Greece to tackle overtourism, short-term leasing with new measures
The tiny volcanic island of Santorini receives some two million tourists each year (Getty Images)
Greek Prime Minister Kyriakos Mitsotakis announced a series of measures aimed at addressing the impact of overtourism and regulating short-term rentals as the country experiences a surge in visitor numbers post-pandemic.
The measures were revealed during his annual speech at the Thessaloniki International Fair on Saturday.
Rising tourist numbers post-pandemic in Greece
In 2023, Greece saw a record 36.1 million visitors. This trend has continued in 2024, with arrivals increasing by 16% in the first half of the year to 11.6 million, according to data from the Bank of Greece.
Tourism accounts for approximately 20% of Greece’s economy, making it a crucial sector.
The high prices in Türkiye’s Aegean region have driven Turkish and other tourists to seek more affordable alternatives, notably the Greek islands.
Despite the differences in service and quality, the allure of lower costs and trendy destinations has shifted the flow of tourists away from Bodrum, Cesme and Datca, leaving local businesses to adapt to the changing dynamics of the tourism market.
New fees and taxes to address overtourism
In response to concerns over overtourism, particularly during peak months, the Greek government will begin charging fees to cruise passengers.
These charges will be higher for popular islands like Santorini and Mykonos. Additionally, the government will increase a climate-related tax on accommodations from April to October, with the revenue benefiting local communities.
Mitsotakis reiterated his concerns about overtourism, stating that Greece will limit cruise ships visiting its busiest islands starting in 2025.
Short-term leasing restrictions
The growing prevalence of short-term rentals, which has been blamed for exacerbating Greece’s housing crisis, will also face new restrictions.
Mitsotakis announced a one-year ban on new short-term leasing in three key areas of Athens. To incentivize property owners to shift to long-term leases, those who convert from short-term rentals will be exempt from paying a rental tax for three years.
From 2019 to 2023, holiday rentals increased by an average of 28% annually, with the number of available short-term rentals doubling. By contrast, hotel accommodations grew by just 3.5%, according to a report by Grant Thornton for Greece’s Chamber of Hotels.
Additional economic measures
Besides tourism-related actions, Mitsotakis unveiled several measures to ease the cost of living, including:
- A 2.2% to 2.5% increase in pensions for around 2 million people starting in January 2025.
- An increase in the minimum wage from April 2025.
- Wage increases for public sector workers, including doctors, firefighters, and the military.
- Tax reliefs for self-employed individuals, farmers, and other workers.
- Changes to unemployment benefits.
Greece’s fiscal path
Mitsotakis emphasized that the spending plan for 2025 is balanced, reiterating the government’s commitment to maintaining fiscal discipline.
Greece aims to achieve a primary budget surplus of 2.1% of GDP for both 2024 and 2025, up from 1.9% in 2023.
This fiscal discipline has been key to Greece’s return to investment grade status in 2023 after 13 years in junk status.
DBRS Morningstar predicted further reductions in Greece’s public debt-to-gross domestic product (GDP) ratio, expected to fall to below 140% by 2027, down from 161.9% in 2023.
