ECONOMY

Tourism sector’s potential

Investment in Greece’s tourism industry is projected to rise by an average annual rate of 5.4 percent until 2016, according to a study by the World Tourism Council (WTC). The study, presented by WTC President Jean-Claude Baumgarten at the first World Tourism Forum in Athens, estimates that investment in tourism this year will reach 5.7 billion euros and that the industry will account for about 700,000 jobs, or 15.9 percent of the country’s total. Employment is projected to rise by 1.5 percent per year over the next decade. Baumgarten said Greece has tapped just 15 percent of its potential in the tourism sector. Deputy Finance Minister Petros Doukas said his office is inundated with investment proposals for tourism projects that mainly originate abroad. Recently appointed Tourism Minister Fanni Palli-Petralia said the sector’s development was among the government’s priorities and said it was planning bold reforms. AIA too expensive The founder of UK-based easyGroup, Stelios Hadjioannou, said the high costs of Athens International Airport, as a result of the concession agreement with Germany’s Hochtief, acted as a brake to any efforts to develop Athenian tourism. The same applied to other Greek airports, the pricing policy of which is prohibitive to low-cost flights from abroad. Hadjioannou urged the government to «break» the contract with Hochtief and allow the use of other airports for Athens, such as the one at the military facility in Elefsina, west of the capital. He said the operation of budget airlines brought multiple benefits to the countries they fly into, for example France, where 1.5 million Britons have bought holiday homes. Separately, a survey commissioned by the Association of Greek Tourism Enterprises (SETE) shows that foreign visitors to Athens are likely to dig deeper into their pockets for a «basket» of products than at a number of competitive destinations in the Mediterranean. Among seaside resorts, according to the survey, the island of Zakynthos (an average-cost Greek destination) proves the least competitive, as the adjacent table shows. In contrast, Iraklion appears cheaper than Turkey’s Belek, the Algarve and Las Palmas. The issue of «cost at the destination» is particularly apt in any effort to interpret travel behavior, according to the study. Expenses at the destination for package tour holidaymakers is proportionately and by far the smallest part of total expenses. What appears to be negatively affected is the expectations gap: You are likely to be annoyed when you purchase transportation, accommodation and half-board very cheaply and then have to pay for further extras either inside or outside the hotel (coffee, beer, water) more expensively. More importantly, value for money is more important than absolute cost. According to the SETE study, due to the highly inelastic Greek cost structure, the country should move from a policy of cost reduction to cost control and the provision of services of high-added value. The World Travel &Tourism Council (WTTC) has developed a method of recording competitiveness indices for the purpose of comparisons at an international level. These indices refer to prices, infrastructure, environment, technology, human resources and the freedom of market entry. Its latest survey, conducted in April 2005, shows Spain as the most competitive destination, followed by Cyprus, Portugal, Greece, Egypt, Croatia and Turkey. The study stresses the complexity of the issue of competitiveness. The term «competitiveness,» it argues, may be satisfactory in a common linguistic sense but is not fully correct in relation to its strict application, which measures return on investment. The investment of 1 million euros in a specific tourism activity may be more competitive in one area or country than in another. For instance, investing in the golf industry in Spain’s Costa Brava today will yield a higher return than a similar investment at Crete’s Hersonissos.