Greek Hotels See Strong 2024, but Tax and Staffing Challenges Loom

ITEP President Konstantina Svinou presenting data on the average occupancy of Greek hotels during January-October 2024. Photo © Greek Travel Pages (GTP)

Greek hotels reported higher occupancy rates during the first ten months of 2024, signaling another record year for tourism, according to the Institute for Tourism Research and Forecasts (ITEP).

However, as highlighted by ITEP President Konstantina Svinou, the sector faces significant challenges, including disproportionate tax burdens compared to competitors and ongoing staffing shortages, which could hinder future growth.

Strong performance in 2024

Presenting the data at the recent 12th General Assembly of the Hellenic Chamber of Hotels (HCH) in Athens, Svinou highlighted that occupancy rates in Greek accommodations showed year-over-year growth from January to October.

The only exceptions were the peak summer months of July and August, when rates remained steady at 83 percent in July and 88 percent in August, compared to 86 percent the previous year, suggesting “market saturation during the high season”.

Nonetheless, the slowdown was offset by notable increases in occupancy during the shoulder seasons. For instance, September saw occupancy climb to 84 percent, up from 79 percent in 2023, while October rose to 64 percent, compared to 55 percent last year. Similarly, during the March-May period, occupancy rates improved, with April reaching 50 percent, up from 44 percent in 2023.

Rising average room rates

Data for average room price of Greek hotels during January-October 2024. Photo © Greek Travel Pages (GTP)

In addition to increased occupancy, average room rates also grew throughout the first ten months of 2024, peaking in August. During this peak month, the average room rate rose to 187 euros, a 22 percent increase from 153 euros in 2023. Similarly, median room rates surged, with August reaching 164.7 euros, up 46 percent from 112.5 euros in the same period last year.

Significant price growth was also observed earlier in the year. For instance, during the first quarter, room rates increased by approximately 10 percent. In July, the average price climbed from 115.3 euros in 2023 to 138.2 euros, while September saw a rise from 100 euros to 130 euros year-over-year.

Five-star hotels on the rise

The positive performance of Greek tourism has been bolstered by a notable increase in high-category hotels. Currently, 24 percent of Greece’s total hotel capacity is classified as four- or five-star establishments, reflecting a growing emphasis on luxury accommodations. Specifically, the number of five-star hotels has increased by 30 percent compared to pre-pandemic levels.

Despite this shift, small hotel units with up to 50 rooms account for 79 percent of all hotels.

“Small hotel units with up to 50 rooms are the backbone of the Greek hospitality sector, playing a vital role in supporting the national economy,” Svinou emphasized.

Challenges: Taxation and staffing shortages

Svinou further pointed out that despite the sector’s growth, hoteliers remain cautiously optimistic, citing excessive taxation and staffing shortages as significant challenges compared to their European competitors.

Heavy tax burden on hotels

Hellenic Chamber of Hotels Director Agni Christidou presents data showing that the hotel sector bears the heaviest tax burdens compared to other industries in Greece. Photo © Greek Travel Pages (GTP)

According to an ITEP analysis, hotels in Greece face a combined charge of 16.5 euros per overnight stay, stemming from the climate resilience fee and the stayover duty (known in Greek as the “τέλος διαμονής παρεπιδημούντων”). This amount does not include VAT and is second only to Paris, where the equivalent charge is 22.76 euros.

The VAT rate for accommodation in Greece, at 13 percent, is the highest in Europe, according to ITEP’s data. For comparison, France has a 10 percent VAT rate, while Switzerland’s stands at just 3.7 percent.

Moreover, it was pointed out that the hotel sector bears the heaviest tax burdens compared to other industries in Greece.

“It is obvious that the hotel sector has become the constant bearer of disproportionate burdens,” noted Hellenic Chamber of Hotels President Alexandros Vassilikos, warning that over-taxation “erodes the competitiveness of Greece’s hospitality offerings”.

Staffing shortages persist

ITEP data of lack of personnel in the Greek hotel sector. Photo © Greek Travel Pages (GTP)

Another pressing issue is the persistent lack of personnel in the sector.

Data from ITEP reveal that in the first quarter of 2024, 34 percent of hoteliers reported being unable to fill vacant positions.

The problem is particularly acute in Central Greece (excluding Attica), where vacancies reached 47.7 percent, as well as in the islands of the North Aegean (45.4 percent), the Peloponnese (34.8 percent), and the Macedonia-Thrace region (34 percent).

Highlighting the challenge, Svinou stressed the need for systemic solutions to address staffing gaps.