After promises by government quarters to hold off on any new hotels other than those already approved or being approved (4,500 rooms), the Athens Hoteliers Association agreed to book another 10% of available rooms in luxury hotel units for officials of the 2004 Olympic Games. That leaves another 10% yet to be covered in order to host the Olympic family.
The agreement came after Spyros Divanis, president of the hotel association, took up arms and opposed the building of new hotels in the Maroussi area, close to the Olympic sports complex. He even threatened to renege on the previous agreement to book thousands of rooms for the officials and visitors attending the 2004 Athens Olympics.
(The Lascaridis Group, managers of Athens’s Hotel Grande Bretagne and Thessaloniki’s Hyatt Regency hotel and casino, plans to build a luxury hotel in Maroussi. It contends that this area of Athens, which has no luxury hotels currently, urgently needs at least three. However, even though the government lifted a 15-year ban on the construction of new hotels, has not yet changed zoning laws and town planning provisions to allow open hotel construction in Maroussi.)
The basic premise for the war of words is that Athens already has too many hotel rooms, which has caused occupancy rates at to drop by nearly 10 percent. Meanwhile, prices have risen 6.5 percent but income has slipped by 4 percent.
The truth of the matter is that Greece is the only European country whose hotel industry is experiencing a downturn in sharp contrast to the upward trend seen across the continent, a study by global firm Arthur Andersen has found. The survey, which looked at 4,000 hotels in 140 countries, revealed that units in the Greek capital had lower occupancy rates and average room yields for the first quarter of 2001 when compared with its European competitors. The average occupancy rate at European hotels for the period was 62.5%, up 1.3% compared with 2000, while the figure for Athens was 59.5%, down 9.7%. Other destinations in the southern European belt recorded increases during that period: Barcelona, 4.5 percent, Cyprus, 10.6 percent, Istanbul, 7.6 percent and Rome, 10.8 percent. The continuing slump at the Athens stock exchange is seen as a key factor contributing to the poor figures, as business travel has dropped due to cutbacks at companies and firms.
Market professionals say the poor market conditions has a negative effect on the occupancy rates of Athens hotels that traditionally host business clientele. In the last year or so, most companies have cut down on their budgets in an effort to control expenses.
As well, destinations beyond the “eurozone” provide tour operators with greater profit margins as currencies in those countries fluctuate, further boosting the spending power of Britons and Germans – Greece’s two major markets.
Furthermore, Greece’s tourism destination competitors outside the eurozone offer tour operators larger profit margins.
These larger margins may be the result either of fluctuations in national currencies against the euro or of their weaker position in relation to the harder Western currencies. Such factors make destinations in these countries economically more attractive, both for tour operators and tourists. The continuing rise in unemployment and consumers’ falling real disposable incomes contribute to the selection of cheaper holiday destinations, such as Turkey, Cyprus or Egypt. On the other hand, bookings are down for this summer in other competing countries, like Spain, while a new factor in recent years is the return to popularity of destinations like Bulgaria and Croatia, at very competitive prices.
After a frenzy of mergers in recent years within the tour operator sector, an important factor affecting demand for hotel accommodation worldwide is the much larger bargaining power of these companies. Tour operators active in Greece tend to focus on mass tourism, meaning that their bargaining power affects more resort hotels rather than city hotels, which attract more business and conference clients.
However, city hotels that have been able to maintain their occupancy rates at satisfactory levels are those able to offer conference facilities. Another negative factor is that Athens is not yet listed among those capital cities attracting visitors for a few days throughout the year, the so-called “city breaks,” which is a major source of revenue for other European cities.
Yet, despite boasting the world’s largest outside archaeological park, and its excellent climate, the city’s capital is overloaded with problems. The development of city break tourism requires a minimum of traffic problems, more than adequate basic infrastructures, little or no atmospheric pollution, a plethora of tourist information facilities and a satisfactory aesthetic appearance.
Until recent years, visitors to Athens were mostly tourists on their way to the islands who had decided make a few days’ stopover in order to see some archaeological sites. Some important steps have been taken and important projects have been completed or are under way. The infrastructure expected for the Olympic Games of 2004 in coming years promises even better days. The center of the city is vastly better than in the not-so-distant past, but a lot remains to be done because competitor cities have not stayed idle, either.
Nevertheless, changing a city’s image, either through traditional promotion methods or the use of new technologies, is not at all easy and requires strategy, method and investment. The Olympic Games is one of the tools that may be used to achieve this target.
A further negative factor for the tourism industry could be the increased hesitancy of Americans to visit Europe in general due to the adverse publicity from the recent spread of the foot-and-mouth and “mad cow” diseases on the continent, and to the general state of America’s economy. Athens receives a large number of American tourists and any factors affecting their flow are bound to have an appreciable impact on the city’s hotel occupancy rates.
Meanwhile, according to the terms of the hotel booking agreement signed last year for the Olympic Games family, Athens hotels will reserve 11,000 rooms in Luxury, category A and category B hotels and a further 4,500 in category C hotels to meet Olympics-related needs. Athens 2004 hopes to house a further 3,000 in cruise ships, while the balance of the estimated 23,000 hotel rooms required will be met by the new hotels to be constructed by 2004.
The International Olympic Committee requires that three fourths of the accommodations offered by a host city be 3-, 4- and 5-star hotels. This requirement may work in favor of the new hotels to be built in the next three years, some of them by known hotel chains.
Sydney had 44,000 rooms in hotels of all categories during last year’s Games, compared to just 29,000 in Athens at present. And although Athens has covered the needs of accommodation for the Olympic family, professionals are not so sure about the needs of visitors. They say Athens will welcome more visitors than any other Olympic Games in memory. Daily overnights during the Games are expected to surpass 135,000.