Bargain deals to Greece – will they last?

PRICES for holidays to Greece have been slashed as the bankrupt country works to attract tourists, but low prices are not expected to last as potential tax hikes are on the horizon. In the UK, holidaymakers are being offered deals with discounts of up to 70% in a bid to encourage tourists to keep coming to the country. Ryanair has launched a campaign to ‘Keep Greece Flying’ by dropping prices on flights between Athens and Chania, Rhodes and Thessaloniki to just €4,99 (R68), while cutting fares on its international routes to/ from Greece by 30%. South Africans booking a holiday to Greece will also benefit from low prices. Suppliers and hoteliers are offering good deals as they are trying to collect as much cash prior to parliament announcing a possible new bailout deal, says Annemarie Lexow, Travel Vision’s sales and marketing manager. The bailout deal that is currently on the table will see Greece having to make harsh concessions in exchange for a cash lifeline of €86bn (R1,1trn). They’ll be faced with higher taxes, cuts to government pensions and a sell-off of €50bn (R680bn) worth of state assets in order to recapitalise banks and make debt payments. The proposed VAT reforms in particular could have a debilitating impact on the tourism sector, as Greece would need to increase VAT on tourism expenses. The rate of VAT in the food sector is likely to increase from 6,5% to 13% and in the accommodation sector could increase from 13% to 23%. “Any increase in VAT on accommodation will certainly have an impact on package prices,” says John Ridler, spokesperson for Cullinan Outbound. He adds, however, that it is likely that the authorities will try to keep the increase to a minimum to stimulate travel and earn valuable foreign currency. Even if prices increase, Greece will remain a popular destination for South African travellers, says Sharmila Ragunanan, Flight Centre’s retail marketing leader. “In general, the choice of travel destination is determined by a number of factors, especially the desire to experience and visit a particular place. It is not driven solely by cost.” Rian Bornman, md of FlightSite, says Greece remains a popular destination and interest is still strong. He warns, however, that a notable ‘wait and see’ approach is currently apparent with clients.