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Greece PM Calls Tourism the ‘First Locomotive’ to Pull the Economy Out of Recession

Apr 15, 2014 2:00 pm

Lee Cannon  / Flickr

A restaurant in the tourist section of Corfu, Greece. Lee Cannon / Flickr


Greece’s successful return to bond markets is the most recent in a series of “positive messages” for the economy that included the country posting a record year for tourism and forecasting an even stronger 2014, Tourism Minister Olga Kefalogianni said.

“We have left the big difficulties behind us,” Kefalogianni said in an interview yesterday. “The trend is now turning and we’ll see the Greek economy start recovering this year.”

Prime Minister Antonis Samaras has called the tourist industry, which accounts for about one sixth of gross domestic product, “the first locomotive that started and began to pull our economy out of a painful six-year recession.” Greece successfully tapped debt markets last week for the first time in four years, selling 3 billion euros ($4 billion) in five-year bonds.

Greece saw a record 18 million visitors last year, as travelers from Germany and the U.K., who shrugged off recent images of a strife-torn country, were joined by visitors from growth markets like China and Brazil. Industry projections show this year to be ahead of last year’s pace, the minister said.

“The messages from all our markets are extremely positive, giving us the confidence that 2014 will be a new record year,” Kefalogianni said. Her ministry’s forecasts match estimates by the Association of Greek Tourism Enterprises.

Recovering Markets

Traditional source markets for Greek tourism, which had declined sharply in recent years, have begun recovering, Kefalogianni said, with pre-booking figures from the country’s industry association indicating Greece can expect more tourists from the U.K., Germany and France this year. Germans are the most frequent visitors to the country, followed by the U.K., the Former Yugoslav Republic of Macedonia, France and Russia.

Asked if Russian tourist visits, which reached 1.4 million last year, would be affected by tensions between that country and the European Union over Ukraine, the minister said, “in the first three months of 2014, we saw an increase of 12 percent in the number of visas issued in Russia, so I would say this as a message is definitely a very positive one.”

In addition to generating revenue, tourism is also a major source of investment for the cash-stricken Mediterranean country. Part of the government’s infrastructure-improvement plan is designed to help raise the contribution of tourism to the country’s GDP, Kefalogianni said.

In December, Greece’s Hellenic Republic Asset Development Fund, charged with raising cash through asset sales, chose the Jermyn Street Real Estate Fund IV as preferred bidder for Astir Palace Vouliagmenis SA, a luxury-resort operator jointly owned with the National Bank of Greece, after Jermyn Street bid 400 million euros for 90 percent of the company.

Tourist Resort

In January the fund accepted NCH Capital’s bid to build a tourist resort on the island of Corfu. New York-based NCH will spend 23 million euros for the leasehold and invest about 75 million euros to develop a hotel, marina and private vacation homes. The deal marked the first overseas investment in state land in 15 years.

Oaktree Capital Group LLC in March set up a joint venture with Greek hotel owner Sani SA to run as many as six luxury resorts. “It’s very positive for Greece that a fund as big as Oaktree” chose to invest in the country now, Sani Chairman Stavros Andreadis said by phone. “It confirms investor confidence toward Greece.”

With assistance from Sharon Smyth in Madrid.

To contact the reporter on this story: Eleni Chrepa in Athens at echrepa@bloomberg.net To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net Kevin Costelloe.

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