How Greece became a standout destination—and why investors are taking notice

The Hilton Athens has been sold
Alpha Bank sold the Hilton Athens last year for €138 million.

Travel company Thomas Cook has described Greece as the “standout” destination this year, driving demand while “full” Spain is flattening.

The country has seen an increase in transactions in the first quarter as investors hope for reforms in the country’s laws to allow the sale of nonperforming loans and drive further deals.

“Trading for the summer season was going well,” Peter Fankhauser, Thomas Cook’s CEO, told analysts. “The standout destination this year is Greece, where bookings have grown by more than 30 percent. In addition, more and more customers are choosing long-haul and smaller European destinations, such as Cyprus and Bulgaria. Egypt and Turkey have also an excellent run in recent weeks. The big, big growth is in Greece this summer and that is driving most of the growth in the group.” 

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Greece, Fankhauser added, had seen strong close to the last summer season, as the country’s recovery gains momentum.

Greece is currently taking over from Spain in terms of growth. “Spain is flat because you have a certain number of beds,” Fankhauser said. “And if the beds are full, then Spain is full and that is what it is. So we don't expect growth in Spain.”

Investor Attraction

Drawn by the recovery are investors. According to HVS, institutional investors were net buyers in 2016, and the most notable dispositions in this category came from administrators and banks, including Alpha Bank’s sale of the Hilton Athens to Dogus Holdings, together with TEMES, for €138 million and the Astir Palace Resort being sold to Arab-Turkish fund AGC Private Equity Partners for €444 million. The Astir Palace Resort includes two hotels: Arion, a Luxury Collection Resort & Spa, and The Westin Athens.

Sources close to the deal pointed to time taken to close it, with the exchange having taken place in 2013. The process was delayed on a number of fronts, one of which was said to be the state ownership element of the property.

The same source pointed to a mismatch in expectations between buyers and sellers in the market in general, with the latter having high price expectations, while foreign investors were looking to compensate for a higher risk with higher yields, typically around 10 percent. 

Despite the caution, the market is moving. The beginning of this year saw Greek lender Eurobank confirm that a strategic investor had emerged to take over the management of the Capsis Hotel in Thessaloniki, for a reported €30 million, amid speculation that 26 bidders had expressed an interest in the site. 

Brand Notice

The global operators have also continued to show their faith in Greece. At the end of March, AccorHotels announced that it would open its first hotel under the Ibis Styles brand in Heraklion, Crete.

Renzo Iorio, COO Accor Services Italy, Greece, Israel & Malta, said that the agreement, signed with Polis H.M., testified to AccorHotels’ focus on the region. “We do think that the value that a global leader like AccorHotels can be a powerful axe to support Greek hospitality entrepreneurs, not only in resort activity but in urban hotels too.”

This year may see legislative changes that will allow distressed properties to come to the market and drive further transactions in the sector. Philip Camble, director, Whitebridge Hospitality, said that the country would benefit from “a more transparent business and regulatory environment.” 

With travelers overflowing from Spain into Greece, investor appetite may drive enthusiasm for reform. 

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

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