INSETE: Greece’s Hotel Performance on a Decline

Although Greece is seeing an increase in tourist arrivals and revenues this year, the country’s hotels are experiencing a low performance – in terms of occupancy, earnings and early bookings – compared to 2018.

This contradiction is analyzed in the monthly bulletin of the Greek Tourism Confederation’s (SETE) research body INSETE.

Providing recent data on international arrivals and revenue from tourism in Greece, INSETE said that during the January – June 2019 period, Greek airports recorded 8.1 million international arrivals, up 4.4 percent year-on-year. Moreover, citing Bank of Greece data for the first five months of the year, revenue from travel receipts was up by 14.4 percent to over 2.8 billion euros.

However, as INSETE points out, Greece’s hotels are not following the upward trend of the country’s arrivals and revenue.

Citing data from a recent ITEP study, INSETE underlined that 45 percent of Greek hotels that are open all year round are showing reduced occupancy, while one in four hotels were forced to lower their prices. Also, 46 percent of the country’s seasonal hotels recorded a drop in early bookings, while 23 percent of them were obliged to slash their early booking discounts to attract new clientele.

In addition, during the January-June 2019 period, hotels in Athens saw their occupancy drop by 3.8 percent, revenue per available room (RevPar) decrease by 2.9 percent and the average room rate (ARR) increase marginally by 1.0 percent.

Why the inconsistency?

According to INSETE, the inconsistency between Greece’s tourism figures and hotel performance can be attributed to two main reasons:

On the one hand, the increase in tourist arrivals and revenue in Greece comes mainly from countries outside the EU and not from the country’s traditional markets. As a result, the tourism flow is not distributed evenly in the various Greek destinations, as it is mainly directed to Athens.

On the other hand, the country’s increase in the supply of beds in recent years, especially in hotels of high category, coupled with the increase in the supply of beds of short-term rentals, exceeds the increase in demand, leading to reduced occupancy in hotel units.

Moreover, INSETE’s bulletin, which includes data for the 2019 summer period, also revealed that the number of scheduled airline seats on international flights landing at regional airports in Greece was down by 6.7 percent, or by 1.2 million, compared to seats projected in the same period in 2018.

“In view of the international slowdown in the demand for tourism services from Greece’s traditional markets, also apparent from the 6.7 percent decline of scheduled airline seats on international flights at regional airports, it is necessary to immediately restore the competitiveness of the tourist product (by cutting taxes charged on the product) and regulate the short-term rental market,” INSETE General Director Ilias Kikilias said.

Kikilias also underlined the necessity of an effective national strategic plan for tourism.