Mainland Greece can claim the distinction of being one of the first large scale international tourist destinations, as evidence by the establishment in 1929 of the Greek National Tourism Organization (EOT). In the 50’s and early 60’s Greece was mainly popular with European motoring vacationers looking for the Mediterranean beach life, combined with beautiful scenery, history, low cost accommodations, and the wonderful yet reasonably priced Greek food.

As air-travel and cruises became more popular in the late 60’s, 70’s and 80’s, southern Greece and the Greek islands became the European and North American summer ‘sun and sand’ destination. Accommodations became more organized, featuring larger city and resort hotels, improved infrastructure, and a more organized approach to tourism from the Greek Government, including the creation of Xenia Hotels and Resorts as one of their initiatives.

The industry was dominated by locally owned hotels and family-operated local chains, with tour operators being the main feeder channel to bookings. This created a highly seasonal market with an average duration of five months, the summer months becoming the main focus.

The arrival of the internet somewhat reduced the dependency of the non-chain related independent hotels and resorts (the vast majority of Greek hotels and resorts at the time) on the major tour operators, but for the independent larger resorts the dependency continued.

This model continued mainly unchanged through the early 2000’s with the 2004 Olympics becoming the key reason for the Greek Tourism Industry to reinvent itself, with major facility improvements, infrastructure improvements, and with new hotels and resorts entering the market. The positive worldwide exposure resulted in nearly a decade of unprecedented increases in tourism arrivals, with Greece re-emerging as one of the world’s top leisure destinations and attracting a bigger share of the luxury leisure market.

The 2010 Greek financial crisis brought Greek tourism to a halt, however, with the protracted lack of revenues forcing closures and major restructuring of a number of hotels and resorts. As a result, the opportunity for discounted investment in tourism was abundant. However, the lack of confidence in the recovery of the Greek tourism market discouraged many potential investors from capitalizing on the opportunity, with the exemption of a few international funds like Hines Real Estate Investments (Grand Hyatt Athens), Oaktree Management Fund (Ikos Resorts), and local investment groups like TEMES (Costa Navarino/Hilton Athens) and Lampsa SA (King George acquisition), to name a few. They understood the potential of Greek tourism.

Recovery came slow but steady with the Greek tourism industry making a huge recovery from one of its worst years in 2012 to one its best years in 2019. Hospitality related investment properties increased in value based on this recovery, the expectation of improved arrivals, and the expansion of the season.

In 2020 COVID-19 effectively put the Greek and worldwide travel industry into a historic tailspin, but this created another unexpected opportunity to acquire heavily discounted leisure properties – but it was mostly unpursued, possibly due to the unknowable future during the time of a global pandemic. This opportunity was short lived, as the aggressive approach of the Greek Government for the 2021 season gave the Greek Tourism Market an advantage over its competitors, and now the 2022 season is expected to generate nearly 75% of the 2019 banner year revenues, so leisure property values are no longer available at a discount.

Which bring us to 2022 and beyond and the future outlook of the Greek leisure industry. The distinction of referring to the industry as leisure versus tourism is significant for Greece as a destination. As the leisure market over the past three decades became more global and diverse, Greece as a mature leisure destination was challenged by new leisure destinations, most of them backed with huge amounts of marketing and advertisement budgets, along with newer facilities and infrastructure and versatile development rules and regulations, giving the opportunity for mixed use hotel/resort/residential projects and integrated resorts with second/investment home development.

While the rest of Greece’s main competitors in Southern Europe – Italy/Spain/Portugal/France/Malta – were quick to adapt to the new model of the leisure market, Greece was slow in changing as it continued to rely on the classic tourism model. The same slow reaction gave the opportunity to other port cities, like Barcelona, to take a large part of the cruise industry’s home porting from Athens (for the record, one of the first home ports of the modern cruise industry).

Despite the new destination challenges and the delay in adopting to the new development rules and regulations, the Greek leisure industry has, for the most part, thrived since the recovery of the Greek economic crisis, reaching record breaking occupancy and REVPAR (revenue per available room) numbers. The drawback of not introducing new development regulations, however, has hindered further expansion of the seasonality and possible further investment opportunity. These issues are already being addressed by the government, which will certainly add to the expectation of a strong outlook for the Greek leisure industry.

The potential hospitality investor for Greece must be cognizant of the fact that the Greek leisure market, for a country smaller in size than Florida, is extremely diverse, depending on the location. Athens is a year-round destination with occupancy levels in the mid-70s and a brief winter low season, while mainland resorts nearby have a 7 month seasonality, including islands like Hydra, just a one hour ferry ride away.  Seasonality is a factor affecting mostly the mainland and island resorts no matter the location. The potential of extending the season is real, however, with the introduction of integrated resorts with a residential component, given the new development regulations. This will certainly be a reality for the mainland and some of the larger islands, like Crete, but may not be as conducive for the smaller islands.

The mixed use potential will certainly enhance the investment opportunity for city hotels, with the Hilton conversion in Athens to a residential/hotel luxury mixed use project from a 550 room conference hotel being one of the first.

The high profile islands of Mykonos, Santorini, and Paros are leading the way as exclusive luxury unique destinations, along with a strong residential component fully exploited by the high-end short-term rental industry. However, the lesser known Aegean and Ionian islands are coming on strong and are primed for the development of boutique resort/residential projects.

In conclusion, the Greek hospitality market is changing rapidly, moving from the traditional pure hotel/resort investment, where EBIDTA multiples determine the value of the asset, to hotel/real estate investment where the increase in equity value plays an important role in the valuation process.

Timothy Ananiadis is President of the Tourism Committee of the American-Hellenic Chamber of Commerce