Greek reforms could hit holidaymakers' pockets

Tourists visiting Greece face a sharp increase in the cost of food, drink and accommodation, as part of plans aimed at solving the country's debt crisis.

In order to secure the latest bailout from the European Central Bank, the European Commission and the International Monetary Fund, prime minister Alexis Tsipras has proposed a series of reforms, including harmonising the country's VAT rates.

This would mean doubling the current 6.5% rate on accommodation, and removing a 30% VAT discount currently enjoyed by the country's Aegean islands. Officials are also discussing raising the VAT on restaurants from 13% to 23%.

Last time this happened, in 2011, as many as 4,500 businesses closed down, with the loss of 40,000 jobs - leading restauranteurs to describe the proposed VAT hike as the 'premeditated murder of tourism'.

The changes could come into force as early as July 1.

The Greek National Tourism Organisation says that holidays in Greece will still be good value, whatever the results of the negotiations.

And for anybody that hasn't yet booked, the hike in prices is likely to be offset by heavily-discounted package prices. Tour operators have been slashing the prices of many holidays by as much as half, aiming to tempt tourists concerned about a possible Greek exit from the euro.
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Meanwhile, prices in tourist hotspots such as Crete and Corfu have fallen by 13% this year - and the current strength of the pound means that every £500 changed into euros will net £65 more than a year ago.

Indeed, Dimitri Patrikios, managing director of Ionian and Aegean Island Holidays, believes that the deal may actually stimulate tourism.

"Once the deal's done, it's only going to have a positive impact because at least the uncertainty has gone," he tells travel website TTG Digital.

"The cost of uncertainty is far greater than any marginal increase in something, which is offset hugely by the exchange difference [between the pound and the euro]."

Brits are by far the most frequent visitors to Greece, with around two million of us travelling there each year. Visitors are being advised to take plenty of cash, as there could be problems using credit cards and ATMs if the country leaves the euro. However, any switch to a new currency could take time, with people able to spend euros in the meantime.

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