Greek Tourism Rebounds: Positive Recovery Amidst Varied Regional Trends

Greece and its picturesque islands in the Aegean, Ionian, and Mediterranean seas, along with the Greek-influenced part of Cyprus, are experiencing a remarkable revival in tourism following the pandemic. While the recovery is not evenly spread across the region, the country’s hotels have outperformed industry expectations, showcasing encouraging signs for the tourism sector.

The Bank of Greece conducted a survey revealing a staggering 74.7% surge in international visitor arrivals in the first quarter of 2023 compared to the previous year. In tandem, hotel revenue soared by an impressive 28.6%, with Athens and Thessaloniki leading the way. Nikos Voulgaridis, owner of Kókkini Porta Rossa hotel in Rhodes, emphasized that this growth surpasses a post-pandemic rebound.

He stated, “We have recovered from the COVID-19 impact, though there are some differences in the demographics of our clientele.”

From January to May 2023, Greece’s hotel occupancy reached 57.8%, indicating a significant rise from the previous year’s 44.4%. Similarly, Cyprus experienced even stronger performance, with an average occupancy of 60.6%, surpassing both 2022 (47.3%) and 2019 (52%) figures during the same period.

The survey also revealed notable increases in average daily rates (ADR). In Greece, ADR rose to €156.16 ($170.54) from €130 in 2022 and €111.53 in 2019. Cyprus followed a similar trend, with ADR reaching an average of €208.35, compared to €202.17 in 2022 and €145.61 in 2019.

Viktoria Kouchianitze, reservations manager of Potidea Palace Hotel in Halkidiki, expressed optimism, stating that 2022 was the hotel’s best year ever, highlighting guests’ eagerness to make the most of their vacations after the prolonged pause during the pandemic.

While the Greek region as a whole is demonstrating a healthy recovery in tourism, certain markets face challenges. Voulgaridis highlighted the impact of the absence of visitors from post-Soviet countries, particularly affecting northern Greece, which had become a significant Russian tourist market. However, most other resorts managed to attract visitors from alternative feeder markets, including the United States.

It is crucial to note the economic headwinds faced by feeder markets, including interest rate hikes, high inflation, and escalating energy costs. These factors, coupled with the ongoing Russia-Ukraine conflict, have influenced spending patterns from key source markets, potentially affecting Greek market fundamentals in an indirect manner.

In Cyprus, the lack of tourists from Russia, Ukraine, and Belarus continues to hinder the rebound of the hospitality sector. Vassos Kilanis, general manager of St. Raphael Resort & Marina Hotel in Limassol, highlighted the challenges faced due to geopolitical events, stating, “[When] the war in Ukraine broke out, we lost 60% of our expected tourism… As such, we had to focus on other feeder markets.”

JLL’s Ana Ivanovic acknowledged the recovery in Greek tourism and its impact on the labor market. Strong demand, coupled with the rise of hybrid and remote-work models, has led to increased demand during low seasons and longer average lengths of stay. Seasonal closures of properties and the fluctuating nature of labor contracts pose challenges for employees. However, Greece’s attractive trading fundamentals have not gone unnoticed by major international hotel brands, with several announcing their arrival in renowned leisure destinations.

As Greece’s tourism sector faces a shortage of approximately 80,000 employees, the country’s hospitality unions have sought international agreements to recruit from countries such as Bangladesh, Egypt, Pakistan, and Syria. However, success in these endeavors has been limited thus far.

The future of Greek tourism lies in continued hotel and resort upgrades, coupled with fluctuations in guests’ disposable income. As the country welcomes new hotel brands, the sector’s occupancy and stability remain closely tied to the evolving dynamics of the tourism industry.