H O T E L S

H O T E L S

Performance of Greek Tourism and developments in the basic figures

of the Greek Hotel Market 2011 - 2012

201324 Stadiou str, 105 64 Athens

Τ. +30 213 2169900 • F. +30 210 3225 449 • www.grhotels.gr • info@grhotels.gr

2011

CONTRIBUTORS 1. Dr Kyriakos Emm. Rerres, Scientific Director of ITEP. 2. Dr Agni Christidou, Director Hellenic Chamber of Hotels 3. Dr Antonis Spinakis, General Manager QUANTOS S.A. 4. Sophia Panousi, Researcher. 5. Dionysia-Chrysavgi Aggelopoulou, Research Assistant.

EDITING Dr Gerassimos Zacharatos Emeritus Professor of Tourism and Economic Management, University of Patras General Director of ITEP

RESEARCH INSTITUTE FOR TOURISM (ITEP) 24, Stadiou Street 105 64 Athens Tel. 213 2169967, 213 2169968 Fax. 210 3312033 Email: itep@grhotels.gr http://www.itep.gr

Contents

Recent developments in the global tourism market. ........................................................ 5

Review of 2012. ................................................................................................................................................................... 5

Prospects for 2013. ............................................................................................................................................................ 8

Developments in competitor countries. ................................................................................................................... 8

Overview of Greek tourism ...................................................................................................... 10

The evolution of Greek tourism figures during 2012. ..................................................................................... 10

Purpose of visit to Greece............................................................................................................................................. 10

Foreign arrivals by country of origin ..................................................................................................................... 12

Travel expenditure and average length of stay. ............................................................................................... 14

Tourism seasonality in Greece. ................................................................................................................................. 16

Overnight stays of tourists in Greece ...................................................................................................................... 17

Expenditure per visit and day of stay in Greece ................................................................................................ 20

Competitiveness of Greek tourism ........................................................................................................................... 22

Developments in the institutional environment of Greek tourism ........................................................... 24

Νational collective agreement for payment terms of the employed in hotel enterprises all over the country. .............................................................................................................................................................. 27

Annual survey of ITEP for the hotel market. ..................................................................... 28

Identification of research. ........................................................................................................................................... 28

Changes of hotel capacity. ........................................................................................................................................... 28

Risk of disinvestment in Greek tourism. ................................................................................................................ 31

Greek hotels' revenues in 2011. ................................................................................................................................ 35

Greek hotel occupancy rates in 2012. .................................................................................................................... 37

Prices of the Greek hotel product. ............................................................................................................................ 41

Performance of hotels hosting mostly foreign clients .................................................................................... 46

Employment ....................................................................................................................................................................... 47

Employment in Greek hotels. ..................................................................................................................................... 50

Employment rate of women and foreign workers in Greek hotels. .......................................................... 52

Average employment per hotel unit ....................................................................................................................... 57

Summary. ............................................................................................................................................................................ 60

4 54 5

4 54 5

4

Recent developments in the global tourism market.

Review of 2012. It is generally accepted today that tourism is a key factor for the economic development of a country. A strong tourism sector directly contributes to the national income of the country, combats unemployment and improves the balance of payments, while it is also substantial the indirect contribution to the economy through its multiplier effects. At the same time, tourism is perceived as the connecting link between the different countries, by contributing to the development of transnational exchanges, trade promotion and to the strengthening of world peace. Finally, the development of hard and soft infrastructure improves the overall competitiveness of countries.

According to the World Tourism Organization data, in 2012 total cross-border movements for the first time surpassed the threshold of 1 billion arrivals, growing by 3.8% compared to 2011. The recovery of world tourism has been spectacular and beyond all expectations during the fourth quarter of 2012. On a monthly basis, the best performance in 2012 occurred in March (6%) and the lowest in July (1%). Despite the current economic instability, the increase is expected to continue in 2013 with a slightly lower rate (3-4%).

Table 1 International Tourist Arrivals by Region

REGIONS

2000 2005 2010 2011 2012 2011 10/09 11/10 12/11

(millions) (Share

%) (% change)

WORLD 678 805 952 996 1.035 100 6,5 4,7 3,8

Developed Economies 422 461 507 531 550 53,1 5,2 4,6 3,6

Emerging Economies 256 344 445 466 485 46,9 8,0 4,8 4,1

Europe 389,4 447,0 487,6 517,5 534,8 51,7 3,0 6,1 3,3

EU-27 328,1 358,1 372,0 390,9 400,1 38,7 2,6 5,1 2,3

North Europe 47,8 62,4 63,8 64,8 65,1 6,3 1,8 1,6 0,4

West Europe 139,7 141,7 154,3 161,0 165,8 16,0 3,9 4,3 3,0

Central & East Europe 69,3 90,4 95,9 105,3 113,7 11,0 3,4 9,8 8,0

South & Med. Europe 132,6 152,5 173,5 186,4 190,2 18,4 2,4 7,4 2,0

Asia & Pacific 110,1 153,6 205,1 218,1 232,9 22,5 13,2 6,4 6,8

Oceania 9,6 11,0 11,6 11,7 12,1 1,2 6,1 0,9 4,0

South Asia 6,1 8,1 12,0 13,4 14,0 1,4 19,5 12,0 4,4

America 128,2 133,3 150,3 156,3 162,1 15,7 6,4 4,0 3,7

North America 91,5 89,9 99,3 102,1 105,6 10,2 6,7 2,8 3,4

Caribbean 17,1 18,8 19,5 20,1 20,9 2,0 1,6 3,0 4,0

Africa 26,2 34,8 49,8 49,2 52,3 5,1 8,5 -1,1 6,3

Middle East 24,1 36,3 59,2 55,3 52,6 5,1 13,5 -6,7 -4,9

Source: UNWTO, Tourism Barometer Vol. 11, January 2013.

6 76 75

At regional level, all regions of the world recorded an increase in international arrivals, with the exception of the Middle East. The areas with the best performance were Asia-Pacific and Africa (6.8% and 6.3% respectively), followed by the Americas (3.7%) and Europe (3.3%). The arrivals in the Middle East fell by 5%, due to political tensions that still plague many countries in the region.

In Southern Europe there is an increase in arrivals by 2%, while in Greece arrivals fell by 6% compared to 2011.

Chart1

International Tourist Arrivals 2012/2011 (%change)

Source: UNWTO, Tourism Barometer Vol.11, January 2013.

Tourism receipts exceeded the psychological barrier of one trillion U.S. dollars in 2011, growing by 12.3% in comparison with 2010. 83% of all destinations reporting relative data have managed to increase their tourism receipts. Best performance was achieved by the countries of South-East Asia with an average increase of 21.6%.

In European destinations the increase in tourism receipts ranged at higher levels than the average (13.5%), while in Greece the increase was more limited and amounted to 9.3%.

It is worth noting that the positive progress of international tourist arrivals and receipts confirms the resilience of tourism activity in periods of prolonged economic uncertainty.

With regard to tourism expenditure, China was once again by far the faster growing spender for trips abroad with annual growth of 42% compared to 2011, followed by Russia which increased its expenditure by 31%. In monetary terms, the U.S. market expanded by 7%, the UK by 5% and Germany by 3%. Instead, the markets of the countries of Southern Europe applying austerity programs shrank, in order to improve their fiscal imbalances. In France, travel expenditure fell by 7%, in Italy by 2%, in Spain by 4% and in Greece by 18.5%.

3,8%

-5,5%

2,0%

3,3%

6,8%

-4,9%

-8,0%

-6,0%

-4,0%

-2,0%

0,0%

2,0%

4,0%

6,0%

8,0%

World Greece Medit. Europe

Europe Asia-Pacific Middle East

6 76 76

Table 2

Tourism Receipts by Region

REGIONS 2000 2005 2009 2010 2011 2010/09 2011/10

(billions $) % change

WORLD 475 679 854 928 1.042 8,7 12,3

Europe 231,6 349,4 411,5 409,5 464,6 -0,5 13,5

North Europe 36,1 53,6 58,6 61,7 69,8 5,3 13,1

West Europe 83,7 123,2 144,2 142,4 161,6 -1,2 13,5

Central & East Europe 20,3 32,8 47,4 48,1 56,3 1,5 17,0

South & Med. Europe 91,5 139,7 161,3 157,4 176,9 -2,4 12,4

Asia & Pacific 85,3 135,8 203,2 255,6 299,7 25,8 17,3

Oceania 14,3 25,9 33,6 38,5 41,7 14,6 8,3

South Asia 4,8 9,9 14,9 19,9 24,2 33,6 21,6

America 131,3 145,5 165,9 180,7 198,3 8,9 9,7

North America 102,0 107,7 119,2 131,2 144,7 10,1 10,3

Caribbean 17,2 20,9 22,4 22,8 23,5 1,8 3,1

Africa 10,3 22,0 28,6 30,5 32,7 6,6 7,2

Middle East 16,8 26,6 42,0 52,2 46,6 24,3 -10,7 Source: UNWTO, Tourism Barometer Vol.11, January 2013.

Chart 2

International Tourism Expenditure 2012/11 (change %)

Source: UNWTO, Tourism Barometer Vol.11, January 2013.

-18,5%

-7,0%

-4,0%

-2,0%

3,0%

5,0%

7,0%

31,0%

42,0%

-30,0% -20,0% -10,0% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0%

Greece

France

Spain

Italy

Germany

U. K.

USA

Russia

China

8 98 97

Prospects for 2013. For 2013, the WTO estimates that the increase in international arrivals will range between 3 and 4%.

Table 3 Expected Change in International Arrivals for

2013 World +3% to+4% Europe +2% to+3% Asia and Pacific +5% to+6% America +3% to+4% Africa +4% to+6% Middle East +0% to +5% Source: UNWTO, Tourism Barometer Vol.11, January 2013.

For another year the Asia-Pacific region and the countries of sub-Saharan Africa will be the leaders of the ongoing tourism activity development. Arrivals at those regions are expected to increase by 6%. The U.S. is expected to improve its performance by 3 to 4% and Europe will follow with lower rates.

The course of the tourism market in the Middle East will depend largely on the political developments in the region. If the war continues in Syria and turmoil in countries like Egypt and Tunisia, tourism will suffer severely. Such a development would benefit the tourism industry of other Mediterranean destinations in southern European countries.

Developments in competitor countries. As it has been mentioned earlier, destinations in the countries of South and South-East Europe, except for Greece, attracted a larger number of tourists in 2012.

As it is shown in Table 4, all the main competing countries achieved growth in arrivals in 2012. In Croatia foreign arrivals grew by 5.1%, in Portugal by 5%, in Cyprus by 3% and in Turkey by 1.1%. In contrast, Greece recorded a 5.5% decrease.

Table 4 Evolution of foreign tourism in Greece and the competitor countries

% change

Country Arrivals Tourism Receipts

Period 2010/09 2011/10 2012/11 Period 2010/09 2011/10 2012/11

GREECE Jan.- Dec. 0.6 9.5 -5.5 Jan.- Dec. -7.6 9.3 -4.6

Italy Jan.- Dec. 1.0 5.2 0.8 Jan.- Dec. 1.4 5.6 3.4

Spain Jan.- Dec. 0.9 7.6 1.8 Jan.- Dec. 3.9 8.6 0.7

Portugal (1) Jan.- Dec. 1.7 10.1 5.0 Jan.- Dec. 10.0 7.2 5.6

Croatia (1) Jan.- Dec. 3.6 7.4 5.1 Jan.- Dec. -2.1 5.9 3.6*

Cyprus Jan.- Dec. 1.5 10.1 3.0 Jan.- Dec. 3.8 12.9 6.1

Turkey Jan.- Dec. 5.7 9.9 1.1 Jan.- Dec. -2.0 10.6 1.8

(1) It refers to foreign tourist overnights in hotels. * It refers to Jan.-Sept. Source: National Statistical Authorities and Central Banks of the countries.

8 98 98

In terms of tourism receipts, it stands out the positive performance of Portugal (5.7%).Italy has achieved a higher rate of increase in revenues compared to arrivals, suggesting that it managed to sell its product at better prices. While in Spain it seems that prices lagged slightly behind over 2011.

Greece has received 4.6% less revenue in 2012 than the previous year.

Chart 3

Key Tourism Figures 20012/2011 (Change %) Foreign Tourist Arrivals (%) Tourism Receipts (%)

(Note) Tourism Receipts of Croatia refer to 9 months of 2012. Source: National Statistical Authorities and Central Banks of the countries.

-5,5

0,7

1,8

4,0

5,1

3,0

1,1

-8

-6

-4

-2

0

2

4

6

-4,6

3,4

0,7

5,6

3,6

6,1

1,8

-6

-4

-2

0

2

4

6

8

10 1110 119

Overview of Greek tourism

The evolution of Greek tourism figures during 2012. Inbound tourism in Greece decreased in 2012 by -5.5% compared to 2011. Greater was the reduction in the arrivals from the EU-27 countries (-8.5%), due largely to the decline of tourists from France (-15%) and Germany (-5.9%). Regarding other countries, arrivals from Russia grew by 18.4%, while arrivals from USA fell by 23%.

Table 5

Foreign Tourist Arrivals at Selected Airports January-December

Airports 2009 2010 2011 2012 10/09 11/10 12/11

Thessalonica* 1.189.444 1.146.356 1.261.885 1.319.018 -3,6 10,1 4,5

Kavala 83.942 81.461 79.474 67.925 -3,0 -2,4 -14,5

(N. Greece) 1.273.386 1.227.817 1.341.359 1.386.943 -3,6 9,2 3,4

Irakleio* 1.954.611 1.934.765 2.173.276 2.114.901 -1,0 12,3 -2,7

Chania 592.456 592.992 656.985 717.598 0,1 10,8 9,2

(Crete) 2.547.067 2.527.757 2.830.261 2.832.499 -0,8 12,0 0,1

Rhodes 1.273.006 1.374.926 1.647.707 1.608.064 8,0 19,8 -2,4

Kos 627.857 697.324 851.930 803.188 11,1 22,2 -5,7

(Dodecanese) 1.900.863 2.072.250 2.499.637 2.411.252 9,0 20,6 -3,5

Araxos 41.418 39.636 38.015 66.107 -4,3 -4,1 73,9

Kalamata 30.446 32.874 30.967 33.407 8,0 -5,8 7,9

(Peloponnese) 71.864 72.510 68.982 99.514 0,9 -4,9 44,3

Corfu 744.228 729.765 789.760 868.787 -1,9 8,2 10,0

Kefalonia 143.438 148.811 148.768 168.357 3,7 0,0 13,2

Zante 430.398 420.241 448.576 424.165 -2,4 6,7 -5,4

Aktio 147.574 143.950 143.965 142.465 -2,5 0,0 -1,0

(Ionian Islands) 1.465.638 1.442.767 1.531.069 1.603.774 -1,6 6,1 4,7

Mykonos 96.745 111.289 131.003 139.963 15,0 17,7 6,8

Santorini 162.414 181.352 200.576 200.165 11,7 10,6 -0,2

(Cyclades) 259.159 292.641 331.579 340.128 12,9 13,3 2,6

Skiathos 108.829 106.833 113.006 117.912 -1,8 5,8 4,3

Mytilene 71.452 62.010 62.889 49.442 -13,2 1,4 -21,4

Chios 11.967 12.079 9.971 8.420 0,9 -17,5 -15,6

Lemnos 6.563 5.575 7.473 7.620 -15,1 34,0 2,0

Samos 116.203 108.933 118.219 108.157 -6,3 8,5 -8,5

(N. Aegean) 315.014 295.430 311.558 291.551 -6,2 5,5 -6,4

TOTAL 7.832.991 7.931.172 8.914.445 8.965.661 1,3 12,4 0,6

ATHENS 3.140.811 2.996.595 2.871.524 2.453.106 -4,6 -4,2 -14,6

GRAND TOTAL 10.973.802 10.927.767 11.785.969 11.418.767 -0,4 7,9 -3,1

* Total Arrivals. Source: Civil Aviation Authority, Athens International Airport “Eleftherios Venizelos”, Regional Airports.

According to data published by airports and by the Civil Aviation Authority (CAA), during 2012 arrivals by air of foreign tourists recorded a decrease of 3.1% compared to 2011, which

10 1110 1110

was considered a year of recovery for the Greek tourism market, evidencing an increase in air-transport arrivals by 8% (Table 5).

Several regions of the country saw a rise in arrivals by air. The highest percentage increase was recorded in the airports of the Peloponnese (44.3%) and particularly in that of Araxos. However, in absolute terms, this increase corresponds to 30 000 additional tourists, since the bulk of tourist flow arrives in Peloponnese by car or by boat via the Adriatic Sea.

The winners of 2012 include destinations of Northern Greece due to increased traffic from the markets of Russia, Turkey and Middle East. Positive was also the outcome for destinations of the Ionian Islands because of the recovery of the UK market.

Crete, though, recorded stagnation. Foreign arrivals by air fell (-3.5%) in the islands of South Aegean as well as in the other islands of the Archipelago (-6.4%) due to a significant slump in the German, Dutch and Swiss market.

However, in regional airports there was a marginal increase in arrivals by 0.6%. The negative sign of arrivals throughout the country is mainly due to the Athens International Airport, where arrivals fell by 14.6%.

Athens for another year experienced the negative consequences of the actual policy situation and the degradation of its historic center. The resulting political conflicts and the ongoing protest demonstrations turned the city center into a non friendly place for residents and tourists. The concerted efforts of the State during 2012 to restore accessibility to the city center have brought positive results, but still there are problems that must be addressed by all stakeholders in the government and the city. If the public and private partnership scheme for the recreation of the city center succeeds, Athens has all the natural and man-made resources that could make it the most attractive tourist destination in the Eastern Mediterranean.

The less favorable course of arrivals did not leave untouched tourism receipts that fell by 4.6% in 2012, according to data from the Bank of Greece. The net receipts from travel services, albeit reduced, contributed 55.7% in total net receipts from abroad and thus they offset the 41.9% of the deficit of the trade account of the country.

Purpose of visit to Greece Business travel to our country continued to decline during 2012. The second quarter of 2012 business travel fell by 19.2% compared to the same quarter of 2011.

12 1312 1311

Chart 4

Travel Receipts by Purpose of Visit 2010 & 2011

2010 2011

Source: Bank of Greece.

Table 6

Τravel Receipts by Purpose of Travel (million €)

Period P e r s o n a l P u r p o s e s

Business Purposes

Total

% Change

regarding last year

Leisure Studies Health Visit to family

Other reasons

Total Personal Purposes

2007 8.765,8 280,6 41,7 715,5 534,9 10.338,5 980,7 11.319,2 -0,3

2008 9.301,2 272,2 50,4 646,0 462,0 10.731,8 904,1 11.635,9 2,8

2009 8.336,1 306,4 40,3 546,6 472,4 9.701,9 698,4 10.400,3 -10,6

2010 7.461,8 282,1 29,8 471,6 620,4 8.865,7 745,6 9.611,3 -7,6

2011 8.446,7 223,9 35,2 489,5 596,1 9.791,3 713,14 10.504,7 9,3 2009

% Change on the same

quarter of last year

Ι 163,5 53,4 7,9 65,0 55,6 345,5 140,8 486,3

ΙΙ 2.123,6 96,6 10,3 126,4 122,1 2.479,0 193,5 2.672,5

ΙΙΙ 5.343,2 80,2 16,5 247,5 186,2 5.873,7 176,5 6.050,2

IV 705,8 76,1 5,5 107,7 108,5 1.003,7 187,6 1.191,3 2010

Ι 135,7 53,2 7,7 71,1 60,9 328,5 148,1 476,6 -2,0

ΙΙ 1.814,0 92,1 10,4 107,7 153,7 2.177,8 197,0 2.374,8 -11,1

ΙΙΙ 4.811,7 67,5 5,1 205,8 314,2 5.404,3 247,2 5.651,5 -6,6

IV 700,4 69,3 6,7 87,1 91,6 955,1 153,3 1.108,4 -7,0 2011

Ι 158,1 45,0 4,5 63,3 61,7 332,6 134,1 466,7 -2,1

ΙΙ 2.091,0 74,5 7,2 110,2 151,0 2.433,9 187,2 2.621,1 10,4

ΙΙΙ 5.437,9 53,4 15,9 225,2 279,0 6.011,5 234,5 6.246,0 10,5

IV 759,7 51,0 7,6 90,8 104,5 1.013,5 157,5 1.171,0 5,6 2012

Ι 115,5 37,2 6,7 74,3 58,4 292,1 115,3 407,3 -12,7

ΙΙ 1.932,1 64,0 6,4 116,0 143,7 2.262,2 151,3 2.413,5 -7,9

Source: Bank of Greece

77,6%

2,7%

4,9%

6,8% 7,8%

80,4%

2,1%

4,7%

6,0% 6,8%

12 1312 1312

Foreign arrivals by country of origin The arrivals from traditional markets of other EU countries continued to decline in 2012, recording a 8.5% decrease compared to 2011. The biggest losses were on the Polish market (-43.5%) which attracted 200,000 fewer tourists. There was also a significant drop in the French (-15%), Dutch (-14%), Swiss (-17.1%) and Finnish market (-8.1%).

Table 7

Foreign Tourist Arrivals in Greece by country of origin

COUNTRIES 2010 2011 2012 D%

2011/10 D%

2012/11

I. EUROPE 13.275.962 14.651.513 13.866.306 10,4 -5,4

EUROPEAN UNION 10.199.904 10.698.013 9.791.900 4,9 -8,5

France 868.346 1.149.388 977.376 32,4 -15,0

Germany 2.038.871 2.240.481 2.108.787 9,9 -5,9

U.K. 1.802.203 1.758.093 1.920.794 -2,4 9,3

Spain 155.302 154.774 155.722 -0,3 0,6

Italy 843.613 938.232 848.073 11,2 -9,6

Netherlands 528.157 560.723 478.483 6,2 -14,7

Hungary 109.160 69.756 69.789 -36,1 0,0

Poland 402.170 450.618 254.682 12,0 -43,5

Portugal 19.497 34.642 20.483 77,7 -40,9

Romania 257.939 223.699 230.396 -13,3 3,0

Sweden 281.069 333.906 319.756 18,8 -4,2

Czech Rep. 294.936 309.062 289.034 4,8 -6,5

Finland 205.282 167.632 154.134 -18,3 -8,1

Switzerland 274.418 361.405 299.619 31,7 -17,1

Norway 187.319 226.627 294.114 21,0 29,8

Russia 451.239 738.927 874.787 63,8 18,4

IIΙ. ASIA 869.737 882.643 921.808 1,5 4,4

Japan 10.021 10.125 8.841 1,0 -12,7

China 13.620 15.838 12.203 16,3 -23,0

Israel 197.159 226.110 207.711 14,7 -8,1

Turkey 561.198 552.090 602.306 -1,6 9,1

IV. AFRICA 44.239 38.450 37.411 -13,1 -2,7

Egypt - Sudan 15.925 4.675 4.724 -70,6 1,0

South Africa 19.985 21.981 19.686 10,0 -10,4

II. AMERICA 691.379 719.661 558.728 4,1 -22,4

Brazil 34.015 52.118 31.125 53,2 -40,3

USA 498.301 484.708 373.831 -2,7 -22,9

Canada 113.358 142.287 102.694 25,5 -27,8

V. OCEANIA 126.173 134.979 133.368 7,0 -1,2

Australia 108.088 115.902 117.852 7,2 1,7

VI. TOTAL 15.007.490 16.427.247 15.517.622 9,5 -5,5

Source: Hellenic Statistical Authority, Bank of Greece, Border Survey.

14 1514 1513

The German market, which is the largest source for Greek tourism fell by 5.9%, meaning 150,000 fewer arrivals.

Inbound tourism from Northern Europe, especially from Germany, Holland and the Scandinavian countries, was negatively affected by the political situation creating uncertainty, by the defamatory comments of the international media about the social and economic situation in our country and the risk of exit from the eurozone.

The negative climate was aggravated by the political uncertainty caused by the election result of the 6th May. The climax of the instability in our country coincided with the beginning of the tourist season and the time when Europeans choose the destination for their summer vacation.

After the elections of 17th June, the situation in the tourist market returned again to normal, but it was too late for a strong reversal of the downward trend in order to offset the loss of the first seven months.

The strong decline of the Southern European markets should be attributed primarily to the economic downturn, which these countries are facing. In contrast, UK constituted an exception to the downturn that followed the tourist markets of EU countries. In 2012 Greece attracted over 160,000 tourists from the UK (9.3%). Despite the impressive increase in absolute numbers, the English market is still well below 350,000 tourists compared with the 2008 level.

Chart 5

Foreign Tourist Arrivals in Greece (% change 2012/11)

Source: Hellenic Statistical Authority, Border Survey by the Bank of Greece.

The German market has continued to maintain the position of the largest originator of tourism flows in Greece for another year, followed by Great Britain and France.

-15,0 -14,7

-9,6 -5,9

9,3

18,4

9,1

-23,0 -22,9

-5,5

-30,0

-25,0

-20,0

-15,0

-10,0

-5,0

0,0

5,0

10,0

15,0

20,0

25,0

14 1514 1514

The Russian and Norwegian market continued to grow at high rates, despite the high rise they had made the previous year. The Russian market expanded by 18.4%, following the impressive growth of 63.8% that was recorded in 2011. It climbed fourth in the ranking in 2012 with 875,000 arrivals, surpassing in size the Italian market. Arrivals from Norway increased by 29.8% after a similar increase in 2011. The upward trend continued in the Turkish market that grew by 9.1%.

The second largest Asian market after Turkey is Israel. This year it declined by 8.1%, after an increase of 139% over the previous year. The arrivals from Far East declined significantly, mainly due to the precipitation of business tourism. Alarming decline was recorded in arrivals from America. The U.S. market shrank by 22.9% and Canada by 27.8%.

Chart 6

Evolution of foreign tourism shares by region (%) 2010 2012

Source: Hellenic Statistical Authority, Border Survey by the Bank of Greece.

Briefly, the image of individual markets in 2012 shows a significant reduction of shares from the U.S. and EU countries. Asian markets improve slightly their share, mainly due to the upward momentum that the Turkish market continues to show. The share of EU countries fell by 5 percentage points. At their greatest extent such losses are covered by the increase of tourist arrivals from European countries outside the EU (Russia, Norway). Finally, the significant drop in arrivals from China and Japan shows that the inhabitants of these countries combine trips to Greece with trade or other business. The Greek destinations have not achieved yet to establish themselves as important centers for touring in the emerging Asian markets.

Travel expenditure and average length of stay. According to data from the annual border survey conducted by the Bank of Greece, the average trip expenditure by foreign tourists in our country has declined steadily: from 730 € in 2008, dropped to 639.50 € in 2011 (Table 8).

Correspondingly, the average daily consumption fell from 76.3 € in 2008 to 69.6 € in 2011. The average length of stay of foreign tourists in Greece decreased from 9.6 days in 2008 to 8.0 in 2011 (Tab. 8).

European Union 68,0%

America 4,6%

Asia 5,8%

Other regions 21,6% European

Union 63,1%

America 3,6%

Asia 5,9%

Other regions 27,4%

16 1716 1715

Chart 7

Travel Expenditure by non-residents in Greece

Source: Border Survey of the Bank of Greece.

Indications obtained from the first two quarters of 2012 show that the average length of stay seems to have been stabilized in recent months at the low levels that prevailed after 2010.

Table 8 Travel Expenditure by non-residents in Greece

Year Quarter Expenditure per journey

(€)

% Change of Expenditure per

journey compared to the same quarter the

previous year

Expenditure per overnight

stay (€)

Average duration of

stay

2008

730,0

76,3 9,6

2009

697,3

73,5 9,5

2010

640,4

68,6 9,3

2011

639,5

69,6 9,2

2009 Ι 469,7 -0,5% 61,9 7,6

ΙΙ 687,9 -4,1% 74,4 9,2

ΙΙΙ 777,2 -5,7% 74,6 10,4

IV 539,1 -4,1% 72,0 7,5

2010 Ι 486,1 3,5% 61,9 7,9

ΙΙ 646,3 -6,0% 65,9 9,8

ΙΙΙ 686,0 -11,7% 70,5 9,7

IV 524,3 -2,7% 68,1 7,7

2011 Ι 421,1 -13,4% 62,8 6,7

ΙΙ 624,7 -3,3% 70,5 8,9

ΙΙΙ 699,8 2,0% 70,4 9,9

IV 532,9 1,6% 66,5 8,0

2012 Ι 416,2 -1,2% 59,8 7,0

ΙΙ 627,0 0,4% 70,3 8,9

Source: Bank of Greece.

486,

3

2.67

2,5

6.05

0,2

1.19

1,3

476,

6

2.37

4,8

5.65

1,5

1.10

8,4

466,

7

2.62

1,1

6.24

5,9

1.17

1,1

407,

4

2.41

3,5

0,0

1.000,0

2.000,0

3.000,0

4.000,0

5.000,0

6.000,0

7.000,0

Ι ΙΙ ΙΙΙ IV

2009 2010 2011 2012

16 1716 1716

Tourism seasonality in Greece. According to the results of the Border Survey of the Bank of Greece, in 2012 68.9% of the total tourist traffic corresponds to the period June - September, while 85% to the period May - October. The rates for the same periods of the previous two years are almost identical (Chart 8). Consequently, the above periods define the edge ("peak") of the tourist season in Greece within a year for at least the last years.

Chart 8

Monthly Distribution of Tourist Arrivals in Greece

Source: Bank of Greece.

Examining the distribution of visitors per month, we observe that the above finding is generally met with some variations among visitors from different nationalities (Chart 9). It is characteristic that 81.3% of the Italians visiting Greece in 2012 made their holidays during the period June - September, while a significant proportion of visitors from the USA came for vacation in Greece in March (3.4%, the percentage is even higher for 2010 and 2011). The Americans also had an increased percentage of total visits during the month of November (7.4%), significantly higher than the corresponding percentage of visitors from other countries. Noteworthy is also the fact that a significant volume of visitors from France (7% of the total French visitors) came to Greece for holidays from April, one month earlier than the visitors of other nationalities

0%

5%

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25%

Jan

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ch

Apr

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Jun Jul

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2012 2011 2010

18 1918 1917

Chart 9

Monthly Distribution of Tourist Arrivals by Country of Origin of the Visitors 2012

Euro Zone Countries Non Euro Zone Countries

Source: Bank of Greece.

The overall conclusion from the study of chart 9 is that visitors who come to Greece for tourism from the U.S. are more evenly distributed over the period of one year compared to visitors from other country of origin, clearly considering Greece as a purely summer destination. At present, the winter tourism is a comparatively small part of total tourism activity, though with significant growth potential.

Overnight stays of tourists in Greece The monthly distribution of the duration of stay in Greece - as is the monthly distribution of tourism expenditure - is identical to the picture of tourist arrivals as it is reflected in Chart 8. The duration is expressed by the number of overnights made by tourists in Greece in hotels and similar accommodation, in houses (owned or not), in vessels, but also in any other type of accommodation.

Examining further the number of nights spent by tourists on a monthly basis in 2012, we observe that during the period May - October and even more during the period June – September, the number of nights per visit is significantly increased compared to the other months. This picture - despite annual changes - generally occurred in the years 2010 and 2011 (Chart 10). It is characteristic that in the month of December, the length of stay is 30% - 40% lower compared to the month of August

0%

10%

20%

30%

40%

50%

Jan

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ch

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France Germany Italy

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5%

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20%

25%

30%

Jan

Feb

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ch

Apr

May

Jun Jul

Aug

Sept

Oct

Nov

Dec

U. K. Russia USA

18 1918 1918

Chart 10

Number of nights per visit on a monthly basis for the years 2010 - 2012

Source: Bank of Greece.

The length of stay in Greece varies between tourists from different countries of origin, with the Italians generally making holidays no more than 7 days during the winter and 12 days in the summer months, while the Americans prolong their stay generally more than other visitors nationality, especially during the winter months. The Russians showed smaller variations in the length of stay from month to month. In any case, it is again clear the trend of tourists to spend more days in Greece during the summer months.

Chart 11

Number of nights per visit on a monthly basis by country of origin of visitors 2012

Euro Zone Countries Non Euro Zone Countries

Source: Bank of Greece.

6

7

8

9

10

11

12

Jan

Feb

Mar

ch

Apr

May

Jun Jul

Aug

Sept

Oct

Nov

Dec

2012 2011 2010

6

8

10

12

14

16

Jan

Feb

Ma…

Apr

May

Jun Jul

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Oct

Nov

Dec

France Germany Italy

4

9

14

19

Jan

Feb

Mar

ch

Apr

May

Jun Jul

Aug

Sept

Oct

Nov

Dec

U. K. Russia USA

20 2120 2119

Expenditure per visit and day of stay in Greece Changes in tourism expenditure per visit in a year is equivalent to changes in the number of nights per visit. In August 2012, tourists spent on average about 750 euros during their stay, while in December about 420 euros (45% reduction). General expenditure per visit is higher during the summer months (Chart 12).

Chart 12

Tourism expenditure per visit on a monthly basis for the years 2010 - 2012

Source: Bank of Greece.

The only notable differences are related to the size of the expenditure per visit of the American and the Russian tourists who spend more during their stay compared to visitors of other nationalities.

300

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450

500

550

600

650

700

750

800

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ch

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Aug

Sept

Oct

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Dec

2012 2011 2010

20 2120 2120

Chart 13

Tourism expenditure per visit on a monthly basis by country of origin of visitors 2012

Euro Zone Countries Non Euro Zone Countries

Source: Bank of Greece.

With the exception of the months of August and September, the tourism expenditure per day of stay decreased compared to 2011 (more than 10% for the months of February, March and October). These changes resulted in changing the picture of 2011, which was characterized by significantly higher costs per day spent at the beginning and at the end of the summer tourist season, and going back the monthly change of the size to the picture of 2010, which was characterized by an increase in size until May, stagnation until October and decline thereafter until December (Chart 14).

Chart 14

Tourism expenditure per day of stay on a monthly basis for the years 2010 - 2012

Source: Bank of Greece.

200

400

600

800

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1.200

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Feb

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ch

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Jun Jul

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France Germany Italy

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Feb

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ch

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U. K. Russia USA

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100

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ch

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Jun Jul

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2012 2011 2010

22 2322 2321

The Russians and Americans spent 90 to 110 euros per day in the period May - October, a figure significantly higher than that of visitors from other countries. The Russians also spent more than 160 euros per day in December (probably during the Christmas holidays), while significantly increased, compared to the other months, was the expenditure in the month of December for the French. Overall, however, the daily expenditure of tourists from the 6 main countries of origin is higher during the summer than in the winter.

Chart 15

Tourism expenditure per day spent on a monthly basis by country of origin of visitors

2012

Euro Zone Countries Non Euro Zone Countries

Source: Bank of Greece.

Competitiveness of Greek tourism To better capture the competitiveness of the tourism sector, the World Economic Forum for the last seven years has established the Travel and Tourism Competitiveness Index (TTCI), which measures the factors and policies that influence the development of tourism sector in different countries.

This index is derived through the estimation of fourteen separate indicators-pillars, critical for the competitiveness of tourism, which fall into three broader categories of indicators. The first is the institutional and regulatory environment of the country, the second is the business environment and infrastructure, and the third is the man-made, cultural and natural environment. For the 2013 TTCI 140 countries participated.

According to the latest data from the WEF, Europe remains the first region in the world in terms of tourism competitiveness, as the first places in the overall TTCI index ranking are occupied by European countries. Switzerland holds the leading position in the general classification, while regarding the three sub-indices holds the first position in the ranking for the regulatory and business environment, and ranks second in the man-made and natural environment. Germany is in the second place of the overall ranking and in the ranking for

20

30

40

50

60

70

80

90

100

Jan

Feb

Mar

ch

Apr

May

Jun Jul

Aug

Sept

Oct

Nov

Dec

France Germany Italy

20

40

60

80

100

120

140

160

180

Jan

Feb

Mar

ch

Apr

May

Jun Jul

Aug

Sept

Oct

Nov

Dec

U. K. Russia USA

22 2322 2322

the regulatory and business environment. Supremacy in the ranking index for anthropogenic, natural and cultural resources have steadily USA.

Finally, Greece lost another three positions in the overall standings for the competitiveness of the tourism sector reaching the 32nd place in 2013 from the 29th place in 2011. However, tourist infrastructure in Greece is classified as excellent and ranks in 3rd place on the pillar tourist infrastructure. In a relatively good position (20th) is classified for the aviation infrastructure and the rich cultural resources (25th). The loss of three positions in the overall ranking is considered to be due to the shrinking of available resources for the development of the tourism sector, because of the serious economic and financial problems.

Table 9 The Travel & Tourism Competitiveness Index 2013 and 2011 Comparison

Overall Index

T&T Regulatory Framework

Business Environment and

Infrastructure

T&T Human, Cultural and

Natural Resources

2013 2011 2013 2011 2013 2011 2013 2011

Countries

Ove

rall

Rank

Scor

e

Ove

rall

Rank

Scor

e

Rank

Scor

e

Rank

Rank

Scor

e

Rank

Rank

Scor

e

Rank

Switzerland 1 5,66 1 5,68 1 5,94 1 1 5,42 1 2 5,63 2

Germany 2 5,39 2 5,50 8 5,57 12 6 5,29 2 7 5,31 5

Austria 3 5,39 4 5,41 2 5,80 3 11 5,11 12 9 5,24 10

Spain 4 5,38 8 5,29 14 5,48 22 5 5,30 10 6 5,36 6

USA 6 5,32 6 5,30 44 4,95 44 2 5,36 3 1 5,65 1

France 7 5,31 3 5,41 9 5,56 7 7 5,18 8 11 5,20 9

Portugal 20 5,01 18 5,01 20 5,42 19 27 4,78 24 19 4,84 17

Italy 26 4,90 27 4,87 50 4,90 45 29 4,76 27 14 5,05 15

Cyprus 29 4,84 24 4,89 22 5,35 23 21 4,89 14 46 4,27 44

Czech Rep. 31 4,78 31 4,77 28 5,24 26 37 4,49 37 28 4,61 31

GREECE 32 4,75 29 4,78 39 5,02 34 33 4,65 29 30 4,58 29

Croatia 35 4,59 34 4,61 42 4,99 42 39 4,43 36 42 4,37 43

Turkey 46 4,44 50 4,37 64 4,62 66 52 4,08 39 27 4,63 28

Morocco 71 4,03 78 3,93 68 4,59 69 73 3,60 77 68 3,89 73

Egypt 85 3,88 75 3,96 86 4,35 70 77 3,56 74 84 3,74 71

Source: The Travel & Tourism Competitiveness Index, WEF 2013.

24 2524 25

23

Table 10 Top Three Performing Economies per Pillar

Χώρες Po

licy

Rule

s an

d Re

gula

tion

s

Envi

ronm

enta

l Sus

tain

abili

ty

Safe

ty a

nd S

ecur

ity

Hea

lth

and

Hyg

iene

Prio

riti

zati

on o

f Tra

vel &

To

uris

m

Air

Tra

nspo

rt In

fras

truc

ture

Gro

und

Tran

spor

t In

fras

truc

ture

Tour

ism

Infr

astr

uctu

re

ICT

Infr

astr

uctu

re

Pric

e Co

mpe

titi

vene

ss in

the

T&

T In

dust

ry

Hum

an R

esou

rces

Aff

init

y fo

r Tr

avel

& T

ouri

sm

Nat

ural

Res

ourc

es

Cult

ural

Res

ourc

es

Australia 14 56 13 40 39 4 49 20 18 137 22 38 2 20

Austria 37 6 7 1 22 30 15 1 20 131 17 12 49 12

Barbados 41 27 32 28 8 32 9 26 19 113 23 2 133 50

Brazil 119 30 73 70 102 48 129 60 55 126 62 83 1 23

Brunei 126 135 24 65 123 45 67 86 65 2 36 63 53 95

Canada 10 41 18 53 37 1 33 21 23 124 5 34 10 16

Cyprus 88 38 27 45 2 36 19 5 40 102 24 10 96 48

Finland 7 3 1 15 53 11 20 44 13 118 4 64 54 26

Gambia 65 34 84 105 25 81 50 126 110 3 111 21 114 121

Germany 33 4 14 2 77 7 6 23 11 125 18 61 31 4

GREECE 98 72 69 13 28 20 58 3 33 127 50 55 40 25

Hong Kong 3 118 3 50 12 6 1 71 2 32 8 3 84 42

Iceland 48 19 4 7 5 17 38 9 8 121 3 11 63 57

Iran 124 101 106 79 130 102 76 133 93 1 87 128 74 45

Italy 100 53 44 29 79 24 39 1 31 134 41 72 34 7

Kazakhstan 99 124 99 3 90 82 80 87 48 73 71 121 120 117

Korea, Rep. 50 69 39 19 75 31 16 51 1 96 33 81 89 10

Lebanon 115 127 116 33 38 67 110 27 84 68 64 1 136 68

Mauritius 28 77 36 66 3 60 37 48 69 75 49 6 134 110

New Zealand 2 22 9 17 21 12 46 11 22 74 13 17 26 52

Seychelles 55 70 91 63 1 27 31 29 58 120 56 5 65 64

Singapore 1 23 5 56 4 14 2 38 9 66 2 8 92 35

Spain 67 25 23 24 10 10 10 5 28 106 34 39 29 1

Sweden 16 1 8 38 74 19 17 36 3 129 12 33 45 2

Switzerland 17 2 2 10 11 9 3 5 6 139 1 25 19 6

Un. Arab Emirates

13 91 50 61 36 3 26 24 39 35 15 24 71 33

U. K. 8 7 22 48 40 5 13 22 10 138 6 45 15 3

USA 23 112 57 51 30 2 27 13 17 94 14 69 3 5

Source: The Travel & Tourism Competitiveness Index, WEF 2013.

24 2524 2524

Developments in the institutional environment of Greek tourism The previous year 2012 was marked by the re-establishment of the Ministry of Tourism (Presidential Decree 85/2012, Government Gazette A’ 141/2012). Basis for the establishment of the new Ministry were the services of the former Ministry of Tourism, which were merged into the Ministry of Culture and Tourism through the following institutional and administrative regulations:

The Ministry of Tourism also undertook the General Secretariat of Culture and Tourism Infrastructure, which was renamed “General Secretariat for Tourism and Infrastructure Investment”, while acquiring the competence for the management and coordination of the programmes of the National Strategic Reference Framework (NSRF) 2007-2013 that fall within the scope of tourism. The institutional framework, governing the competences of the Ministry of Tourism, continues to be fluid, moving in the direction of the absorption of powers of its supervised public entities.

In the context of the overall restructuring of the public sector and the saving of resources, the Organisation of Tourism Education and Training (OTEK) was abolished by the Law 4109/2013 (Gov. Gazette A’ 16/2013) titled "Abolition and merging entities in the public and broader public sector”. The actions and responsibilities of OTEK are eventually carried out by the Ministry of Tourism and its educational units now operate as regional services.

In a bill filed for public consultation in January 2013, there is shift of competences exercised by the Greek National Tourism Organization (GNTO) to the Ministry of Tourism in the field of tourism studies and investments. Apart from the transposition of the relevant Directorates of GNTO to the Ministry, the latter detaches the Special Agency for Promoting and Licensing Tourism Investments, which was established in GNTO according to Article 12 of Law 4002/2011 (Gov. Gazette A’ 180/ 2011), as amended by Article 148 of Law 4070/2012 (Gov. Gazette A' 82/ 2012).

At this point, it is worth noting that the tourism business community, as expressed by the professional collective bodies, when welcoming the re-establishment of the Ministry of Tourism, had expressed the view that the Ministry of Tourism should be enhanced by a range of powers exercised by other Ministries, which are considered to be crucial for the operation and development of tourism businesses. The activation of the Special Agency for Promoting and Licensing Tourism Investments which approves and authorizes as "one stop service" tourist investments of over 300 beds, complex tourist accommodation and installations of special tourism infrastructure, marks the first implementation of this new policy by the Ministry of Tourism.

During 2012 a number of law changes also occurred in the regulatory field of tourism:

Key element to the development of entrepreneurship is the license regime for tourist accommodation, which was amended by Law 4070/2012(Gov. Gazette A' 82/ 2012), in order to simplify and accelerate the process of granting operation license This license is made uniform for the entire hotel unit and its services, including

26 2726 2725

individual stores, restaurants, bars and swimming pools that operate in the hotel premises. Henceforth, the same person could be responsible for the observance of sanitary rules for all hotel services. The law provides for the possibility of granting by GNTO preliminary approval of the accommodation operation when there is submission of all necessary documents by the interested entrepreneur. A deadline of 50 days is foreseen for the public administration to carry out the necessary controls of the hotel establishment and grant the license operation. Strict disciplinary action is taken against the officials who do not meet the deadlines.

The qualifications and requirements for the appointment of hotel Director have been updated to meet the demands of 4 and 5 star hotels, based mostly on higher or university education and work experience of the interested person.

The grid of provisions referred to the licensing of hotel accommodation received the favorable impact of rationalization and simplification of the environmental legislation. In accordance with the .Joint Ministerial Decision No 59845/2012 (Gov. Gazette B’ 3438/2012) the environmental licensing of hotel accommodation, within the city limits with a capacity of more than 120 beds and outside the city with a capacity of less than 100 beds, becomes more simple. So, it is no longer required to conduct Environmental Impact Study, but the hotel has to be subjected to Standard Environmental Commitments which form an integral part of the operation license, issued by GNTO. There is no time limit for the Standard Environmental Commitments, which remain in effect unless significant changes occur to the premises, for example increase in the capacity of the hotel by more than 10%.

In 2012 the framework for the creation and operation of “complex tourist accommodation” was completed. This new form of accommodation has been established by Article 8 of Law 4002/2011 (Gov. Gazette A’ 180/ 2011) and henceforth a series of executive decisions have been issued , such as:

The Ministerial Decision No. 177/2012 on determining the technical and functional specifications of complex tourist accommodation (Gov. Gazette B’ 319/2012).

The Joint Ministerial Decision No. 278/2012 laying down specific energy requirements (Gov. Gazette B’ 615/2012 ) and

The Ministerial Decision No 125/2012 on setting standard regulations of joint ownership and operation of complex tourist accommodation (Gov. Gazette B’ 195/2012).

Tourist accommodation complex is a new form of integrated accommodation, which includes 5-star hotel combined with furnished homes and special tourism infrastructure on an area at least 150,000 sq.m. The houses can be sold or leased for at least 10 years, while the proportion of the houses should not exceed 30% of the total build-up area of the complex. It is provided by law to create such a complex in an existing hotel if the area is at least 50,000 sq.m following specific terms and conditions set forth in paragraph 6 of Article 8 of law.4002/2011. This new form of accommodation ceased to be a point of contention between the state and the hotel industry. after the above legislative clarification, that the tourist accommodation

26 2726 2726

complex is formed by the coexistence of three elements (5*hotel accommodation, special tourist infrastructure and furnished holiday homes ) .

In the ever changing landscape of special forms of tourism, the Ministry of Culture and Tourism introduced by Law 4070/2012 (Gov. Gazette A' 82/ 2012)., the form of fishing tourism, despite the reactions of the key players in the tourism sector. Fishing tourism consists in providing business packages of tourism services and goods related to fisheries, aquaculture, sponges and to all the cultural and gastronomic environment of fishing communities. The Law provides for the granting of a special license for fishing tourism businesses owned by fishermen or cooperatives of fishermen or fish farmers, who use professional fishing or sponge fishing boats.

In the area of marine tourism, which is a major sector for Greek tourism, the Ministry of Culture and Tourism included a special chapter in Law 4070/2012 on tourist ports, modifying the existing legislation for their creation and operation. A redefinition was given for tourist ports in order to include nautical sports vessels and to distinguish for clarity in three separate categories: marinas, anchorages and shelters. The General Secretariat for Tourism now has all the powers of location, administration, management, operation, control and maintenance of electronic records of tourist ports. Prohibition is introduced against docking vessels in fishing ports or shelters where there is licensed tourist port in less than 5 nautical miles.

The hotel port which was a particular category of port according to Law 2160/1993 was abolished. A number of issues are also dealt with, mostly related to the creation, process and operation of marinas, the operation rules on the marinas and the rights of the management body.

The adoption of the Medium Term Financial Strategy 2013-2016 by Parliament with Law 4093/2012 (Gov. Gazette A’ 222/2012) included a number of provisions that have an impact on the tourism sector, such as:

The Law facilitates the hotel enterprises to hire passenger car for private use with driver. Thus, a long-standing demand of the hotel industry is realized adjusting the national legislation in force with European law.

The status of the profession of tourist guide is amended in order to align with the requirements of European Law, which are incorporated into Greek legislation (Presidential Decree 38/2010). Consequently it is recognized the right of access to the profession of tourist guide to nationals of Member States of the EU, who are having the relevant qualifications obtained in another Member State of the EU and recognized by the Council for the Recognition of Qualifications in accordance with prescribed procedures. Moreover, intensive training courses for tourist guides are foreseen for archeology and history graduates of domestic and foreign universities

28 2928 2927

Νational collective agreement for payment terms of the employed in hotel enterprises all over the country. The sectoral collective agreement on payment terms and working conditions of the employed in the hospitality industry could be characterized as widely accepted and so far almost of universal application.

It provides for a reduction of the basic sectoral salary of around 15%, while maintaining all benefits (even those removed by the Memorandum of Understanding on Specific Economic Policy Conditionality of February 2012) and bears no changes in the institutional aspects of the previous agreement. The period of validity is from 1/7/2012 to 31/12/2013.

The agreement is tailored to the circumstances and new conditions that have shaped the national economy, the tourism industry and consequently the hotel business. It resets rationally and realistically the issue of conditions of remuneration of employees in Greek hotels, moving in three axes:

Business survival in an ever-worsening recessionary environment.

Maintaining or increasing employment in hotels throughout the country,

Achieving industrial peace in a very fragile social environment, the consistency of which is tested daily.

Given the fact that the vast majority of hotel enterprises that are small and medium sized struggle for viability, the new national sectoral collective agreement appears to shield the working environment in Greek hotels, preventing bad practices that tarnish the image of the industry and undermine the quality and value of the hotel product.

28 2928 2928

Annual survey of ITEP for the hotel market.

Identification of research. ITEP in collaboration with the Hellenic Chamber of Hotels makes every year a field research among Greek hotels with the questionnaire method. The questionnaire is sent to all hotels in the country in order to gather information on the fundamentals of hotel units affected by the situation. More specifically, the Hoteliers are invited to indicate their average monthly occupancy rate, the average room price and employment during the months of October, May and August.

The survey is usually conducted during September and therefore the October data are related to the previous year. It is also reported the turnover of the previous financial year. The performance of the hotels is associated with the quality and technical characteristics of each unit kept at the database of the Hellenic Chamber of Hotels.

In the 2012 survey the response was very satisfactory. Completed questionnaires were received from 1,204 units, representing 13% of the total number of hotels in the country. The hotels that have responded dispose 75,981 rooms and account for the 14.6% of the total capacity. The layered distribution of this year's sample is quite satisfactory. There is only a slight under-representation of low class hotel in some areas. For this reason the averages, presented in the following analysis, were multiply weighted by the number of rooms of each unit, by the relative distribution of rooms among the regions and the proportion of rooms of each star category within the region, so as to reduce the relative bias of the estimates. Reference point for all calculations in the present analysis is the room and not the hotel unit.

Changes of hotel capacity. 2011 was the first year in the postwar period where the number of new hotels was lower than the number of those that closed, thereby recording a reduction in the number of hotel units in operation and a corresponding reduction of their total bed capacity.

According to hotel records kept by the Hellenic Chamber of Hotels, the number of hotels has decreased by 80 units and the total capacity of the sector by around 2,000 beds.

This unprecedented reduction of the hotel capacity cannot be attributed solely to the economic crisis that our country is experiencing the last three years. Besides, in 2009 and 2010, although Greek tourism had witnessed significant precipitation on the demand side, the hotel capacity in the country increased by 4.4%.

30 3130 3129

Table 11

Evolution of Hotel Capacity 1990 - 2012

Year Units Rooms (000)

%Change compared to previous year

(in rooms)

Average Room size

1990 6.423 224,9 35,0

1995 7.387 281,6 7,4% 38,1

2000 7.856 309,1 0,2% 39,3

2001 8.073 320,5 3,7% 39,7

2002 8.285 329,4 2,8% 39,8

2003 8.527 339,5 3,1% 39,8

2004 8.843 351,9 3,7% 39,8

2005 9.036 358,7 1,9% 39,7

2006 9.110 364,2 1,5% 40,0

2007 9.207 368,0 1,0% 40,0

2008 9.227 375,1 1,9% 40,7

2009 9.559 383,0 2,1% 40,1

2010 9.732 397,7 3,8% 40,9

2011 9.653 396,2 -0,4% 41,0

2012 9.661 399,0 0,7% 41,3 Source: Hellenic Chamber of Hotels.

It should also be borne in mind that, during the period in question, the investments, that were initiated prior to 2008, were in a state of completion, since many new projects had been subsidized by development law. It is worth noting that in Greece the average time between the completion of a project, since its inclusion in the Development Law and the time of actual operation of the unit, is five years.

The most likely explanation for the reduction of the hotel capacity is the over-taxation imposed to the industry after 2011

The mandatory inclusion of those who co-manage small hotels in the Self-Employed Insurance Agency as well as the above mentioned over-taxation of real estate, made the operation of small units, targeted primarily at low-income Greek clientele, unprofitable. This explains why most closed units were located in the mainland and in the urban centers.

In 2012, the older investment projects that were completed exceeded the number of closed units, so the hotel capacity in the country increased by 22 units and 3,110 rooms. Most new units opened in the Cyclades and the Peloponnese, while in Central Greece, Western. Macedonia, Thrace and Thessaly the number of hotels has continued to decline.

The average size of hotels in Greece continued to increase: from 41 rooms in 2011 it reached 41.3 rooms in 2012.

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Chart 16 Evolution of hotel capacity

1990-2012

Source: Hellenic Chamber of Hotels.

The ever widening difference in the slope of the curve, showing the evolution of beds and in the curve, corresponding to the evolution of units, demonstrates the continuing increase in the average size of hotel units in Greece. In 1990 the average size of the Greek hotel was 35 rooms and as mentioned above, in 2012 reached 41.3 rooms on average (Table 11).

At the same time, the qualitative composition of hotel capacity in the country continues to improve. In 2012, the proportion of rooms in 5 star hotels rose to 13.98% of the total capacity of the country, compared to 4.77% in 1990. 4-star hotels account for 25.1% and 3-star hotels 23.83%. The share of 4stars hotel appears lower compared to the previous year, although over 25 new units enrolled to the capacity of that particular class. This is due to the fact that many of the 4 star units upgraded to 5 star.

As it is shown by the data of Chart 17, in 1990 only 4.8% of the total number of rooms in Greek hotels belonged to the category of 5-stars. In 2005 the figure had risen to 8.1% and in 2010 to 12.9%. The relative share of 4-star hotels is also increasing over time, whereas the proportion of all other categories is shrinking.

For example, 1-star hotels accounted for 10.6% of total hotel capacity in 1990, 8.9% in 2000, 7.4% in 2010 and just 7.1% in 2012 (Table 12, Chart 17).

The continuous improvement of the qualitative composition of hotel capacity in the country, especially after 2005, should be attributed to the beneficial effect of the incentives given through the development law for investments in modernization and in building new high class hotels.. The regions of South Aegean and Peloponnese improved the proportion of five-star hotel rooms in relation to the rest of the country.

6.42

3

6.64

7

6.85

6

7.13

9

7.16

8

7.38

7

7.47

7

7.47

7

7.59

4

7.78

5

7.85

6

8.07

3

8.28

5

8.52

7

8.84

3

9.03

6

9.11

0

9.20

7

9.22

7

9.55

9

9.73

2

9.65

3

9.66

1

225 236 244

257 262 282 289 296 304 309 309

321 329 340

352 359 364 368 375 383 398 396 399

0,0

50,0

100,0

150,0

200,0

250,0

300,0

350,0

400,0

450,0

0

2.000

4.000

6.000

8.000

10.000

12.000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Rooms (

000)

Hotel Units

32 3332 3331

Chart 17

Distribution of hotel capacity in rooms according to star category(%)

1990 2000 2012

Source: Hellenic Chamber of Hotels.

Table 12

Distribution of hotel capacity according to star category (%) 1990 - 2012

5***** 4**** 3*** 2** 1* Σύνολο 1990 Units 0,7 7,3 24,5 42,4 25,1 6.423

Rooms 4,8 22,3 28,7 33,6 10,6 224.882

Beds 4,8 22,3 28,9 33,2 10,9 423.660 2000 Units 1,0 9,7 18,6 50,0 20,8 7.936

Rooms 5,8 25,3 24,4 35,7 8,9 309.056

Beds 5,9 25,3 24,5 35,3 9,0 586.372 2010 Units 3,2 12,7 23,3 44,7 16,1 9.732

Rooms 12,9 25,6 23,3 30,8 7,4 397.660

Beds 13,4 25,8 23,3 30,2 7,3 763.407 2012 Units 3,6 12,9 23,8 44,2 15,6 9.661

Rooms 13,8 25,1 23,6 30,2 7,2 399.037

Beds 14,5 25,2 23,5 29,5 7,2 767.756

Source: Hellenic Chamber of Hotels.

Risk of disinvestment in Greek tourism. The last four years, the Public Investment Program (PIP) has fallen so much that it would be difficult for the state to maintain the existing infrastructure. The explanatory statement of the 2013 Budget shows that the PIP was reduced by 11.8% in 2010 and by 21.8% in 2011.

4,8

22,3

28,7

33,6

10,6 5,8

25,3

24,4

35,7

8,9

5***** 4**** 3*** 2** 1*

14,7

25,1

23,8

29,2

7,1

32 3332 3332

The performance of PIP is still declining during 2012 . The continued cuts of the PIP have become the sole reserve of the government in order to achieve the strict fiscal targets set out in the Memorandum (Table 13).

The continued disinvestment in tourism will probably cause a systemic problem in the industry. The infrastructure and the overall picture of public space are an integral component of the tourism product. If the quality of infrastructure and of the built environment deteriorates, it will erode the competitiveness of the Greek tourism product, while at the same time the enterprises will not be able to intervene for remedy.

Table13

Evolution of Public Investment Program 2003 - 2011 (in million €)

Years

Public Investment Program % Change

relative to previous year

GDP % of GDP Other National

Resources Co-financed Total

2003 3.974 4.461 8.435 - 172.431 4,9

2004 4.639 4.883 9.522 12,9 185.266 5,1

2005 2.569 4.955 7.524 -21,0 193.050 3,9

2006 2.673 5.511 8.184 8,8 208.622 3,9

2007 2.763 6.046 8.809 7,6 223.160 3,9

2008 2.559 7.065 9.624 9,3 233.198 4,1

2009 2.455 7.133 9.588 -0,4 231.081 4,1

2010 2.218 6.236 8.454 -11,8 222.151 3,8

2011 1.885 4.722 6.608 -21,8 208.532 3,2

Source: Direction of Public Investments Ministry of Development,, Directorate of Financial Policy Ministry of Finance.

The PIP now has been restricted to 3.2% of GDP, with investments in fixed assets amounting to 1.6% of GDP from 3.7% in 2008 (Table 14).

It should be noted that Greece, during the period from 2001 to 2009, presented higher percentage of GDP for fixed capital investments compared to other countries of the Euro zone. The last four years, the share of public investment in fixed assets falls short significantly than that of our partners and our direct competitors in southern Europe.

34 3534 3533

Table 14

Gross Fixed Capital Investments of General Government (%GDP)

Years Greece Eurozone Countries 2001 3,6 2,5 2002 3,4 2,4 2003 3,5 2,6 2004 3,6 2,5 2005 2,8 2,5 2006 3,4 2,5 2007 3,4 2,6 2008 3,7 2,6 2009 3,1 2,8 2010 2,2 2,5 2011 1,6 2,3

Source: EU Statistical Annex of European Economy (Spring 2012).

Private investment is shrinking even faster. According to data from the draft budget for 2013, total investments decreased by 21.3% in the first quarter of 2012, while public investment for the same period noted single digit change.

Furthermore, the development programs for the hospitality industry have frozen the last two years. The amendments and ministerial decisions that will launch the new development law have not been yet finalized. In addition, the completion of investment projects that were subject to investment aid programs in previous years, are being carried out very slowly, because of the limitation of funds from the banking system and the long delays in the payment of approved grants from the state.

Table 15

Domestic MFI Credit to Domestic Enterprises by Branch of Economic Activity (million euros)

Year Quarter Agriculture Industry Commerce Tourism Shipping Total

2010 Ι. 3.987 23.934 33.203 7.639 10.701 135.105

ΙΙ. 2.200 26.829 26.724 7.376 19.340 130.159

III. 2.155 24.471 25.873 7.274 17.798 123.543

IV. 2.060 24.269 25.355 7.355 17.498 123.244

2011 Ι. 2.124 24.854 25.407 7.404 16.983 122.173

ΙΙ. 2.031 24.862 25.245 7.224 16.927 121.372

III. 2.024 23.907 25.678 7.282 18.306 122.680

IV. 2.009 23.405 24.687 7.229 18.008 120.126

2012 Ι. 1.921 23.054 24.053 7.490 16.231 118.316 ΙΙ. 1.895 22.879 23.590 7.453 14.803 114.529 III. 1.503 22.011 22.641 7.326 14.190 110.320 IV. - - - - - -

34 3534 3534

Percentage Change ΙΙΙ/2012 compared to same Quarter of 2010

Agriculture Industry Commerce Tourism Shipping Total

Ι. -51,82% -3,68% -27,56% -1,95% 51,68% -12,43%

ΙΙ. -13,86% -14,72% -11,73% 1,04% -23,46% -12,01%

III. -30,26% -10,05% -12,49% 0,71% -20,27% -10,70%

IV. - - - - - -

Source: Monthly Bulletin of the Bank of Greece.

According to data from the Bank of Greece, the loan balances of tourism enterprises were reduced by 3% in August 2011 over the previous year. This means that the repayment of installment payments is greater than new loans to tourism businesses.

Considerable interest presents the low participation rate of the tourism industry to the overall financing of private enterprises from the banking system (Chart 18). Although the tourism industry contributes over 15% of the country's GDP, it absorbs only 5.8% of the credits granted by banks to private companies. The underfunding of the sector cannot continue for long without penalizing long-term prospects of Greek tourism enterprises.

Chart 18

Share of Productive Sectors to Domestic Bank Credit (III Quarter2012 )

Source: Monthly Bulletin of the Bank of Greece.

The government acknowledges that the rate of decline in bank credit to the private sector continues to be accelerated for the fourth consecutive year. This restriction is attributed to :

a lack of demand for such new investment loans,

the sharp and prolonged downturn in economic activity,

Agriculture 1,4%

Industry 20,0%

Trade 20,5%

Tourism 6,6%

Shipping 12,9%

Other Branches

38,7%

36 3736 3735

the climate of increased uncertainty and to the

lack of liquidity that the banks are facing due to the continuous decline in their deposit base and limited access to international money markets.

On the merits, the Government attaches part of the responsibility for reducing the investment interest on the side of the private sector, which has been affected by the economic uncertainty, the low utilization of the existing capacity of enterprises and the large unsold inventory of buildings resulting in undervalues.

The above observations may be accurate for some of the branches of the national economy, but it is not so for an extroverted and competitive sector of the economy, such as the Greek tourism. The big hotel companies and those that are located in coastal areas, especially on the islands, they can replace the loss of the internal market by attracting more foreign tourists. In order to achieve this, they have to adjust their product to the demands of new customers. So, investments are needed for modernization and also working capital to support the openings in new markets. In other words in the present context the hotels need more capital than in the past.

Consequently, the decline in the loan balances of tourism businesses in recent years cannot be attributed to a corresponding lack of interest by the private sector. Therefore, it is difficult to understand the very low rate of the tourism sector participation in total bank financing.

According to data from the Bank of Greece on the bank financing of domestic companies, loan balances of tourism enterprises by the end of the first 9 months of 2012 amounted to 7,326 million euros. The tourism sector, as it was mentioned above, received only 5.8% of credits granted by domestic banks to the private sector of the economy, despite its significant contribution to national income. The credit exposure of banks in the tourism sector remains essentially unchanged from 2009 (7.358 million) to date.

This actually means that the amortization installments paid by tourism businesses for earlier loans are higher than new loans in recent years.

This is a clear indication that new investments in fixed assets are lower than the depreciation of existing buildings used by tourism businesses in our country. In other words, the production capacity of the industry deteriorates without being replaced.

In conclusion, it should be noted that the underfunding of public works and tourism businesses cannot go on any longer without damaging the quality of the tourism product of our country and without harming irreparably the long-term prospects of the industry.

Greek hotels' revenues in 2011. The turnover statistics collected in the annual survey are related to the previous financial year. Therefore, this year's report presents the results of the Greek hotels in 2011.

2011 was a year of recovery for the Greek hoteliers. The current field research conducted by ITEP revealed that in 2011 the average income per room amounted to 14,490 euros and was up by 9.2% compared to 2010. It should be noted that the receipts of Greek hotels in 2010,

36 3736 3736

were reduced by 13.4% compared to 2009. The crisis has particularly hit the hotels of 3 and 4 stars. Instead, limited losses were recorded in the units of lower categories.

The recovery in 2011 was more in favor of the grand hotels of higher category addressed primarily to foreign customers. As it is shown in Table 16, the revenues of 5-star hotels were increased by 12.3% compared to 2010. The 4 star hotels increased their revenues by 11.3% and the 3 stars by 7.5%. In contrast, in 2-star hotels their receipts shrank by 3.4% and in one star hotels by 5.6%.

With the exception of units in the South Aegean, the annual revenue of one star hotels is very low, since it does not exceed € 3,000 per room.

Table 16 Average Revenue per Room 2011 and Percentage Change versus 2010

REGION 5***** 4**** 3*** 2** 1* Averag

e 2011

Average

2010

D% 2011/1

0 Attica

(excl. islands) 50.064,

7 21.779,

4 12.298,

7 10.343,

3 4.784,9 27.517,8 28.095,1 -2,1%

Central Greece (excl. Attica)

24.721,7

11.486,6

8.173,2 3.506,4 2.164,3 8.815,8 8.661,9 1,8%

Epirus- Thessaly 20.164,

0 11.682,

9 7.018,5 5.202,3 3.249,8 8.958,4 9.848,6 -9,0%

Macedonia- Thrace

28.123,7

15.528,7

7.803,0 4.484,6 3.411,5 13.869,1 11.132,6 24,6%

Peloponnese 18.317,

3 13.498,

9 8.587,7 5.190,3 1.728,3 10.223,8 10.495,8 -2,6%

Aegean Islands 19.086,

8 10.070,

4 5.410,2 4.783,0 1.312,5 7.931,0 7.800,8 1,7%

Crete 22.880,

5 14.987,

2 9.681,0 4.989,4 2.552,2 15.111,9 12.837,4 17,7%

Cyclades – Dodecanese

23.048,0

15.136,9

8.721,2 6.703,9 5.240,2 13.755,9 12.285,9 12,0%

Ionian Islands 18.233,

8 14.162,

5 7.566,3 5.477,1 1.754,1 10.275,1 10.109,7 1,6%

COUNTRY TOTAL 2011

27.556,9

15.450,0

8.650,2 5.709,2 3.344,5 14.491,2 13.274,4 9,2%

COUNTRY TOTAL 2010

24.532,7

13.887,4

8.043,3 5.912,1 3.544,2 13.274,4

D% 2011/2010 12,3% 11,3% 7,5% -3,4% -5,6% 9,2%

Source: ITEP, Field research on hotels in Greece 2012.

It is apparent that family hotels, offering services of low quality, have difficulty to address the international tourism market in order to compensate for the loss of their turnover from the precipitation of the internal market.

At regional level, the best performance compared to 2010 was achieved by the hotels of Macedonia-Thrace, which greatly benefited from the continued improvement of tourist flows from the Russian and Turkish markets.

Very good financial performance was also achieved by the hotels in Crete with their receipts increased by 17.7% and hotels on South Aegean islands with an increase of 12%.

38 3938 3937

The hotels on the mainland showed poorer performance in 2011. The largest decrease in revenues was recorded by hotels in Epirus, Thessaly, Peloponnese and Attica.

In absolute terms, the high class hotels in Attica and Thessaloniki continue to have the bigger receipts, earning significant income from the offering of halls and mass catering premises, addressed to the general public.

As in previous years, the smaller revenue per room is presented by hotels in the North Aegean and Central Greece. This is attributed to the fact that the hotels in the North Aegean Sea have the highest seasonality and hotels in the hinterland of mainland serve primarily low-income Greek tourists or operate only during the winter season.

Greek hotel occupancy rates in 2012. In 2012, the image of tourist activity in Greece showed two faces. In the first 7 months it showed a significant precipitation of tourism demand. Political uncertainty, combined with deep and prolonged recession, reduced to an unprecedented extent the demand from the domestic market. The inbound tourism was also negatively affected by the defamatory comments of the international media about the political and economic situation and the underlying risk of exit from the Euro zone.The double elections at the start of the season had unfavorable effects on the whole tourism market. In May 2012, the average occupancy rate of Greek hotels was reduced by 6.2% compared to the same month in 2011 and it amounted on average to 45.29%.

This is the average occupancy rate of the hotels that operated at the said period. This clarification is necessary because in 2012 an unusual phenomenon appeared that was related to the large number of seasonal low class hotel, which did not work at all until the end of May. The total of 4 & 5 stars were in operation, but the 12.8% of the total capacity of the one star hotels remained inactive, also the 10.3% of 2 star hotels and the 6.9% of 3 star hotels. (Table 17).

Table 17 Closed Hotels in 2012 (%)

Region 5***** 4**** 3*** 2** 1* Total

Attica (excl. islands)

0,0% 0,0% 8,2% 0,0% 0,0% 2,1%

Central Greece (excl. Attica)

0,0% 0,0% 14,9% 11,1% 21,4% 9,6%

Epirus- Thessaly 0,0% 0,0% 5,1% 19,7% 0,0% 8,0% Macedonia- Thrace 0,0% 0,0% 7,8% 10,8% 16,5% 5,0% Peloponnese 0,0% 0,0% 15,9% 6,1% 53,1% 7,2% Ionian Islands 0,0% 0,0% 6,9% 11,8% 29,9% 5,8%

Cyclades – Dodecanese 0,0% 3,2% 5,3% 15,7% 2,2% 5,3% Crete 0,0% 0,0% 2,0% 4,1% 8,0% 1,2%

Aegean Islands 0,0% 0,0% 0,0% 9,8% 0,0% 2,8%

COUNTRY TOTAL 0,0% 1,1% 6,9% 10,3% 12,8% 4,3%

Source: ITEP, Field research on hotels in Greece 2012.

38 3938 3938

This is a highly unfavorable development, because it proves that the season in low class hotels and especially in those that are located on the mainland, is shrinking constantly.

In August instead, increased demand, manifested by foreign markets, more than offset the continued subsidence of domestic tourism. The restoration of confidence after the election on 17th June, resulted in a marginal improvement in the average occupancy rate of the Greek hotels in August 2012, compared to the corresponding month of 2011, the average occupancy rate improved by 0.1% and amounted to 77.86%.

The last two years the tourist destinations of the mainland followed diametrically opposite direction from the island destinations. The cities of mainland attracted business trips and areas traditionally visited by Greek middle and low income class holidaymakers continue to show further decline in the occupancy rate of hotels. On the other side, island destinations that host a large number of foreign tourists continuously upgrade their relative position.

It is indicative that in May the occupancy rate decreased by 23.38% in Attica, 18.6% in Epirus-Thessaly, 14.34% in the Peloponnese and 10.76% in Central Greece. With the exception of Attica, the same areas had shown a reduction in occupancy rate during 2011. Only hotels of Macedonia-Thrace, Crete and the Ionian Islands recorded rise in occupancy.

This year, the region of Macedonia-Thrace experienced the most positive performance although in 2011 the region was a negative protagonist. To this fact contributed two occasional factors:

Better performance by the hotels in Thessaloniki that hosted a significant number of injured people and their escorts from Libya, with their costs covered at a great extent by the oil-rich countries of the Middle East and

The continuation of the upward trend in tourist arrivals from the Russian market, Turkey and other Balkan countries visiting by road destinations of Northern Greece.

In conclusion, it should be noted that over time, regardless of market conditions, it appears that tourism activity continues to be concentrated in the island destinations of the country

40 4140 4139

Chart 19

Average Occupancy Rate in Hotels by Region (Change %) (August )

Source: ITEP, Field research on hotels in Greece 2012.

Table 18

Average Occupancy Rate in Hotels (%)

Region May Change% August Change%

2010 2011 2012 11/10 12/11 2010 2011 2012 11/10 12/11

Attica (excl. islands)

61,08 70,89 54,32 16,06 -23,38 53,67 55,40 54,40 3,22 -1,81

Central Greece (excl. Attica)

39,09 28,93 25,82 -25,99 -10,76 63,80 60,40 59,35 -5,33 -1,74

Epirus- Thessaly 46,12 36,10 29,39 -21,73 -18,60 65,04 60,43 58,31 -7,09 -3,51

Macedonia- Thrace 50,88 39,66 44,89 -22,05 13,20 72,33 66,09 69,41 -8,63 5,02

Peloponnese 36,70 34,15 29,25 -6,95 -14,34 73,13 75,00 72,98 2,56 -2,69

Ionian Islands 40,14 38,95 30,75 -2,96 -21,05 70,29 74,34 70,23 5,76 -5,52

Cyclades – Dodecanese

54,74 50,46 51,54 -7,82 2,14 89,06 87,65 88,92 -1,58 1,45

Crete 47,67 50,31 46,31 5,54 -7,94 85,13 89,87 86,93 5,57 -3,27

Aegean Islands 51,03 47,66 48,29 -6,60 1,32 86,55 87,99 90,91 1,66 3,32

COUNTRY TOTAL 47,33 48,28 45,29 2,01 -6,20 75,84 77,78 77,86 2,56 0,10

Source: ITEP, Field research on hotels in Greece 2012.

By all previous studies we know that the size of the hotel unit is positively correlated with the achieved average occupancy rate (Table 19). This has also been confirmed this year as

3,22

-5,33

-7,09 -8,63

2,56

5,76

-1,58

5,57

1,66 2,56

-1,81 -1,74

-3,51

5,02

-2,69

-5,52

1,45

-3,27

3,32

0,10

-10,00

-8,00

-6,00

-4,00

-2,00

0,00

2,00

4,00

6,00

8,00 A

ttic

a (e

xcl.

isla

nds)

Cent

ral G

reec

e (e

xcl.

Att

ica)

Epiru

s- T

hess

aly

Mac

edon

ia- T

hrac

e

Pelo

ponn

ese

Aeg

ean

Isla

nds

Cret

e

Cycl

ades

– D

odec

anes

e

Ioni

an Is

land

s

TOTA

L CO

UN

TRY

D% 11/10 D% 12/11

40 4140 4140

the small family hotels have achieved occupancy rate in May 24.76%, while in August occupancy rate stood at 67.40% on average.

Table 19

Average Occupancy Rate in Hotels by Size(%)

Size May Change% August Change%

2010 2011 2012 11/10 12/11 2010 2011 2012 11/10 12/11

Family hotels (1-20 rooms)

35,03 26,14 24,76 -25,38 -5,30 66,45 68,65 67,40 3,31 -1,82

Small hotels (21-50 rooms)

44,48 37,00 34,26 -16,82 -7,41 71,96 72,55 73,51 0,82 1,32

Medium-sized hotels (51-100 rooms)

47,25 47,46 41,04 0,44 -13,53 73,15 72,92 73,24 -0,31 0,44

Large hotels (> 101 rooms)

53,91 55,52 53,47 2,99 -3,70 82,62 82,60 82,40 -0,02 -0,25

Hotels Total 47,33 48,28 45,29 2,01 -6,20 75,84 77,78 77,86 2,56 0,10

Source: ITEP, Field research on hotels in Greece 2012.

Small hotel units (from 20 to 50 rooms) in May achieved occupancy rate of 34.3%, the medium size of 41% and large (over 100 rooms) 53.5%. In August, the differences are less visible, but again the big hotels achieve higher occupancy.

Table 20

Average Occupancy Rate in Hotels by Star Category(%)

Star Category May Change% August Change%

2010 2011 2012 11/10 12/11 2010 2011 2012 11/10 12/11

5***** 52,71 56,17 55,83 6,56 -0,60 77,17 77,02 81,72 -0,19 6,10

4**** 57,41 57,32 52,04 -0,16 -9,22 84,73 84,63 82,76 -0,12 -2,22

3*** 46,95 39,71 38,98 -15,42 -1,83 75,07 73,3 72,83 -2,36 -0,65

2** 39,01 35,39 32,43 -9,28 -8,38 70,84 72,49 72,34 2,33 -0,20

1* 35,57 25,68 25,64 -27,80 -0,14 67,57 73,83 72,27 9,26 -2,11

Hotels Total 47,33 48,28 45,29 2,01 -6,20 75,84 77,78 77,86 2,56 0,10

Source: ITEP, Field research on hotels in Greece 2012.

In small and medium size units, the occupancy rate is 75% and in large units (over 100 rooms) at 82.4%. However, occupancy rates have remained stagnant even in big hotels compared to 2010.

Similar indications are recorded in the statistics relating to changes in occupancy rates relative to the star categories (Table 20). Higher occupancy rate is achieved by hotels of high star categories. In May, occupancy rate in 4 & 5 star hotels is around 55%, whereas in August

42 4342 4341

is around 82%. On the opposite side, the hotels of medium quality level show in May occupancy rates lower than 40% and in August around 72.5%.

Over time it seems that the high-class hotels are constantly improving their average occupancy, while the two and one star hotels are unable to retain their customer base. It is indicative that in August 2012 the marginal improvement in average occupancy rate of Greek hotels is due to the overall performance of the best five star hotels. They improved the occupancy with respect to 2011 by 6.1%, while in all other star categories the occupancy rate was lower than in 2011.

It is obvious that during the crisis, the high class hotels are able to exert a more flexible pricing policy. Limiting the prices of their rooms, they can easily limit the losses in terms of overnights. Moreover, high-class hotels were always less dependent on the domestic tourism market. In any case it is easier for them to recoup their losses by attracting more customers from the international market.

It is indicative that in May the 61.7% of Greek hotels had an average monthly occupancy rate below 40%, while only 3.9% of hotels had occupancy rates exceeding 80% (Table 21).

Things are considerably better as it is expected in August. Only 16.3% of the units, most of them located in urban centers of the mainland achieve occupancy rate below 40%. About 50% of hotels have an average occupancy rate of over 70%. Finally, nearly 30% of the units achieved in August occupancy rates exceeding 90% It is indicative that in May the 61.7% of Greek hotels had an average monthly occupancy rate below 40%, while only 3.9% of them had occupancy rates exceeding 80% (Table 21).

Table 21 Distribution of Average Occupancy Rate Achieved by Greek Hotels in 2012

Range of Occupancy May 2012 August 2012

% Hotels Cumulative Distribution

% Cumulative Distribution

Average Occupancy <20% 33,9 33,9 5,9 5,9

Average Occupancy 21-40% 27,8 61,7 10,4 16,3

Average Occupancy 41-60% 20,2 81,8 12,6 28,9

Average Occupancy 61-70% 8,8 90,7 8,1 37,0

Average Occupancy 71-80% 5,4 96,1 13,1 50,1

Average Occupancy 81-90% 2,1 98,2 20,8 70,9

Average Occupancy 91-100% 1,8 100,0 29,1 100,0 Source: ITEP, Field research on hotels in Greece 2012.

Prices of the Greek hotel product. As it is shown by the data in this year's survey of ITEP, the prices of rooms in Greek hotels remained for another year essentially unchanged. The weighted average price of the rooms throughout the country increased by 1.14% in May and 1.97% in August (Table 22). These differences fall within the limits of statistical error, taking into account the continuing

42 4342 4342

improvement of the hotels of higher categories in the proportion of the total capacity of hotel rooms offered in the market.

Table 22

Average Room Rate in Hotels by Region (€)

Region May Change% August Change%

2010 2011 2012 11/10 12/11 2010 2011 2012 11/10 12/11

Attica (excl. islands)

108,90 98,54 87,08 -9,51 -11,63 118,68 98,83 82,90 -16,73 -16,11

Central Greece (excl. Attica)

61,20 52,04 57,20 -14,97 9,91 77,38 65,67 73,78 -15,13 12,35

Epirus- Thessaly 68,29 56,11 50,91 -17,84 -9,27 84,83 65,35 65,94 -22,96 0,90

Macedonia- Thrace

67,40 68,73 62,02 1,97 -9,77 110,15 102,36 106,04 -7,07 3,60

Peloponnese 75,42 68,26 68,21 -9,49 -0,07 98,71 95,17 88,63 -3,59 -6,87

Ionian Islands 44,69 51,65 52,04 15,57 0,76 66,74 70,63 72,81 5,83 3,09

Cyclades – Dodecanese

61,47 66,35 70,45 7,94 6,18 97,37 106,55 122,12 9,43 14,62

Crete 57,95 61,32 62,62 5,82 2,12 97,84 109,55 111,42 11,97 1,70

Aegean Islands 57,20 55,07 57,82 -3,72 4,99 103,56 107,41 96,50 3,72 -10,16

COUNTRY TOTAL 65,80 65,28 66,02 -0,79 1,14 99,42 100,16 102,13 0,74 1,97

Source: ITEP, Field research on hotels in Greece 2012.

For the record, it should be recalled that prices followed an upward trend from 2000 to 2008, which remains the record year for prices in Greek hotels. In 2009, prices fell by about 5% and they have since remained essentially unchanged.

In May 2012, the average room rate in the whole country stood at 66 €, from 65.3 € in May 2011. Respectively in August 2012 it increased to 102.13 €, from 100 € in August 2011.

The prices have not varied in a similar manner throughout the country. Hotels on most island destinations recorded significant price increases, while the ones on the mainland recorded significant price decreases. The greatest decrease in hotel rates occurred in Attica (-16.1% in August and -11.6% in May).

Hotels in Peloponnese also recorded reduction in prices, which in May rose to 9.5% and in August to 3.6%. The islands of the Ionian Sea are included in the destinations with negative performance, where, despite a 5% increase recorded in May, a spectacular price reduction occurred in August of around 10% (Chart. 20). The hotels there were forced to offer tour operators more rooms in attractive prices. Thus, it was possible to attract an increased number of clients from the English market and counteract the precipitation in sales from the Italian and domestic market. In other words, hotels of the Ionian lost many individual clients from the Italian and Greek markets that pay higher prices during the high demand period in August.

44 4544 4543

Chart 20 Evolution of Average Room Rate in Hotels by Region

(August)

Source: ITEP, Field research on hotels in Greece 2012.

In the other island destinations, especially in Crete, there were price increases. In the South Aegean the average selling room rate rose to 111,4 € and it was increased approximately by 1.7% compared to 2011. This is a positive development, since the previous year prices had risen by 12%. In North Aegean islands price increases were more moderate and fluctuated around 3%. The winner of this year was undoubtedly Crete. The prices of the rooms were improved by 6.2% in May and by 14.6% in August.

Regardless of the positive performance of the tourism market in the above region, it should be noted that the rise in prices over the last three years in the South Aegean and Crete is largely due to the increase in the number of rooms in five star hotels. This development led to a corresponding increase in the specific weight of the rooms of this category in shaping the average sale price of hotel rooms in the area.

One interesting remark is the fact that higher prices in August were recorded in the hotels of Crete, South Aegean and Ionian Sea, while traditionally higher average prices had been recorded in Attica and Central Macedonia. This is another clear indication that in 2012 prices increased in resort hotels, whereas in city hotels serving customers in the greater proportion from the domestic market, prices continued to move downward after an even greater decrease that was noted in the previous two years.

As it was noted earlier, smaller hotels during the crisis have made the biggest price reductions. Small family hotels (up to 20 rooms) displayed a slight decrease in prices by 1.4% in August and significantly greater (-6.6%) in May. In the category of small hotels, price decrease was about 4% in both May and August. Reduced prices by 6% show medium sized hotels in May, although they improved their pricing by 2.9% in August.

-16,73 -15,13

-22,96

-7,07

-3,59

5,83

9,43 11,97

3,72 0,74

-16,11

12,35

0,90 3,60

-6,87

3,09

14,62

1,70

-10,16

1,97

-25,00

-20,00

-15,00

-10,00

-5,00

0,00

5,00

10,00

15,00

20,00

11/10 12/11

44 4544 4544

Table 23

Average Room Rate in Hotels by Size (€)

Size May Change% August Change%

2010 2011 2012 11/10 12/11 2010 2011 2012 11/10 12/11

Family hotels (1-20 rooms)

51,61 51,40 48,01 -0,41 -6,60 66,89 67,19 66,26 0,45 -1,39

Small hotels (21-50 rooms)

53,81 48,82 46,81 -9,27 -4,11 73,08 70,11 67,34 -4,06 -3,95

Medium-sized hotels (51-100 rooms)

53,86 59,27 55,78 10,04 -5,90 71,95 77,17 79,39 7,26 2,88

Large hotels (> 101 rooms)

78,33 79,38 78,88 1,34 -0,63 126,89 122,62 127,61 -3,37 4,07

Hotels Total 65,80 65,28 66,02 -0,79 1,14 99,42 100,16 102,13 0,74 1,97

Source: ITEP, Field research on hotels in Greece 2012.

With regard to price trends in different hotel categories, it should be noted that low class hotels continue to lose ground in the market.

In August, prices in 5 star hotels increased by approximately 9% and in 4 star by 2.5%. Instead, in 3 star hotel units prices fell by 3.7% and in 2 stars by 7.8%.

Table 24

Average Room Rate (€)

Category May Change% August Change%

2010 2011 2012 11/10 12/11 2010 2011 2012 11/10 12/11

5***** 108,14 102,61 101,99 -5,11 -0,61 166,00 156,90 170,99 -5,48 8,98

4**** 70,06 69,13 70,11 -1,33 1,42 112,65 107,42 110,05 -4,64 2,45

3*** 53,49 49,98 49,01 -6,56 -1,93 71,76 69,99 67,40 -2,47 -3,70

2** 44,38 44,67 41,12 0,65 -7,94 59,79 62,67 57,80 4,82 -7,78

1* 41,40 32,96 31,04 -20,39 -5,81 57,94 48,51 47,26 -16,28 -2,57

Total hotels 65,80 65,28 66,02 -0,79 1,14 99,42 100,16 102,13 0,74 1,97

Source: ITEP, Field research on hotels in Greece 2012.

It is obvious that the position of the large luxury hotel units is gradually strengthened since they can attract valuable foreign customers and on the other hand smaller units of lower classes suffer because they were oriented to serving Greek customers.

This is a worrying trend that if continued it will alter the traditional physiognomy of Greek hoteliers, leading to greater concentration in the industry.

In absolute terms, the average room rates in Greek hotels tend to be frozen at the levels specified in Table 25.

46 4746 4745

Table 25

Average Room Rate in Hotels by Star Category (€)

Category May August

5***** 100 € 170 €

4**** 70 € 110 €

3*** 50 € 70 €

2** 40 € 60 €

1* 30 € 50 €

Source: Estimates from the Field Research of ITEP, 2012.

Prices in 5 star hotels are set at around 100 euros in May and around 170 euros in August. In 2-star hotels, which constitute the majority of the hotel units, prices tend to be around € 40 in May and 60 euros in August.

These prices are the weighted averages of each category. Therefore, the weight of large units is very high compared to the small ones. If further studied the distribution of prices, it shows that 42% of Greek hotels sell their rooms at rates down from 40 euros in May (Table 26). The percentage of hotels that sell rooms less than 60 euros is 73.4%. In contrast, only 7% of Greek hotels sell their rooms over 100 euros in May.

In August the price level is much more improved. Only 7% of hotels have rooms under 40 euros. But there is a large number of units (37.9%) that sell from 40 to 60 euros per room. In the period of high demand, only 17% of hotels have available rooms over 100 per day.

Table 26 Distribution of Average Room Rate

Range of Price May2012 August2012

% Hotels

Cumulative Distribution

% Hotels

Cumulative Distribution

Average Room Rate <40 euro 42,1 42,1 17,0 17,0

Average Room Rate 41-60 euro 31,3 73,4 37,9 54,9

Average Room Rate 61-80 euro 14,2 87,6 17,9 72,8

Average Room Rate 81-100 euro 6,3 93,8 10,3 83,1

Average Room Rate 101-130 euro 3,1 97,0 6,2 89,2

Average Room Rate 131-150 euro 1,2 98,2 4,1 93,4

Average Room Rate >151 euro 1,8 100,0 6,6 100,0

Source: ITEP, Field research on hotels in Greece 2012.

Considering the relative stagnation of prices, the slight improvement in hotel occupancy rates in August and also the significant retardation in the first months of the year and a reduction in revenue from events and other similar activities in city hotels, we estimate that the turnover in Greek hotels will decline in 2012 by about 5%. It is expected to lead to

46 4746 4746

improved financial performance at the resort hotels on the islands serving foreign tourists, but it will be offset by the deterioration of the financial results of the hotels on the mainland and in the big cities, which are affected by developments in the domestic market.

Small hotel units of low class and rooms to let will suffer the most. If it is taken into account the over-taxation of the property and the problem of compulsory insurance in the Self-Employed Insurance Agency, it becomes apparent that there is more risk to the viability of small family units that composed for years the backbone of Greek hotel industry.

Performance of hotels hosting mostly foreign clients There is a large difference in performance of the hotels hosting foreigners than those that serve mainly Greek customers. As it is shown in Table 27, the hotels that cater to the international tourism market, regardless of their size and class, have much better performance.

The average revenue per room is inversely proportional to the percentage of foreigners hosted by each hotel. For units where foreigners are below 20% of all their customers, the average annual revenue per room stood at 9,885 euros, while in units that serve more than 70% foreigners it reaches 16,290 euros.

The average occupancy rate in May is 30.5% in hotels that foreigners are less than 20% of all clients and 51.6% in those that the proportion of foreigners exceeds 70%. Something similar happens in August. The average occupancy rate of units mainly serving foreigners reaches 85.7%, while in the units depending on the domestic market it amounted to 61.7%.

The prices also of the rooms are higher in hotels that attract larger number of foreign customers.

The most interesting thing is that hotels with more foreign customers achieve greater price increases in August versus May. The hotels that host mainly Greeks, the average price of 53 euros in May stands at 70 euros in August (24.3% increase). In contrast, hotels that host mainly foreigners the price of 71.5 euros in May stood at 119.7 euros in August (67.4% increase).

Table 27 Impact of the Percentage of Foreign Customers on the Performance of Hotels

Basic Tourist Variables Percentage of Foreign Customers in Hotels

<20% 21-50% 51-70% >71%

Average Revenue per Room 2011 9.885,61 10.825,18 13.380,90 16.292,48 Occupancy Rate May 2012 30,48 40,33 43,72 51,67 Occupancy Rate August 2012 61,66 65,56 68,40 85,76 Average Room Rate May 2012 53,08 55,04 62,19 71,47

Average Room Rate August 2012 69,41 67,37 83,24 119,70

Source: ITEP, Field research on hotels in Greece 2012.

48 4948 4947

Employment

Tourism is the only extrovert activity in the Greek economy that contributes to the creation of new jobs since 2000. As it is shown by the data in Table 28, during the period of economic growth that extends until 2008, most new jobs were created in the public sector and in particular in the areas of the Public Administration, Defense and Education, followed by the industry trade (retail and wholesale) and the constructions.

The sector of hotels and restaurants created cumulatively 52,700 jobs from 2000 to 2008. Instead, all the traditional export sectors such as food, clothing and footwear industry, agriculture, production of tobacco products, chemical industry and transportation, employed a smaller number of workers in 2008 compared to 2000.

Table 28

Sectors with the largest numbers in job creation and job losses Country Total 2000 - 2008

Sectors that create more jobs Sectors that lose more jobs

Sector Number of Employed

Sector Number of Employed

Construction 88.419 Agriculture – Farming -159.900

Retail Trade 87.993 Manufacture of wearing apparel and fur

-36.472

Public Administration, Defense & Social Security

80.869 Insurance and pension funds -14.651

Other Business Activities 80.185 Food & Beverage Industry -6.672

Education 72.182 Manufacture of tobacco products

-5.005

Hotels - Restaurants 52.697 Leather Processing -3.525

Health & Social Care 45.822 Wood Manufacture & Construction Products

-3.228

Wholesale Trade 35.809 Refined petroleum products -2.242

Other Services 25.272 Air Transport -2.055

Real Estate Activities 21.493 Medical Manufacture -1.980

Total 590.741 Total -270.201

Source: Hellenic Statistical Authority. Elaboration by Labor Institute /General Confederation of Workers of Greece.

During the recession from 2008 to date significantly all sectors contributing to employment in the previous period were affected except for tourism. Overall, the past years 815 000 jobs were lost in Greece.

Indicatively, the construction industry lost 125,000 jobs the biennium 2009-2010 and the first quarter of 2011. At the same time 117,000 jobs were lost in manufacturing, while retail and wholesale trade lost around 61,000 jobs. Due to fiscal policy of the memorandum, employment will shrink significantly in the public sector of the economy in the near future.

48 4948 4948

Table 29 Sectoral changes in the number of persons employed

2008 – 3rd Quarter 2012(in thousands)

SECTOR OF ECONOMIC ACTIVITY 2008 3rd

Quarter 2012

Cumulative Change

Change% 2012/2008

Activities of extraterritorial organizations and bodies

1,6 1,6 0,0 0,0%

Accommodation and food service activities 307,1 296,0 -11,1 -3,6% Human health and social work activities 231,0 219,9 -11,1 -4,8%

Agriculture, forestry and fishing 516,9 491,5 -25,4 -4,9%

Financial and insurance activities 113,4 106,1 -7,3 -6,4% Professional, scientific and technical activities 244,5 223,4 -21,1 -8,6% Education 322,3 287,6 -34,7 -10,8%

Administrative and support service activities 72,7 64,8 -7,9 -10,9%

Information and communication 78,0 68,0 -10,0 -12,8% Public administration and Defense; Compulsory social security 377,4 327,3 -50,1 -13,3%

Transportation and storage 214,9 185,2 -29,7 -13,8%

Electricity, gas, steam and air conditioning supply 32,1 27,3 -4,8 -15,0% Other service activities 92,0 77,6 -14,4 -15,7% Mining and quarrying 15,6 12,7 -2,9 -18,6% Wholesale and retail trade; repair of motor vehicles and motorcycles 834,0 664,6 -169,4 -20,3%

Real estate activities 8,6 6,3 -2,3 -26,7% Water supply; sewerage, waste management and remediation activities 31,4 22,9 -8,5 -27,1%

Arts, entertainment and recreation 58,1 40,6 -17,5 -30,1%

Manufacturing 533,7 356,9 -176,8 -33,1% Activities of households as employers 81,7 54,1 -27,6 -33,8% Construction 386,8 204,8 -182,0 -47,1%

TOTAL 4.553,8 3.739,2 -814,6 -17,9%

Source: Hellenic Statistical Authority, Labor Force Survey, Elaboration ITEP.

In the field of hotel and restaurant sector, the reduction in employment during the recession was marginal (-3.6%), since, according to the estimates of the Hellenic Statistical Authority, from 2008 to date 11,000 jobs were lost. It is reliably estimated that these jobs were lost in the restaurant business according to the industry unions, because 4,500 small restaurants and recreation outlets have closed in the cities of the mainland (Chart 21).

50 5150 5149

Chart 21

%Change in Employment in Selected Sectors of the Greek Economy 2008 - 2012

Source: Hellenic Statistical Authority, Labor Force Survey, Elaboration ITEP.

From Chart 21 it is apparent that tourism is the only industry that can currently retain jobs and create in the short term new jobs in our country.

Employment in Greek hotels. According to estimates derived from the field research of ITEP, Greek hotels in May 2012 employed 94,360 people and 119,920 in August. These figures result from reduction of sample data on the total number of rooms. The average employment is weighted according to the size of unit, the class of the hotel and the region that the hotel is installed.

Compared to 2011, employment in May decreased by 2.3% and in August it increased by 0.8%.

A first interesting observation is that the percentage increase in employment is greater than the increase in occupancy rate of hotels and this happens in a year where no rise is recorded in hotel capacity. This should be attributed to the fact that where reduction of the activity is recorded, employment is decreasing at a much slower pace than occupancy rate. After all, this was proved by last year's survey. Instead, when occupancy rate is increasing, hotels employ an additional number of people to serve their customers.

The absolute figures for 2012 are not directly comparable to the figures released in the report of 2011, as they do not include members of the families occasionally helping in small hotel units and also the weighting method has been redefined. The average employment is

-17,9%

-3,6% -4,8% -4,9% -6,4% -10,8%

-20,3%

-33,1%

-47,1% -50,0%

-45,0%

-40,0%

-35,0%

-30,0%

-25,0%

-20,0%

-15,0%

-10,0%

-5,0%

0,0%

TOTA

L

Acco

mm

odat

ion

and

food

se

rvic

e ac

tiviti

es

Hum

an h

ealth

and

soc

ial w

ork

activ

ities

Agr

icul

ture

, for

estr

y an

d fis

hing

Fina

ncia

l and

insu

ranc

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es

Educ

atio

n

Who

lesa

le a

nd r

etai

l tra

de;

repa

ir o

f mot

or v

ehic

les

and

mot

orcy

cles

Man

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turin

g

Cons

truc

tion

50 5150 5150

weighted by the size of the unit, the class of the hotel and its region.. In the comparative tables below, the number of employees in 2011 has been reassessed and consequently the information presented is strictly comparable.

At the regional level, sharp decline in employment has been recorded in areas hosting large numbers of Greek customers. In contrast, an increase in employment has been observed in traditional destinations receiving mainly foreign clients. The greatest decrease occurred in the areas of Epirus - Thessaly -31.5% in May and -21.3% in August. Peloponnese followed, where employment shrank by 16% and Attica, where there was a decrease of 8.2% in August.

At this point, it should be noted that employment in hotels in Attica is steadily decreasing since 2008. The shrinking of the workforce in 2012 is added to an abnormally high employment drop by 19.4% in 2011. Last year's decline was largely caused by the fact that several hotels in the city center had ceased operations.

The most significant employment growth between 2011-12 was recorded in the region of Macedonia -Thrace (11.4%). The previous year this region had reported drop in employment by 8.56%, due to the negative performance of the city hotels of Thessaloniki in 2011. In fact this year, employment in the region returned to 2010 levels.

In Crete and the islands of South Aegean employment increased for another year. The Region of South Aegean is the only region where jobs are steadily increasing from 2008 onwards. The continuous expansion in the number and hence in the capacity of high-class hotels has contributed decisively to the rise of employment.

Be noted that in 2012 the hotel capacity in the country increased by 3,000 rooms. Most of this capacity was added to the South Aegean, Crete and Macedonia - Thrace. Without the additional employment due to the operation of new hotel units, the number of jobs in Greek hotels would shrink by 1.3% in May, while presenting negative results in August.

For another year continued the trend of concentration of tourism employment in the island country. In absolute terms the largest number of employees was recorded in the South Aegean, with hotels employing in August over 30,850 people. Crete follows with 27,570 employees.

In 2008, Crete was the first in employment while in 2012 the South Aegean Region. Attica instead shrunk its share in total employment. Last year it had been supplanted in absolute numbers by the Region of Macedonia - Thrace, while this year by the region of the Ionian Islands.

52 5352 5351

Table 30 Estimate of Total Employment in Hotels by Region

REGION Employment.

May 11 Employment.

May 12

Change% May.12/ May.11

Employment. Aug.11

Employment. Aug.12

Change% Aug.12/ Aug.11

Attica (excl. islands)

11.027 10.236 -7,2% 11.298 10.374 -8,2%

Central Greece (excl. Attica)

2.750 2.608 -5,2% 3.584 3.731 4,1%

Epirus- Thessaly 5.525 3.786 -31,5% 6.207 4.887 -21,3%

Macedonia- Thrace

11.597 12.677 9,3% 14.755 16.438 11,4%

Peloponnese 8.813 7.148 -18,9% 11.448 9.613 -16,0%

Ionian Islands 2.516 1.854 -26,3% 3.101 2.818 -9,1%

Cyclades – Dodecanese

20.453 22.043 7,8% 25.096 27.569 9,9%

Crete 23.060 23.855 3,4% 29.732 30.854 3,8%

Aegean Islands 10.890 10.155 -6,8% 13.867 13.707 -1,2%

COUNTRY TOTAL 96.631 94.361 -2,3% 119.088 119.992 0,8%

Source: ITEP, Field research on hotels in Greece 2012.

Chart 22

Evolution of Total Employment in Hotels by Region( May–August)

Source: ITEP, Field research on hotels in Greece 2012.

-7,2% -5,2%

-31,5%

9,3%

-18,9%

-26,3%

7,8%

3,4%

-6,8%

-2,3%

-8,2%

4,1%

-21,3%

11,4%

-16,0%

-9,1%

9,9%

3,8%

-1,2%

0,8%

-35,0%

-30,0%

-25,0%

-20,0%

-15,0%

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

May 12/11 August 12/11

52 5352 5352

In absolute terms the largest number of employees was recorded in South Aegean, with hotels in August to employ over 35,700 people, followed by Crete with 30,600 employees. For the first time the region of Macedonia - Thrace supplanted Attica and moved into third place.

Employment rate of women and foreign workers in Greek hotels. According to the data of the survey, the 58% of workers in Greek hotels is women. The highest proportion of women was recorded in the hotels of the lower categories. In the one-star hotels, throughout the country, the proportion of employed women increased to 68.4% in May and 71.7% in August. In 2-star hotels the proportion of women increased to 67% in both May and August. In 3-star hotels it is close to 64%, while in 4 and 5-star hotels it was shaped lower, near to 53%. Obviously in smaller hotels that are not employing skilled staff for specific jobs, the proportion of women is greater. In family run hotel units up to 20 rooms the rate is around 70%, while in large units of over 100 rooms the rate is limited to 53%.

Table 31

Employment of Women in Greek Hotels (%)

REGION 5***** 4**** 3*** 2** 1* Total

May 12

Aug. 12

May. 12

Aug. 12

May. 12

Auγ. 12

May. 12

Aug. 12

May. 12

Aug. 12

May. 12

Aug. 12

Attica (excl. islands)

43,5 43,8 50,9 51,7 55,1 57,0 61,9 62,5 45,0 45,0 50,8 51,8

Central Greece (excl. Attica)

62,3 60,0 58,1 63,0 65,4 67,2 55,0 66,5 0,0 0,0 60,5 64,7

Epirus- Thessaly 56,8 58,0 61,3 61,5 52,4 57,0 56,6 55,9 61,5 66,1 56,0 57,9

Macedonia- Thrace

53,0 53,5 57,7 57,3 62,6 62,1 65,4 66,7 78,4 77,3 59,9 60,3

Peloponnese 47,7 57,7 60,9 58,7 65,4 64,2 64,4 65,2 58,9 76,0 60,9 62,2

Ionian Islands 51,1 49,1 57,2 58,6 60,1 64,6 61,3 67,2 42,7 54,9 58,1 61,6

Cyclades – Dodecanese

55,6 55,5 57,9 57,8 64,7 64,3 64,9 66,0 57,6 69,1 59,2 59,5

Crete 47,9 47,9 52,7 53,7 63,0 62,0 67,4 69,1 68,5 69,8 55,9 57,1

Aegean Islands 46,2 48,4 50,4 50,6 52,7 51,6 66,7 68,3 50,0 73,2 54,3 55,2

COUNTRY TOTAL

51,1 51,7 55,1 55,4 60,1 60,4 64,3 66,1 64,7 69,3 57,0 58,1

Source: ITEP, Field research on hotels in Greece 2012.

At regional level the lowest proportion of women was recorded in Athens with 51%. Within the region of Attica, the lowest ratio was recorded in 5-star hotels with 43.5%, while less than 51% remains the proportion of women in 4-star hotels.

54 5554 5553

In contrast, the highest proportion of women was recorded in 1-star hotels in the region of Macedonia-Thrace, the Ionian Sea and in the Cyclades, where women constitute over 70% of the workforce in August.

In the lower class hotels on the islands of the country, employees are engaged primarily in cleaning, in food departments and in the reception. For these jobs, hoteliers prefer to employ women from the local labor market. In large hotel units where there are more skilled jobs, the posts are more stable. These posts are often occupied by men, who are not easily replaced, since they form the core of the human capital of the company. Mechanics, gardeners, waiters and storekeepers are usually men who work for many years in the same company.

Chart 23

Employment of Women in hotels by Region (%)

Source: ITEP, Field research on hotels in Greece 2012.

Nevertheless, it is obvious that the hospitality industry offers employment opportunities in the Greek regions at a time when unemployment affects a large percentage of the female workforce. Of course, there are indications that women are employed in particular disciplines and they are not often part of the permanent business staff. This issue should be addressed in future by providing appropriate incentives.

50,8

60,5

56,0

59,9

60,9

58,1

59,2

55,9

54,3

51,8

64,7

57,9

60,3

62,2

61,6

59,5

57,1

55,2

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

Att

ica

(exc

l. is

land

s)

Cent

ral G

reec

e (e

xcl.

Att

ica)

Epiru

s- T

hess

aly

Mac

edon

ia- T

hrac

e

Pelo

ponn

ese

Aeg

ean

Isla

nds

Cret

e

Cycl

ades

–

Dod

ecan

ese

Ioni

an Is

land

s

May 12

August 12

54 5554 5554

Table 32

Employment of Women in Greek hotels by Hotel Size and Region (%)

REGION

Family Hotel (1-20 rooms)

Small Hotel (21-50 rooms)

Medium-sized Hotel

(51-100 rooms)

Large Hotel (>101 rooms)

Total

May 12

Aug. 21

May 12

Aug. 12

May 12

Aug. 12

May 12

Aug. 12

May 12

Aug. 12

Attica (excl. islands)

50,95 49,31 62,96 63,90 52,94 54,61 46,80 47,74 50,81 51,79

Central Greece (excl. Attica)

78,40 79,00 56,10 65,02 57,47 61,15 63,66 60,64 60,53 64,72

Epirus- Thessaly 59,37 60,03 62,37 64,51 53,03 54,95 49,77 50,50 56,05 57,86

Macedonia- Thrace

70,44 71,69 64,76 65,78 59,91 60,47 56,35 55,77 59,89 60,28

Peloponnese 69,99 69,87 66,24 66,18 63,25 65,19 53,00 55,02 60,86 62,17

Ionian Islands 26,92 42,56 65,35 68,74 58,50 64,45 54,33 55,10 58,06 61,58

Cyclades – Dodecanese

63,42 70,31 63,78 65,65 63,82 62,64 57,29 57,21 59,23 59,54

Crete 70,35 72,73 65,59 66,83 60,35 61,33 51,84 52,35 55,91 57,06

Aegean Islands 72,74 74,28 55,92 60,45 67,66 63,27 48,55 48,73 54,26 55,22

COUNTRY TOTAL 66,53 68,84 63,22 65,32 59,83 60,56 53,25 53,51 57,04 58,08

Source: ITEP, Field research on hotels in Greece 2012.

Following the proportion of women, the proportion of foreigners is higher in hotels of midscale and low categories. Across the country, the largest proportion of foreigners was recorded in 1-star hotels around 30% and the lowest in 5-star hotels in May (16.4%).

At regional level, the highest proportion of foreign workers was registered in the hotels of South Aegean 33.14% in August and 31.79% in May. The hotels of Macedonia-Thrace follow, where the ratio stands at 20%, whereas in Crete it is 19% in August. At the other end are the hotels in Attica, where employment of foreigners is limited to 16.8%. Especially in the five-star hotels of Attica, this ratio is around 7%. Across the continent, the proportion of foreign workers is lower than the average of the country

Another interesting point arising from the evolution of employment is that in 2012 the number of foreigners working in Greek hotels has considerably shrunk.

In May 2012 the proportion of foreign workers to the total employed fell to 20.48% and to 21.42% in August. Compared to 2011, the number of foreign workers decreased by 7.3% in May and by 8.4% in August. The largest decrease in employment of foreigners was registered in hotels of the medium categories on the mainland. Growth rate appears only in lower class hotels in South Aegean and in Crete. It seems that in the local communities the reflexes of social solidarity work, meaning that hoteliers tend to support employment of young people originating from their territory, defying the need to reduce operational costs in their businesses.

56 5756 5755

Table 33 Employment of Foreign Workers in Greek Hotels (%)

REGION 5***** 4**** 3*** 2** 1* Total

May 11

Aug. 11

May 11

Aug. 11

May 11

Aug. 11

May 11

Aug. 11

May 11

Aug. 11

May 11

Aug. 11

Attica (excl. islands)

7,25 7,00 15,08 16,38 21,16 21,63 30,92 30,49 19,00 19,00 16,33 16,84

Central Greece

(excl. Attica)

9,13 9,55 9,42 15,30 14,52 13,52 20,54 18,43 0,00 0,00 14,65 14,61

Epirus- Thessaly

18,94 15,89 17,59 13,63 8,83 11,19 9,51 14,99 6,25 2,34 11,93 13,00

Macedonia- Thrace

23,54 24,15 17,96 19,07 11,26 13,46 18,34 20,35 40,53 37,85 18,55 19,91

Peloponnese 8,83 10,16 16,07 15,88 23,04 23,56 12,62 14,95 34,04 12,52 15,97 16,84

Ionian Islands 14,07 18,63 8,54 13,96 17,84 14,13 15,00 12,90 14,58 14,58 14,87 14,54

Cyclades – Dodecanese

13,66 15,11 17,48 18,84 19,93 18,21 29,46 28,12 25,15 22,79 18,41 18,94

Crete 27,54 32,28 28,55 29,59 38,87 38,73 39,20 37,99 43,00 36,24 31,79 33,14

Aegean Islands

9,00 12,83 9,31 10,86 13,83 12,50 31,07 31,78 0,00 29,49 15,49 16,71

Country Total 16,40 18,23 20,10 21,28 19,77 19,73 26,63 26,80 32,52 27,21 20,48 21,42

Source: ITEP, Field research on hotels in Greece 2012.

The ratios do not appear to vary significantly with respect to the size of the units. In small family businesses (1-20 rooms) the ratio ranges in 28%, in the medium sized 25-27% and in big hotels 21%. It appears however that the difference is due to the fact that large city hotels employ fewer foreign workers. This means that the proportion of foreign workers in the resort hotels is almost similar, regardless of the size of the unit. It should be noted that tourism activity is offered for the employment of foreign workers around the world. Greece is not among the countries with a high proportion of foreign employment in this industry

56 5756 5756

Chart 24 Employment of Foreigners in Hotels by Region (%)

Source: ITEP, Field research on hotels in Greece 2012.

Indicatively, in Spain immigrants are 53% of total workers in the industry, in Germany 31.0%, while in countries such as England and Denmark the figure is even higher.

Chart 25

Employment of Foreigners in Hotels in Member States of E.U. (%)

Note: The percentage of the UK is referring to the employment of foreigners in fast-food companies. Source: International Labour Organization

16,3

3

14,6

5

11,9

3 18,5

5

15,9

7

14,8

7

18,4

1

31,7

9

15,4

9

16,8

4

14,6

1

13,0

0

19,9

1

16,8

4

14,5

4 18,9

4

33,1

4

16,7

1

0,00

5,00

10,00

15,00

20,00

25,00

30,00

35,00

Att

ica

(exc

l. is

land

s)

Cent

ral G

reec

e (e

xcl.

Att

ica)

Epiru

s- T

hess

aly

Mac

edon

ia- T

hrac

e

Pelo

ponn

ese

Aeg

ean

Isla

nds

Cret

e

Cycl

ades

–

Dod

ecan

ese

Ioni

an Is

land

s

May 12

August 12

23,5%

31,0%

53,0%

75,0%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

Greece Germany Spain U.K.

58 5958 5957

Average employment per hotel unit In terms of employment per unit, ITEP's research shows that 17.8% of hotel enterprises in Greece are employing only one person who probably is the owner of the business. Cumulatively, 50.7% of the Greek hotels in May and 46% in August employ fewer than five employees. Only 5.2% of Greek hotels employ more than one hundred (100) employees in the peak season of August. These numbers are not considered small by European standards. According to data from the International Labour Organisation (ILO), the 94% of the 2.7 million tourist enterprises in the EU employs fewer than 10 employees. The average number of employees per enterprise in the tourism industry is close to 3.5 people, while Greek hotels during the month of August employ on average 14 persons per unit.

Table 34

Employment per Room in Greek Hotels 2012 Star Category May August 5***** 0,51 0,62 4**** 0,31 0,38 3*** 0,19 0,24 2** 0,13 0,18 1* 0,09 0,13 Source: ITEP, Field research on hotels in Greece 2012.

Employment per room in May is estimated to be around 0.28 and rises to 0.35 in August.. This means that for every 3 new rooms added to the hotel capacity in the country, a new sustainable job is created. Certainly, employment is higher per room in the hotels of higher categories. More specifically, in the five-star hotels the average employment per room stands at 0.8 people, in the four-star hotels to 0.38, in three star hotels to 0.24 and in the two lower categories to 0.17 employees per room.

In order to investigate and quantify the effect of various characteristics of the hotels regarding the number of employees in a hotel unit, the study of ITEP has taken into consideration certain econometric models.

The key findings of the signs and absolute sizes of the estimated coefficients of regressions are the following:

a. The variable that explains the largest proportion of the variation of employment is the number of each hotel room that is the size of the unit. The elasticity of employment was estimated at 0.84. This means that a unit that has 10% more rooms,it will employ 8.5% more employees than another unit of the same class with similar technical characteristics.

This practically means that smaller units of the same class contribute proportionally to the creation of more jobs.

b. The price elasticity of the room regarding employment was estimated at 0.37. This means that, taking out the effects of other factors, a hotel that charges the room by

58 5958 5958

10% more than another one, is employing 3.7% more employees. Therefore the rising of prices means more jobs.

c. It is noted that the continued operation of the units contributes positively to employment.

d. The higher- class units employ more workers when the effect of other factors is isolated

e. The elasticity of employment compared to the occupation rate of the unit (OR) was estimated very low.

Table 35

Distribution of Employment in Greek Hotels (%)

Range of employed

May August %

hotels Cumulative Distribution

% hotels

Cumulative Distribution

Up to 1 employee 17,8 17,8 12,6 12,6

2-3 employee 20,2 37,9 18,9 31,5

4-5 employee 12,7 50,7 14,5 46,0

6-7 employee 7,7 58,4 9,4 55,4

8-10 employee 9,3 67,6 9,3 64,7

11-15 employee 8,6 76,3 8,9 73,6

16-25 employee 7,1 83,3 8,6 82,2

26-50 employee 6,0 89,4 6,5 88,7

51-100 employee 6,5 95,9 6,1 94,8

100 + employee 4,1 100,0 5,2 100,0

Source: ITEP, Field research on hotels in Greece 2012.

60

59

Summary. 2012 was a difficult year for the Greek hotel industry. The picture of the performance of hotels is twofold: the first six months were characterized by decrease or stagnation in the main tourist figures (employment, occupancy, average room rate), while in the second half there was a reversal of the climate, with the corresponding figures recording positive changes. This proves once again the resilience of Greek tourism in economic crises.

More specifically, in May (1.14%) the average room rate recorded a small increase, while employment and occupancy decreased by 2.3% and 6.2% respectively. In August there was a marginal increase in the above figures.

The hotels in major urban centers and those hosting large percentage of customers from domestic market suffered the greatest impact of the ongoing financial crisis in 2012. However, many of the island destinations of the country were also affected in 2012.

Chart 26

Summary of performance of the hotel industry 2011- 2012

Employment 96,631

1,14%

-6,2%

MAY 2011 %CHANGE MAY 2012

Occupancy Rate 48.3%

Average Room Rate

65.30 €

Occupancy Rate Change % 2012/11

-6.2%

Employment 119,439

Occupancy Rate 77.80%

Average Room Rate

100.20 €

Employment Change% 2012/11

0.8%

Occupancy Rate Change% 2012/11

0.1%

Average Room Rate Change% 2012/11

2%

AUGUST 2011 % CHANGE AUGUST 2012

2,0%

0,8%

0,1%

Average Room Rate Change% 2012/11

1.14%

-2,3%

Employment Change% 2012/11

-2.3%

H O T E L S

H O T E L S

Performance of Greek Tourism and developments in the basic figures

of the Greek Hotel Market 2011 - 2012

201324 Stadiou str, 105 64 Athens

Τ. +30 213 2169900 • F. +30 210 3225 449 • www.grhotels.gr • info@grhotels.gr