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Tourist arrivals to Greece rise, migrant flows hit tourism in some Greek islands

  • Published by Ozgur Tore

athens Acropolis

International arrivals statistics in Greece improved in July, boosted by last-minute bookings: airport arrivals were up +9.0% at regional airports and +9.6% in Athens. However, tourism in some Greek islands hit by refugee and migrant flows.

Corresponding ytd July changes were +6.7% (regional) and +5.6% (Athens). Road arrivals were also up +1.6% over last July, which had been adversely affected by capital controls, while the drop for year to date was contained at -4.8%. In absolute numbers, the rise in airport arrivals for the year to date (seven months) amounted to +556 thousand and the drop in road arrivals to -307 thousand.

greek islands refugeesAs in previous months, the overall positive change in airport arrivals masks significant regional differences, most notably the marked decrease in arrivals at islands which have been affected by refugee and migrant flows: Lesvos (-62.7% for the seven-month period), Samos (-29.7%) and Kos (-15.9%).

In addition, Bank of Greece figures for the first half of the year indicate a -1.6% reduction in arrivals, accompanied by a significantly larger drop in revenues of -5.8%. These decreases are due to a combination of factors, such as a loss of Greece's share of traditional markets from which a large part of bookings are made in the first few months of the year, limited expenditures by tourists due to terrorist attacks and international instability, among others.

Recent data from the Labour Ministry's ERGANI system (and from IKA-ETAM, see below) highlight the importance of tourism to the Greek economy and society: data on balance of paid employment changes (+/-) indicate the following (see below):

-              82.8% of the increase in paid employment for the period January-July 2016 in the overall economy is due to tourism (33.6% catering, 49.1% lodging).

-              For July: the increase in catering and lodging exceeded the increase in employment in the economy overall by 52%.

In addition, according to Social Security Fund IKA-ETAM "Monthly Employment Data", tourism employment in 2015 rose by +14.8% and wages by +13.3%.

Positive developments in tourism include the announcement of a Low Cost Carrier route from Singapore for summer 2017; the announcement of the TEMES-Olayan-Dogus as Preferred Investor for the Athens Hilton (508 rooms); and the opening of a new hotel (Athens Avenue, 94 rooms) in Athens.

The positive news also includes the increase in bank deposits, the banks' reduced dependence on ELA, S&P's upgrading of four systemic Greek banks (National, Piraeus, Alpha and Eurobank) from the "selective default (SD)" rating to "CCC" and the relaxation of capital controls. The concession of the Piraeus Port Authority (OLP) to COSCO was completed, and the latter plans investments of €600 million to transform Piraeus into the largest commercial gateway from Asia into Europe as well as a hub for the cruise industry.

Finally, with regard to fiscal figures, the General Government budget on a consolidated cash basis saw a sizeable increase in revenues of 11.2% in the first half of 2016 (first half 2015: -10.9%) to €35.4 billion, with an increase in General Government primary spending plus a 0.6% rise in overdue State obligations (first half 2015: -3.4%), to €33.67 billion. A primary surplus of €1.73 billion resulted in the first half of 2016, compared to a primary deficit of €1.64 billion in the first half of 2015. It is also noted that the increase in overdue State obligations for the first half of 2016 was €1.23 billion, while it was €1.6 billion in the same period of 2015. Without these obligations, primary general government expenses were €32.4 billion in first half of 2016, compared to €31.88 billion in the first half of 2015.

As a result, in the context of an unstable international environment, last-minute bookings could provide a boost to Greek tourism, albeit with reduced tourism expenditures.

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