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By Elaine
Green
Greece’s governing conservative
party, New Democracy, has put tourism at the centre
of its drive for economic growth. A year in office,
one of its first acts was to re-establish the Ministry
of Tourism.
The Ministry develops tourism policy, stimulates
international tourism relations, and is responsible
for bilateral country agreements. Under its wing
is also the Greek National Tourist Organization
(GNTO) which markets Greece to investors, helps
develop new tourism products, runs quality control
programs and promotes Greece abroad.
Tourism Minister Dimitris Avramopoulos
believes it is a major achievement of the new administration
that its Development Law has devoted an entire chapter
to tourism.
This section of the bill outlines the vital role
that tourism plays in the economy. Indeed, the tourism
industry is the country’s second top economic
contributor, after shipping, employing around 800,000
people and comprising some15 percent of GDP - estimated
to reach over 18 percent by 2010.
"Tourism is an economic powerhouse that can
boost domestic demand for a plethora of products
and services in every other productive sector,"
says Avramopoulos.
Incentives for the tourism industry
in the chapter include subsidies for 30-40 percent
of investment capital to modernize accommodation,
with a further five percent on the table for the
construction or refurbishment of four and five-star
hotels. Moreover, the bill removes an earlier $6
million limit on hotel construction and upgrading
projects eligible for state grants.
Other incentives in the package of
measures include sweeteners to encourage the construction
or refurbishment of hotels in the two-star category
and above.
Greece’s full investment law
includes sweeping tax reforms such as a reduction
in company taxes from 35 percent to 25 percent and
a drastic reduction in bureaucratic procedures –
factors set to attract international investors.
Tourism stands to make significant
gains from general business subsidies of up to 55
percent on investment costs and up to100 percent
corporate tax exemption for new players. New firms
can also benefit by applying for grants to cover
up to half of their staffing wage costs.
Some $2.6 billion has also been pumped into the
industry from the European Union’s Third Structural
Fund up to the period ending 2006. Half of this
has gone to the GNTO to set up alternative modes
of tourism.
New initiatives to already benefit
from these measures are niche tourism firms, such
as health spas, conference tourism, sports initiatives
and eco-tourism. Incentives for alternative tourism
investments attract cash grants and subsidies of
up to 40 percent.
International investors, particularly
firms from the US and the UK, are set to boost Greece’s
currently ailing foreign direct investment figures
dramatically, say officials. Existing Greek firms
are also encouraged to offer strategic stakes to
foreign players. In addition, the state has launched
a privatization plan that it anticipates will act
as a magnet to US investors.
In its first major privatization
since coming to office, the government has put up
for sale Olympic Airlines, which has been restructured
to be more cash-efficient and marketable. With its
famous Olympic rings and reputation for safety,
the airline has always had a loyal following from
the US. At least three of the initial bidders for
the national carrier were either American or had
US funds as backers. These include Greek-American
consortium Olympic Investors, which is part of a
consortium with a Greek American equity partners
and a buy-out firm; and Chrysler Aviation, the US
charter company led by Greek-American, entrepreneur
Stelios Rapis.
The tourism industry has also attracted
a British player, Loyalward, which is to set up
a multi-million dollar complex in Crete. The complex
is to be in Cavo Sidero, a peninsula on the island’s
eastern coast and will encompass five themed villages,
each containing a five-star hotel, three golf courses,
a marina, sports academy and extensive cultural
activities. A number of US hotel groups as well
as investors have already taken an interest in the
project.
New US investors will be following
in the footsteps of multi-nationals across a wide
variety of industries with many years of activities
in the country.
In 2004 a number of these players
also showed their enthusiasm for the country by
sponsoring or acting as official supporters of Greece’s
Olympic Games. These included Xerox; Kodak; Coca-Cola
- which has the advantage of having a regional base
in Greece via the Coca-Cola Hellenic Bottling Company;
General Electric; McDonalds and John Hancock Mutual
Life Insurance Company – among others.
International investors such as Loyalward
are helping Greece to market itself and the firm
has become quite a diplomatic force for the country.
"For tourism, quite frankly, Greece has everything,"
says Christopher Egleton, Loyalward’s Chairman.
"The Greek people are the most hospitable in
Europe, the food is great," he added. "And
because Greece is the foundation of Western Civilization,
we are innately tied to its culture."
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Greece 
