Tourism boom in Greece prompts hotel investors to redraw investments plans

How many new hotels does Athens need? In the city center, there’s a hotel every 50 meters. Built to high standards, the hotels are paying investors off accomodating armies of tourists that descend on the city every day. However, what happens now that the country seems to have hit new records in tourism and the industry is aiming to extend the season? Are the hotels enough or do we need more? In the market they are talking about new investments and probably lots of them.

With the new strong conditions in tourism, international and domestic businessmen look to be active in the hotel industry on new investments, Vassilis Fotopoulos, Associate Director, Hospitality Lead at Arbitrage, tells Business Daily.

The recovery of tourism "at the same time, increases the willingness of new international players (big brands and private capital) to enter the Athenian hotel market. Small all-suite units are constantly being developed around and within the center, while the aparthotel trend is now being established and is constantly gaining ground", he emphasizes.

Despite the pandemic, uncertainty and the war in Ukraine, the flow of hotel investments remains strong with many new projects earmarked for Athens' two hotspots, the city center and the Athenian Riviera.

Data from Arbitrage show that new hotels are already underway in Omonia, Syntagma and Kolonaki. Among them are larger units, with over 200 rooms, while most accommodation in the center of Athens being small boutique hotels. Indicatively, the 5-star One and Only Aesthesis hotel is intended for the south of the city, in Glyfada, while in 2024 the Hampton hotel (formerly Mistral) is expected to welcome the public in Kastela, Piraeus.

"The investment plan and the tourist opportunities in the Athenian Riviera, including the planned investment in Elliniko with the new large units expected in 2025, are expected to act as reinforcements in the further development of tourist, business and investment interest", concludes Fotopoulos.

Improved sentiment, interest rates and the longer season

With this year's strong results in arrivals, sentiment in the industry has improved dramatically. But as the sector looks to beat 2019 numbers, interest rates are rising, making hotel financing more expensive as most of their loans are with floating rates. Also, the higher cost of money will put a strain on the disposable income of Europeans, thus reducing money for holidays next year. Experts point out that those who offer more affordable accomodation services will be more resistant to the downturn than those who cater to the top end of the market.

In Greece, the next challenge for the industry is to extend the season, which seems to be happening - albeit slowly. A crucial role in this effort is played by the promotion of Athens as a city destination, and the highlighting of the various aspects of the city, such as culture. Advertising campaigns have been helpful, such as the GNTO's "greekend: End your week like a Greek", which began in February, as well as the recent video prepared by the Region of Attica promoting cultural tourism in Attica, entitled: "Attica. Culture in a Word".

There are indications that US airlines are preparing to expand their routes to Athens during the winter. Also, British tour operator Jet2 recently announced the launch of winter routes for the first time, with flights to Athens from Manchester and Birmingham airports. 

"Just the Beginning"

Vangelis Vlachos, managing director of the Athens Development and Tourism Promotion Company, emphasizes in comments to Business Daily, that "for us this is only the beginning". "We should note that Athens has taken 6th place in Europe and 8th in the world as a conference destination in the ranking of the International Congress and Convention Association Report for 2021", he says.

“During the pandemic we have gained attention as a destination for visitors who intend to stay for a long time, such as digital nomads. We expect this interest to increase because Athens brings together many of the qualities that 'long-term visitors' are looking for in a destination," adds Vlachos.