26th economia Student Contest: Tourism-Destination Greece
1st Prize | Individual Essay
Tourism in Greece: current challenges
Greece welcomed more than 33 million tourists in 2018, triple its population. Tourism represented 11,7% of Greece’s GDP in 2018 while it accounted for more than 16,7% of the total employment. Greece tourism proved a robust and resilient sector during the crisis and managed to constantly improve year over year. Greece has experienced exponential growth in recent years, a trend that may prove not to be sustainable, due to several challenges. To begin with, new tourist development is hindered by the absence of a national strategy for spatial plans. Seasonality also burdens Greece’s tourism sector from operating evenly throughout the year and overcrowded and hyper congested areas had led Greece’s most visited island to imposed a cap on cruise ship visitors. Lack of infrastructure is further highlighted due to the aforementioned which along with a troubled tourism education system poses a threat to further expansion prospects of the industry. Lastly, the COVID-19 pandemic could have devastating results for Greek tourism for many years to come. Tourism has a greater impact and offers greater value-added to the economy (Dritsakis, 2012) compared to other sectors which mean that Greece must face the challenges and emerge stronger with a more diversified and competitive product mix.
2. Challenges of Greek tourism
Greece’s tourism infrastructure was hindered by a long recession which deterred the government from undertaking significant infrastructure projects as well as a stagnant private sector with anemic investments due to bureaucracy, obsolete land use planning and unavailability of funding. Already Greece is facing problems regarding telecommunication, health, power supply, transportation, water supply during the summer months (Varvaressos et. al, 2013). Therefore, it is clear that for Greece to keep up with the growing demand it needs to invest heavily to ameliorate its tourism infrastructure in the following years.
The political intervention that caused instability (Buhalis, 2001), the absence of a master plan for tourism, and the development of spatial plans, the significant delays in infrastructure projects and the lack of funding are the main reasons for the observed blight. Through the establishment of new sustainability criteria for touristic development and a new long-term plan for tourism Greece may set the foundations for achieving a plethora of investments. The delays could be tackled by the implementation of public-private partnership model which is proven to offer a faster implementation and lower costs (Teker & Teker, 2012) and the necessary funding may be cover by project bonds, private capital and European funds.
The private sector adjusted sooner to the surge in demand and many investments are either in the phase of planning or execution. However, in many regions (i.e. Crete, Mykonos, Santorini) the capacity is systematically exceeded and therefore further lodging investments are needed. As Greece struggles to attract more affluent visitors and concerns about carrying capacity are raised private investors should concentrate on the development of luxury lodgings and infrastructure such as marinas and sports facilities. Sustainability should also be in the focus of every strategy, which may also attract more demand for such enterprises as greener policies seem more appealing to an increasing number of people (Kapiki, 2012).
2.2 Spatial planning the case of tourism
Greece is characterized by the lack of a consistent plan in spatial planning. A long-term strategic plan may available sustainable growth and encompass beneficiary elements for the organization of the tourist activity. Coastal spatial planning, for example, may “help preserve the quality of the seascapes and at the same time allocate human activity optimally in overcrowded places” (Papageorgiou, 2016). Also, spatial planning could set out the carrying capacities in regions. In general, in Greece tourism spatial planning lagged compared to the overall tourism development and the result is that it is considered as one of the main obstructions of the stagnant building activity in tourism.
Given the bureaucratic history of the Greek state, a viable solution for establishing spatial plans could be found at stakeholders and local municipal councils engagement in order to achieve a commonly acceptable outcome. For this reason, adequate funding should be allocated and a concrete framework should be established by the state (William et al., 1998) for local societies to have the right instruments to decide upon land use. The state should set the priorities in the aforementioned, which must include the protection the natural resources, and tackle mistakes that halted growth in the past, such as the absence of zoning, and decentralize the decision-making process. Also, this model could be used (Graci, 2013) to reverse critical damage to the environment, that stems from past reckless behaviors. Thus, spatial planning should not be seen from the tourist sector as a threat to its growth rather than an opportunity for it to establish sustainable criteria to enable him to thrive in the long term.
2.3 Seasonality – Overtourism
Greece is experiencing seasonality in tourism, both in terms of numbers of visitors and the expenditures of visitors. At the same time, the seasonality is causing hyper congestion to Greece’s most visited regions, whereas ‘lesser’ destinations are experiencing low capacity rates. This phenomenon is widely observed in the Aegean and Ionian islands during the summer and is less present in Peloponnesus, continental Greece and west Macedonia (Krabokoukis & Polyzos, 2019). Seasonality could be attributed mostly to natural factors such as weather conditions (Greece is mostly considered a summer destination) and institutional policies such as school closures and public holidays also influence seasonality (Rudihartmannm 1986).
Seasonality has great economic effects on tourist businesses, which are characterized by the inefficient use of facilities during winter. Literature suggests (Jang, 2004) that one of the best ways to counter seasonality and therefore hyper congestion is through diversification. Baum and Hagen (1999) suggested that Mediterranean countries, like Greece, could achieve that by establishing new demand for already existing products. For example, seaside hotels could offer heavily discounted prices off-peak season to attract elderly north Europeans. On the other hand, Greece could emphasize on creating additional products. Creation of events, festivals in which the tourist will interact with the locals could be tourist attractions during the off-season period (Baum and Hagen, 1999; Getz, 1991). Conference tourism may also be a new driver of growth in tourism. Greece could leverage its healthcare infrastructure and through an aggressive pricing strategy which will be boosted from an aggressive promotion (Velissariou & Tsioumis, 2014) escalates its share in the global healthcare tourism market.
Historical precedents from Cyprus (Sharpley R, 2002; Farmaki, 2012) however have proved that diversification may eventually lead to lower than expected revenues and slashed profits. Therefore, Greece should expect that such a strategy may not be seen as the main source of income rather than a complementary one.
2.4 Education & Sustainability
Greece lacks in terms of skilled labor in the tourism sector which downgrades its general competitiveness. The current educational tourism system is considered highly obsolete and there are a lot of calls for change. A bold modification of tourism educational programs and a radical swift towards tourism education for the future should take place to enable develop the next generation of middle and higher management personnel, who will be engaged in the organizational planning of their enterprises.
The tourism industry is radically shifting towards a technological evolution, the advent of AI and automation have already changed the way that many traditional organizations operate. Education providers should keep up with the ICT and AI developments and provide graduates with a clear understanding of how may they leverage new technologies to achieve a higher value for the visitors. For example, marketing courses should incorporate how AI should be used to achieve optimal segmentation. It should be noted that every change in the curriculum should have as its first consideration the sustainability in tourism and how it can be achieved through technology.
Service friendliness, personal recognition, professionalism, attentiveness are considered to create value for the tourists (Kapiki, 2012). Greece had more than 30 international visitors in 2019 which highlights the importance of the tourist workers being able to adapt when dealing with people from different cultural backgrounds. The tourism education providers should focus on incorporating soft skills in their courses goals as they are seen as the number one desired competence in hospitality management (Sisson & Adams, 2013). This is further highlighted by the tourism education future initiative (Sheldon & Fesenmaier, 2013) which underscores the value of mutual respect, ethics, creativity, diversity, ability to adapt to create the next generation of responsible tourism workers that act as stewards to their destination.
2.5 From tourist to traveler
Another factor of growing importance for the competitiveness of Greek tourism concerns the demand side, the transition from the traditional tourist towards the traveler. Tourists nowadays are choosing their destinations based on activities such as gastronomy, extreme sports, and birdwatching. Furthermore, the purpose of travel has changed substantially and city breaks, conferences, health issues, rural tourism account for an increasing number of visitors. Whereas literature suggests that Greece is mostly being chosen from tourists because of its sunny weather and its magnificent beaches (Jacobsen et al., 2009), Greece could benefit from diversification both in terms of tampering seasonality and boosting its competitiveness. For example, tourists may not travel solely for culinary but important decisions such as revisiting may be taken due to this factor (Harrington & Ottenbacher, 2010).
Consequently, Greece needs to give more attention to promoting a concept that seems appealing to all audiences to surpass conterminous peers. That means not only taking advantage of the “the tourist gaze” visual concept (Urry, 1992) but instead emphasizing in the creation of a fully sensory richness to succeed as a popular tourist destination (Dann & Jacobsen, 2003;). To achieve that Greece should expose content makers, such as journalists and travel bloggers, to a variety of activities that will stimulate all their senses. Evidence suggests (Pan & Ryan, 2009) that their feelings will be integrated into their written reports and thus can stimulate respectively the same culinary, olfactory and acoustic feelings to their readers.
2.6 Black Swans in tourism – the case of COVID-19
In December 2019 a novel coronavirus emerged in the Hubei region in China, that claimed more than 3.000 lives. A few months later the COVID-19 was declared a global pandemic from WHO and quarantine was imposed/recommended to billions of people. The virus grounded most of the civilian aircrafts and halted an upward trend in international tourism creating uncertainty regarding the future of the industry.
Greece is not overexposed, however, significant threats arise. Greece welcomes its main tourist influx in the constrained 3-month summer period. Taking into account even the most optimistic scenario, Greece’s summer tourism season may be as short as 2 months. In that case, tour operators and tourist agents may mitigate the economic fallout of this crisis by offering flexible rebooking policies and attracting customers from not hard-hit countries (i.e. the Middle East). This may eventually lead to a huge spike in arrivals in September and October that could partly compensate for the loss in the second quarter, although the virus cases may spike again in autumn and there are concerns about the disposable income of the visitors, which may be strained due to the economic woes of imposing a lockdown on economies. An immunity certificate may also act as a solution to allow healthy travelers in the country, however, it is still not practically feasible. Therefore, for the short term, Greece should anticipate a sharp decline in tourist arrivals.
Greece’s structural problems may drug down one of its best performing sectors. Although, with the appropriate actions the country will be able to establish itself as the undisputable tourism powerhouse in the East Mediterranean. Its most popular tourist product “sun & beach” should be further highlighted and promoted as long as Greece creates additional demand for already existing products and establish new ones to counter seasonality and create value for visitors. To achieve that Greece must establish a long-term master plan for tourism that will set out the criteria for sustainable tourism development and will enable the transform towards the future. Human resources will play an important role in the next day of Greek tourism and thus restructuring the educational programs will be crucial.
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 PwC in its report ‘From recession to anemic recovery, Investments in Greece’ highlights the effect of the economic crisis that led to the investment (net investments < depreciation) deficit during the crisis years.
 The average delay on infrastructure projects in Greece is 28 months in construction and 23 months in preparation according to PwC’s report: ‘Infrastructure in Greece: Funding the future’
According to the report, Greece still uses some of the same plans that date back in 2005 and are still in effect whereas. In the meantime, a new framework isn’t expected until at least the advent of 2021.
 Santorini acknowledged that it has reached its carrying capacity limits and set a cap on the daily number of cruise visitors.
 Greek Tourism Confederation considers the absence of spatial planning as the main driver of discouragement of tourism investments.
 According to Bank of Greece more than 18 million tourists arrived (more than half) in Greece in the 3Q of 2019, while the travel receipts were more than € 10 million more than all the other quarters combined.
 According to Bank of Greece the 6 most tourist attractive regions (Attica, Central Macedonia, Eastern Macedonia and Thrace, Crete, Southern Aegean) accounted for more than 86% of the country’s total visits.
 According to the PwC’s Greece publication “The next day of Greek tourism (2018)” the average room capacity in Greece’s main destinations is at 58% whereas in the lesser destinations stands at 31%
 This is further impacted by the marketing strategy of the Greek national tourism organization, which aims at maintaining and further promoting Greece as a sun and beach destination.
 According to The Travel and Tourism Competitiveness Report 2019, WEF, Greece came 25th globally in the overall score, but only came 59 in the sub-index of human resources and Labor market, which takes into account factors such as the extent of training of staff and the treatment of costumers.
 The Greek tourism Confederation recommends adjustments to the existing curriculum and calls for an integrated long-term plan regarding tourism education in an open letter to the Greek Prime minister in December 2019.
 Historic precedents, most namely SARS, have shown that the impact is felt even in the countries that were not exposed largely to the disease (McKercher & Chon, 2004), such as Greece, due to the impact of travel warnings.
Studies suggest that the warmer weather and lower humidity will lead to the decrease of cases (Wang et. al., 2020).
 Deutsche bank in its report “Coronavirus: A threat to the business of traditional tourist destinations” suggested that immunity certificates could be used to scan the visitors.
 There is a growing concern about the long-lasting psychological impact of the quarantined people that may prevent them from booking their next trip. Evidence from previous outbreaks, the SARS and the MERS (Hawryluck et al., 2004; Reynolds et al., 2008) suggest that post-traumatic stress disorder and depression levels were likely to occur in people that have been quarantined.