ma­jor­ity of tourism pack­ages for 2016 com­pared with this year.

Some tough ne­go­ti­a­tions are cur­rently un­der way re­gard­ing the sign­ing of the re­main­ing con­tracts be­tween tour op­er­a­tors and Greek hote­liers for the 2016 sea­son. The rep­re­sen­ta­tives of for­eign travel gi- ants are press­ing the Greeks to ab­sorb the cost of the VAT rise, or, at best, in­sist­ing that ho­tels share the ex­tra bur­den. What­ever the case, hote­liers will see rev­enues de­cline.

Given that the ma­jor­ity of tourism en­ter­prises in Greece are cur­rently in debt and the chances of se­cur­ing any fi­nanc­ing from the do­mes­tic bank­ing sys­tem are slim, if not nonex­is­tent, the VAT ab­sorp­tion will cre­ate huge prob­lems in the in­dus­try. Ret­sos says a key is­sue stem­ming from the new con­di­tions is whether Greek ho­tel busi­nesses will man­age to re­main com­pet­i­tive in terms of prices and qual­ity, and how many will sur­vive.

Also among the cri­te­ria for next year is the main­te­nance of the high sup­ply of air seats from for­eign mar­kets to Greece. Fur­ther­more, an is­sue that will have to be dealt with in an or­ga­nized fash­ion is the high in­flow of im­mi­grants that some of the coun­try’s most pop­u­lar re­sort ar­eas have been sub­ject to this year. As the ex­pe­ri­ence of the last few months has shown in des­ti­na­tions such as the eastern Aegean is­lands, this phe­nom­e­non has a clear im­pact on the tourism econ­omy.

Among the ex­ter­nal fac­tors that are likely to af­fect in­com­ing tourism in 2016 is the ex­change rate of the euro against cur­ren­cies such as the US dol­lar and the Bri­tish pound. This year the de­cline of the com­mon cur­rency in com­par­i­son with the dol­lar and the pound has bol­stered visi­tor num­bers from two of the big­gest mar­kets for Greek tourism.

Greece stands to gain an ad­di­tional share of the re­gional tourism mar­ket from the re­di­rect­ion of the in­ter­na­tional tourism flow if, as in pre­vi­ous years, ex­tra­or­di­nary events such as ter­ror­ism at­tacks etc are re­peated in ri­val des­ti­na­tions.

In­vestors, the GAIAOSE rail­way prop­erty com­pany and the Euro­pean In­vest­ment Bank are still wait­ing for the gov­ern­ment to de­cide what to do with the ten­der for the Thri­a­sio Transit Cen­ter. The dead­line agreed with the EIB has passed and the bank has the right to claim 125 mil­lion eu­ros back.

The rise in the VAT rate for ho­tel ac­com­mo­da­tion and food ser­vice will dou­ble the tax on most tourism pack­ages for 2016 com­pared with this year.

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