The Association of Hellenic Tourism Enterprises (SETE) has been forced to lower its estimates for the year that as recently as the end of February was expected to see 25 million tourism arrivals (including 2.5 million cruise passengers) and over 14 billion euros in direct revenues.
Already the great growth rates since the start of the year for this summer season from traditional tourism markets have been slashed, mainly due to the extended economic and political uncertainty in the country and planned value-added tax changes.
The VAT currently imposed on tourism accommodation is 6.5 percent. If the scenario of a mild increase to 8 or 9 percent materializes, there will be small consequences, but these will be limited compared to the other scenario for a rate more than twice today’s. SETE argues that such a development would be destructive for Greece’s tourism, with traffic swinging away to the country’s rivals with lower VAT rates on their tourism packages.
With 70 percent of holiday packages already sold for 2015, a VAT hike would mean hoteliers may need to ask visitors to pay an extra amount before their departure, when the difference in tax will be payable from the hoteliers to the state. Unsold packages will simply suffer a price hike.