Fearful German tourists add to Greece's woes by staying away in droves

Helena Smith in Athens, and Kate Connolly imn Berlin

guardian.co.uk, Saturday 26 May 2012 14.07 BST

Resentment over EU austerity measures and images of violent protests have led to 50,000 holidays being cancelled in 10 days

German holidaymakers normally flock to Greek destinations such as Rhodes, the largest of the Dodecanese Islands. Photograph: Eyeswideopen/Getty Images

Every May, coaches carrying German tourists would cruise up the long winding road that leads from Pyrgos to ancient Olympia. There they would decant in en masse, a permanent fixture in the tavernas, bars and shops that line the Peloponnesian town's cobbled thoroughfare. But things have changed.

"They're just not coming," says Dimitris Tyligadas, a local hotelier. "And if they do, they kind of look at us through half-closed eyes, as if they don't really trust us."

Olympia is not alone. The German reaction to the economic crisis engulfing Greece has been to stay away. In the 10 days after the inconclusive election on 6 May an extraordinary 50,000 bookings – half of those usually made every day at this time of year – were cancelled, the Observer has learned. Most were Germans fearing the consequences of being seen as the source of the austerity regime enforced in return for EU-International Monetary Fund rescue loans to prop up Greece's moribund economy.

"The drop was considerable," said Andreas Andreadis, president of the Association of Greek Tourism Enterprises. "We estimate that German arrivals will be down by about 25% by the end of the year."

Germans exceed even Britons in their lust for the sun, sea and freedom of spirit associated with Greek resorts. Close to four million visit each year – more than any other EU member state. For a country that depends on tourism, with one in five working in it, their absence could have a devastating effect; never more so than now when the future of Greece, either in or out of the eurozone, is likely to have ramifications not only for Europe but the world economy.

Earlier this year Athenian newspapers were full of reports of Germans "fearing for their lives" if they visited Greece. Violent street protests, peaking with the burning of the German flag outside the Greek parliament in February, at the height of the booking season, spurred the first wave of cancellations.

It was a far cry from the image Germans such as Andrea Schale had in mind when they booked their Greek holiday months earlier. For Schale, a 27-year-old sales assistant from Potsdam, the resort of Malia in Crete conjured "fishing boats, a white, sun-baked terrace, a bottle of ouzo to wash down after a plate of souvlaki". On Friday as she prepared to board a flight from Berlin to the island's capital, Heraklion, she found herself wondering whether she had made the right choice.

"We've seen lots of images on TV of Greeks burning the German flag, setting fire to rubbish bins and of stones flying. I just hope the anti-German sentiment isn't going to ruin our holiday. I think I'll pretend to be Austrian just in case, or better still, speak English."

According to a poll by the Foundation for Future Studies, which interviewed 4,000 Germans, only 1.1% are planning a holiday in Greece this summer, a drop of almost a half since last year, and of two-thirds since the start of the economic crisis in 2009.

"The dominant image of Greece right now is not of sunny islands, beautiful beaches or cosy little tavernas, rather of strikes, anti-German sentiment and corruption," said Ulrich Reinhardt, the foundation's scientific head. "These negative associations have led to a huge amount of unease."

The German foreign office has advised tourists to check on the current situation before any holiday and to avoid "demonstrations and large gatherings".

Ironically, Greece could not be quieter, less strike-plagued or better value for money. Walkouts that saw thousands of tourists being stranded at harbours and airports last year have dropped as unions lay down their arms ahead of general elections on 17 June.

"We don't have plans to stage any strikes until September although much will depend on whether the new government chooses to continue with these barbaric austerity measures that Merkel is demanding," said Ilias Iliopoulos at the civil servants' union, Adedy.

Even Athens, the focus of fiery demonstrations since Europe's debt crisis erupted beneath the Acropolis, has calmed down dramatically despite the political uncertainty that has followed this month's poll. "Last year in April and May there were 54 strikes, according to the public order ministry. This year there have only been four," said Andreadis.

"And precisely because of the crisis Greece is the best value it's ever been for the past decade. To fight the bad press and re-energise demand we have reduced rates dramatically and have far better offers compared with Italy, Spain, Turkey and Portugal," he said. "This is actually an incredible opportunity. The Greece we dream about and want our children to live in could be born out of this crisis."

But it is a perilous balancing act. Although Greece attracted an unprecedented 16.5 million tourists last year – with record numbers from Russia and other new markets across the Balkans and Turkey – falling prices could lead to the sort of revenue losses that will exacerbate what is already the worst recession in living memory for Greeks.

A 10% drop in GDP would equate to 100,000 job losses say industry experts, many of whom are bracing for the worst.

Adding to the pressure, German tour operators such as TUI have demanded that Greek resorts not only cut the price of holidays by up to 35% but have insisted they also add "drachma clauses" to cover themselves should the euro be scrapped and replaced by a seriously devalued drachma.

Under such circumstances, Greece is in danger of becoming a bargain basement destination if it cut its prices too sharply, said Claudia Brözel, a German professor of tourism marketing, noting that the country usually appeals to Germans from the higher income bracket.

"This could really damage its image in the long-term, and attract the type of tourist Greece doesn't want," she said.

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