EXECUTIVE SUMMARY – MARKET SNAPSHOT
Over the past three years, the hospitality market in Greece has witnessed substantial business growth. Aside from the recognition that Greece is one of Europe’s leading and safest tourism destination, the other main contributing factors related to the new entry of internationally recognized operators and the sustained retrofitting and upgrading of existing hospitality assets, coupled with investments in the improvement of specific transport infrastructure. The renewed efforts in the active management of the sector’s non-performing loans (NPLs) also contributed to the movement in the hospitality property sector.
At the same time, the hospitality sector continues to be affected by domestic challenges and international macroeconomic developments. In Greece, such challenges refer to the economic stability and growth prospects, the outstanding high ratio of the sector’s NPLs, the illegal immigration issue in certain islands and the volatile tax framework. We also expect certain international developments to affect arrivals and related income from tourism. The Brexit negotiations outcome is one of them, whilst any further devaluation of Turkish lira could intensify competition. Other non-European markets (like Egypt, Morocco and Tunisia) in the Mediterranean market could also attract tourists and related investment capital as their situation stabilizes further and new hotel projects come to the market.
- A possible downturn in the current tourism cycle is expected to be mild and rather expressed as a reduction in the demand growth rate of the Greek hospitality sector.
- International financial uncertainty, combined with the newly-grown competition from neighboring markets, may lead to a possible reduction in the estimated revenue from international tourists. Given also the oversupply of 5-star hotels in popular Greek destinations, we expect the developing of more competitive and quality hotel establishments as well as 3-star and 4-star boutique hotels.
- International Tour Operators, such as TUI, Thomas Cook and Alltours, are expected to strengthen their presence in the Greek hospitality market, acquiring or managing new hotels and resorts as a way to control a larger number of rooms in the coming years.
- The more active management of real-estate-collateralized corporate non-performing loan portfolios, with hotel assets as collaterals, could be an opportunity for change of ownership, reinvestment and repositioning.
- The lack of good quality serviced apartments in the city of Athens and in other destinations, will probably lead to a shift in the interest of investors and managers, towards the acquisition and operation of new assets in the city, and probably, in the regional market, where associated tourism demand is sizable.
- Progress is also expected in the branded residences sector, which until recently was mainly represented by individual family businesses. New development projects are currently focusing on resort destinations and we expect them to expand into central Athens, mostly via conversions of existing and fitting out semi-completed residential buildings.
- The yachting and cruise sectors in Greece are expected to expand, as sailing boat and yacht chartering and general demand for sea tourism continue to soar. At the same time, there are several ongoing tenders for new marina and port projects, or for refurbishments, extensions and management of existing ones, with certain ones aiming to host cruise ships.