Greece Tourism Report Q1 2009

Following relatively strong growth of 8.5% year-on-year (y-o-y) in foreign tourist arrivals to Greece in 2007, and three years of steady growth in the tourism sector, a slowdown is on the cards in 2008. Official figures show that tourist arrivals rose by 2.6% y-o-y in the nine-month period from January to September 2008. Although lacking detail, the ministry stated that arrivals from Romania, Poland and Bulgaria were up favourably in the early part of 2008, while there was a buoyant increase in tourist arrivals from Russia.

There was also a strong increase in the number of cruise vessels arriving at Greek destinations.

Forecast Scenario BMI continues to expect a noticeable weakening in foreign tourist arrivals to Greece in 2008. This is largely based on further downward revisions by BMI, this quarter, to economic growth in the country’s key source markets in the UK and the eurozone. Indeed, we have edged down our forecast for tourist arrivals in 2009 (and now anticipate negative growth) but maintain that there will be a recovery in the following year.

Hospitality Recent data, albeit for hotels in Athens and the greater Athens area, suggest a noticeable weakening in the hospitality sector. Figures for the period January to August 2008, show average occupancy rates fell by 2.7% compared with the corresponding period a year earlier. More recent data show average occupancy rates falling 5.9% y-o-y in September 2008, after a 5.5% y-o-y decline in August. According to the association, all hotel categories reported declines, with three-star hotels recording a 9.1% y-o-y decline in occupancy rates in September to 69.9%, five-star and two-star hotels reported a 6% y-o-y drop, while occupancy rates at four-star hotels eased 4.4% y-o-y.

Athens International Airport As expected, Athens International Airport (AIA) continues to record deteriorating traffic figures. The most recent data for the first nine months of 2008 show total passenger numbers increased a weak 0.3% y-o-y, with international passengers up a modest 1.8% y-o-y to 8.4mn. However, growth in international traffic over the summer months was poor, with passenger numbers actually declining y-o-y in September.

Domestic traffic, meanwhile, over the nine-month period, recorded a fall of 2.4% y-o-y.

Olympic Airlines The sell-off of Olympic Airlines finally got underway in the closing months of 2008. In September, the government confirmed that it would shut down the airline and transfer its landing slots and trademark to a new privately-owned company called Pantheon. The authorities also gave the green light for the launch of a tender to find buyers for the three new companies that will replace Olympic Airlines, ground handling and technical maintenance, with the process set to be completed by early 2009. As of November, the Greek government reported that at least 10 investors had shown interest in the privatisation, including Qatar Airways, Iberia, Chrysler Aviation, SkyOne, and Swissport.

Aegean Airlines Aegean Airlines’ financial results for the first three quarters of 2008 show revenues were up a healthy 26% y-o-y to EUR468.2mn (US$597mn), although the airline reported a 21% y-o-y drop in net profit to EUR26.5mn (US$33.8mn). The fall in profitability, despite healthy passenger numbers, was attributed to high fuel costs and the strengthening of the US dollar versus the euro (resulting in valuation losses on US dollar aircraft loans). Passenger traffic rose 13% y-o-y to 4.6mn in the nine-month period, of which, domestic traffic increased 8% y-o-y, while international passenger numbers rose a particularly favourable 23% on the corresponding quarter in 2007.

Greece Tourism Industry SWOT