The Mediterranean nation has been hoping that tourism, which accounts for about 15 percent of GDP and employs roughly a fifth of the country's 4 million workforce, will boost its bleak economic prospects.

A 10 percent jump in arrivals and a rebound in revenues in 2011 had fuelled hopes for a strong recovery in the sector, which had struggled with slumping revenues for two years before that.

Despite hotels slashing prices again, Greece expects tourist numbers to fall 3 percent from 16.4 million last year, prompting a 5 percent fall in revenues of about 10 billion euros, said the head of Greek Tourism Enterprises, the main tourism association.

"It's mainly because of a double-digit drop in pre-bookings. We are now rushing to cover this gap," Andreas Andreadis told Reuters.

Strained relations with euro zone paymaster Germany, frequent anti-austerity protests and negative publicity have put off tourists from the country's top tourist markets, Andreadis said.

"It's not just politicians fighting anymore. It has come down to the people of the two countries, Germany and Greece," said Andreadis. "We need to restore relations between the two people and leave out any differences among bankers and politicians."

Initial data shows pre-bookings for the high summer season from Germany, which accounts for about 14 percent of Greece's total number of visitors, are down 20-30 percent.

The drop in pre-bookings from Britain, Italy and the United States is expected to be smaller but still in the double-digit range.

Greece's economy is in recession for a fifth consecutive year and is seen contracting by 4.3 percent this year as the government imposes austerity measures in exchange for financial aid from the European Union and the International Monetary Fund.

The tourism sector has helped narrow the country's current account gap, which shrank to 10.5 percent of GDP in 2010.

Tourism receipts from European Union residents visiting Greece fell 17.4 percent year-on-year in November 2011, the latest data available from the Bank of Greece indicated, with revenue from non-EU travellers down by 6.3 percent.

Greece is now banking on visitors from Russia, Ukraine, Israel and its tourist rival Turkey, Andreadis said.

"We expect double-digit growth in bookings from these countries," Andreadis said. "But this rise will not fully offset losses from Greece's traditional tourist markets."

• A Permanent Economic Emergency