Under a cloud: Greece frets for tourist season

Below Athens' lofty Acropolis, taverna-owners chase after potential customers strolling along the stone-paved alleys of Plaka past empty handicraft shops. The season hasn't started, but the tourist industry is worried.

Holiday bookings - mainly from Britain, Germany and, lately, also eastern Europe - are already down about 15 to 20 per cent from last year, according to the Pan-Hellenic Federation of Tourism Enterprises.

If recession-hit Europeans continue to stay away from Greece's sun-bleached islands, it would threaten a vital source of income in a country where unemployment, anger at political scandals and the government's weakness in the face of the global crisis already fuel almost daily street demonstrations.

Greece relies on tourism for about one in five jobs. Its conservative government is clinging to a one-seat majority and under pressure to do more to help even though its credit rating, recently cut by Standard and Poor's, put Greece one notch below Estonia.

"I've worked here for 15 years and never seen anything like this before," said Labros Pit, busy attracting passers-by to the tables of the popular Vizantino restaurant in Plaka.

Any visitors to Athens early this year risked being turned away at the gates of the Acropolis, an ancient symbol of the classical spirit and civilisation, as culture ministry employees blockaded it to protest against job cuts and pay delays.

It's a stark contrast for Greece, which since it was discovered by the international jet set in the 1950s, has evolved into a European magnet for mass-market tourism, attracting 15 million or so visitors each year.

With €11.6 billion in tourist receipts in 2007, the Mediterranean country was the 12th most popular international destination in the world, immediately following Turkey and Thailand, according to the World Tourism Organisation.

"Business is down, with the riots in Athens and the financial crisis," said Nikos Kalyvas, 55, smoking a cigarette in his rustic taverna, nested among Plaka's Greek specialty shops and elegant 19th century houses painted in soft cream colours. "We are at least 30-40 per cent down from last year."

The first test will be the Easter season, when coastal resorts traditionally reopen after the winter.

Hotels have slashed prices to counter the drop in arrivals, hoping wary consumers may be just deferring spending decisions.

"Our hopes are now pinned on last-minute bookings," said Nikos Papalexis, head of hoteliers in Peloponnese's Achaia, a southern region still recovering from ruinous wildfires in 2007.

Tourism and related services are the economy's main driver, worth about €44 billion per year or 18 per cent of gross domestic product, according to the Greek tourism ministry.

The strength of the euro further darkens the picture, hampering Greece's competitiveness compared with neighbouring Turkey. Bookings from Britain, Greece's top feeder market, were down 18 per cent at mid-March, said UK-based Ascent-MI, mirroring a similar drop in the pound's value against the single currency.