Pandemic a major blow for Airbnb

At the foot of the Acropolis hill, in the touristic Koukaki district, the coronavirus lockdown has silenced the sound of Airbnb customers' wheeled luggage.

The tourist industry in Athens, as in many other European capitals, has ground to a halt, with planes grounded and restaurants, museums and archaeological monuments all closed.

This has left a huge hole in the Greek economy which had been recovering from a decade of crisis.

Owners of small apartments in Koukaki, who had been renting them on the Airbnb platform in order to provide income during the financial crisis, are once again struggling.

"The reservations stopped abruptly," laments Romina Tsitou, an Airbnb host since 2014.

"I hope I won't have to put them for long–term rental, but I may have to if this situation drags on," she adds. For the time being her two Airbnb apartments accommodate medical staff.

Stefania Dimitroula has already put her apartment up for long-term rental.

"Since the beginning of the summer of 2018, it was fully booked via Airbnb, almost exclusively by foreign tourists," the 32-year-old woman said, but "100 percent of the reservations for April, May and June have been cancelled".

Being unemployed, she had no other choice.

"I was counting on the earnings of this apartment, around 1,000 euros per month, to compensate for the loss of my job," she explained, expressing pessimism about the summer season, which the Greek government is hoping to jumpstart on July 1.

Long-term rentals are becoming "a major trend", according to Patrick Tkatschenko, a real estate agent in Athens.

"Airbnb is suffering a huge blow," he told AFP.

- Airbnb slashes staff but will adapt-

The "hard hit" American home-sharing platform announced on Tuesday that it will slash a quarter of its work force -— some 1,900 people all around the world.

"We are collectively living through the most harrowing crisis of our lifetime," Airbnb co-founder and chief executive Brian Chesky said in a blog post.

This year the San Francisco-based company's revenue will be "less than the half" of the 2019 figure, and Chesky admits he doesn't know when the tourists will return.

Still there are many who believe that holiday apartments, rather than hotels, have a future, as safe havens away from the crowds.

Enrique Alcantara, president of Apartur, the holiday apartment owners' federation in Barcelona, foresees a 85 percent drop in sales revenue for 2020.

He predicts though that holiday apartments "are going to adapt more easily to the new times that lie ahead, to the new needs of the tourists, mainly as far as security is concerned".

In Athens too, despite the staggering drop in holiday reservations, there remains a glimmer of hope.

"Tourists will benefit from private apartments in order to feel more secure in comparison with hotels where they will have to interact with more people," Stratos Paradias, president of the Greek Federation of Property Owners and of the International Union of Property Owners, told AFP.

He also thinks apartments that manage to stay in the short-term rental market will bounce back "faster than elsewhere" because "Greece is considered one of the safe countries thanks to the way it has handled the COVID-19 pandemic".

- Holding fast to short-term rentals –

In Barcelona, Sybille Campagne's holiday letting calendar is empty.

"For July-August, all reservations were cancelled," the 43-year-old French woman explains.



Nevertheless she isn't considering taking her apartment off the Airbnb platform because it accounts for 80 percent of all her reservations.

Juan Quilis, a 35-year-old telecom technician who owns an apartment in Seville, is also sticking with short-term rentals for the time being.

"I'm not too worried for now, because I have a savings cushion but if I see that things don't come around, I will put my apartment in long term rental. As a last resort."

In France, Airbnb expects to see its reservations come back swiftly thanks to its local clientele, with the French particularly fond of staycations.

Aurelien Perol, Airbnb director of communication in France, expects last-minute reservations to rise as lockdowns are lifted.

Meanwhile in Amsterdam, holiday rentals spiked in mid- April and have plummeted since, according to the local newspaper Het Parool.

- 'Purge is necessary' –

A study conducted by Spitogatos, the most popular online property ads network in Greece, found a clear rise in apartments listed for long-term rentals in mid-April, accounting for 30 percent of the market in central Athens.

Spitogatos CEO Dimitris Melachroinos thinks the long-term rental sector will keep rising as it will be seen as "a safer option".

This new turn in the real estate market will also lead to much-needed regulation of the sector.

"The short-term rentals practice grew out of control in Athens in recent years. The purge provoked by the COVID-19 crisis is necessary," Paradias says.

In Koukaki, the number of short-time rentals skyrocketed between 2017-2019, from 360 to 1,150, according to AIRDNA, which analyses rental platforms like Airbnb. As a result, property prices have nearly doubled causing problems for local apartment seekers.

burx-chv/kan/pvh/mtp

Agence France-Presse 

Greece Secures History's Biggest Debt Writedown; 83.5% Of Lenders Approve

ATHENS, Greece (AP) – Greece's private creditors agreed Friday to take cents on the euro in the biggest debt writedown in history, paving the way for an enormous second bailout for the country to keep Europe's economy from being dragged further into chaos.

Greece would have risked defaulting on its debt in two weeks without the agreement, sparking turmoil in the markets and sending shock waves through the other 16 countries that use the euro.

Prime Minister Lucas Papademos called the deal – which shaves some (euro) 105 billion ($138 billion) off Greece's (euro) 368 billion ($487 billion) debt load – an important "historic success '' in a televised address to the nation Friday night. "For the first time, Greece is not adding but taking debt off the backs of its citizens.''

The country said 83.5 percent of private investors holding its government debt had agreed to a bond swap, taking a cut of more than half the face value of their investments as well as accepting softer repayment terms for Greece.

The swap aiming to turn around the country's debt-ridden economy was a key condition to secure a (euro) 130 billion ($172 billion) rescue package from other eurozone countries and the International Monetary Fund.

The managing director of the Institute of International Finance, which negotiated the deal with Greece for large investors, called the bond swap "the largest ever'' debt restructuring.

"This has been painful and the pain is not over yet. But I now can see light at the end of the tunnel for the Greek economy,'' Charles Dallara told Greece's Mega television. He estimated Greece could return to the markets "within a few years.'' If recovery continues, "I think the risk for Greece and the risk on the eurozone will be very manageable,'' he said.

Of the investors holding the (euro) 177 billion ($234 billion) in bonds governed by Greek law, 85.8 percent joined. The deadline for those owning foreign-law bonds was extended to March 23.

Creditors holding Greek-law bonds who refused to sign up will be forced into the deal.

The decision to force losses on some bondholders means that the debt relief will trigger payouts of so-called credit default swaps, a type of insurance on bonds. The International Swaps and Derivatives Association, the private organization that rules on such cases, said its committee ruled that a "restructuring credit event'' occurred.

When the debt relief plan was first announced last year, eurozone leaders and the European Central Bank worked hard to avoid a credit event because they feared the payout of credit default swaps could destabilize big financial institutions that sold them. But since then, that prospect has started to look less threatening. The ISDA said that if triggered, overall payouts will be significantly below the $3.2 billion in net outstanding credit default swap contracts linked to Greece. The exact level of payouts will be determined on March 19.

The Fitch ratings agency downgraded Greece to "restricted default'' over the bond swap – a move that had been expected. Fitch was the third agency to downgrade Greece into default, after Moody's and Standard & Poor's. The agencies are expected to raise the country's credit rating after the completion of the swap.

The finance ministers from the 17-nation eurozone said Greece had fulfilled the conditions to get approval for the bailout next week. IMF chief Christine Lagarde, meanwhile, recommended the fund chip in (euro) 28 billion ($36.7 billion) to the rescue package, which includes (euro) 10 billion left over from Greece's first bailout. The IMF's board is set to decide on the final contribution next week.

The eurozone ministers on Friday already released up to (euro) 35.5 billion ($47 billion) in bailout money to fund the debt swap. Investors exchanging bonds will receive up to (euro) 30 billion – or 15 percent of the remaining money they are owed – as a sweetener for the deal and (euro) 5.5 billion for outstanding interest payments.

source: mb.com.ph

Greek leaders ready to back austerity deal

(Financial Times) -- A dispute over pension cuts stalled talks last night between leaders of Greece's fractious national unity government on tough new austerity measures, one of the last hurdles to be cleared before eurozone officials can sign off on a €130B ($172B) bailout and save Athens from a messy default. However, officials said they were still confident of reaching a deal by the morning.

A statement by Lucas Papademos, the technocrat prime minister, said there was "broad agreement on all the issue except for one which demands further elaboration".

The talks between Papademos and the heads of the three Greek political parties in his cabinet included €3B ($4B) in new spending cuts contained in a 50-page document distributed to political leaders in the morning. The full cabinet is due to rubber-stamp the deal today.

After seven hours, Papademos called in the troika -- mission chiefs from the European Commission, European Central Bank and International Monetary Fund who drafted the new medium-term fiscal programme with the Greek finance ministry -- to help break the deadlock. Greece still needs to find about €300m of savings to close a €3bn program of spending cuts to keep this year's budget on track.

Papademos earlier held separate telephone consultations with Christine Lagarde, IMF managing director; Olli Rehn, the EU monetary commissioner; and Jean-Claude Juncker, chairman of the eurozone finance ministers, who are due to discuss the Greek program this evening.

People familiar with the negotiations said Antonis Samaras, the conservative leader, had raised objections to cuts in supplementary state pensions, while former premier George Papandreou refused to discuss the alternative of cutting primary pensions. The pensions issue is seen as critical as elderly, low-income Greeks have been hit hardest by the deeper than expected recession.

George Karatzaferis, the rightwing leader and junior coalition partner, left the talks. It was not clear whether he would return to join the negotiations.



There has been mounting frustration in other European capitals, including Brussels, where officials had hoped to get a deal agreed last weekend so that they could quickly execute the central pillar of the deal -- a €200bn bond swap that will see private Greek debt holders lose half their holdings, wiping €100bn off Athens' €350bn debt pile.

Once the deal is agreed, the focus of the Greek drama will turn to Paris, where the lead negotiators for private bondholders were to meet with investors to begin preparations for the debt restructuring, and to Brussels, where eurozone finance officials will meet on Thursday to cobble together enough money to keep Greece afloat for the foreseeable future.

Debate over the structure of the new bail-out package continued to intensify behind closed doors as eurozone leaders attempted to construct a programme that would both keep the total in new rescue funds at €130bn and reduce Greek debt levels to 120 per cent of economic output by 2020.

Both those goals were signed off at a summit in October, but Greece's worsening budget outlook has forced finance ministry officials to rework the package to stay within those parameters.

There was growing consensus that sufficiently reducing Greece's debt level, which is now at about 160 per cent of economic output, would require more than the agreed €100bn cut in private debt, with leaders' focus increasingly turning to the €40bn in Greek bonds held by the European Central Bank -- the largest of any single investor.

According to several senior eurozone officials, the ECB has not yet agreed to help a revised bailout plan, but it was studying whether it could forgo profits on the €40B ($53B) portfolio -- which would pay out about €55B ($73B) if taken to maturity -- by transferring the bonds to the eurozone's bailout fund, the European Financial Stability Facility, at the price it originally paid for them.

Another plan being considered would have Greece buying the bonds directly from the ECB at the depressed price, using EFSF funds or bonds to pay for them. Either scheme would require eurozone governments ensuring more EFSF funds to buy the Greek bonds -- which may prove politically impossible.

While senior officials at EU institutions and eurozone member states were hoping the ECB would agree to forgo its profits, which would knock as much as €15B ($20B) off of Greece's debt load, four officials with direct knowledge of the talks said such a deal had not yet been agreed.

Without ECB accession, officials worry it will be impossible to get Greece's debt down to levels approved by the International Monetary Fund, which has estimated that the private debt restructuring alone will only get Athens' debt to just under 130% of economic output by 2020. Without IMF approval, the €130bn in new bail-out funds cannot be approved.

Standard & Poor's, the debt rating agency, weighed in on the side of the IMF on Wednesday, saying the restructuring of privately held debt was not enough to make Greece's debt load sustainable.

"Because only a small subcomponent of investors are actually taking the haircut and the official sector [ECB] is not, or only partially, then the reduction . . . is probably not sufficient debt relief to make debt sustainable," said Frank Gill, an S&P analyst.

article source: http://edition.cnn.com/2012/02/08/business/greece-talks/index.html?hpt=hp_t2