There is no doubt: Eurozone economies are in flux. Second-quarter numbers confirm as much. The single currency’s aggregate GDP expanded by only 0.3-percent in Q2, down from the 0.6-percent expansion rate in Q1.
“Growth stalled in Italy and France, as exports struggle and domestic demand is cooling,” HSBC's Favio Balboni told the Independent. “This is worrying given the difficult political agenda ahead, with a referendum at the end of the year in the former, and elections next year in the latter. Even the positive surprise in Germany was driven by weak imports, once again casting doubts on the ability of Germany to be the driver of eurozone growth.”
But there is hope: Greece was a bright spot among the glum GDP reports—albeit constrained. The country reported a 0.3-percent increase in output in the second quarter, in contrast to expectations of a 0.2-percent contraction. It also revised up figures for the first three months of the year, from a 0.5-percent decline to a 0.1-percent decline.
To put it in perspective: Greece’s economy has shrunk by almost 30 percent since the start of the financial crisis in 2008.
Meanwhile, according to ekathimerini.com, Greek banks are now offering higher interest rates to attract back billions of euros that savers pulled out in cash last year, as lenders bid to ease their liquidity strains after a slight reduction of capital controls.
Related: The Mediterranean Resort and Hotel Real Estate Forum (MR&H), part of the IHIF Summit Series, is November 30 to December 2, 2016, at the Fairmont Rey Juan Carlos, in Barcelona, Spain.
Italy, meanwhile, is still struggling. The country reported no growth in the quarter off expectations of 0.2-percent growth. This only adds hardship for Prime Minister Matteo Renzi, who in the fall faces a constitutional referendum.
A headline from Quartz read: "Italy’s economy is barely bigger than it was way back in 2000." Worse, over the past 16 years, Italy’s economy has grown by just 2 percent. Analysts expect GDP for 2016 to expand by less than 1 percent.
Spotlight on Greece and Italy
Greece and Italy will be highlighted during the 2016 Mediterranean Resort and Hotel Real Estate Forum (MR&H), part of the IHIF Summit Series, November 30 to December 2, at the Fairmont Rey Juan Carlos, in Barcelona, Spain.
One panel, "Investing in the recovering markets of Italy and Greece," will discuss the opportunities for hotel investors and developers in the two countries. Joining the panel will be Dimitri Konstantopoulos, head of hotels & leisure sector group corporate & investment banking at Eurobank Ergasias S.A. Konstantopoulos is responsible for a hotel loan portfolio of €1.3 billion, new business development, restructuring of existing exposures, M&A transactions and investment banking operations in the sector.
IHIF spoke to Konstantopoulos to get his current takes on the region and what investors should look forward to in 2016 and beyond. As you'll note from his answers, security, in his opinion, remains the biggest threat to the Mediterranean region.
1) IHIF: What would you say are the three major trends affecting hospitality in the Mediterranean right now?
Konstantopoulos: Security, refugee problems, hotel non-performing-loan (NPL) management in Greece and Italy.
2) IHIF: What makes Greece an attractive market for investment in hospitality real estate?
Konstantopoulos: Security, competitive pricing, it's a traditional destination.
3) IHIF: What are the main challenges facing the hospitality investment sector in Greece?
Konstantopoulos: Security, the refugee problem, NPL management and heavy taxation as compared to other competitor countries.
4) IHIF: How is your company responding to these challenges ?
Konstantopoulos: Eurobank is one of the four major banks in Greece, it is very active in NPL management as compared to other Greek banks and can provide for new money to healthy investors or existing healthy hoteliers. We believe that the refugee problem is only affecting four islands in the Aegean Sea—Kos, Samos, Xios and Mytilini—while the rest of Greek destinations will not be affected.
5) IHIF: How has the Brexit impacted investment in Mediterranean real estate?
Konstantopoulos: Other than the potential depreciation of the British Pound, making all euro destinations more expensive for Britons. I do not see any other repercussions in the near future.
6) IHIF: Which companies/brands do you think are being particularly dynamic/innovative in the Mediterranean?
Konstantopoulos: I can only refer to Greece, where Starwood, Marriott and Hilton have been very active, while Wyndham is currently entering the market through a franchise agreement with a 260-room hotel in Athens.
For an in-depth look at MR&H's program, speaker list and registration information, click HERE.