ECONOMY

Growth in tourism revenue far outstrips GDP gains

Tourism revenue increased in Greece at a far faster pace than the gross domestic product (GDP) in the last decade, posting a 134.4 percent rise while economic activity grew by just 44 percent, showing the ever-increasing significance of tourism for the local economy, an EFG Eurobank report showed. The report, included in the «Economy and Markets» publication of the Economic Studies and Provisions Division of the bank, reached the following conclusions: Greece is now a mature tourism destination but is facing increasing competition from emerging Mediterranean destinations, particularly on prices. The market share Greece has in tourism arrivals has declined in the last couple of years from 1.9 percent in 2003 to 1.6 percent in 2005, while the market share in revenues from incoming tourism has remained stable at 2 percent. This means that revenues per arrival have improved compared with rival countries. Tourism revenue per arrival has grown in the last couple of years in Greece from 739 euros in 2003 to 862 euros in 2005, while in other countries there has been no such increase. The improvement in revenue per arrival is due to the rise in prices and not an increase in the average nights of stay per foreign tourist in the country. The average size of a Greek hotel unit has grown from 65 beds in 1990 to 75 in 2005, but remains smaller than the average size in rival destinations. The hotel sector is plagued by oversupply and a low occupancy rate. In Greece there are 6,169 hotel beds per 100,000 people, while in Turkey, for instance, the ratio is approximately 10 times smaller. Tourism revenue per Greek hotel and per bed lags that of rivals considerably, undermining the possibility of realizing the investment required. Revenue per hotel unit in 2005 was 1.22 million euros and 16,200 euros per bed, while in Croatia the equivalent figures were 6.1 million euros per hotel and 30,400 euros per bed. The distribution of households according to their number of trips lasting over three days were as follows: 54.8 percent none, 28.5 percent one, 10.7 percent two, 3.7 percent three and 2.3 percent four or more trips. Seven out of 10 households that travel choose June, July or August to do so. Most households stay with relatives or friends, and the more affluent ones in second homes or private houses. The highest tourism expenditure is in Crete, while Attica proves to be one of the less costly choices, as most households stay within the area in their secondary or country house. Among foreign destinations, the least expensive are those in the Balkans and the most pricey are on the American continent and in Japan. The annual spending by Greek households in Greece is estimated at 1.549 billion euros in 2004, or about 1 percent of gross domestic product. Adding spending abroad, total tourism expenditure equals 1.3 percent of GDP or 2 percent of total consumption. Tourist in Greece spend mostly on food (46.3 percent), fares and fuel (20.3 percent), accommodation (18.9 percent), group trips (11.2 percent) and entertainment (3.1 percent).