International arrivals during Q1 at Athens airport decreased by 3.0%. Thessaloniki Airport saw an increase of 12.5% compared to last year’s Q1 but this is probably due to the fact that Thessaloniki Airport does not distinguish between domestic and international arrivals and the former increased sharply due to the forced closure of the Athens – Thessaloniki motorway at Tempi for a few months. Arrivals at all Greek airports also increased by 2.8%. In April, however, figures deteriorated sharply, largely due to the early Easter which discouraged foreign tourists from coming to Greece as well as due to the closure of the European airspace due to the volcanic ash from Eyjafjallajokull in Iceland which led to many cancelled early holidays.
The performance of the hospitality industry during the first quarter showed marked deterioration for Athens and Thessaloniki, though not for the Resort Hotels which, during Q1, were of a non-seasonal operation. Athens overall RevPAR decreased by 7.0% in Q1, Thessaloniki by 12.9%, while (non-seasonal) resort destinations had an overall increase of 12.8%. However, April was very bad for resort hotels (which now also included a significant number of seasonal hotels) mainly due to airport closures caused by the volcanic ash and early Easter which discouraged holiday-makers to fly to Greece.
The opening of the Met Hotel in Thessaloniki has improved the hospitality infrastructure of the city; however, the addition of 212 rooms in the 5* category supply, making it the second largest hotel in the city, has put pressure on occupancy and rates overall.
Due to the early Easter many seasonal resort hotels have delayed their opening, not only because demand for Easter holidays was reduced but also because of the long time gap between Easter Holidays and the beginning of the spring/summer holiday season.
Although the impact of the eruption of the volcano Eyjafjallajokull in Iceland was largely negative, it also had a positive impact for some hotels (particularly in Athens) whose customers extended their stay until the opening of the airports and/or where stranded tourists checked-in while waiting for airports to open again.
The comparison of the performance of Athens, Thessaloniki and Greek Resorts with other comparable destinations shows their disadvantageous position. In particular, in April there was a reversal of the until then mostly negative trends to positive across Southern Europe, while in Greek hotels the negative developments became more pronounced and included the resort hotels as well.
Airtraffic controllers’ strikes in April caused significant cancellations as well.
Things to consider for the next Quarter- Last minute reservations are expected to limit the poor performance of resort hotels compared to last year’s performance.
- The avoidance of further violent demonstrations in Athens and extensive, and often unfair, coverage of them in the international Press and Media will further help redressing the ground lost so far this year.
- Athens hotels should get a major boost during the biennial Poseidonia shipping exhibition in June.
- The opening of the Athens seafront will boost the city image as a city break destination.
- The Greek Government has announced the lifting of restrictions on manning cruise ships (‘cabotage’ rules) and the Tourism industry keenly awaits the draft law that will implement this liberalization. Due to these rules and despite the Greek seas being a favorite for cruises – there are over 1,000,000 passengers in the Greek seas annually, only 6.5% of European cruise passengers originated from Greece while Italy benefited by 60%. Athens hotels and the Athens airport are expected to be the main beneficiaries of the much anticipated liberalization.
- The further increase of the VAT on hospitality services to 11% from July 1st, 2010 (from 9% at the beginning of the year) will have a negative impact on the profitability of the industry overall, particularly in combination with the price reductions taking place due to current market conditions.
GBR Hospitality Quarterly Newsletter provides a snapshot of the performance of Greek hotels based on a sample of more than 180 hotels & resorts in Greece. This data is complemented by data from other sources so as to place the Greek hospitality industry in the perspective of Greek tourism and of the International Hospitality Industry. Finally, a topic of special importance to the hospitality industry will be presented each time.