Greece has managed to win its bet on increased tourism activity and is heading towards a new record in travel revenues, while recent data shows that international arrivals will continue to grow even in the autumn.
According to the President of the Panhellenic Federation of Hoteliers, Grigoris Tassios, in several tourist areas hotel bookings for September and October are even higher than in 2019. However, he notes that the extent of the increase in the country’s travel revenues is not reflected in the results of the hotels.
Limited Operating Profit for Hotels
The turnover in hotels, he adds, may reach the same levels or even higher than in 2019, but the operating profit will be limited, as since 2019 or 2022, there has been a price inflation of around 10% to 15%, coupled with an increase in interest rates.
Simultaneously, wage costs are also rising, even unusually for this year, as due to the lack of staff, there have been phenomena of a bidding war for specific categories of employees. This, as Tassios emphasises, will take one to two years to amend. He adds that “the average salary in hotels is currently at 1,200 euros gross, which means we are almost all adhering to the sectoral agreement of hotel employees and are slightly before the goal set by the government for 2027, which is for the average salary in the private sector to reach 1,500 euros gross. So, at this moment, we are leading the way.”
Regarding the increase in interest rates and how it affects the operation of hotel businesses and investment activity, it is noted that there are two categories of investments. The first category relates to investments that have been integrated and funded by the Recovery Fund, and essentially have not been affected by the increase in interest rates.
The second category pertains to existing businesses that have had a long-term loan, and in many cases, had been restructured due to memorandums. These businesses have now encountered a barrier, which is the increase in interest rates. There were businesses that had a 2.5% interest rate, and now find themselves at 6%. This development, according to Tassios, means a “squeeze” on liquidity, essentially cash liquidity, which also indicates a halt, to a point, for some investment plans, mainly on modernisation though, not on new hotels.
Vote of Confidence from Tour operators for 2024
Concluding with a positive outcome for 2023 overall for Greek tourism, Tassios considers the vote of confidence from tour operators for the country in the next year a given. He even brings up the case of Rhodes and the following day as an example, since based on the experience of the last 20 years, it has never happened that tour operators bounce back so quickly after a, essentially, natural disaster.
The vote of confidence means that the product has positioned itself highly in terms of hotel services and hospitality. Moreover, another significant factor for 2024 is that the contracts being signed are moving with increases of about 5% to 7%, even though inflationary pressures would justify even higher increases, close to 10%. However, as Tassios points out, we all understand in the market that we need to remain competitive. The problem for tour operators now is not only related to the destination, which clearly plays its role, but also to the budget of the average family in Europe. Nevertheless, he observes a return of visitors to organised tour packages. Concerning the increases in airfare, he emphasises that everyone must pull together to make the package more competitive.
The Challenges for 2024
Among the significant issues that need to be resolved for Greek tourism, Tassios pinpointed the regulations concerning short-term rentals, the enhancement of infrastructures based on the spatial planning for tourism, and the planning of interventions to address the labour shortage, both with the relocation of foreigners from third countries and with individuals who have been granted political asylum in the country and are eligible to work. Regarding the latter case, according to available data, there are over 25,000 men and women who could be employed in the tourism sector, and this needs to be coordinated with the Ministry of Migration and Asylum. Concerning relocations, it has been requested that the responsibility be vested in one ministry instead of the current three. Regarding the labour card, which is expected to be implemented in most parts of the country by 2024, there should be an open dialogue with the government to acknowledge the objective variations and challenges the sector faces.
International Air Arrivals on an Upward Trajectory
During the period of January to July, 13.3 million international air arrivals were recorded in Greece, representing an increase compared to 2022 by 14.8% or by 1.4 million arrivals. In comparison to the January to July period in 2019, the increase is estimated to be 11.4%. The relevant data comes from the Institute of the Association of Greek Tourism Enterprises.
More specifically, during the period from January to July, the Cyclades recorded 706,000 international air arrivals, representing a decrease of 57,000 or 7.5% compared to the same period in 2022. The Peloponnese recorded 109,000 arrivals, showing a decrease of 3,000 or 2.7%. In the geographic region of Crete, international air arrivals amounted to 2.7 million, registering an increase of 163,000 or 6.4%. International air arrivals at the airports of the Dodecanese reached 2.1 million, marking an increase of 63,000 or 3%. In the geographical unit of the Ionian Islands, an increase of 142,000 or 7.8% was recorded, with a total of 2 million international air arrivals.
In July, there were 4.4 million arrivals, indicating an increase of 4.6% (+192,000) compared to July 2022 and 13.6% compared to July 2019.
Over 30% Rise in Road Arrivals in July
During the period of January to July, 5.5 million international road arrivals were recorded, compared to 3.9 million during the same period in 2022, showing an increase of 41.8% or by 1.6 million road arrivals and a decrease of 10.2% compared to 2019.
In the first seven months of 2023, there was an increase from all neighbouring countries compared to the corresponding period in 2022. Specifically, the largest increase in absolute differences was recorded from Bulgaria, at 69.3% or by 1 million, with a total of 2.4 million road arrivals recorded.
This was followed by Turkey, where the largest increase in percentage differences was observed, at 119.5% or by 292,000, amounting to a total of 536,000 road arrivals. The increase from North Macedonia was 13.4% (+204,000), with road arrivals totalling 1.7 million. Meanwhile, the increase from Albania was 23.2% (+173,000), with road arrivals amounting to 920,000.
In July, road arrivals totalled 2 million, presenting an increase of 468,000 or 30.8% compared to last year, and a decrease of 5.6% compared to 2019.
