Athens.- Greek hoteliers are sounding the warning bell for the viability of their enterprises and banking on budget air carriers, shrewd diplomacy, a reduction in the value-added tax rate and and a dose of good luck for a recovery in revenues for 2011.
“There will be a steep increase in loss-making hotel enterprises in 2010 as compared to to 2009,” says Giorgos Tsakiris, president of the Hellenic Chamber of Hotels (XEE).
According to a study presented at the 26th Philoxenia International Tourism Exhibition in Thessaloniki on Thursday, an estimated 50 percent of Greek hotels offered lower rates this year than in 2009, resulting in a 7-8 percent reduction in overall revenues.
Tsakiris says the reductions were unavoidable and were essential to stem the loss of visitors to other destinations.
“The sole marketing tool we had was hotel prices… but next year we must have more at our disposal.”
Tourism operators were encouraged by the 2 percent rise in the number of visitors for the August-September period, after the steep fall earlier in the year – partly the result of adverse publicity due to riots and strikes in the spring.
“We managed to overturn this very negative image only with large discounts,” Tsakiris points out.
Arguing for a reduction in VAT on tourism services, hoteliers cite Bank of Greece Governor Giorgos Provopoulos, who reported that a 1 percent increase in the price of the tourism product has been found to cause a 3 percent drop in the number of visitors. It has been emphasized that in the Dodecanese, where VAT rates are lower, state revenues increased – in contrast to the Ionian Islands, where VAT is higher. Foreign tour operators are currently pressing Greek hoteliers for a freeze in prices for the 2011 season.
At the same time, the strong interest shown by low-cost airlines is a major source of optimism for both the industry and the government. Entrepreneurs are urging the government to pursue “high diplomacy” so as to tap this interest without upsetting relations with the powerful foreign tour operators or encroaching on the turf of the two main Greek carriers upon which they also rely. Already, more than 10 foreign budget airlines are reported to have shown interest in starting or adding flights to Greece, including Ryanair, easyJet, Transavia, Air Berlin, TUIfly, Wizz Air, BelleAir, Condor and Germanwings. The sharply stronger interest is attributed to the budget carriers’ realization that there is a broad untapped capacity that could accommodate large numbers of tourists, especially in the off-season.
Ryanair is reportedly driving a hard bargain with Greek authorities, arguing that it could bring 1.5 million tourists to Greece next year and promising to start flights to Rhodes and Kos on March 17. An industry leader has noted that, if Greece secured a 75-80 percent capacity utilization for its 750,000 beds for six months, this would add 4 million visitors to the current number.
“Greece is now a competitive destination in relation to Turkey and other European destinations,” says Tsakiris. “Barring events that could turn people away, next year is bound to be better than 2010.”