KILLINI: When he took a job as the manager of one of Greece's biggest resorts overlooking a sandy beach near Ancient Olympia, the cradle of the Olympic Games, Michalis Minadakis thought he had the goose that laid the golden egg.

But seven years later, his dream of a bonanza with sun-seeking tourists is in ruins as the country's debt crisis has deepened, sparking talk of a Greek exit from the euro and social unrest that has begun to scare off visitors.

"Germans have been good friends of Greek tourism but they're afraid to come over now," said Minadakis, his eyes fixed on empty sunbeds around a pool at his Olympia Riviera Resort that boasts four hotels and a beach that is 1.2 miles long (2km).

"This will be a very tough year. The hurdles we are facing are huge," he said, adding that he had suffered a 25 percent drop in bookings this year and received 50 percent fewer visitors from Germany, Greece's biggest tourist market.

Tourism, which slumped by 25 percent in 2009-2010 only to rebound last year, is crucial to Greece's economy, accounting for 15 percent of its output and one in five jobs in a country where unemployment has hit a record high of 21 percent.

Greece's sandy resorts, azure waters and ancient temples remain popular, but will not, it seems, be enough to pull it out of a fifth year of recession.

Andreas Andreadis, the head of Greece's tourism enterprises association (SETE), said he feared revenues would plunge this year. "We will see a considerable drop," he told Reuters. "A negative number, something like 10-15 percent."

The pain is already being felt - tourist receipts for the first quarter tumbled by 15.1 percent to 396.3 million euros from 466.7 million euros, the Bank of Greece said.

The Greek tourism minister held a brainstorming session with industry officials last week to try to draw up an anti-crisis plan and later said the state needed to spend more on advertising to attract last-minute bookings.

Separately, Greek and European tourist operators are mounting their own publicity and price-cutting campaigns.

"We are trying to save what can be saved," said Yannis Retsos, head of the hoteliers' association. "Anything close to a 10 percent revenue drop would be a success."

POLITICAL TURMOIL

Last month's inconclusive parliamentary election, which left the country without a government and saw a party intent on renegotiating an international bailout that has kept the country afloat come second, increased the uncertainty.

Days after the election, reservations slumped by 50 percent. A repeat election on June 17 that may determine Greece's future in the euro - during what is the first month of the lucrative tourist season - has hoteliers and travel agents on edge.

Retsos said the uncertainty was damaging tourism and that the country needed a stable government to restore confidence.

The battle now was to contain losses, he added.

"We've already lost half of the season and are fighting for July, August and September," he said.

International media reports reflecting growing resentment against Germany among ordinary people, political pundits and the popular press, coupled with warnings that anti-austerity strikes and protests could disrupt people's holidays, are not helping.

"I was a bit anxious coming here because of what the media reported about Greeks hating Germans," said Britta Missler, a German tourist. "When I go back to Germany I'll tell everybody there is no need to worry."

About 2.2 million Germans visited Greece last year, but many now appear to be plumping for other destinations such as Spain or Turkey. Athens, where about a dozen hotels have shut down, and other big cities have been hardest hit.

"The German-Greek relation problem is huge. Only time can fix what's broken," said Retsos.

Last month, TUI Germany advised Greece-bound customers to take more cash in euros after its travel agents reported a surge in questions from customers about what would happen if Greece were to exit the euro and reintroduce the drachma.

"My friends said I'm crazy to come to Greece," said 35-year old Robert Leoniuk from Poland, who was staying at the Olympia Riviera resort with his wife and three-year-old son, and said he had taken a wad of euros with him just in case.

FIGHT BACK

Only last year, Greece was celebrating a record 16.5 million tourists - after two difficult years - as cheaper fares and upheaval in Egypt and Tunisia made it a popular destination.

That had raised hopes that the sector was on the road to recovery and might even be able to save the sickly economy.

A rise in visitors from Eastern Europe, Russia and Israel may help make up for the loss of tourists from Germany and Britain, but industry officials fear it will not be enough.

Domestic tourism - which accounts for up to 25 percent of total tourism revenues - is unlikely to save the day. Greeks' incomes are being severely squeezed as they reel from salary and pension cuts, layoffs and tax rises,

In the heart of Monemvasia, a town on the southeastern Peloponnese peninsula with a medieval fortress and Venetian style homes, Anastassia Livieratou keeps the family tradition of making silver jewelry inspired by local history and life alive.

"We have no Greek clients anymore. They cannot afford to buy anything," said Livieratou gazing at a deserted street through the window of her empty shop. "It's a lost year for us." AGENCIES