The need to create new beds in popular Greek destinations, upgrade existing hotels, develop new destinations by investing in tourism infrastructure, and marketing actions to lengthen the season, is stressed by PwC’s study of the Greek economy under the general title “From the recession to recovery.”
More specificall, the key points of the survey for Greek tourism include the following:
45,000 new beds by 2022
** The number of additional beds required by 2022 is around 45 thousand concentrated mainly in Crete (35 thousand), South Aegean (3 thousand) and the Ionian Islands (7 thousand), where the occupancy rates are quite high in peak times (August) The funds needed for the new beds investment are estimated at € 1.7 billion.
** Upgrading and maintenance is necessary to increase the competitiveness of tourist accommodation. In particular, € 2.3 billion are required for upgrading existing hotels and € 0.8 billion for maintenance of hotel infrastructures. In total, by 2022, investments of 4.8 billion euros are needed to keep Greek tourism on its development course.
Competitiveness is the key
- The competitiveness of the tourism sector is determined by the destination, the size of its hotel units and their categories
- There are three strategies for developing the tourism industry:
- Adding capacity to the main destinations
- Upgrading hotels to the next category
- Developing secondary destinations with targeted marketing and upgrading of hotel units
- The most promising strategy appears to be the development of secondary destinations, followed by the upgrading of hotels and boosting of capacity
- Marketing activities for the Greek tourist product aiming at the extension of the tourist season and the development of secondary destinations
- Tax and institutional incentives for increasing the size of tourist businesses as well as expanding or upgrading hotel units
- Faster licensing of “green tourism” investments
- Priority to investment in tourism infrastructure, i.e. those services that are necessary for a development of tourist reception areas (food, transportation, museums and attractions)
PwC survey: Greece needs investment boost of 22 billion euros
According to the survey, An additional 22 billion euros per year will be required for the next five years for Greece to achieve a healthy growth trajectory, according to a study presented on Thursday by PricewaterhouseCoopers (PwC), after a similar report by the Hellenic Federation of Enterprises (SEV).
The PwC study pointed out that this extra 110 billion euros of investments would not lead to an economic miracle, but rather would simply allow the gross domestic product to improve on its current stagnant growth rate and reach 3-4 percent.
The consultancy’s officials voiced pessimism regarding the country’s growth in the years to come. This year, they said, the growth rate will likely fail to make the 2 percent mark regardless of the outcome of the country’s negotiations with its creditors on Greece’s exit from the bailout process and the restructuring of the Greek debt.
The study recorded that Greece has over the years of the crisis been deprived of investments worth tens of billions of euros: The gross fixed capital formation rate dropped to 14.7 percent of GDP in the 2008-16 period from an average of 21.3 percent in 1996-2007. In 2016 it amounted to just 11.7 percent, or 20 billion euros, while the European Union average stood at 19.8 percent (if Greece had matched that rate, investment would have amounted to 35 billion euros).
PwC notes that for the country to escape from this state of divestment, it needs an investment shock: The gross fixed capital formation rate must more than double to 42 billion euros per annum, or 208 billion in the years to end-2022. At the current rates of incoming foreign direct investment, with the implementation of the Public Investments Program, the money flow from Brussels and the country’s own assets, Greece will only secure 98 billion euros in investments in the next five years, so there is a shortfall of 110 billion.
The missing capital, PwC officials stressed , could come from a credit expansion and possible additional funding from European programs. However, Greek investors will be the decisive factor, they argued.
See the entire study (in Greek) here