In Athens next month, Athinagoras Konstantinidis, director at Atrium Hotels, will be part of the Mediterranean Resort & Hotel Real Estate Forum, which is sponsored by Questex, parent company of Hotel Management magazine.
In addition to being a director at the luxury resort group, Athinagoras also is VP of the Rhodes Hotel Association. Athinagoras will be speaking on the the Regional Outlook: Island Markets panel, exploring investment in islands where infrastructure, incentive schemes and land availability offer opportunities. The panel will discuss development in Baleares, Cyprus, Malta, Crete, Rhodes, Hvar and Sicily, among others.
Ahead of the conference, he shared his insights on effective customer service, expansion plans and the hurdles of doing business in Greece.
1. You currently have three luxury resorts based in Rhodes, Greece. Do you have ambitions to expand and if so, which markets are you considering?
We are examining possible expansion opportunities in several Greek destinations like Athens, Crete and Kos. For example, last year we participated in an auction for the acquisition of three hotels in Kos.
Currently, we are focusing on land purchases in various locations in Rhodes and Crete, have already acquired a critical mass and plan to start development in the next years.
2. In your experience, what do you believe are the main issues investors consider when assessing resort development?
The main question you should always ask when considering resort development is: What are you adding to the market supply? Because in popular tourism destinations, where hotel concentration is high and attractive land availability is limited, one has to be confident they’re filling a gap in the market and differentiate notably from competing products.
Resort development is a capital-intensive endeavor, and although land purchase is around 10 percent of the total investment, the location of the investment plays a disproportionately larger part in the value of the investment. The choice of location is therefore of critical importance, as it should fit in the overall vision and the concept of the project.
Also, one has to carefully examine the factors affecting the legal certainty of their investment. Because Greece [has] yet to legislate a Tourism Spatial Planning and Land Use framework, coastline-use regulation, a thorough countrywide forest land, archaeological land mapping and cadaster are still pending (to mention a few), one has to carefully consult with their legal and technical advisors when assessing investment [for] legal certainty.
Due to these risks, combined with the substantial bureaucratic hurdles that have existed in Greece for years (e.g. environmental), experience and knowledge in these matters is vital in evaluating resort development. Due to the newly elected Greek government the business community is very optimistic regarding the resolution of these matters, and right now the future for investments in Greece is brighter than ever.
3. What are the specific opportunities in an island market?
The Greek islands in particular have a great brand internationally, especially due to destinations like Santorini, Mykonos and the Aegean Islands. This definitely adds a lot to the value of a project, as people visit the Greek islands to explore a distinctive bundle of experiences.
In the Greek islands, natural beauty is complemented with culture, history, tradition and Greek hospitality. Interestingly, numerous studies presented by [nonprofit tourism organization] INSETE have indicated that the aforementioned natural and cultural wealth of Greece is far from being fully utilized when considering land availability, coastline and other land use. Furthermore, the biggest Greek islands have the advantage of having developed fully fledged tourism ecosystems, with a widespread presence of hotels, restaurants, tour operators, cruises, tourism schools and an overarching tourism conscience in the local communities.
These, along with the efforts of the Ministry of Tourism and SETE (Greek Tourism Confederation) to enhance tourism competitiveness, and the sophisticated marketing approach by Marketing Greece, are all fostering a dynamic, cooperative and healthy investment climate, critical elements for a successful investment horizon.
4. And conversely, the challenges of an island market and how to overcome them?
Infrastructure, transportation, flight connections and general access are often major challenges of an island market. Although the established Greek destinations normally possess the above, there is still ample room for improvement, especially in the smaller islands. The implementation of a strategic 10-year tourism growth plan by the Greek government in collaboration with private sector tourism associations is about to address these matters, alongside competitiveness, innovation and sustainability.
Another challenge in an island market is seasonality, and the well-known issues accompanied with it. Small labor markets and scarcity in talent for senior positions due to the intensity of demand for staff, often means that the cost of human capital is high due to the necessary expenditures in staff accommodation and off-shore recruitment. Additionally, development cost can be pricier (20 percent to 25 percent higher) compared with the mainland due to remoteness, the shortage of organized large construction companies, expensive materials and supplies, etc.
Lastly, regarding land availability, in many cases attractive locations have small-size land ownerships which require effort, persistence and experience to complete large areas that are ready for development.
5. How do you maintain [your focus on customer service] with all the other operational and market demands on the business?
Being successful in such a competitive industry requires significant product differentiation, as luxury hotel resorts operate in a monopolistic competition market structure.
Aside from striving for hotel operational excellence and optimum market strategy, Atrium Hotels has a unique customer-centric approach, originating from our obsession with employee satisfaction...You may visit the best hotel in the world, with outstanding facilities and flawless service, but if the staff are cold and robotic the hotel is soulless.
6. What is the importance and relevance of attending events like MR&H?
I’m confident that MR&H is a fantastic platform for knowledge sharing and networking. The experience and know-how of the attendants makes the whole event intellectually stimulating and highly educative, fostering discourse and debate about real issues faced by the hotel and real estate community.
Athinagoras Konstantinidis will be speaking on the “Regional Outlook: Island Markets” panel, which takes place on Wednesday, October 30, from 2:20 p.m. - 3:15 p.m. The Forum runs from October 29 to 31 at the Hilton Athens. Register here.