Prime Minister Announces Tourism Measures

Prime Minister Costas Karamanlis in late December announced 14 measures to support the Greek tourism industry.

His announcement followed almost two weeks of street violence throughout the country and mainly in the capital that led to numerous visitor cancellations.

The announced measures include a 50 percent increase in advertising promotion to attract tourists, a reduction of the common real estate tax (ETAK) that is imposed on the hotel industry, subsidized loans, and measures to boost training and employment in the sector.

However, the constant request of hoteliers in regards to the permanent abolition of the two percent “sojourn tax” that they are charged by municipalities was not met completely.

The tax was reduced from two percent to 0.5 percent and, according to the prime minister, the loss of income to the municipalities will be replaced by a 20 percent increase of road tax on motor vehicles.

However, the Central Union of Municipalities and Communities of Greece (KEDKE) gave a negative response in regards to the sojourn tax reduction as they replied that a reduction “was out of the question” (see page 6).

The prime minister also said that tourism is a strategic sector for the country and that the government is determined to do everything possible to help tourism overcome the serious problems caused by the international crisis.

“We will reinforce the competitiveness of the Greek tourism product in this very difficult international environment,” Mr. Karamanlis said.

The Hellenic Hotels Federation expressed its satisfaction with the prime minister’s announcement, while the Association of Greek Tourism Enterprises said that the specific measures are expected to help the tourist sector deal with the crisis and strengthen the competitiveness of Greek tourism in the near future.

The association added that the announced measures meet some of the timely demands of the tourism sector, but do not lay the foundations for future sustainable development.

The Hellenic Chamber of Hotels said that the announced support measures, of which most identify with the chamber’s proposals, are moving in the right direction and are expected to relieve the tourism sector that is headed towards an extensive economic crisis.

However, the chamber pointed out that procedures for the implementation of measures that require legislation must be put into operation promptly.

The Hellenic Association of Travel and Tourist Agencies expressed its optimism in regards to the tax reductions and the 50 percent increase in expenditure for Greece’s promotion.

“This will reduce the impact of the recent events and will also contribute to the general increase of our tourism product’s competitiveness,” the association said.

The Greek Car Rental Companies Association and the Panhellenic Federation of Restaurants and Related Occupations (POESE) applauded the prime minister’s measure that concerns the reduction of the “sojourn tax” charged on their enterprises.

“With the reduction of the sojourn tax the prime minister proved true with his pre-electoral promise to ‘reduce the unfair tax imposed by the local government’ as he had said,” POESE underlined.

On the other hand, the Panhellenic Federation of Tourism Enterprises expressed its deep concern that once again there is almost no support for the tourist agency and tour bus sector, which contributes greatly to Greece’s tourism development and is the leading operator of the tourism product.

“During this crucial period our sector remains completely helpless,” the federation said.

In his speech, the prime minister stressed that the course of Greece’s economy is affected to a large extent by tourism and for that reason the government is ready to take additional measures if necessary.

The Greek tourism industry accounts for some 18 percent of the country’s gross domestic product.