Bloomberg: Greece takes action against over-tourism and short-term rentals

Article on the interventions announced by Kyriakos Mitsotakis at TIF, was published by Bloomberg, saying that “the Greek prime minister announced measures aimed at addressing the negative impact of over-tourism as visitors continue to arrive in the country in record numbers after the pandemic.”

The government is “very concerned” about the influx of cruise passengers some months of the year and will start charging fees, Mitsotakis said Saturday during his annual speech at the Thessaloniki International Fair. He will also raise a climate crisis-related tax on accommodation.

Greece received a record 36.1 million visitors in 2023, while arrivals rose 16% to 11.6 million in the first half of 2024, according to the latest Bank of Greece data. The tourism sector contributes about 20% to the economy, making it vital to the nation’s health, the medium noted.

The country will also extend the Golden Visa program to investors willing to allocate at least 250,000 euros to local startups. Foreigners previously had to buy property to obtain the visa.

All passengers arriving on cruise ships in Greek ports will pay a fee and the charge will be higher on the popular tourist islands of Santorini and Mykonos. The charge “will be 20 euros for the difficult high season months,” Mitsotakis told a news conference on Sunday. The accommodation tax will also be increased for the April-October period, with the revenue benefiting local communities.

Mitsotakis reiterated concerns that regions of Greece are facing the problem of “overtourism”. In an interview with Bloomberg in June, he announced plans to limit cruise ships visiting the country’s most popular islands from 2025.

Short-term rentals have been blamed for sparking the country’s housing crisis, which along with high consumer prices has been at the center of recent political debate, the article noted.

The government will ban all new short-term rentals for at least a year in three main parts of Athens, Mitsotakis said. Property owners who change leases from short-term to long-term will not have to pay rent tax for three years, as will landlords who decide to rent out their homes rather than keep them off the market, he said.

Holiday homes grew at an average annual rate of 28% from 2019 to 2023, while available accommodation for short-term rentals doubled over the same period. Meanwhile, hotel units grew just 3.5% in that time, according to data published in a report by Grant Thornton for the country’s Hotel Chamber published this week, the American medium said.

Greece has already pledged to cover a primary budget surplus – an indicator showing revenue minus expenditure excluding interest – of 2.1% of GDP in both 2024 and 2025, up from 1.9% in 2023.

Fiscal discipline is one of the most important criteria for financial markets, and the country’s recent prudent budget stance was one of the levers for rating agencies to return Greece to the investment-grade band in 2023 after 13 years where it was in the junk category, Bloomberg reports.

“Healthy and rising primary surpluses, coupled with healthy nominal growth, will further facilitate a significant reduction in the government debt-to-GDP ratio, which is expected to fall below 140% by 2027, from 161.9% in 2023,” DBRS Morningstar said on Friday.

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