(Adds Ionian Sea location in 21st paragraph.)
June 9 (Bloomberg) -- Prime Minister George Papandreou’s attempts to draw tourists to Greece may be undermined by union calls for strikes against new government austerity measures.
Unions representing more than 3 million workers are planning walkouts this month as Papandreou shapes 78 billion euros ($114 billion) of budget cuts and state asset sales to meet European Union bailout requirements.
About 5,000 protesters, including power, postal and bank workers, marched through central Athens today carrying banners, one of which had a map of Greece with a red “Not For Sale” sign on it. Members of the PAME labor union took over the Finance Ministry offices in Athens on June 3 and 50,000 people protested two days later. A general strike is set for June 15.
“If we weren’t committed to a conference, we might not have come,” said Norm Hartwell, a 70-year old dermatologist from Christchurch, New Zealand, as he dragged his suitcase through central Athens during a five-hour subway walkout this week. “We were thinking there may be disruptions.”
The demonstrations come as Papandreou’s government is cutting the sales tax for hotels to make pricing more competitive, keeping tourist sites such as the Acropolis open later at night and marketing Greece on websites such as those of Facebook Inc., Expedia Inc. and Twitter Inc.
“Tourism has a central role in growth,” Papandreou said in Athens at the annual general meeting of the Association of Greek Tourism Enterprises, also known as SETE, May 4. “Maybe it sounds obvious, but all these years it wasn’t. Together we are proceeding with a revolution of the obvious.”
Tourism accounts for about 16 percent of Greece’s gross domestic product, according to the London-based World Travel and Tourism Council. That’s four times as much as for Germany and twice the European Union average. The Greek economy will shrink 3.5 percent this year, after a 4.5 percent contraction last year, according to a European Commission forecast.
“As long as social tensions remain high, confidence is low and so tourism could be negatively affected from the strikes,” Giada Giani, an economist at Citigroup Inc in London, said by telephone. “The negative impacts are likely to be there.”
Tour operators, airlines and hotel owners do say there is revived interest in Greek holidays, a year after a wave of protests and violence deterred visitors. Political turmoil that started in Tunisia and spread to Egypt, Libya and Syria has helped send tourists back to Greece.
Marie Nury, who visited Greece from Grenoble, France, said she had considered going to Morocco or Tunisia but chose not to.
“People will come to Greece now,” she said in the Athens Backpacker Hotel. “This year the portrayal is that the crisis is a political problem and not one of the Greek people.”
People now are less tolerant of strikes and protests, said Loukas Tsoukalis, an economist at Athens University and head of research institute ELIAMEP.
“If you have been waiting for months for tourism to help you be in a better than your previous sorry state of affairs and 10 or 100 people are threatening that, then there may be reactions,” he said. “I think society is much less willing to tolerate that sort of thing this year.”
Tourism and Culture Minister Pavlos Yeroulanos said he was trying to lure Germans and Britons as well as draw visitors from new markets such as Israel, the Balkans, Ukraine and Russia.
The government is working on simpler visa procedures for tourists from Ukraine and Russia and promoting Greece as “the safe destination it always was,” Yeroulanos said in an e-mailed response to questions on April 12.
“There is now a Russian market for the first time in the Cyclades,” said Kostas Dimitrokalis, who owns five hotels on the island of Santorini. He said his reservations are up as much as 11 percent in the first months of the year.
Tourism fell last year after three people died during a general strike on May 5. Anarchists rampaged through the city and set fire to buildings during protests before the 110 billion-euro EU-led bailout was agreed to on May 2, 2010.
“It took years for Athens to get a good reputation with the 2004 Olympic Games,” Giannis Retsos, president of the Hellenic Hotel Federation, said April 28. “Last year showed how this reputation can be destroyed in one day through one incident.”
Greece spent about 10 billion euros to build a metro, airport and tramway and to upgrade infrastructure in preparation for the Olympic Games.
Income from international tourism dropped 8 percent in 2010, according to SETE. German visitors, who made up 14 percent of total visitors in 2010, declined 14 percent to 2.4 million from the year earlier.
Unemployment was at a record 16 percent in March. Island regions, whose populations rely on tourist revenue, are outpacing the mainland. The jobless rate was 25 percent in the Ionian islands in the Adriatic Sea, which include Corfu and Zakinthos. The tourist sector employs one in five Greeks. The Ionian was considered part of the Adriatic though now is it viewed as a separate body of water, according to the online version of Encyclopedia Britannica Inc.
Papandreou in March pleaded with lawmakers in parliament to help keep the peace by not supporting any strike action.
“We need this year, if we really want to change the course of the country and see growth, to have the requisite calm for the tourism season to have positive results,” the premier said. “We can’t, like last year, portray an image of the country being torn to pieces by strikes and shut ports.”
Government initiatives to draw visitors include a cut in the value-added tax rate for hotel stays to 6.5 percent from 11 percent as of Jan. 1. The government on May 19 extended museum hours: The Acropolis site, one of the most visited spots, is open year-round until 7 p.m daily, from 3 p.m. previously.
Early bookings show arrivals will rise about 10 percent this year and revenue by as much as 7 percent, the hotel federation’s Retsos said. Revenue from foreign visitors rose 4.7 percent in the first three months of the year, Alpha Bank SA said May 26, after a 2 percent decline in the same period last year. “Significant” increases were seen for April.
Piraeus Port Authority SA, the operator of Greece’s biggest harbor and the main link to the islands, slashed vessel docking fees in March and raised its forecast for passenger cruise ship arrivals this year. It was operating normally today, with all staff working, a coast guard spokesman said.
Dockworkers held a four-hour work stoppage on May 31 to oppose Papandreou’s plan to sell a stake in the port. The sale is part of 50 billion-euros in state asset sales to secure additional funding from the EU and IMF and help pay down the EU’s biggest debt load. Greece’s debt is expected to peak at 153.3 percent of GDP next year, according to an EU-IMF report.
Assets for sale include the two biggest ports, the Athens International Airport and stakes in the country’s phone, gambling and power companies. Papandreou has also announced 28 billion euros of spending cuts and revenue raising measures for the next five years as tax evasion undermines deficit-cutting.
“We weren’t affected at all” by any strikes or protests during a four-day cruise of Greek islands, dermatologist Hartwell said. In Athens, “the demonstration in the square was very peaceful and not threatening at all.”
--Editors: Maria Petrakis, Anne Swardson
To contact the reporters on this story: Natalie Weeks in Athens email@example.com
To contact the editor responsible for this story: Angela Cullen at Acullen8@bloomberg.net