Greek Hotels: 3 Factors Affecting the Market’s Competitiveness
Short-term rentals, the new climate resilience levy and the increased value-added tax (VAT) rate on accommodation are the three main factors currently influencing the Greek hotel market’s competitiveness and profit potential, according to Hellenic Hoteliers Federation (POX) President Yiannis Hatzis.
Speaking during the federation’s 1st Regional Conference in Karpenisi, central Greece, Hatzis stressed that the challenges the sector is called to face are increasing.
“We are seeing a serious weakness in the way the government approaches our sector over time regarding key competitiveness issues,” he said.
The factors affecting competitiveness of Greek hotels
According to the federation’s president, the first major factor that is hurting the sector’s competitiveness is the short-term rental market, which “has been allowed to compete unfairly” with the hotel industry for more than a decade.
“We have reached the point where we have 1 million beds in such accommodations that are operating without a basic legal structure and without basic hygiene and safety standards,” he said, adding that the Tourism Ministry must “put a brake” on the “uncontrolled operation” of short-term rentals.
“These accommodations are operating under the shadow of the sharing economy at the expense of hotels; the state budget; and most importantly, at the expense of local communities and our fellow citizens who are asked to pay double and triple rent to find housing,” he stressed.
Next, the federation’s president referred to the newly introduced climate resilience levy charged on hotel guests. It is reminded that the Greek Government in December 2023 passed a new law to replace the infamous “stayover tax” with a climate crisis resilience fee. The charges have been increased significantly for the season running from March – October.
“This is a levy that was decided at our expense without any prior consultation,” Hatzis said, adding that the charge in reality hinders the effort of a balanced tourism development as (on a percentage level) it is much higher than it should in destinations of low demand.
“Central Greece is an example in which this injustice is even more noticeable,” he said.
Hatzis informed the audience that POX is currently preparing a documented proposal to submit to the Ministry of National Economy with the aim of reducing the levy.
The third factor hurting the Greek hospitality sector’s competitiveness is the high VAT charged on accommodation that has more than doubled over the past 10 years. The VAT rate charged on Greek hotels is currently at 13 percent, higher than the country’s competitors including Spain, Portugal and Turkey.
“The VAT is charged to our customers at a rate which is higher than all our international competitors,” he stressed, adding that the federation has already discussed the necessity of improving the relevant framework with the government.
“A VAT reduction will bring multiple benefits in the medium term,” he assured.
Lower category hotels need access to funding
Moreover, during his speech, Hatzis touched on the subject regarding the lack of support for lower category hotel units.
“Greek hoteliers contribute more than 10 billion euros to the gross domestic product and employ more than 200,000 workers, based on latest study of the Hellenic Chamber of Hotels,” said Hatzis, highlighting that the sector’s success does not reflect “the actual picture” of individual regions.
“One of the main obstacles to the quality upgrade of the Greek tourism product is the constant absence of support for hotels up to 3 stars that have a capacity of more than 200,000 rooms,” he said, underlining that all hotels should have the necessary financial support to modernize their facilities both in terms of energy and infrastructure.
To face this, Hatzis said POX is preparing a series of free consulting workshops, in collaboration with Deloitte, which will help prepare the federation’s members that wish to upgrade their facilities.
He added that the federation is also looking into cooperating with the National Bank of Greece to create a special program so hoteliers of low category hotels can have access to capital from the banking system.
“These two actions combined with our pressures as a union will hopefully lead to a subsidy program for small hotels from the Ministry of Development,” he said.
The 1st Regional Conference of the Hellenic Hoteliers Federation was held under the title “Co-shaping the Tourism Product of Mainland Greece” and aimed to promote tourism on the mainland and develop further cooperation between hoteliers and the government.
“Our times require synergies so that the sector can withstand increasing challenges and find optimal solutions… Because tourism in Greece is an issue that concerns us all,” Hatzis said.