To What Extent has Tourism in Greece Been Affected by the Financial Crisis

Written by Dimitri Floros-Xynopoulos


According to the United Nations the year 2017 was said to be the ‘International Year of Sustainable Tourism for Development’. Tourism is a major economic sector for global Gross Domestic Product (GDP). Travel & Tourism generated $7.6 trillion and 292m jobs in 2016. This equates to 10.2% of global GDP  (World Travel & Tourism Council, 2017). This report will outline the different ways tourism stimulates the economy. It will then discuss some of the issues that have affected tourism in Greece in the last decade and then assess the likely future of the sector.

Main Body

There are three ways that Travel & Tourism contributes to economic activity: Direct Contribution, Indirect Contribution and Induced Contribution. Direct Contribution is defined as the direct payments travellers make to accommodation, travel (such as buses or ferries), attractions and entertainment, as well as food and beverage. The Indirect Contribution is comprised of investment spending on Travel and Tourism as well as the impact of purchases from suppliers such as farmers, food production and things like cleaning and maintenance. Induced Contribution is made up of the spending by indirect and direct employees in the industry which feeds back into the economy, creating a multiplier effect (WTTC, 2017). As you can see, tourism can help to generate a great deal of economic prosperity for a nation and it is the backbone of the Greek Economy.

The Global financial crisis of 2009 led to a series of Greek debt crises in the following years. The source of these issues was poor management of the economy and government funds, high levels of tax evasion, unsustainable growth and finally, the unfortunate inability to exercise control of monetary policy due to Eurozone membership. Three bailouts were organized totalling 247bn euros and austerity measures were put into place. The effects of these austerity measures were chronic unemployment, most worryingly youth unemployment, as well as high levels of poverty and enormous reductions in wages across the nation. It is believed that real GDP fell by 25% between 2009 and 2015 (Kindreich, 2017). There were a number of issues since the beginning of the crisis which affected the travel and tourism sector in Greece.

Towards the end of Greece’s bailout extension period in June 2015, the Greek Government issued capital controls in the form of an ATM withdrawal limit of 60 euros daily (Reuters, 2016). The news, of course, had a negative impact of expected tourism as this, together with the uncertainty of safety, lead to many families cancelling their summer holidays. The truth of the matter was that these controls only applied to Greek citizens and would not affect holidaymakers at all. Unfortunately, the damage was already done by scaremongering news outlets.

The second involved violent protests in the capital city, Athens. Anti-austerity protesters frequently clashed with riot police over the past eight years and the global media took notice. When President Barack Obama visited the country in 2016, anti-capitalist protesters threw rocks and Molotov cocktails at clashes (CNN, 2016). The news of violent clashes travelled fast and forced many people to rethink, and ultimately cancel, their annual holidays. Unfortunately, only a small percentage of Greeks were responsible for these atrocities and most of the country was looking forward to the seasonal increase in business that tourism brings, knowing its importance.

The combination of these factors led to a fall in tourist revenue in 2016 of 6.5% (Mintel, 2017). Interestingly, receipts from Euro area residents fell by 7.1% that year compared to 2015, suggesting EU residents may have been put off by the economic uncertainty at the time (Greek Travel Pages, 2017).

It is also suggested that a larger factor in the state of tourism in Greece is the economies of tourist nations. Bloomberg claimed that according to TUI, German bookings to Greece were up 16% this year (GTP, 2018). This makes sense as Greek nationals form a relatively small segment of tourism in Greece and it is tourists from 3rdcountries that drive the numbers. To this extent, the ongoing debt crisis in Greece would not have as much of an effect on tourism as an economic downturn in, for example, France or Germany.

In 2016, 433,000 jobs were directly attributed to tourism which translates to more than 1 job in 10 nationwide. That figure rose by 5.9% in 2017 (Mintel, 2018). This is one of the biggest tourism sectors in Europe. Furthermore, the tourism sector in Greece is growing at nearly 7% annually, compared to the global industry average of just 3.9% (WTTC,2018).

The future is very much bright in terms of the sector’s growth. Many see tourism as the country’s lifejacket. The sector created a remarkable 8 out of 10 new jobs in 2017 (Smith, 2017). The year also saw a new record being set: 30 million travellers arrived in Greece for leisure – three times the small nation’s population. It is interesting to note that tourism in Greece is further affected by the political climate in countries that compete for tourists. In July 2016, a failed coup d’état attemptin Turkey sparked similar negative affects for the nation’s tourism industry. Political turmoil in Turkey as well as Egypt and other North African Countries has been beneficial to Greek tourism. A survey by the BAT foundation for Future Issues states that only 5% of respondents said they would feel safe visiting Turkey (FVW, 2017). Consumers view these nations and Greece as economic substitutes. The countries have very similar climates and geography. The only real difference is religion and culture.


It is fair to say that the last decade has been very difficult for the Greek people. As the country continues to recover there are many signs that the tourism industry will be central to economic growth. Tourism in Greece will expand past the classic summer breaks. Relatively untapped segments appear to be on the rise including City Breaks (very short duration) to Athens and Thessaloniki and even medical tourism has the potential to create employment opportunities in Greece. In 2014, SETE set a target of 24 million visitors to Greece by the year 2021. The nation shattered this record five years early by reaching 30 million in 2017 (Mintel, 2017). This trajectory should create a great deal of confidence for those involved in the sector.


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