ATHENS — Despite all the gloom surrounding Greece and its battered economy, the sun has been shining on the country’s tourism industry, offering one of the few glimmers of hope for recovery.
Greeks have cut back on vacations, prompting a 20 percent drop in domestic tourism. But the number of foreign visitors to its sun-drenched islands and ancient monuments is set to reach a record of 16.5 million this year.
That is up 12 percent from 2010, according to the Association of Greek Tourism Enterprises. Sorely needed revenue is expected to increase by the same rate, netting 11 billion euros ($15 billion).
In places like the Cretan port of Rethymno, the debt crisis seemed a distant concept at times. During a recent visit, restaurants were full all along the coastal promenade.
“Our foreign customers have always been our bread and butter,” Maria Stavroulaki, the owner of the Knossos tavern, said one late-summer night. “They saved us this year, too.”
Greece faces a long road to recovery after two years of austerity. The finance minister, in one of the more optimistic forecasts, said last month that the economy could shrink more than 5 percent this year before slowly returning to growth in 2012. With most economic indicators pointing downward, the increase in visitors is seen as a godsend.
Tourism accounts for almost a fifth of the country’s gross domestic product and one in five jobs. Exports rose 40 percent in the first half of 2011, after a 25 percent drop in 2010, but they account for a much smaller share of gross domestic product.
Coastal shipping, which feeds tourism, performed well, too. The number of passengers on cruise ships docking in Greece up 28 percent in the first eight months of the year.
“Without a doubt, tourism has already helped soften the blow of the economic crisis,” said Pavlos Geroulanos, the culture and tourism minister. “New markets keep growing and old ones are coming back with an old passion for Greece.”
The rebound, achieved despite fierce competition from regional rivals like Spain and Turkey, appears to be part luck, part planning.
The Arab Spring uprisings diverted visitors from popular tourist destinations like Egypt, Tunisia and Morocco, industry analysts say, and Greece was able to capture a share of that.
Advertising appears to have helped as well, with the central and local authorities promoting religious tourism, mountaineering and agricultural tourism. An online government video campaign called “You in Greece” showed satisfied visitors against a backdrop of tantalizing beaches and picture-perfect ports.
Meanwhile, the reduction in January of the value-added tax on hotels to 6.5 percent from 13 percent — one of the few tax breaks introduced amid several austerity measures — allowed hoteliers to reduce their prices to attract more customers.
“The first thing that the Greeks did right is drop their prices early this year,” said Toby Nicol, communications director of the World Travel and Tourism Council, an industry group based in London.
As usual, around a third of all foreign visitors this year came from Greece’s most loyal markets: Germany — despite the grumbling over having to pay for Greece’s bailout — and Britain. But there was also a surge in visitors from Russia after the lifting of visa restrictions at the end of last year; from the former Soviet states; and from Serbia, Israel, Turkey and China.
Official figures are not broken down by country of origin, according to the head of the Association of Greek Tourism Enterprises, Andreas A. Andreadis, but visitor numbers from the new markets are up sharply and show rich potential for further gains.
“Greece is more accessible to Russia and Israel than Spain, for example, so we should exploit this,” he said.
To help maintain a competitive edge, entrepreneurs want sales taxes on all tourism services cut to the base rate of 6.5 percent. Some packages are still taxed at 13 percent.
They are also lobbying for the halving of Greek airport taxes, which are among the highest in Europe, and the reversal of the near-doubling of value-added tax in restaurants and bars, to 23 percent.
Tax breaks are not enough, though. For Greece to build on this year’s success, it must also dispel its image as an unpredictable destination where labor strikes can cause transport disruption and protests can turn violent, Mr. Nicol said.
“Travelers will think twice about visiting a destination if they’re worried about missing their ferry connection,” he said.
Violent anti-austerity rallies are thought to have kept many visitors away from Athens, where arrivals have fallen 3 percent this year. About 10,000 hotel cancellations were made in one particularly riotous week in June, when tough measures were being voted on in Parliament.
There were anti-austerity protests on some of the islands, too, but hoteliers did what they could to muddle through.