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Greek tourism faces tense 'summer of patience'

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People visit the Areios Pagos hill in Athens, Greece, July 25, 2021. Picture taken July 25, 2021. REUTERS/Louiza Vradi
Tourists make their way at Propylaia atop the Acropolis in Athens, Greece, July 25, 2021. Picture taken July 25, 2021. REUTERS/Louiza Vradi

For two balmy weeks in July, hotel manager George Tselios dared to hope his pandemic nightmare was behind him. He was getting 100 bookings a day for his Rhodes seaside resort - "unthinkable numbers" for the past year and nearing normal levels, write Karolina Tagaris and Angeliki Koutantou.

Then the island was downgraded to "orange" on Greece's COVID-19 map - one level before curfews and other tough restrictions become mandatory - and bookings sunk to around 50 a day.

The uncertainty that had plagued tourism since early 2020 was back, to the despair of Tselios and others in an industry that is Greece's economic mainstay and provides one in five jobs.

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"You can only see two to three weeks ahead, maximum," said Tselios, whose Blue Sea Resort draws visitors from Germany, Britain and Scandinavia. "This is a transitional summer."

Following a catastrophic year for global travel, June data for Greece was promising. International arrivals jumped more than 13-fold that month versus 2020, easing fears about a possible wave of bankruptcies among tourism businesses.

But August bookings are patchy, and industry officials say it is too soon to predict how the summer will unfold.

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"For the first time in years, a secure forecast for this year's tourism revenues cannot be made," Yannis Retsos, president of tourism confederation SETE, said last week.

"The positive momentum could, at any moment, be overtaken by insecurity, and vice-versa."

In a sign of hurdles ahead, Greece, which relied heavily on promoting "COVID-free" islands to draw tourists back, was forced to impose a week-long curfew and music ban on its party island Mykonos after infections surged this month.

On Rhodes, another popular island, with over 2.5 million visitors in 2019, business owners worry that the broader south Aegean region may be marked "deep red" by the European Centre for Disease Prevention and Control, and that big-spending German tourists may stay away.

In June, the Bank of Greece said it would take two to three years for travel and spending to return to the record levels of 2019 when Greece saw over 33 million tourists and 18 billion euros ($21.3 billion) in revenues. It forecast this year's revenues would be 40% of 2019's levels.

Ioannis Hatzis, who owns three hotels on Rhodes and sits on the board of the country's hoteliers federation, said he believed that target could be met, even if demand dipped in the coming weeks.

"It is a summer of patience," he said.

The sentiment was echoed by Grigoris Tasios, president of the Greek hoteliers federation.

"We're doing much better than last year," he said.

However there are likely to be tougher financial times ahead, with the Bank of Greece warning that tourism businesses would be most at risk when banks removed loan moratoria and the state withdrew financial support once the pandemic ends.

About a quarter of loans to the sector are deemed non-performing, which could pose a broader problem for Greece's weakened financial system.

Ahead of the reopening of tourism in May, Tselios and other business owners interviewed by Reuters hoped for a strong season. Read more . But with coronavirus variants causing havoc with government planning in Greece as well as in key markets, nobody wants to be over optimistic.

Paris Kakas, who runs the Sea Dreams ferry company on Rhodes, had told Reuters that his company was struggling under millions of euros in bad debt. Now, halfway through the season, he is no closer to repaying his loans. Read more.

"Compared to what we were expecting, things are going well. But it's nowhere near what we could do in a good season," Kakas said.

"Traffic is better than last year, ticket sales are better than last year, revenues are better than last year, but for a company of our size, they're very small."

($1 = €0.8470)

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The European Commission has approved a €1.8 million Latvian scheme to support farmers active in the cattle-breeding sector affected by the coronavirus outbreak. The scheme was approved under the State Aid Temporary Framework. Under the scheme, the aid will take the form of direct grants. The measure aims at mitigating the liquidity shortages that the beneficiaries are facing and at addressing part of the losses they incurred due to the coronavirus outbreak and the restrictive measures that the Latvian government had to implement to limit the spread of the virus. The Commission found that the scheme is in line with the conditions of the Temporary Framework.

In particular, the aid (i) will not exceed €225,000 per beneficiary; and (ii) will be granted no later than 31 December 2021. The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. On this basis, the Commission approved the scheme under EU state aid rules. More information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here. The non-confidential version of the decision will be made available under the case number SA.64541 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved.

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The European Commission has approved a €500,000 Portuguese scheme to further support the passenger transport sector in the Region of the Azores in the context of the coronavirus outbreak. The measure was approved under the State Aid Temporary Framework. It follows another Portuguese scheme to support the passenger transport sector in Azores that the Commission approved on 4 June 2021 (SA.63010). Under the new scheme, the aid will take the form of direct grants. The measure will be open to collective passenger transport companies of all sizes active in the Azores. The purpose of the measure is to mitigate the sudden liquidity shortages that these companies are facing and to address losses incurred over 2021 due to the coronavirus outbreak and the restrictive measures that the government had to implement to limit the spread of the virus.

The Commission found that the Portuguese scheme is in line with the conditions set out in the Temporary Framework. In particular, the aid (i) will not exceed €1.8 million per company; and (ii) will be granted no later than 31 December 2021. The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) TFEU and the conditions of the Temporary Framework. On this basis, the Commission approved the measure under EU state aid rules. More information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here. The non-confidential version of the decision will be made available under the case number SA.64599 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved.

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The European Commission has cleared, under EU state aid rules, France's plans to set up a € 3 billion fund that will invest through debt instruments and equity and hybrid instruments in companies affected by the pandemic. The measure was authorized under the Temporary State Aid Framework. The scheme will be implemented through a fund, titled 'Transition Fund for Businesses Affected by the COVID-19 Pandemic', with a budget of € 3bn.

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Executive Vice President Margrethe Vestager (pictured), competition policy, said: “This €3bn recapitalization scheme will allow France to support companies affected by the coronavirus pandemic by facilitating their access funding in these difficult times. We continue to work closely with member states to find practical solutions to mitigate the economic impact of the coronavirus pandemic while respecting EU regulations.”

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