Tuesday, August 10, 2010

Live your myth in Greece

Back in the day when I could still afford to travel to the Greek islands I would often read and hear stories about how tavernas and restaurants would have two different sets of menus, one with prices for foreign tourists and another set for Greek visitors. The owners would use the fact that many holidaymakers from abroad found it difficult to get used to paying in thousands of drachmas rather than tens of francs or marks.

It also reflected the fact that then the gap in earnings bewteen the average Greek and northern European was enormous, something that came as a shock when I first came to Greece and realised that the summer job I had had as a lowly clerk paid more than a fully qualified doctor was earning here.

With the passage of time the gap in earnings between the groups has narrowed, though it should be added not disappeared and yet strangely the same system of differential pricing has become inverted with Greeks shelling out far more for their holidays than tourists from other countries. A friend of mine told me that she could save money if she took a charter flight to London and then Rhodes than book a holiday direct via a travel agent here in Thessaloniki.

Unable to squeeze more money from the tour operators hoteliers charge outrageous rates to their fellow countrymen and women, hoping to get the same kinds of profits as in the past, even though the local holiday season has shrunk dramatically as the cost of vacations has risen exponentially. Now the Greek family that spends two weeks at a hotel or pension is the exception rather than the rule. This does not mean that people are not going on holiday but rather the nature of holiday making is changing with more and more people choosing to stay with family or friends or taking a week off rather than the traditional two or three.

There are a number of reasons for this and first and foremost is the current economic crisis which has forced Greeks to think very carefully about how and where they spend their money. With the threat of job losses hanging over everyone's head many are choosing not to spend money unless absolutely necessary.

The Greek trade union congress, GSEE is talking about a million out of work within the year, or approximately one in five of the work force nationwide. Not than unemployment is ever evenly spread and here in the north of Greece that figures is set to be much higher, especially in the towns and cities hit by loss of textile and other manufacturing jobs to other Balkan states and, of course China.

On the other hand tourism in Greece has been in a downward spiral for a number of years weighed down by rising prices which have deterred both foreign and domestic visitors from staying longer. Even those visitors who can take advantage of cheap flights and accomodation are often shocked by the prices of eating out and entertainment which are far greater than at home. How many residents of Dusseldorf, Dieppe or Doncaster think that that 4 euros is a reasonable prices for a cup of instant coffee is open to debate. This is a far cry from the 80's and 90's when even the inflated prices charged in the tourist hot spots were still comparatively cheap for northern europeans.

Chatting with friends recently returned from the island of Kefalonia they told stories of shocked vistors amazed that despite the fact that Greece is in the middle of its worst financial crisis in a generation prices were still so high? When people have no money are they supposed to drop? Apparently not. Adam Smith is obviously not required reading on the beach.

Yet when you talk to the owners of these places they are adamant that the only way they can survive is by charging more and more, so making up in profit margin what they are losing in sales volume. And so the vicious cycle goes on with the holiday season growing ever shorter and prices ever higher as those involved in the tourist industry try to squeeze more and more money out of visitors in the quickest time possible.


laineyquenna said...

Greece has many different things for a tourist to see what is absolutely incredible. This is not only on the islands, or just the mountains, forests, or simply (and yes, we still do, hehe) or just the nightlife. It's really interesting and beautiful place. The time is absolutely incredible, but a little warmer in the summer of last two years.
cheap flights to greece

Anonymous said...

I just inquired about prices for a late september vacation, and a hotel owner quoted me prices 35% higher than quoted in June, and she very kindly explained to me that they had to increase their prices because bookings were down this summer, and they still had to pay all the expenses of operating the hotel. Which seemed to me a very strange logic. They have those expenses whether or not I book. But really, it was amazing that she expected that I would book a room at a 35% increase - so that she could have the same profit margin over the time frame, and not per unit.

Anonymous said...

I experienced vastly reduced prices on an Aegean island recently, for accommodation at least. There were also attractive offers on ferries.

I think an initial reaction to reduced custom may be to increase prices, but eventually if demand goes down, so will prices. The only alternative is to change the product on offer, but Greece doesn't have the resources to reorganise its tourism sector, so the only way for the sector to (re-)attract tourists will be to offer more competitive prices.