Hotel News Now: Hope for better days in Greek tourism despite challenges
Hotel News Now published the following feature in which the leading hospitality site explains why there is hope for better days in Greek tourism despite the challenges:
"It might be too early to say Greece has turned its tourism sector around, but a bright side does appear to be slowly emerging, according to sources.
Still, sources said, huge macro-economic considerations remain to be resolved, and no one is under the impression that all the pain has subsided.
Aris Ikkos, research director of Greece’s Research Institute of Greek Tourism Confederation (known by its Greek initials, SETE), said the next step for Greece is the restructuring of debt and addressing non-performing loans, which he said would take place soon.
He added that the Bank of Greece reported at the end of the first half of 2016 that more than 54% of all loans in the tourism sector were deemed to be non-performing, as opposed to a little more than 45% across all Greek industry.
Ikkos said Greece is still under a stabilization and adjustment program, which “since summer 2015 is being implemented by the government rather consistently, even if often reluctantly.”
He said that as a result the Greek economy is “considerably more extroverted and competitive,” despite “the major impediment (still being) an adverse financial environment that creates a competitive disadvantage for many enterprises.”
Hotels, meanwhile, carry on, with some markets performing better than others.
Katerina Santikou, business development director of Greek hotel chain Santikos Collection, said the government has “not necessarily supported the tourism sector … despite tourism being number one in terms of employer and gross domestic product.” Her company has one countryside and three beach resorts, all in Greece.
“Industries such as mining benefit more, as they have organized labor, and most tourism labor is part-time. It was the private sector that moved forward the hotel sector, and it still is,” she said.
Santikou said while news and immigration in and from Turkey has hurt business, Greece has benefitted from the drop in tourism to other Mediterranean markets, such as Tunisia and Egypt.
“We’ve had two great years with visitors from the U.K. and Germany being stable,” she said. “And while Russia is a traditional, unstable, if not mature market, we saw more Russians when Russia halted diplomatic relations with Turkey.”
Greek tourism could be more competitive if it wasn’t hit by 29% tax, she added, pointing out that the west coast of Turkey has 0% tax.
According to STR, parent company of Hotel News Now, Greece recorded occupancy of approximately 70.2% year-to-date through October, up 2.2% in year-over-year comparisons. At the same time, average daily rate improved by 3.2% to €118.91 ($127.99), and revenue per available room rose 5.5% to €83.42 ($89.79).
The principal Greek cities, Athens and Thessaloniki, have shown notable improvement in ADR and RevPAR so far in 2016. The Greek capital posted a 4.1% rise in ADR to €121.52 ($130.80) and RevPAR of 5.5% to €89.10 ($95.91), while Thessaloniki, Greece’s second largest with a population of 320,000, saw ADR rise 3.1% to €68.46 ($73.69) and RevPAR increase 7.1% to €46.43 ($49.98).
Regional Greece, which includes numerous resort islands, saw moderate growth driven by occupancy in year-over-year comparisons, with a 2.1% increase in occupancy to 58.1%, an ADR drop of 0.1% to €164.07 ($176.60) and a 2% RevPAR jump €95.29 ($102.57).
Greece in three
To understand the Greek market, Ikkos said, there are three important things to keep in mind:
- Internationally known destinations with international airports—such as Crete, Rhodes and Mykonos—have performed well in the midst of the crisis.
- Destinations addressing the domestic market, such as mainland areas in the Peloponnese or smaller islands in the Cyclades, have been greatly affected by the deep recession, with vacation spending down from €3.8 billion ($4.1 billion) pre-crisis to €1.3 billion ($1.4 billion) currently.
- Athens suffered between 2009 and 2013 from social unrest, but since then has been doing very well, mainly with city breakers. The big challenge there remains the need to considerably return meetings incentives, conferencing and exhibitions business.
“Add to the above the considerable restructuring that is taking place in favor of larger structured companies, and you can get closer to the truth,” Ikkos said. “Better-organized businesses in international destinations and in Athens are doing well. For the rest, it is a mixed bag.”
In terms of price point, the luxury and midscale are seeing the most recovery, he said.
The restructuring of the market has also seen an increase in lower-budget tourists from the Balkans and Eastern European, Ikkos said.
Themis Trakas, director of business consultancy HVS’s Greek office, added that the country has also been hurt by a lack of direct flights and weak positioning in niche tourism sectors such as health and wellness.
Ikkos said political and economic instability, strikes and other bad publicity have often led to tourists canceling or postponing trips to Greece and taking advantage of discounts on travel.
That was particularly the case during the first five months of this year, he said, with “adverse publicity due to migration/refugee waves and disagreement with creditors.”
Still, he said, hoteliers could be encouraged by the fact that spending per night remained stable.
Hellenic turnaround
Trakas said in his firm’s October “In Focus: Greece” report that “preliminary estimates for (full-year) 2016 indicate 25 million total foreign tourist arrivals, excluding cruise ship passengers—and €15 billion in tourism receipts.”
He added that a “lack of appropriate infrastructure” was hampering improvement. But in December 2015, he said, the Greek government signed a €1.2 billion ($1.3 billion) privatization deal with a German airport operator to manage 14 regional Greek airports that “by the end of the 40-year lease … will increase the number of passenger movements to around 52 million.”
Ikkos also championed the airport deal, saying he expects it to benefit Greek tourism for two reasons: “Better management and maintenance of the airport,” and, “for islands, an airport is one of the few, if not the only, economic agent that has aligned interests with all sectors in the value-adding chain of tourism.”
Risks still litter the landscape
“The risk is that the International Monetary Fund and European institutions—that is, the German government—will not be able to agree on the next step, and the debt question will linger on for a few more years. Regarding the NPL issue, the risk is that the Greek government will delay reaching an agreement with creditors as to how to solve the situation,” Ikkos said.
He added that, following the recapitalization of banks, bank finance is again available, although investment appetite is very restricted due to continuing uncertainty and anti-entrepreneurial policies, mainly in the form of excessive taxation.
Ikkos said the Greek government needs to help tourism by:
- Lowering taxes;
- doing a better job promoting Greece’s unique cultural heritage, especially in the off season;
- coordinating central government, regional government and business marketing programs;
- forcing accommodation suppliers through sharing economy platforms to have a level playing field in terms of taxation; and
- opening up more to the Asian, American and Canadian markest, for which there are no direct connections in the off season.
Glimmers of sunshine
Signs of very recent robust life in the Greek hotel market include:
- The Astir Palace Resort in Athens sold to Apollo Investment HoldCo for €393.1 million ($423.1 million);
- Athens Hilton sold for €142 million ($152.9 million) to Greek firm Home Holdings SA and Dutch firm D-Marine Investments Holding BV, possibly with a management agreement with Mandarin Oriental Hotel Group;
- Marriott International is returning to Athens in 2018 with the 366-room Athens Marriott, formerly the Metropolitan, and a $15 million makeover;
- The 273-key Wyndham Grand Athens, formerly the Athens Imperial and closed since 2012, will re-open on 1 December; and
- United Arab Emirates-based Somewhere Group bought the 250-room Eden Beach Resort.
Read more here.
RELATED TOPICS: Greece, Greek tourism news, Tourism in Greece, Greek islands, Hotels in Greece, Travel to Greece, Greek destinations , Greek travel market, Greek tourism statistics, Greek tourism report
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