ECONOMY

An improved outlook for Greece’s tourism industry and new incentives boost investment in high-class hotels

The improved prospects of Greek tourism over the last two years and upgraded investment incentives have rekindled the interest of investors in the construction of top-class hotels. In 2005, out of a total of 9,036 Greek hotels, there were only 155 five-star and 944 four-star hotels, with a total capacity of 56,888 beds. So far this year, of the 221 applications for construction and expansion of hotels approved by the Greek National Tourism Organization (GNTO) under the incentives of the latest development law, 126 were for five-star and four for four-star hotels, with total capacity of 22,473 new beds. In contrast, 95 of the applications approved concerned three-star hotels, with total capacity of 3,974 beds. The trend, if maintained, will confirm that the center of gravity of the Greek hospitality industry has shifted from the lower categories to those of higher quality. In 2005, the GNTO approved just 48 applications – representing a new capacity of 6,435 beds – of which 26 were for four- and five-star hotels and 22 for three-star facilities. An analysis of the 2006 data reveals that interest in the construction of new, high-class hotels is particularly strong in the island areas. Of the total capacity of 22,473 four- and five-star beds approved this year, about 18,500 were on the islands, particularly in the Dodecanese and on Crete. In particular, of the 126 applications approved, 38 concerned the construction of new or the expansion of old units in the Dodecanese, accounting for half the proposed new capacity in both categories. Apart from hotels, in the 2005-2006 period the GNTO also approved architectural designs for 26 conference centers, three golf courses, three ski centers and 19 thalassotherapy spas. As a result of the improved investment climate in the sector and following three revisions of the Competitiveness Program under the European Union-subsidized Third Community Support Framework investment plan, the absorption rate of the program has risen to 53 percent from just 7.9 percent in March 2004, according to Tourism Ministry figures. The government has approved 460 applications, representing a total budget of 917 million euros, of which the subsidy is 400.5 million euros. New jobs are projected at more than 2,600 posts. Tourism Minister Fanni Palli-Petralia has said tourism will continue to hold a prominent place in the new revised development law, to come into force on January 1, 2007. British tourist profile Provisional data show that the number of British visitors to Greece in the first nine months of the year was slightly up compared to last year. Regarding projections for 2007 from bookings up to 15 days ago, Greece shows the lowest drop vis-a-vis its main competitor destinations, which will translate into a higher market share of the British tourism market. A survey conducted at Athens International Airport shows the number of arrivals from Britain slightly down in the January-September 2006 period, at 141,552. The average number of days of stay of British visitors was 11, of which four were spent in Athens. The tourism industry’s top annual event, the World Travel Market fair, opens in London today.