ECONOMY

Domestic tourism expected to shrink over August 15 holiday

domestic-tourism-expected-to-shrink-over-august-15-holiday

Association of Greek Tourism Enterprises (SETE) president Andreas Andreadis anticipates a minimum 20 percent annual drop in Greeks traveling within the country on and around the August 15 holiday.

The collapse of the domestic tourism market began after the introduction of capital controls at the end of June with mass cancellations and a slowdown in new bookings. While Greeks’ traditionally go on their summer vacations around the Dormition holiday on August 15, that boost will not be sufficient to cover the losses from the previous period and the rest of the season.

Demand has been observed for destinations accessible by road such as Evia, Pilio, Pieria, Laconia and Halkidiki.

Interest has also been shown for the Cycladic islands, although limited to just before and after August 15.

The domestic tourism market this year is characterized by shorter vacations, lower consumption and a preference for visiting relatives and friends. The crisis has spread to accommodation rentals despite prices being maintained at 2014 levels or lower still by negotiating.

According to the president of the Greek Confederation of Room and Apartment Rental Businesses, Constantinos Brentanos, phone calls for bookings, which in other years reached 15 a day, are at a minimum.

Bookings through specialized websites are also down. In areas dependent on domestic tourism, rooms are still available. In addition, Brentanos reports that accommodation bookings by Greeks are down in popular destinations such as Corfu, Rhodes and Crete.

He says the rise in illegal accommodation, which he puts at over 200,000 units (compared to 380,000 that operate legally), is also to blame since such units avoid taxation and create unfair competition. He adds, “Order must be imposed to protect legitimate businesses that bear tax and social security burdens compared to those who break the law and pay nothing to the state, while many deposit rents into foreign accounts.” He says that while the law provides for fines of up to 50,000 euros, since checks are not made it makes no difference.

Brentanos expects that accommodation prices will increase in 2016 due to the doubling of VAT for such businesses. He underlines the difficulty for SMEs in the sector already offering very low rates and operating at the limit to absorb the VAT increase and other charges such as the ENFIA property tax.