On Saturday, the Greek government announced that all of the country's banks would close for at least ten days (six banking days), with a planned re-opening of Tuesday, July 7. As the New York Times explained, investors have been concerned by the probability that Athens will be unable to meet a $1.8 billion loan repayment to the International Monetary Fund that is due on Tuesday. The Athens Stock Exchange is also closed all week—and as the Associated Press noted, the country's government borrowing rates in bond markets are "taking a pounding" as uncertainty over Greece's economic future and role in both the European Union and the Eurozone spreads.
According to the AP, the two-year bond yield jumped up to nearly 34 percent, 12 percentage points higher than Friday to their worst rate in more than a year. The 10- and 5-year rates also jumped.
Closely watched spreads in Spain and Portugal also rose, though not nearly as much. That suggests that while the prospect of a Greek exit from the euro is unnerving European investors, there is not much concern yet that it could destabilize weaker economies.
While the long-term effect of this move on Greece's hospitality industry remains to be seen, Greece's hotels association has already issued a statement warning that limits on cash withdrawals is already having an impact on the vital tourism industry.
"We wish and hope that all political forces will assume their responsibilities, restoring the country as quickly as possible to normality and stability, which are absolutely essential requirements to protect Greek tourism and to support one more time the national recovery effort of the Greek economy," The Hellenic Chamber of Hotels said in a statement.
The hotel association also said that it is working with other tourist industry bodies to "safeguard the country's international image and to deal with any instances of exploitation of the current situation."
But some hotel-related businesses are already seeing an immediate effect: Bloomberg is reporting that Jochen Rothenbacher, an analyst at equinet Bank in Frankfurt, cut his share price target for tour and hotel operator TUI to 14 euros from 17 euros today, keeping his “neutral” recommendation. TUI operates 23 Grecotels in Greece with more than 11,000 beds, or about 7 percent of its total bed capacity, he said, adding that the current issues should affect TUI in the short to mid-term only.
But it's not all bad news: TUI spokesman Michael Roell said bookings to Greece are “slightly up” in 2015, after a strong increase last year, and that the situation had not kept guests from booking trips to the country in past months. TUI is advising travelers to bring more cash when traveling to Greece, he said.
As of earlier this month, Athens had numerous hotel projects in the works. Kathimerini reported in early June that the former Fashion House Hotel on Omonia Square would soon reopen under a new leasing company. The four-star property with 117 rooms has been leased for 40 years by the Mage Hotels and Resorts group, controlled by a Greek-American entrepreneur. The group’s aim is to get a license and start operating the hotel in the fall. The same group is also close to a long-term lease on another hotel close to Omonia. Both hotels had shut down in early 2011.
Another group, Domotel, will open the Domotel Kastri hotel in the northern Athens suburb of Kastri, at end-July, while the Electra group is planning to open a new unit at the old Education Ministry building on Mitropoleos Street in the city center in time for summer 2016.