The popular image of Greek hospitality has been that of Spain’s cheaper neighbor, but that looks set to change. The Greek hoteliers' association recently reported that luxury hotels in Mykonos were among the most expensive in the Mediterranean and the country is set to welcome more high-end hotels to its portfolio. 

According to the Institute of the Greek Tourism Confederation, last year's tourism activity generated a €1.45-billion increase in revenues to €1.56 billion, with the direct contribution of tourism to gross domestic product of 10.3 percent, against the sector’s direct and indirect contribution to the economy, which was estimated between 22.6 percent and 27.3 percent.

The study estimated that, for every euro of tourism activity, the country’s GDP increased €2.20 to €2.65. For the three island regions of Crete, South Aegean and the Ionian Islands, tourism directly contributed 47.4 percent of GDP.

According to the most recent data by SETE Intelligence, the research arm for the Greek Tourism Confederation, 11.5 million arrivals were recorded during the January to June period, along with another 3.83 million in July 2018, an increase of 15.1 percent and 9.8 percent on the year, respectively.

The organization used data from Trivago to report that the average rate for luxury hotels on Mykonos island €705 during July, a €19 drop from the previous year. Nevertheless, the same figure was still higher than in Ibiza, Sardinia and Greek rival Santorini, which recorded rates of €618, €612 and €589, respectively. Santorini, in fact, posted a €3 increase in the rates for high-end accommodation.

There were opportunities for investors looking to enter the market as the country continued to work out its nonperforming loans. The first wave of hotel sales started last December, driven by Greek banks and some private suppliers who had issued loans the hotel proprietors are unable to service; this month a further 100 hotels are expected to come to auction, including resort and spa hotels. 

According to bank sources and SETE, nonperforming hotel loans added up to some €3 billion, out of a total €8 billion in loans to the Greek tourism sector in general. 

New Developments

Opportunity in Greece goes beyond existing room stock. According to a study by Pepper Hellas, the number of luxury units in the country accounted for 5 percent of Greece’s total room stock, which has itself expanded by 21.2 percent over the past 20 years. 

There are a number of luxury developments underway, including the Four Seasons Astir Palace Hotel Athens, which is due to open in March 2019. 

The end of August saw the announcement of a new luxury resort to be built in Kavala. The Elefthere Seaside Luxury Thermal Spa Resort will include a luxury hotel with 155 rooms and 13 villas.

Germany-based Design Hotels recently added four new Greek properties to its portfolio: Perianth Hotel in Athens, the Olea All Suite Hotel & Spa in Zakynthos and two hotels in Santorini; the Istoria and the Vora hotels. 

And Dolphin Capital Partners, an owner and developer of integrated resorts like Amanzoe in Greece, and Kerzner International chose Greece for the location of their first hotel under the One & Only brand, the One & Only Kea Island. 

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.