Thomas Cook-Greece Meetup May Signal “Funny Business” As Usual

When my Greek compatriots picked Kyriakos Mitsotakis as prime minister over incumbent Alexis Tsipras, I admit I was waiting for the other foot to fall on their dreams of progress from politicians. When I read the new Minister of Tourism Haris Theoharis’ “business as usual” comment from a meeting with Thomas Cook’s CEO Peter Fankhauser, that second foot fell.

Being Broke: Customary Greek Business

According to the news from GTP, Mr. Theoharis was briefed on the most important news. In the report, the recapitalization of the broken Thomas Cook balance sheet, and probable takeover by China’s Fosun Tourism were tops on Fankhauser’s list of info to pass to Theoharis. The fact TC is begging for £750 million ($940 million) in investment to float his company, would ordinarily give an official a moment of pause – not so for Greece’s new tourism boss.

I am not sure why either Theoharis or Fankhauser are seen smiling so big in the photo op for this announcement since Thomas Cook’s shares have been nearly wiped out since last Monday. In London trading, Thomas Cook went down 45% as nearly £80 million ($100 million) was wiped off its market value. Following the meeting, Minister Theoharis Tweeted his confidence that Thomas Cook would stay afloat and gave a vote of reassurance that Greece waits for more TC tours.

“The meeting took place in a very reassuring and calm atmosphere and the feeling I received was that we proceed with business as usual.” 

Shop Owners Remain Calm

Meanwhile, the shop owners and hoteliers I talk with on a daily basis here in Crete are not in the “remain calm” mode as their businesses teeter because Thomas Cook, TUI, and other tour operators told Turkey, Egypt, and Tunisia cheaper. That’s right, there are even fewer happy tourists carrying shopping bags on 25th August Street in Heraklion this year, than last. The all-inclusive buffet lines are still full at some resorts, but May and June were devastating for many others. Shops, which rely heavily on selling souvenirs, culinary experiences, and luxury goods, they’re feeling the squeeze this year.

Last year, 1.4 million tourists visited Crete from Germany alone, but this year—— Part of the problem is that reporting agencies often paint a rosier picture than truly exists. For instance, recent Bank of Greece figures for the whole of Greece tell the same story I am telling, only it’s tilted away from huge underlying problems.

It is obvious from reading the detailed statistics, that a rise in off-season revenues from tourism caused by a huge influx of big-spending Americans covers up the fact the Germans spend almost nothing while on Crete. Receipts from Germany dropped by 10.3 percent, Russian expenditures dived over 6%, but Americans flew in to spend twice as much early this year. The real news is that inbound visitors dropped by 2.6 percent year-on-year as of May, and June was not much better. To gauge whether or not Mr. Mitsotakis needs to be focused on business as usual or not, let’s take a look at some other indicators.

According to ELSTAT, retail trade in the clothing and footwear category fell almost 13 percent from January 2018 to January 2019. Pharmaceuticals and cosmetics were down over 9 percent, auto fuel sales dropped over 5 percent, and things like books and other such items dropped by over 10 percent. Department stores across Greece took the biggest hit, also almost 13 percent. These numbers do not, however, tell the worst part of the story. The first quarter of 2019 was a disaster nobody seems to want to address.

Be Very Glad: You Still Have Jobs

According to this report from ELSTAT, the Turnover Index in Accommodation decreased by 37 percent, which validates the perception of the average shop owner, innkeeper, or tavern owner on Crete. Food services businesses were hurt a bit less, only losing a bit over 10 percent in turnover. If you’re looking for a speck of good news, unemployment is lower than at any time since 2011. But its clear Greece does not need to be operating with “business as usual” strategies. Thomas Cook is in relatively worse shape than the Greece economy. Meanwhile, the Minister of Tourism is seen bolstering confidence in a company that is part of the problem. The press release at GTP also spotlights an unwise Casa Cook investment in Chania, as well. Funny, somewhere you’d think the people of Greece might want to know why their neighbor the shopkeeper went out of business.

Then again, maybe I am new to Greece and do not understand the subtleties. Maybe I will ask my friend the souvenir shop owner to explain.