Greece Tourism Report Q2 2009

Tourism Overview We maintain our view of a sharp slowdown in growth of foreign tourist arrivals in 2008 to about 2% yearon- year (y-o-y), following relatively strong annual growth of 8.5% in 2007. The slowdown in growth was exacerbated by a wave of street protests across the country at the end of last year. This was sparked by the police shooting dead a youth in Athens but was compounded by the plethora of economic and financial market problems currently engulfing the country. At the same time, and in anticipation of a downturn in the Greek tourism industry this year – partly in line with global trends – businesses in the sector have been seeking financial support from the government, including calls for reductions in VAT for tourism enterprises.

Hospitality Although data are incomplete, statistics for hotels in Athens and the greater Athens area suggest a poor outturn in the hospitality sector for 2008 as a whole. After declines in average occupancy rates of near 6% y-o-y in the summer months of August and September, Athens’ hotels were drastically affected by street protests at the end of the year. Data show that average room occupancy rates fell by almost 26% y-o-y in December, with the possibility that the hospitality sector could be in for a very poor winter season.

Forecast Scenario Greek tourism is likely to face a difficult year in 2009. In the wake of continuing downward revisions this quarter to BMI’s real GDP growth forecasts for the eurozone and the UK – Greece’s main source markets – we have revised down our expectations for foreign tourist arrivals this year, and now anticipate more marked negative growth of 6% y-o-y. We believe though that there will be a slight recovery in foreign arrivals next year. Over the longer term, BMI maintains an uninspiring outlook for visitor arrivals, with an annual average growth rate over the forecast period to 2013 of under 2% (revised down further this quarter).

Athens International Airport In an unsurprising data release, total passenger numbers at Athens International Airport (AIA) declined 0.4% y-o-y in 2008 to almost 16.5mn. Although domestic traffic fell 2.2% y-o-y, the number of international passengers increased a slight 0.5% y-o-y to some 10.6mn.

Olympic Airlines With regard to the privatisation of Olympic Airlines, the government stated, in February 2009, that the bids received so far were not satisfactory and called on big domestic business groups to show interest.

Aegean Airlines Aegean Airlines reported weaker but further strong growth of 14% y-o-y in passenger traffic in 2008 to 6mn passengers (after growth of 18% y-o-y in 2007). The increase was buoyed by impressive growth of 23% y-o-y in traffic on international routes to 2.3mn passengers, while it carried 9% y-o-y more passengers on domestic flights (a total of 3.7mn passengers). The airline also made noticeable gains by capturing a market share of 29% at AIA, compared with 25% in 2007. Aegean has announced it will expand its European routes in 2009 despite the global downturn, while stating that it has no interest in the privatisation of Olympic Airlines. Aegean Airlines will add flights to Brussels, Berlin, Barcelona, Vienna and Venice, in the summer on new Airbus A320/321 aircraft.