Olympic glory but not much gold for Greece

George Tsakiris, who owns three hotels in Athens, says he and other hoteliers spent 1.5 billion ($2.67 billion) to renovate and supply rooms with new furniture, televisions and internet connections on a bet last year's Olympic Games would power tourism for years to come.

The Greek Government spent 10 billion on a new airport, subway and rail system and venues to prepare for the Games.

Instead, a survey by consulting firm JBR Hellas has found hotel occupancy plunged 7 per cent in the fourth quarter to 57 per cent, the lowest among 11 of Europe's biggest cities. London had the highest occupancy, at 77 per cent.

The Association of Greek Tourist Enterprises has found the number of visitors to Greece fell 3 per cent last year, a blow to a nation that relies on spending by tourists for about 6 per cent of its gross domestic product.

Spending to prepare for the Games helped boost economic growth to 4.2 per cent last year while swelling the country's budget deficit to 6.1 per cent of GDP and increasing its total debt to 111 per cent of GDP, the highest in the European Union.

The European Commission says GDP growth will slow to 2.9 per cent this year.

"The advantage of the Olympics is over and finished," says Bart Daenekindt of KBC Asset Management in Brussels.

That gives the Government of Prime Minister Kostas Karamanlis, 48, until next year to tame the deficit and reduce debt, both about double EU guidelines.

Karamanlis has responded with a plan to cut spending, boost certain taxes and sell state-owned assets. The commission said those efforts might not go far enough.

"There was some relief that the Olympic Games were a success, nothing bad happened, there were no bombs," says Panagiotis Antonopoulos of Alpha Asset Management in Athens.

Tourism is one of Greece's biggest industries. About 6.4 per cent of the workforce of 4.3 million is employed in the tourism trade.

Greece's economy went into overdrive after it was picked to host the Games. Since 1996, a year before Greece was chosen, the economy has expanded an average of 3.8 per cent a year, the third- highest rate in the EU after Ireland and Luxembourg, EU figures show.

Though the economy has been expanding, Greece's 11 million people are still the second poorest among the 12 EU nations that have adopted the euro. Last year, GDP was 15,000 a person, higher only than Portugal's 12,850.

While Greece was gearing up for the Games, hotels and other travel businesses increased their prices.

The average rate for a room in Athens rose 33 per cent last year to 167, the highest among six cities in a survey by Deloitte & Touche. The average rate in Rome, the next most expensive city, fell 1 per cent to 157. In Istanbul, the least expensive city in the survey, the average room rate rose less than 1 per cent to 99.

Greece's post-Olympic experience stands in contrast to that of Australia, which hosted the Summer Olympics in 2000.

Australian tourism rose 11 per cent in 2000, a 2001 study by Jones Lang LaSalle found.

Considering tourism's importance to the economy, Greece isn't the most accommodating of destinations. The Government determines when shops can open; department stores have to close by 3 pm on Saturdays and all day on Sundays. Museums don't have evening hours. The new Athens airport charges the third-highest fees and taxes in the world putting off low-cost holiday-makers and discount airlines.

Hotel owner Tsakiris is running out of ideas on how to salvage his investment. "We lowered our prices and fixed our rooms. What else can a hotel owner do? Now, we wait."

- BLOOMBERG