Tourism represents a significant part of the Greek economy. The impact of the global economic crisis on international tourism in Greece has been intense over the last five years. The economic situation in Greece has been a result from drastic changes that followed after the financial crisis occurred.
As the economic crisis first hit in 2008, Greece registered a decline in inbound arrivals of five per cent in 2009. After a few years of growth and recovery, the uncertainty in 2012 again resulted in a five per cent inbound decline. The reason for this is mainly found in the simultaneous weak economic performance of key source markets to Greece, including Germany, the UK, France and Italy.
The Greek tourism sector has seen a major drop in holiday bookings and a growing number of cancellations in recent weeks. There could be no worse advertisement for Greek tourism than the ‘refugee bomb’ hitting the headlines in Europe and the US. If far fewer tourists come this year because they’re afraid of what they might find, revenues will drop. Unemployment will go up and thousands of small businesses in the tourism sector will suffer a major setback.
The economy in Greece and declining tourist numbers means many hotels in Greece have been forced to close. According to the Greek Chamber of Hotels, 18 have already closed in Athens, while another 80 hotels have closed countrywide.
The combination of increased financial obligations and reduced income is driving small businesses in Greece to the verge of closure. In reality, more than 480 hotels in Greece have gone up for sale in less than a month for as little as 250,000€ as economic crisis continues to bite. The Esperia Palace is just one of the 41 hotels in Attica that have shut down over the last three years according to data presented by the chief of the local hoteliers’ association, Mr. Vassilikos, reflecting the extent of the immense problems being suffered by the capital’s tourism industry. The data showed that the decline in occupancy at Attica hotels amounted to 13.4 percent last year compared with 2011, while prices have dropped by 7.8 percent year-on-year. Hundreds of hotel owners resorted to trying to sell their units over the last two years in places including Crete. According to Ekathimerini.com, the total value of the asking prices advertised for the 482 properties is just over €1.7billion.
For example, in the Halkidiki peninsula in central Macedonia, 106 units have been put up for sale, asking for 406 million euros. Also, another 66 ads concern sales in Crete, asking for 348 million euro and that includes a five-star hotel in Chania. Hoteliers are also selling 53 units on the Ionian Islands for €202 million. The recent increase means that at least five per cent of Greek hotels are now on the market.
According to the estimates by specialized web sites and investment channels, around 1,000 hotels in the country, both big and small, are expected to be put up for sale in the near future. The economic crisis and reduced liquidity in the market have aggravated the phenomenon of hoteliers choosing to close rather than to continue the fight for survival. These factors have made it increasingly difficult to find buyers, even though the average asking price has dropped by 10 per cent in the meantime.
This drift highlights the flip side of Greek tourism: While there was an all-time record in arrivals from abroad last year – benefitting specific tourism destinations and hotels – there are also a great number of mainly small and medium-sized hotels that face serious sustainability issues. Unfortunately, small/medium sized hotels have been going through a prolonged period of crisis for the past seven years because of misguided policy followed by all governments: enormous taxes, non-existent financial support, seasonality, illegal rentals, refugees and AI trends.
In addition, the ill-advised VAT tax hikes further burden Greece’s tourism industry. In fact, tax hikes are expected to hit all of the islands and other places that cater almost exclusively to Greeks much harder than foreign tourist destinations like Athens — where many central hotels are now fully booked — and islands such as Corfu, Mykonos, Rhodes, Crete and Santorini. In particular, Small and Medium Enterprises (SMEs) will struggle to cope with this increase, putting pressure on the livelihood of small hotel owners.
In any case, tourists are expected to trade down to less expensive budget hotel options as well as resort to camping and self-catering. Occupancy rates and revenue per available room (RevPAR) suffer heavily. While occupancy rates are expected to recover within five years, a full recovery of the RevPAR could take up to a decade. Whilst larger players are able to survive by offering discounted rates and flash sales to increase occupancy, SMEs again are set to suffer hardest. According to the World Travel and Tourism Council (WTTC), the wider tourism industry in Greece accounted for 17.3% of GDP in 2014, meaning that any impact on the tourism industry will have a significant impact on the wider economy of Greece.
As it stands now, the situation in Greece is changing on a minute-by-minute basis, and therefore the future is extremely unpredictable despite the constant deceit of the government that “Greek Tourism” is going perfectly well. With all the current developments, it remains uncertain what the future will bring in Greek tourism. We hope and wish for interesting developments in the coming years, or even better, a miracle.
About the author
Philia Tounta has been working in the tourism sector for 19 years. She has worked in various hotels, travel agencies and unions in Greece and abroad. She has acquired an MBA degree in the UK, a Bachelor degree in Athens and a Diploma in Tourism. She speaks English, French, Spanish and Italian and she is a member of TIES, HTS, Bedposts, etc. She has attended numerous seminars and workshops concerning tourism and small business management.
Nowadays she lives in Athens and she is a General Manager of Apokoros Club Hotel & Villas, Craft Deco & Activities in Crete Greece, a Customer Service Officer at Thamiris Hotel(s) Crete, and sales manager at “Crete focus” and “You planet”.
She is a Hospitality & Tourism consultant for small medium sized hotels (‘Hotelice’), a Tourism Ambassador in the Hellenic Tourist Society, a provocateur in seminars and she is occasionally speaks at conferences concerning tourism. She is a freelance author to various online international and local blogs. Often she participates in discussions in Greek radio channels and has been interviewed by various journalists from abroad concerning tourism issues.
