Greece is expecting a record year in terms of visitor numbers, but falling trip expenditure has sparked demands for room stock to be upgraded.
To that end, Germany's TUI Group has acquired Stella Polaris Creta, a subsidiary of the Greek Karatzis firm and owner of land on the southern coast of Ierapetra in Crete, to open a the country's third Robinson Club. “We are aiming to deliver substantial growth in our own hotel brands TUI Blue, RIU, Robinson and Magic Life in the next few years,” said Sebastian Ebel, TUI Group executive board member in charge of hotels & resorts. “The expansion of our portfolio in the trending destination Greece marks a further step towards that goal.”
“In the framework of the close cooperation with TUI Group established over the past two years, we have engaged in a series of talks with group representatives in the last few months to discuss new investment opportunities,” said Greek tourism minister Elena Kountoura. “We are consistently delivering our growth strategy and have generated record results in tourism for the third consecutive year.
“We have also created the conditions to sustain high growth rates over the next few years and are encouraging new investments. We regard that move as a vote of confidence in our economy.”
TUI’s purchase is likely to be repeated. “The asset-heavy strategy that we are seeing with TUI comes with the changes to distribution in hotels,” Joe Stather, associate director, investment advisory, CBRE Hotels, told HOTEL MANAGEMENT. “A lot of operators have now realized that people can get to the properties independently and they are not relying on the airlift of the tour operators. They can sell directly to the consumer and get better margins. The big operators are now struggling for these beach-front locations and if they want to maintain that offering, they need to buy them.”
Greece is leaning on tourism to support the stabilization and gradual recovery of its gross domestic product. SETE, the Greek Tourism Confederation, said that between 2010 and 2016, inbound tourism showed a 38-percent increase in revenues, with more than 90-percent of total tourism activity now coming from abroad “in a very competitive international environment.”
For 2017, SETE has forecast 26 million arrivals, up from 24.8 million in 2016. Travel receipts are also expected to increase by around €1 billion to reach close to €14.5 billion. But as arrivals build, the group reported that, between January and May this year, the average expenditure per trip fell by 1.5 percent to €430.
To help remedy this, the National Bank of Greece released a study in August calling for a “crucial” upgrade to the country’s hotels. “The gap between Greek tourism sector and its main competitors could be bridged through…a strategic plan towards the creation of a high-value-added tourism product. These reforms could increase tourism receipts in Greece by 40 percent.”
The bank also called for the tourist season in Greece to be extended, with more than 75 percent of overnight stays being in the period June to September, against, the bank said, 60 percent for competitor destinations.
The study said that the additional investment required to implement the strategy would be €6 billion in hotels and €16 billion in other tourism infrastructure. “The infrastructures could be completed within five years if annual tourism investment returns to roughly its pre-crisis level,” the study claimed.
With operators making the move into ownership, Greece could see its much-needed investment as the search for premium resorts continues.
Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.