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Greek shock as travel firm closes

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Prospects for holidays in Greece this year have suffered an early setback with the collapse of yet another East European travel firm.

Ukrainian travel operator News Travel, which handled holidays for around 120,000 tourists each year to more than 30 destinations, mainly in Greece and the Greek Islands, has closed its doors.

The popular Greek islands of Crete, Corfu, Rhodes and Kos as well as mainland Halkidiki were included in the agency's travel packages.

It's the latest in a long line of East European travel firms that have gone bust in the last few months, putting the brakes on a fast-growing market in Greek island holidays among tourists from the Ukraine and Russia.

News Travel blames the crisis over Russian intervention over the last few months with the purchasing power of customers hit badly.

The tour operator was one of the fastest growing tourism firms in the Ukraine with more than 170 employees and offices in six cities across the country.

In 2013, holidays to the Greek Island were booming with around 250,000 Ukrainians choosing a holiday in Greece, but numbers plunged in 2014 with travel bookings down 60% over the summer last year.

The St. Petersburg-based Solvex Tour agency shut down in September leaving 9,000 customers stranded abroad, mostly in Bulgaria and Greece.

Last August two major Russian agencies, Labirint and Intaer, announced the suspension of its operations within weeks of each other.

It is estimated that about 10,000 Russian tourists were to visit Greece using the services of Intaer and a similar number booked Greek holidays with Labirint.

The Association of Greek Tourism Enterprises (SETE) has warned of the danger of more bad news from other Russian tour operators as sanctions bite over the county's continuing intervention in the Ukraine coupled to the collapse of the Rouble and the drop on oil prices that has hit Russian exports hard.

But it's not all bad news. The disappointment of another travel agency collapse comes as total figures for tourist visitors to the Greek Islands in 2014 looks set to break another record.

A surge in interest from Britain, Germany and the Unites States has come on the back of good exchange rates for the euro, a government-backed promotion of Greece and more spending power for European consumers.

But not all analysts believe that Greek tourism will continue its positive performance in 2015, especially as Greek elections and the prospect of a radical left-wing government have persuaded some tourists to put their holiday plans on hold.

The left-wing Syriza party has pledged to try and renegotiate Greek debt if it gets elected and even threatened to pull out of the Eurozone if it cannot get a better deal from international lenders.

Such a move could threaten the euro, throw Greece into political and financial turmoil, and trigger a collapse in the number of Greek visitors this year.

Greek tourism has performed well over the past two year and now accounts for 17% of the country's GDP. The year 2014 was the best year ever for Greek tourism with arrivals projected at more than 21.5 million and a total income from Greek tourism of more than €13 billion.

Whatever the outcome of new elections, the new government is unlikely to do anything that will undermine the country's tourism industry, so very important for the Greek economy .

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