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Tourists in Greece are passers-by and hotels the largest debtors of banks

29 October 2015 / 19:10:30  GRReporter
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Tourists may choose Greece as a destination for their holidays, but the data on how many days they stay in the country largely explains why revenues are remaining low although the number of tourist arrivals is increasing.

Thus, according to the latest survey by the Institute for Tourism Studies and Forecasts, 49% of those tourists who preferred a Greek destination last year stayed in the country for a short while, namely only up to 3 nights. Among the main conclusions of the study is the recognition that the average duration of stay of tourists from abroad is steadily decreasing. This fact has a very negative effect on tourist spending during the stay and, therefore, on total revenue from tourism. This group includes tourists who come to the country for a few days or mainly tourists who continue their holiday in another country, choosing a combined package or simply deciding to spend the rest of their vacation in neighbouring Turkey or the Adriatic Sea coast.

Indicative is the fact that while in 2014 tourist arrivals reported growth of around 23%, the corresponding increase in spending reached only 11.1%. According to the annual survey on the borders of Greece carried out by the Bank of Greece, the average spending per trip of foreign tourists decreased by 8.7% in 2014 compared with 2013 and by 10.5% compared with 2012, amounting to 551.8 euro. This decline resulted in a smaller increase in tourism revenues compared with the increase in the number of incoming tourists and the trend continued this year too.

As shown by the latest figures for this year's season (from January to August), 690 million euro growth, or 7.1%, of tourism revenues was actually registered but the increase was mainly due to the 10.6% increase in the number of tourist arrivals, as the average spending per trip fell by 3%. Therefore, while another record is expected this year in terms of tourist arrivals that were 26 million, the estimated revenue will amount to 14.5 billion euro by the end of the year, plus another billion if including the revenue from domestic tourism.

The survey data also show that seasonality (along with revenue) continues to be one of the major problems of Greek tourism - the largest movement of tourists is still observed in the period from May to September. Based on the latest Eurostat data the study states that 63.72% of tourists arrived in various places of accommodation in Greece in the period from June to September. In other European countries this figure is quite different. The available data on Greece's competitors show that in Italy it is 49.44%, in Cyprus 48.8%, in Portugal 48.38% and in Spain the figure is 46.91%. This means that seasonality is more pronounced in Greece than in other countries.

Simultaneously, many hotels are on the top of banks’ list of bad loans, which, despite the increase in tourist arrivals over the past three years, continue to report serious losses. Significantly, as hotel market experts believe, the existing data on all 500 major hotel complexes in Greece indicate that currently only 50 are operating at a profit.

Bad loans management on the part of Greek hotels is already in the spotlight of banking institutions that are exploring different scenarios to deal with the problematic companies while anticipating the final decisions on the settlement pattern of these loans. The problem is growing continuously, as according to the official data of the Bank of Greece at the end of July, the loans of tourist companies totalled 7.5 billion euro. It is estimated that 2.5 billion euro of them were in the red whereas the repayment of loans amounting to 3 billion euro was delayed by about 90 days.

Simultaneously, for some time foreign investors and funds have shown interest in a large number of Greek hotels that are experiencing serious difficulties in servicing their loan obligations. It seems that they are anticipating the recapitalisation of Greek banks to be completed in order to start implementing their plans for the acquisition of hotels. Businessmen from the tourism industry reasonably believe that next year will bring major changes with regard to the over-indebted Greek hotels whereas banks are examining the scenarios to limit their number. This forecast is supported by the fact that the upward trend reported by Greek tourism this year, despite the difficulties, is the main reason why these funds are showing such interest, namely because they see opportunities for growth in the industry.

Tags: TourismReceiptsNightsInstitute for Tourism Studies and Forecasts
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