What might the Greek Elections mean for the travel industry?

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The outcome of the recent Greek elections has made me wonder whether we are at one of those defining moments in history. Most British schoolchildren cover in their history syllabus the rise of Hitler and the Nazis in Germany, and there is a commonly asked question which appears in many History exams, along the lines of “Consider the extent to which the sanctions imposed by the Allies on Germany in the Treaty of Versailles directly led to the rise of the Nazis”.


I wonder whether in 50 years, children will be answering questions on whether the actions of the Troika in imposing payment terms on Greece and other struggling Eurozone countries ultimately led to the break up of the European Union. I hope that I am being unduly pessimistic, but it is difficult, if not impossible to see how the Greeks can remain in the Euro if Syriza deliver on their election promises to the Greek people. And if they do deliver, what are the likely consequences for future elections in other parts of Europe?


As my interest is particularly relating to tourism, I have had some fun over the past week attempting to speculate on what the Greek election results might mean for tourism, both to Greece and more widely in Europe. As usual, part of the answer is “It depends”. There are a number of factors on which the outcomes are dependent, some of which depend on the behaviour of those involved, and some of which depend on how those behaviours are reported.


The starting point is something of immediate concern to anyone who sells holidays to Greece, and that is whether the elections will affect sales to Greece in the critical Peaks period. Some 30% of all summer holidays in the UK are sold in January and February, and if sales get affected by negative sentiment, customers may choose to book other destinations. Those customers are lost to Greece for the whole summer. If customers get any concern that their holidays might be disrupted, by for example, a Grexit in the middle of their holidays, they may decide to choose a lower risk destination. I suspect that this will largely be determined by media portrayals of the new Greek government over the next few weeks. It is interesting that within a few days of the election, the language of Syriza had already been moderated from their position during campaigning, and they were no longer talking about defaulting on their debts.


My guess is that there will be some decline in sales to Greece, but that will be small, at least from the UK, unless the messages change – bear in mind as well that for the past few years, holidays have been affected by strike action resulting directly from the austerity measures – and it may be that the government changes will result in reduced disruption.


Also of some immediate interest in relation to tourism is how this government will choose to approach the sector. Historically, even though tourism represents a massive part of the Greek economy (according to WTTC figures, directly and indirectly tourism represents arounds 16.3% of Greek GDP and 18.2% of total employment), it has been largely ignored within the Greek government. Until relatively recently, Tourism Ministers changed annually, and rarely had any real interest in the sector. We have been fortunate that for the past 3 years, there has been stability, and an excellent, and interested Tourism Minister in Olga Kefalogianni. She came from Crete, and had family connections in tourism. We have to hope that the new Minister, or technically, Deputy Minister, Elena Koudoura shares that interest. The Syriza manifesto proposal to ban All Inclusive hotels was not a very positive starting point, although within the first week in office, there does seem to be a backtracking on that issue.


The important issue for the tourism industry is to attempt to build relationships quickly with the new Minister, and to encourage her to think and act in the long term interests of the sector, for the overall benefit of the Greek economy.


The bigger issue in the long term is whether there is a Grexit from the Euro, and how that Exit is handled. Whilst the Syriza spokesmen have said that they want to remain in the Eurozone, it is difficult to imagine how Greece could successfully make major changes to the terms of its debts and still remain part of the Euro. Whether this will happen, when and how are questions which will be of fundamental importance to the travel industry, as well as what the impacts of such a change would be on prices in Greece.


Taking the last point first, in theory, if Greece has its own currency, prices in Greece should fall. Whilst that will not help tour operators in the short term, as they will have already contracted accommodation at rates previously agreed in Euros, holidaymakers should see their spending money going further – which should encourage increased numbers. That is at least partly dependent on bars, restaurants etc passing on the exchange rate benefits to customers – and they don’t always have a good record in this respect.


The practical questions about how any change takes place are a particular concern for the tourism industry. Greece does have a relatively short holiday season, and it would therefore be ideal if any change occurred between November and March – as the only holidaymakers really affected then would be the city breakers in Athens, and a small number of other specialist groups.


Unfortunately, these types of event have a knack of taking place at the height of the season – and the impacts will vary considerably, depending on whether it is a planned and controlled exit, or a forced departure. In either event, there are almost certainly going to be a few days when banks and cash machines are closed, and no currency of any sort is available. In the worst case of a forced departure, the disruption could be more significant.


When this issue was first mooted two or three years ago, businesses with a significant presence in Greece prepared contingency plans on how they would continue to trade. I wonder how many travel businesses had the foresight to prepare those plans. Either way, it seems prudent to look again at what might happen, and have plans ready in case a Grexit does materialise.


The broader question is then whether the election of Syriza starts a wave of political changes with more anti austerity and/or Eurosceptic parties being elected across Europe. If that occurs, do we start to see more significant changes in tourism movements more generally within Europe?


Whether the impacts of the Greek election are limited to Greece, or have a wider effect on the political situation across Europe will only become clearer with time. However, once again, domestic events in another country could have a significant impact on tourism from the UK.