RPT: FEATURE - Greek Hospitality Industry Facing Losses Due To Inflation, Sanctions Policy

HERAKLION (Pakistan Point News / Sputnik - 26th July, 2023) Local Greek business owners surveyed by Sputnik have said that they struggle financially due to decreased demand amid high inflation and the EU's sanctions policy against Russia, as fewer Europeans can afford to go on holiday, and those who can have become more frugal and prefer not to leave hotels, limiting their holiday activities instead.

In 2022, the EU's annual inflation reached the highest level ever recorded at 9.2%. In June 2023, it slowed down to 6.4%, but has remained almost twice as high as it had been for the previous 20 years.

"Due to high energy prices, air tickets are much more expensive now than they used to be, and for an average European family to visit us this season, the cost might be double or triple that what it was last year," Giorgos, a 44-year-old owner of holiday villas in the south of Crete, told Sputnik.

To save money, frugal European tourists prefer to stay at their hotels and avoid going out and exploring tourist attractions, which has had a great impact on local service providers. The owner of a small rent-a-car business in Crete, Manolis, said this season has been "terrible" for his business, with revenue dropping 40% compared to the previous summer.

"Because of this situation I decided to sell 1/3 of the fleet of the cars I am renting at the end of the season just to bring down the risk factor and the costs," Manolis said.

Many restaurant businesses might not even survive this crisis, Panagiotis, a 46-year-old restaurant owner, told Sputnik, adding that he himself expects losses by the end of the season and in the future.

"I am not optimistic for the upcoming winter. I think, if the situation doesn't change or the government doesn't support us more actively, many business owners like me will face bankruptcy by the end of the season and due to the energy crisis and high prices. I think the upcoming winter will be one of the hardest for Europeans in the last decades," he said.

Moreover, business owners have noticed the lack of Russian tourists after sanctions were imposed on the country, as they were among those who preferred to spend more during their holidays and bought property in the country.

"Of course sanctions against Russia have affected my business to a massive scale. In the past, 85% of my clients were Russians, most of them from Moscow and Saint Petersburg. They were clients who would prefer the best services during their stay, they would book chefs and staff for their stay as well as drivers, massage specialists and DJs; something that European clients never do. Russian clients were supporting the local economy in the way they were spending during holidays in the past, so personally I am looking forward for the sanctions to be lifted so that I will be able to work with Russian clients again," Giorgos said.

At the same time, some businesses do well despite the difficulties; among them are large hospitality facilities, Stefanos, a 56-year-old owner of a medium size hotel, told Sputnik.

"Large hotel facilities are most likely part of a large European tour operator, which guarantees the bookings through the season, and because such tour operators are large, they can, using economies of scale, offer packages with low prices to clients, so they are able to book our hotels with visitors and at the same time stay profitable," he noted.

Some property management companies also report having a good season. Young adults, solo travelers or couples from Western Europe show steady interest in renting renovated flats close to the beach front and to the city centers, Elena, a 26-year-old agent for a local property management company, told Sputnik.

The tourist business in Greece is also going to be affected by the massive wildfire which started on the Greek island of Rhodes on July 18 and reportedly forced the authorities to evacuate about 20,000 people.

"The situation has been dramatic for six days as the fire is burning in the middle and the south of the Island. We have had the evacuations of tourists in the last two days; nearly 20,000 people left the area of the fires, which is a very popular location," Nikos, who owns rented properties in the city of Rhodes, told Sputnik, adding that the industry expects support from the government amid the crisis.

In 2022, after Russia launched its military operation in Ukraine, many European countries, including Greece, imposed sanctions against Moscow, such as a ban on flights of Russian-owned aircraft to the European Union, making it more expensive for Russians to travel to Europe. Some European countries, including the Baltic states, Finland and Poland, have stopped issuing tourist visas to Russians.