On May 15, politicians in Greece announced that they failed to reach the compromise needed to form a government. Greece will go back to the polls in June, perhaps finding a resolution to its inconclusive May 5 elections. Lower livings standards, high unemployment, hefty taxes and general desperation continue to create social unrest on the streets of Athens. Travelers to Greece aren't greeted with bargains that temper this uncertainty. During its financial crisis, Iceland lured in tourism revenue with low prices. So why aren't travelers getting deals on grilled octopus and ouzo?
An explanation of the differences between Iceland and Greece may answer the traveler's confusion. Remember that Iceland is a small island. When it found itself saddled with heavy debt and little money, it was able to act like an island. It unilaterally decided to default on its debt. The default had a significant impact on Icelandic lenders and lowered the value of Iceland's currency. This made it cheaper for international travelers to visit Iceland. The result? An increasing number of visitors flocked to Iceland to soak in geothermal pools and dine on hangikjot.
So why aren't travelers in Greece seeing lower prices? For starters, Greece is a part of the Eurozone and cannot act unilaterally as Iceland did. Greece is running out of money and either needs to borrow it (bailouts) or earn it (taxes). Greece has borrowed to fund this gap but has needed to increase taxes in order to have a shot at paying back these loans. This is why, along with octopus and ouzo, travelers swallow a 23% tax tab.
While the country faces a catastrophe, visitors shouldn't run away yet. For now, many smaller establishments, including restaurants and car rental companies, are absorbing the costs of tax hikes because they don't want to lose business. Travelers wanting to loll in warm turquoise waters, watch brilliant red sunsets and enjoy olive oil drizzled on seafood can still do so. As dire as the situation is, our family has not once felt unsafe during our two-week stay outside of Athens.
Nearly four years after defaulting, Iceland is now enjoying economic growth. Greece, meanwhile is spiraling deeper into its crises. There are several possible outcomes, all of which will have severe ramifications for Greece as well as global financial markets. However, for this traveler, the octopus is still tender and the ouzo smooth -- and I want to do my little part to stimulate the Greek economy.