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Greek Paradise

This is a brief update on the coronavirus and its impact on tourism and the economy in Greece. 

1. The Coronavirus Pandemic


Greece was one of the first countries in Europe to take aggressive action against the coronavirus. Measures taken include: 


  • Early flight and quarantine restrictions, followed by a full flight cancellation; 

  • Population “lockdown”: movement limited per day;

  • All cafes, restaurants, non-grocery retail closed; 

  • Full quarantine of infected villages and regions in Greece; 

  • Cancellation of all cruise ship arrivals and docking; 

  • All hotels closed by law from March 20 – April 30.


As of April 2nd, there have been 1,544 coronavirus cases and 53 deaths. As seen from the chart below, the “take-off” stage of the virus may have been restricted, although it may also be too early to tell. 


Figure 1: COVID-19 Cases and Deaths in Greece (as of 3 April 2020)

Greece Coronavirus 3 April.png

Contrast this with Belgium, a country with similar population: 


Greece-Belgium COVID 19 Comparison.png

The nature of the coronavirus makes it extremely difficult to predict its future spread. However, signs from countries such as China, South Korea and now Italy indicate that a peak is typically reached within 25-30 days of the first large-scale infections. 


With this in mind, we believe there is a strong chance that the virus will “burn out” in Greece by the end of April. It may also persist, however, due several factors. 


2. Economic Impact


The economic damage will be severe. Greece is highly exposed to the tourist sector. In 2018, the World Travel and Tourism Council estimated that 20.6% of Greek GDP and 988,600 jobs were dependent on tourism. 

WTTC Tourism Greece 2018.png

WTTC: Greece 2019 Annual Research Highlights


Our base case is that total tourism, including domestic and foreign tourism in Greece, will fall by at least 50% while revenue will fall by 65% in 2020 due to the COVID-19 pandemic. This case remains optimistic, and depends on the following parameters: 

Greece Tourism Impact.png

Overall economic forecasts are difficult to make given that we don’t know exactly how the total public stimulus package will operate. Prime Minister Kyriakos Mitsotakis had indicated that up to EUR 10 billion may be deployed to fight the crisis. However, we do anticipate seeing the following in the base case scenario, both possibly mitigated by public support:


  • 10% GDP fall

  • 20% unemployment


3. Tourism Decisions


A key issue confronting many owners of tourism assets is whether or not to open for business this season. Even if the base case materialises and Greece is ready for large-scale tourist inflows at the beginning of June, the following issues need to be resolved:


  • A June – October season at 50% occupancy and 65% revenue drop is well-below break-even for most hoteliers. 


  • If the government passes further moratoria on debt payments measures and further support to the sector, then many larger resorts may choose to remain closed. 


  • A significant share of tourists in Greece arrive by car from source markets such as France, Italy, Bulgaria, Romania, FYR Macedonia and others. These tourists overwhelmingly stay in smaller hotels, usually 25-40 rooms built with EU subsidies. These hotels will most likely operate, as they are family run and have a low staff headcount. 


  • The classic tour operator resorts which are 150+ rooms and operate seasonally will almost certainly be severely hit. These hotels depend on seasonal labour contracts and tour operator commitments. The entire mass-market tourism value chain is effectively dead at the moment, and there is no mechanism in place for testing or health screening large numbers of seasonal labour. 


Finally, we do not rule out the possibility of further negative developments towards the summer of 2020. These include: 


  • A repeat of Turkey’s attempt to force the Greek border with refugee inflows. This would affect both the land border as well as the Aegean islands such as Samos, Mytilene, Kos and others. 


  • A COVID-19 epidemic in the existing Greek refugee camps and “hot spots”. 


  • A resurgence of the coronavirus, especially if it mutates and new strains evolve, or if tourists and visitors circulate it within Europe. 


On the other hand, there are also upside possibilities, not least of which are:


  1. The fact that other coronavirus-type pandemics, including SARS and MERS, did burn out relatively quickly;

  2. The fact that several groups are racing to develop vaccines. 


The Greek economy has been enjoying strong GDP growth for the past 3 years, driven by tourism and exports. While the coronavirus has interrupted this, it remains to be seen whether the damage will be long-lasting or not. 


Despite the many difficulties of investing in Greece, significant investment opportunities exist. The next 3 months will be instrumental in deciding the course of the tourist season and the wider economy. 


We are continuing our work in Greece in terms of crisis management, corporate restructuring and investment promotion. 


If we can be of assistance to you in terms of providing information or any further support, please let me know.

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