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TUI asks Greek hotels to promise to take drachma in the worst case

Published: 05 Nov 2011 12:20 GMT+01:00

German daily Bild said on Saturday it had obtained a copy of a letter and contract from TUI to hoteliers, reserving the right to pay in the new currency, should Greece drop the euro.

A spokesman for the travel operator, Robin Zimmermann, confirmed the report.

"We have to protect ourselves against these kinds of currency risks," he told Bild. "There is more than a theoretical possibility that Greece will leave the eurozone."

Experts say that a new Greek currency could lose up to 60 percent of its value shortly after it is introduced.

The board chairman of the Association of Greek Tourism Enterprises (SETE), Andreas Andreadis, told the paper that a number of hotel owners in Greece had received the letter from TUI requesting them to sign a new contract.

"No hotelier is going to do that, and we have appealed to the Greek tourism ministry," he said. "TUI cannot pressure any hoteliers into signing something like this."

The notion that Athens could default on its debt has raised fears of a domino effect that could shake other debt-burdened eurozone members, such as Italy.

As the crisis continues to weigh on financial markets, speculation that Greece could leave the eurozone and revert to its former currency, the drachma, is growing.

The Local/arp

The Local (news@thelocal.de)

Your comments about this article

13:49 November 5, 2011 by Lachner
What did the Greeks expect? They want to turn their back on the EU, drop the Euro currency and default their debts, but still continue to enjoy all the benefits of the EU? Get a grip! If they leave the EU and drop the Euro, they will be paid in their own currency which will be devalued by 60%. If they don't sign the contract, then I'm sure that Hotels in Spain, Portugal, Italy, Turkey, the Caribbean and Latin America will welcome the new business and influx of wealthy Germans.
13:55 November 5, 2011 by pepsionice
Here's my Greek response.....say "sure", and say that you'd like to include the acceptance of German "lira" (don't even say Deutsch-Marks). When the German gets all upset and angry.....tell him that it's ok if was German Reich-marks as well. I'm guessing whatever relationship you had with the German....is pretty much gone by that point.

My guess....for 2012....don't expect many Germans in Greece.

Oh, and maybe Germans should calculate up what life would be like if you had to suddenly return to the old D-marks. It might interesting to discuss this potential return.
17:04 November 5, 2011 by Eastard
@pepsionmice

There are major differences between the instances you use and today... The Greeks are blowing off deliberate abuse of monetary management causing OTHERS to loose allot off money... Even amidst OTHERS trying to help the Greeks they protest against change... It is 100% sure that the world is not obligated to fund the Greek lifestyle in anyones currency ... existing or past. As I recall from recent readings in the Athens Times... many Greeks think it is a normal seasonal thing to default at others expense as though there were no losers... or maybe no Greek losers... It remains very foolish to slap the hands that help... The Greeks want the drachma back without any currency valuation... isn't that consistent with their concept of who is supposed to loose...

I think the German travel agency was kind to offer to let them continue to book... and should insist in the currency requirement... or advise their customers of the long term high risk of doing business with the Greeks... They have a substantial world reputation to regain or tourism will vanish...

It is fine for the Greeks to live in a fantasy... however world money does not live there...
02:54 November 6, 2011 by Dizz
How can that be in a contract? There seems to be a misconception amongst many that you can put anything that you can dream up into a contract and if the other person signs it, then its enforcable by law. Wrong. Contracts have to be within the law to start with, both the letter and, if contested, the spirit. This means that any contract that is blatently one-sided will not stand up if tested in a court of law. Or that's the theory at least.
08:33 November 6, 2011 by mos101392
Leaving the Euro might be the best solution. They go back to the Drachma... The Drachma loses value... Greece then becomes a very inexpensive tourism destination. Greeks enjoy the new legions of tourists and count their Drachmas at the end of the day. Meanwhile, other countries will witness less tourism because it's cheaper to go to Greece.
09:13 November 6, 2011 by jg.
"We have to protect ourselves against these kinds of currency risks..."

Patently, the TUI spokesman is being economical with the truth. As TUI will no doubt expect their customers to continue to pay them in Euros, the least risk of currency fluctuations would be achieved by TUI paying their suppliers in Euros. In reality, TUI believes that a future Drachma would devalue and TUI would like to make a fatter profit by pocketing the difference (as there was no mention of making more money, it seems unlikely that TUI are planning on passing any savings on to their customers).

If the Greeks are to pay back what they owe to foreign banks, they will need to earn in foreign currencies and in countries with weak economies or unstable currencies, it is common for hotels and other travel companies to accept payments in popular foreign currencies. If TUI really want to help, perhaps they should ask to see an accounts summary and Greek tax return for each Greek company with whom they do business.

In the end, regardless of the currency in use, prices reflect demand, supply and competition. The snag is, the relatively few large tour operators tend to stifle competition, much like supermarkets vs farmers.
14:03 November 14, 2011 by agarwaen
@Eastard

A more accurate analogy would be that the "Germany" super market, gave some of its customer's a credit card to use in the store, and forced them to sign an agreement, to use the "Germany" store only. Also, it made them give up their garden and their livestock. It racked up some handsome profits that way, first from the product sales and secondly from the credit card interest. Now the customers are bled dry, and they can't borrow from their own family (their own currency) because that's forbiden also (the ECB isn't a lender of last resort, it's the only central bank in the world that operates in that way ). So the "Germany" Super Market is lending some more money, with a handsome interest, while trying to find ways to make its customers solvent in the long run, and get its promised interest returns, since it (its Banks) has recorded them as income already, in the Super Market's books.

Germany is looking for its own self interests, and rightly so, like every country should. Thinking that German politicians live in some fairy land and are "trying to help the Greeks" is kind of naive.
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