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Greek holidays and euro crisis

- by Jeremy Guest

Greek Islands holidays and the euro crisis.

People who have booked a Greek Island holiday this year or are considering a holiday break in Greece are understandably worried about Greece's political and economic situation. The Greek Islands is one of the UK's favourite holiday destinations with more than 1.5 million visiting Greece and the Greek Islands every summer.

But recent social unrest and political instability has sparked worries at how the latest euro crisis will affect holidays in Greece this year. The biggest concern is the effect on Greek island holiday plans if Greece quits the eurozone.

Worries over Greece and the euro has coincided with a sharp fall Greek Islands holiday visitors this year. A 10% rise in holiday arrivals in Greece last year has been followed by a 12% drop in early holiday bookings in 2012.

Travel agents say the Greek political situation, although troubling, should not affect your holiday plans in 2012. Social disorder seen on TV is almost totally confined to the streets of Athens with no trouble reported anywhere in the Greek islands.

Strikes may have hit key travel services such as airports and ferry terminals but regular visitors to Greece will know that these have always been a feature of Greek life and any stoppages are signalled well in advance.

The parlous state of the Greek economy has seen many businesses collapse and hotel chains will not be immune, but this should not be a reason to avoid Greece this year. Those on package holidays booked through major UK holiday companies will be adequately compensated for any disruption to holiday plans.

Specialist villa companies are confident they can minimise disruption. Greek villa owners are usually paid in sterling anyway and flights are normally covered by the CAA's regulatory ATOL scheme to insure against firms going bust.

The biggest problem is what happens to those holiday euros if Greece were to make a sudden exit from the eurozone. It is pretty certain than banks would close their doors and cash machines be switched off for several days while a new currency was introduced.

The value of that new currency would almost certainly drop sharply in value against the euro – some forecast by as much as 90% – as Greece defaulted on its foreign debt.

Holidaymakers on all-inclusive package holidays to the Greek Islands would hardly notice the difference. They paid up-front for their holiday in sterling and would have little need to eat and drink outside the holiday hotel complex.

Independent travellers should take some precautions against a sudden Greek exit from the eurozone. Some low denomination euros would be useful to tide you over for the few days it would take to introduce a new currency.

The euros in your pocket would be worth considerably more that the local currency afterwards, as would any sterling you held. Given the Greek preference for dealing in cash your British banknotes would be very welcome in any taverna or hotel.

It is highly likely that inflation would soon send Greek prices soaring but the value of foreign currency is likely to rise too, so price inflation would only have a serious effect on the local population.

On the plus side, the price of a Greek Island holiday has already dropped substantially this year as hotels battle to fill empty rooms. Corfu, for example, has seen a 20% drop in hotel room rates for 2012.

Specialist Greek Island package tour operators, such as Olympic Holidays, have already discounted some of its Greece holiday packages by up to 60% in a bid to reverse the decline in 2012 visitor numbers.

Travel organisation ABTA is not giving any special advice for Greek holidays this year other than its usual message that booking your holiday through an accredited package tour operator or travel agent means your money is better protected.

The Association of Greek Tourism Enterprises (SETE) says tourism is hugely important to Greece's economy, accounting for 17% of the country's GDP. Although it forecasts a fall in visitors from western Europe this year it says Greece is attracting more tourists from the Balkans and Russia.

Greek Island holidays have been hard hit by competition of other Mediterranean destinations recently. It's membership of the eurozone has given the impression of Greece being relatively expensive – even though the Office for National Statistics insists the average daily spend of Greek Isand holidaymakers in in 2010 was £53, very similar to the £47 daily spend in Turkey.

The Independent's veteran travel writer Simon Calder is off to his favourite Greece again this year but he's taking cash just in case banks are closed and I'm off to Thassos myself on an independent pay-as-you-go holiday visit in a few weeks time so I'll report back on any problems.

Not that I am expecting any difficulties. I'm sure the Greeks will be far harder hit by any euro exit than will foreign tourists and foreign cash could be like gold dust over there.