The hotel industry in Greece, and Greece itself, have come a long way since the economic crisis that persisted in the country between 2008 and 2017.

The COVID pandemic, of course, was another stumbling block, but tourism and hospitality in Greece also have now fully recovered from that downturn.

The evolution of Greece's hotel industry over the past decade has been dramatic, forced in large part by outside influences, which have put its hotels in a better position to withstand the next downturn or "black swan" event.

The economy is also on a growth track. According to a European Commission report in November, Greece’s "economic activity is expected to grow by 2.4% in 2023, before gradually moderating to 2.2% by 2025. … Headline inflation is projected at 4.3% in 2023 and set to moderate to around 2.1% in 2025."

It added the economy has been boosted by the government’s Recovery & Resilience Plan and a resilient labor market.

Dimitris Manikis, president for Europe, Middle East and Africa at Wyndham Hotels & Resorts, said Greece has a good reputation, and its hotel industry landscape has been "changing over the last decade with many international investment firms, private equity and international funds, along with local financially solid players, entering aggressively in the market that has demonstrated very promising prospects."

He said opportunities are deriving from second- and third-generation hoteliers not necessarily being interested in continuing legacies they have inherited. That is largely due to the enormous capital required to reposition their properties in the competitive international environment.

Non-performing loan portfolios also have attracted investors due to their strong potential gains.

Pavlos Papadimitriou, director in Athens at business advisory HVS, said improvements in gross domestic product and other indices reveal economic turmoil is behind the country.

“The recent rise of the country to investment-grade status is the recognition of what Greece has achieved over the last decade. However, many structural changes and reforms still need to be implemented in order for the country to be perceived and established as an even friendlier destination,” he said.

He said there have been several transactions in the market, but far from what is experienced in more developed markets given the number of Greek hotels, approximately 10,300, and the significance of tourism.

“Although, Greece is considered to be a hot market, there are only a few noteworthy properties coming to the market as they are, in most cases, family owned. Almost all coastal areas are highly desirable, with the ones that are easier accessible by air coming first, while Athens and Thessaloniki are not trailing at all. On the contrary, every asset that is put for sale is almost immediately taken,” he said.

Manikis, himself a Greek, said top-tier Greek destinations such as Athens, Crete, Rhodes, Kos, Corfu and Halkidiki and upper-midscale to luxury hotels are attracting the most interest from investors.

“The focus has been on conversions. There now is a trend toward greenfield projects that can secure better locations and return on investments, and secondary destinations in mainland Greece are also coming to the spotlight as they can offer proximity to major infrastructure and places of interest, and they come cheaper,” he said.

“The game changer for the next 10 years will be infrastructure development, together with upgrading the services and products offered to a wider segment of travelers and with a more sustainable policy in place.”

Greece's hotel transactions market also faces the challenges of a wide bid-ask spread between buyers and sellers.

“Like other mature markets, the hotel evaluations do not necessarily reflect the increasing demand and the current and future performance of the assets. So, from one hand, you have assets with legacy challenges like debts, lack of funding and tired product, and, on the other hand, the same properties can still achieve quite remarkable results in the current environment," he said.

He said international hotel chains have brought international expertise and resources and are now offering more flexible models that can untie the Gordian knot in many such cases. Hotel management agreements, franchises and the growth of white label operators will be the key phenomena of the next few years.

Papadimitriou said an issue is that Greece is a non-transparent market in terms of data availability, although that is changing.

“During the past five to seven years, an increasing number of international buyers have entered the market, and that has led to the entire industry being more institutionalized and sophisticated,” he said.

He said that has translated into more franchise agreements and more demanding and structured corporate governance.

“This must be examined for each submarket within Greece, but in general [average daily rates] are in line with other Mediterranean destinations when comparing similar hotels,” Papadimitriou said.

Manikis said he was cheered by an August 2023 report from the Bank of Greece, which said international arrivals had increased 18.4% year over year in 2023 and increased 3.7% when compared with full-year 2019.

Of competitive Mediterranean destinations, Italy had the best year in 2023, he said, but equally it is by far the most expensive destination in the Mediterranean.

He added domestic demand remains solid, too, and there are domestic hotel firms adding to the mix.

“Greek hoteliers have been dependant on tour operators for the distribution of their hotels, so there was not a need for a strong hotel-level branding. This is gradually changing … and the rise of the white-label operators will change this,” he said.

Manikis points to the international expansion of hotel firm Sani/OIKOS in the all-inclusive space as one example of the Greek hotel industry's muscle-flexing.

He said Greek hotels have a bright future, and the sector remains a high priority for the Greek government.

Challenges include the need for further infrastructure investment, a focus on sustainability, the further diversification of tourism flow and the requirement to make the hospitality industry attractive again to the younger generation of professionals, he said.

“Greece will need a renewed story and narrative to retain its position and increase market share going forward,” Manikis said.

Papadimitriou pointed to some less-known destinations that have potential — the Ionian Sea coast between Syvota to Preveza; the islands of Lemnos, Patmos, Milos and Skyros, all in different regions of the Aegean Sea; the cities of Alexandroupolis, Kalamata and Chania in Crete; and the mountain range of Pindos, an example of a market still offering authentic Greek hospitality.

He said domestic demand has “undoubtedly weakened over the past decade, and it has shifted lately from island destinations to coastal ones in the mainland,” he said.

He added some of this mainland demand is a reaction to high airfares and ferry tickets.

According to data from CoStar, occupancy across Greece in November was 68.3%, a year-over-year increase of 11.36%. That month’s ADR was €215.45 ($232.30), an increase over the same period of 12.8%; and its revenue per available room was €147.24 ($158.71), an increase of 25.65%.

In capital Athens for the same two months, occupancy in November was 71.78%, a year-over-year increase of 18.74%. That month’s ADR was €205.37 ($221.36), an increase of 9.61%; and its RevPAR was €142.64 ($153.75), an increase of 30.14%.

In the country’s second city Thessaloniki, hotel ADR is notably lower than in Athens. Its occupancy in November was 64.51%, a year-over-year increase of 5.81%. That month’s ADR was €100.61 ($108.45), an increase of 11.15%; and its RevPAR was €64.90 ($69.95), an increase of 17.61%.

HVS’s Papadimitriou said the majority of deployed capital is of an international nature, but there has been notable investment from Greek real estate investment trusts, many of which, he added, have international shareholders as well.

He said luxury continues to show resilience, and despite increasing interest rates and construction costs, greenfield developments have not paused.

Another challenge is the lack of destination management organizations that can coordinate various stakeholders.

“We are late on that matter and if we continue to lag, then we will end up with a non-sustainable product,” he said.

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