The travel industry can’t escape the consequences of the debt crisis in Greece. But Graham Pickett of Deloitte tells Ian Taylor there is no reason for panic
The industry should expect Greece to quit the eurozone this summer, possibly around mid-August, but holidaymakers heading to the Aegean have little to fear.
Deloitte partner Graham Pickett, a specialist in travel sector finance, said: “It is not if but when Greece comes out.” However, he told Travel Weekly: “Joe Public will be all right. It won’t be a disaster.”
Visitors to Greece should be able to carry on as normal if the country returns to the drachma as long as they carry cash or credit cards.
Pickett, the head of Deloitte’s travel, tourism and leisure division, said: “Tavernas and restaurants will carry on accepting euros.
“Holidaymakers will have euros in their pockets and credit cards backed by the global banking system.”
However, he warned: “You wouldn’t be able to go to a bank and draw money out. The banks would need to close for four to five days while they fix the exchange rate. So the advice to holidaymakers would be ‘go prepared’.”
Pickett believes a currency switch would happen over a long weekend. “There are a number of holidays coming up,” he said. “I’m sure they have a date in mind.”
Greece’s next bank holiday is in early June, ahead of elections on June 17 to decide the country’s immediate future. The first national holiday after the election is on August 15. However, Athens traditionally shuts down for much of July and August.
Pickett said: “There are three scenarios. One is Germany puts its hand in its pocket to support Greece. That would relieve the situation, but the political will is not there.
“The second is we have the Greek election, there is an anti-austerity vote and Greece leaves the euro. It would be very unpleasant for the world economy and impact on the UK. One report forecast a $1 trillion (£625 billion) impact. A lot depends on how it unravels – it will be expensive.
“There will be sizeable losses among European banks. We get into another round of bank recapitalisation. Things settle down. Then the markets look for the next weakest link: Portugal.
“The third scenario is that the stronger economies – Germany, France, Holland – decide ‘we are losing control’ and go on their own.”
Pickett said: “It is all pretty serious. The question will be how it affects currency flows, corporate finances and businesses on tight margins, which include travel.
“There could be all sorts of issues around hoteliers who have not been paid by tour operators. There is a risk there. I can see some inbound operators and hoteliers in Greece going under, banks pulling overdraft facilities.
“If Greece comes out, it will be a shock to the equity market. We will see more volatility. If share prices are under pressure it could cause problems for some tour operators here.
“The UK economy will take a hit, but I don’t think it will be equivalent to [the collapse of] Lehman Brothers [in 2008]. No one expected that. It will put a dent in the UK recovery, but fundamentally we will get over it. The biggest risk is that it changes people’s behaviour.
“I suspect the euro will soften. That is not good for exports but it is good for holidaymakers.”
Pickett also believes the substantial devaluation a return to the drachma would involve should ultimately benefit the Greek travel sector: “Everybody will be saying ‘let’s go to Greece, it’s so cheap’.”