Discussion Web Site: http://www.commerce.otago.ac.nz/tourism/current-issues/homepage.htm
Tourism in Greece: Strategic Analysis and
Challenges
Dimitrios Buhalis
School of Management Studies for the Service Sector, University of Surrey,
Guildford GU2 7XH, UK
This paper provides a strategic analysis of the competitiveness of Greek tourism. It
illustrates the importance of tourism as an economic activity and analyses the current
situation and structural problems of Greece as a destination. Although Greece offers
unique nature, culture and heritage, the lack of differentiation of the tourism product
as well as competitive disadvantages in marketing and planning cause an
over-dependence on intermediaries for the promotion and distribution of the tourism
product whilst jeopardising its quality. This affects the profitability and competitiveness of both the destination and its small and medium-sized tourism enterprises. The
paper proposes a grand strategy as well as numerous strategic directions, objectives
and tasks aiming to demonstrate the way ahead for Greek tourism. Several major
opportunities emerge through the Olympic Games in 2004 as well as the major projects
currently being undertaken which will enhance the infrastructure of the country. It is
argued that a consistent tourism policy based on professional development and implemented through a Master Plan is urgently required. Strategies and methodologies need
to be identified, whilst private enterprises need to increase their cooperation locally in
order to enhance the quality and competitiveness of the product.
Introduction. Tourism in Greece: From Mythology to a Modern
Industry
Greece has a long tradition in tourism and hospitality mainly due to its history
and ancient civilisation. Foreigners were considered sacred in ancient Greece.
Xenius Zeus, the father of gods, also became the god of hospitality to protect
foreigners and inspire locals to look after their visitors. A land of rich economic,
religious and intellectual activity for more than three and a half millennia;
geographically spread on an archipelago of more than 2500 islands; located at the
south-eastern corner of Europe; on a crossroad to Africa and Asia, inevitably
stimulated travel activity since the beginning of recorded history (Briassoulis,
1993: 285; Skoulas, 1985: 2; EIU, 1986: 45). In modern times, the scientific documentation of tourism in Greece commenced after the Second World War, while
major tourism development started in the mid-1970s, when the unpopularity of
Spanish resorts stimulated demand for alternative Mediterranean destinations.
A dramatic increase of tourism flows to Greece in the late 1970s and 1980s was
experienced, facilitated by plenty of natural, cultural and environmental
resources, existing airport infrastructure in major islands, and lower cost of
living in comparison with most of Europe (EIU, 1990: 49). Greek resorts have
different product and market profiles making them capable of satisfying a great
diversity of tourism demand (Buhalis, 1991; Ottaway, 1993; Boniface & Cooper,
1994: 140; Wickers, 1993). The tourism industry grew rapidly, especially on
island destinations and regions with historical monuments, as demonstrated in
1368-3500/01/05 0440-42 $16.00/0
Current Issues in Tourism
©2001 D. Buhalis
Vol. 4, No. 5, 2001
440
Tourism in Greece: Strategic Analysis and Challenges
441
the spatial analysis of tourism distribution (Komilis, 1987; Leontidou, 1991;
Papadopoulos, 1989: 297–300).
Greece is one of the most remote, peripheral, insular and poor economic
regions of the EU. Its tourism requires urgent strategic management action in
order to compete with alternative destinations and maximise the prosperity of
the host population. Similar strategic exercises are undertaken by competing
destinations around the globe, as they prepare to face the new business realities.
In Spain, for example,
the evolution of demand towards a more diversified touristic product
offering better value for money; the growing concern for the environment
which contradicts the degradation of the surroundings; a fragmented
sector structure with low level of professionalism; and a substantial growth
of competition [especially new destinations which compete in its traditional market segments and enjoy comparative advantages in cost/prices]
have changed the setting of Spanish tourism by constituting a serious
threat to its competitiveness. However, these future trends, though worrying, can be considered as opportunities to remodel the strategy of supply of
Spanish tourism. (Camison et al., 1994: 443)
Several resorts and especially Benidorm and Calvia went through a major
face-lift to accommodate the new trends. Hence this paper concentrates on the
factors which jeopardise the success of Greek tourism as well as on their
impacts on the prosperity of the private sector and the local society and
attempts to propose a strategic framework for competitiveness enhancement.
Only competitive destinations will be able to maximise their benefits in the
future (Buhalis, 2000a) and if Greece would like to benefit from tourism it
should learn from the international experience and adapt its strategic and operational practices.
The paper is based on on-going primary and secondary research and benefits
from a number of interviews with strategic players in Greek tourism. A comprehensive literature review is also incorporated in order to facilitate further
research on the topic. As most destinations are comprised by an amalgam of
small and medium-sized tourism enterprises (SMTEs), it is argued that the
competitiveness and prosperity of destinations are closely interrelated with
those of SMTEs and vice versa. This is also reinforced by Porter’s (1990) analysis
of ‘the competitive advantage of nations’ where the competitiveness of the
geographical area of business operations is directly influenced by both the external business environment and the competence of local enterprises. As Camison et
al. (1994: 443) state:
the conditions determining the competitiveness of a tourist service
[whether accommodation, catering, a theme park, a wholesale travel
agency, etc.] and the holiday experience of a tourist find meaning in a
certain geographical area (the destination) defined by a multidimensional
relationship among firms and industries involved, transport and communications infrastructure, complementary activities [commercial infrastructure, tradition of fairs, etc], support services [training, information, etc.],
natural resources and institutional policies.
442
Current Issues in Tourism
Following the introduction and the examination of the importance of tourism
in the Greek economy (why is tourism important?) the paper focuses on the strategic position of Greek tourism. A comprehensive auditing is undertaken in
order to assess the current situation and to illuminate the structural problems of
the industry (where are we now?). The analysis of the structural problems
demonstrate several reasons which determine the strategic situation (why are we
there?), while the effects on private sector profitability and the impacts of tourism on the host society are illustrated (what are the implications?). A strategic
framework is provided in order to formulate a grand strategy for Greek tourism
and to demonstrate future direction (where do we want to go?). Furthermore, a
number of strategic directions, objectives, and tasks demonstrate how the grand
strategy can be implemented, while the need for a Master Plan drawn up by the
public sector and close cooperation of the private sector are prescribed in order to
facilitate the implementation of the strategy (how are we going there?).
Why is Tourism Important? The Contribution of Tourism to the
Greek Economy
The Greek economy is often criticised for failing to develop strong industrial
sectors and to establish suitable distribution channels for exporting agriculture.
Tourism is a major contributor to the balance of payments, while it is one of the
few activities which would enable Greece to achieve competitive advantages
through the redistribution of labour within Europe (Economist, 1993: 5–6). Thus it
is a vital motivator of the Greek economy reducing the deficit of the balance of
payments, boosting employment, generating income, and contributing to regional
development (Zacharatos, 1989: 274; Truett & Truett, 1987: 178).
Nobody knows the exact contribution of tourism to the Greek economy, mainly
because there is inadequate research on expenditure, flows of income and national
accounts. Tourism is a major export and contributor to both Gross National Product
(GNP) and balance of payments. The Greek National Tourism Organisation (GNTO)
suggests that the tourism contribution to the GDP is estimated at up to 7%. The
tourism receipts in 1998 were 5.186 millions US, covering 29.3% of the deficit in the
balance of payments and 39.83% of the exports of services (www.gnto.gr, 12 October 2000). Paulopoulos (1999) estimates that in 1994 the foreign currency earned
from incoming tourism was $9bn, providing 18–20% of the GNP. Tourism income is
2.5 times more than the income generated by industrial products and 1.8 times more
than the total exports. However, these figures do not include pre-purchases of
drachma by tourists abroad, credit card payments, payments for cruises and other
earnings, which have been estimated to increase total receipts by up to 80% (EIU,
1994: 42 and 1993: 43; Papadopoulos & Mirza, 1985: 133). Tourism is included in the
Greek National Accounts as ‘Invisible Receipt’, and since 1989 it has only been
second to the ‘net EU contributions’, having overtaken both ‘shipping’ and ‘emigrant remittances’ contributions, which used to dominate in the past (Epilogi, 1994:
355, Papadopoulos & Mirza, 1985: 131; EIU, 1990: 49).
Tourism is also increasingly recognised as an instrument for regional development policies, especially for socioeconomically depressed and problematic areas
(Konsolas & Zacharatos, 1993: 57). It is instrumental in developing unfavoured
regions and especially insular areas, which have little potential to develop local
Tourism in Greece: Strategic Analysis and Challenges
443
handicraft and other industries without tourism demand. Consequently, in the
period 1965–1980, the tourism output multiplier in Greece was estimated to be 1.52
(Zacharatos, 1989: 281). Domestic tourism also facilitates a certain degree of redistribution of wealth between metropolitan and peripheral regions. Not only was
the emigration pace from the islands diminished, especially of young people, but
also a trend for rehabitation on the islands has been evident in the last decade as
new job opportunities have emerged (Panagiotopoulou, 1990: 10; Loukissas, 1982:
537). Tourism also stimulates seasonal migration of professionals in several destinations, who work at the region for several months every year (Logothetis, 1990:
23). Tourism is also a major employer as it is estimated that employment in the tourism sector is 10% (6.1% direct employment and 3.9% indirect) of the total employment in Greece (www.gnto.gr, 12 October 2000). Paulopoulos (1999) estimates a
total of 690,000 people to be employed in tourism if we include people indirectly
involved with tourism, with 35% employed yearly, 40% for 6–8 months and 25%
only during the peak season for 2–3 months. About 74% of the labour is employed
in accommodation establishments, 21% in travel agencies, transportation and the
public sector, while a further 5% is occupied in sea transportation (Stereopoulos,
1995: 153). Job opportunities are provided mainly for young people and for
women who are often self-employed within their household (Kassimati et al., 1994;
Kousis, 1989: 328). However, tourism’s contribution to employment is jeopardised, as increasingly the industry is using self-catering and self-serviced accommodation and catering (Zacharatos, 1989: 284).
In reality the contribution of tourism to the Greek economy is substantially
greater as the official figures ignore the ‘para-economy’ (black or parallel economy), estimated to be as high as 28–50% of the official GDP (EIU, 1993: 25; EIU,
1990: 47). Tourism being a seasonal activity often complements other economic
activities, such as agriculture and education, and therefore para-economy in tourism is even greater than other industries. Para-economy includes both international transfers of funds for tourism products offered within the country, as well as
the illegal export of tourism foreign exchange which is re-exported without being
processed through the Greek economic system. As a result, the real impacts of
tourism in the economy are largely unknown (Zacharatos, 1988, 1989).
Where Are We Now? Situation Analysis: The Greek Tourism
Industry and its Competitiveness
The contribution of Greek tourism to the national economy demonstrates the
magnitude and complexity of the industry. Following a brief demand analysis,
an examination of tourism supply is undertaken, whilst a strengths–weaknesses–opportunities–threats (SWOT) analysis demonstrates the competitiveness of both destination and its SMTEs. In addition the paper elaborates on a
wide range of structural problems and illustrates their effects on the profitability
of the private sector and on the impacts of tourism at the destination.
Tourism demand for Greece
Greece has enjoyed a continuous growth in arrivals, since the early 1950s.
Despite the lack of any comprehensive tourism demand analysis undertaken by
the GNTO, several research documents address the tourism-demand issue for
444
Current Issues in Tourism
Greece (Psoinos, 1994a, 1994b; GNTO, 1985a; Tourismos ke Oikonomia, 1993;
NSSG, 1983, 1985, 1987, 1990, 1993; Stavrou, 1984, 1986a, 1986c). In 1950, 33,333
foreign tourists passed the borders while this figure rose to almost 11 million in
1999, as illustrated in Table 1. Greece comes in the 17th place in the world classification of tourist destinations. There is a concentration in the summer months, as
in the last ten years in 37.5% of arrivals were in July and August, while the period
May to September attracted 74% of total arrivals. This is clearly reflected on the
bednights as illustrated on Table 2. Most visitors (93.2%) originate from Europe
and 70.2% from the EU, especially British, Germans, Swedish, Finnish, Dutch and
Austrians. Hence, these nationalities are the dominant markets, with the British
and Germans contributing almost half of all arrivals, as illustrated in Table 3.
About 77.7% came by plane and 60.5% by chartered flights. Although tourism
arrivals in Greece were forecasted to reach 20 million by the year 2000 (Jenner &
Smith, 1993: 161) this was not achieved as a result of increasing competition and
incompetent management in both the public and private sectors.
In 1999, about 60 million bednights were recorded in all types of accommodation establishments, 75% of which were by international tourists. Similar to arrivals, the vast majority of the bednights spent in the country were by Europeans,
especially British, Germans, Swedish, Finnish, Dutch and Austrians. Hence, these
nationalities are the dominant markets, accounting for more than three-quarters of
the bednights, with the British and Germans contributing almost half of all
bednights. Domestic tourism is also a significant contributor. More than 75% of
tourists arrived in Greece by air and 58% of the total arrived on charter flights,
because of the distance from the country of departure. In 1985, about 89% of tourists’ arrivals to Greece were holiday-makers, while only 7% travelled for business,
2% for other reasons and 1% were in transit. About 53% of the tourists arriving in
1985 had bought an inclusive tour package (GNTO, 1985a: 8). The inconvenience
of indirect transportation schedules; large differentials in charges for groups and
individual customers by accommodation establishments; lack of information
about the Greek tourism product; as well as insufficient marketing by SMTEs,
have enabled tour operators to act as intermediates between consumers and principals and to play a dominant role in the tourism industry. However, the development of the Internet enables prospective visitors to pre-book their packages
independently and to use cheaper non-frills airlines and leisure fares of schedule
airlines for their transportation.
The country has cultural attractions and heritage few other destinations can
equal and therefore it can respond to the ‘new era of tourism’, where a greater
degree of individuality and sophisticationwill be required by consumers. In 1998
the average length of stay in the country was 14 days, while the average expenditure per capita reached a level of $456. Similar results emerged in recent research,
although the location of the data collection produced a sample containing a higher
percentage of business travellers (Psoinos, 1994a: 62).
Despite research on motivation, attitudes and satisfaction of tourists arriving in
Greece being inadequate, a few typologies have emerged. Fotis (1992: 83–86) classified holiday-makers in Rhodes in four main categories: ‘tranquillers’ seeking quiet
and relaxing holidays; ‘culturers’ who include a strong educational and historical
element in their holidays; ‘budgeters’ who are predominately budget-constrained
families; and young ‘nightlifers’ enjoying nightlife entertainment. Similarly,
Tourism in Greece: Strategic Analysis and Challenges
445
Table 1 Tourism demand and supply figures for Greece during the period 1950–1995
Year
Arrivals
Bednights
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
33,333
40,568
68,184
94,410
157,618
195,852
218,301
261,738
276,534
339,802
399,438
494,191
597,924
741,193
757,495
976,125
1,131,730
996,473
1,017,621
1,305,951
1,609,210
2,257,994
2,731,587
3,177,682
2,188,304
3,172,968
4,243,563
4,597,354
5,081,033
5,798,360
5,271,115
5,577,109
5,463,060
5,258,372
6,027,266
7,039,428
7,339,015
8,053,052
8,351,182
8,540,962
9,310,492
8,271,258
–
–
–
–
1,273,105
1,351,312
1,594,088
2,041,096
2,069,722
2,552,271
2,963,478
3,934,522
4,921,803
6,129,500
5,102,121
6,158,300
8,810,300
–
–
6,212,000
7,683,639
11,224,000
14,687,325
15,698,030
10,214,164
13,574,801
19,202,614
18,714,446
22,259,598
26,672,482
27,170,344
28,171,610
29,954,664
27,216,605
32,821,789
35,709,851
35,450,027
35,755,308
36,000,000
34,157,667
36,289,604
29,873,046
Bed
capacity
–
–
–
–
–
–
–
–
–
–
–
57,022
60,945
65,604
71,741
78,487
85,323
90,362
98,631
108,180
118,859
135,103
151,420
166,552
175,161
185,275
213,431
231,797
247,040
265,550
278,045
285,860
301,230
317,920
333,820
348,170
359,380
375,370
395,810
423,790
438,360
459,300
Expenditure
(million $)
4.735
5.933
9.583
22.721
25.321
29.123
31.213
41.374
36.196
41.667
49.260
62.469
75.986
95.415
90.800
107.575
143.458
126.768
120.263
140.470
193.556
305.299
392.700
514.900
436.600
643.600
823.700
980.600
1326.300
1662.300
1733.500
1881.000
1527.200
1175.700
1312.800
1428.000
1834.200
2268.100
2396.100
1976.000
2575.000
2566.100
Expenditure
per capita
142
146
141
241
161
149
152
166
142
138
141
142
140
142
135
127
144
149
137
131
155
171
176
197
253
244
225
248
293
318
361
369
303
246
238
217
261
297
305
245
290
319
Current Issues in Tourism
446
Table 1 (cont.) Tourism demand and supply figures for Greece during the period
1950–1995
Year
Arrivals
Bednights
1992
1993
1994
1995
1996
1997
1998
1999
9,756,012
9,913,267
11,301,722
10,658,114
9,782,061
10,588,489
11,363,822
10,970,665
36,260,299
36,747,968
40,657,544
38,889,975
47,945,506
53,364,507
56,549,442
60,256,902
Bed
capacity
475,800
499,606
486,518
534,703
550,692
560,957
577,759
584,714
Expenditure
(million $)
3268.400
3335.200
3904.900
4294.000
3723.100
3772.200
5186.100
NA
Expenditure
per capita
350
354
346
403
381
356
456
NA
Source: Adapted from the Greek National Tourism Organisation and National Statistical Service of
Greece
Wickens (1994: 819 and 2000) classified tourists arriving in Pefkochori as ‘cultural heritage’ type, interested in the natural beauties of Greece as well as its
culture and history; ‘ravers’ attracted by the cheapness of the resort, particularly
the cheapness and availability of alcohol as well as the sun, beach and nightlife;
‘Shirley Valentines’ who are women on a mono-gender holiday who hope for
romance and sexual adventure with a ‘Greek God’ based on the Greek male
stereotype which has been perpetuated by newspapers and the film Shirley
Valentine; ‘heliolatrous’ tourists who are sun-worshippers trying indefatigably
to change their colour; and finally ‘Lord Byrons’ who undertake an annual ritual
return to the same destination and experience the real flavour of Greek hospitality and ambience. Although these typologies provide an initial demand profile,
the strategic analysis and the positioning of the Greek tourism product will be
impossible without further research undertaken on the characteristics, needs,
motivations and behaviour of tourists.
Table 2 Nights spent by foreign tourists and Greek nationals in hotels and similar
establishments by month
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total
Year
1996
867,638
928,305
1,250,226
2,766,116
5,258,710
6,405,495
7,965,179
9,551,439
6,993,686
4,113,665
1,032,350
812,697
47,945,506
1997
946,798
933,592
1,369,751
2,822,243
5,923,093
7,075,829
9,003,064
10,878,827
7,822,329
4,419,861
1,113,342
1,055,778
53,364,507
1998
1,005,719
998,977
1,273,310
2,905,546
6,229,116
7,530,343
9,872,757
11,661,790
8,224,367
4,640,619
1,175,950
1,030,948
56,549,442
Variation
1999
1,066,084
1,060,008
1,448,624
2,864,693
6,617,666
8,342,167
10,723,835
11,805,077
8,756,290
5,234,218
1,245,219
1,093,021
60,256,902
97/96
98/97
99/98
9.12% 6.22% 6.00%
0.57% 7.00% 6.11%
9.56% –7.04% 13.77%
2.03% 2.95% –1.41%
12.63% 5.17% 6.24%
10.46% 6.42% 10.78%
13.03% 9.66% 8.62%
13.90% 7.20% 1.23%
11.85% 5.14% 6.47%
7.44% 4.99% 12.79%
7.85% 5.62% 5.89%
29.91% –2.35% 6.02%
11.30% 5.97% 6.56%
Source: Greek National Tourism Organisation and National Statistical Service of Greece
Austria
Belgium-Luxembourg
Bulgaria
France
Germany
Former Yugoslavia
Yugoslavia
Fyrom*
Denmark
Switzerland
UK
Ireland
Spain
Italy
Cyprus
Norway
Netherlands
Hungary
Ukraine
Russia
Poland
Portugal
Romania
Sweden
Czechoslovakia
Czech Republic
Slovakia
Country
345,259
225,099
140,725
542,222
1,944,704
93,413
281,235
163,126
2,154,850
57,885
119,964
622,619
107,029
95,898
546,187
107,403
43,788
26,245
19,683
314,251
191,585
211,883
126,241
1,674,875
44,085
104,655
517,145
104,041
68,396
450,065
107,685
47,535
16,586
17,919
261,946
130,129
1992
288,317
179,754
157,910
470,945
1,561,113
518,644
1991
34,292
20,919
18,862
317,030
89,642
253,622
164,999
2,191,347
62,780
118,967
625,509
90,412
102,452
510,872
73,999
288,636
224,036
144,534
554,644
2,069,379
191,792
1993
324,369
259,072
2,224,885
62,252
94,920
643,473
98,059
142,013
505,616
91,170
10,652
129,184
49,665
20,858
38,868
459,276
107,882
13,536
78,846
15,102
1995
128,211
347,301
245,572
136,504
551,798
2,272,911
270,347
260,764
318,885
193,327
2,418,628
69,928
122,773
722,652
92,372
143,257
556,593
105,102
10,742
101,474
31,018
21,581
25,474
387,639
1994
238,453
348,091
265,148
133,764
618,565
2,404,628
279,301
270,894
Table 3 Arrivals of foreign tourists at frontiers by citizenship 1991–1999
177,087
28,431
298,959
256,425
1,687,999
54,050
79,717
491,081
85,893
157,722
452,179
113,657
12,942
180,560
88,947
15,856
51,012
448,257
1996
191,619
359,604
213,567
154,765
462,732
1,907,863
247,171
231,496
178,094
55,291
201,633
86,911
292,532
289,387
2,044,243
44,524
96,905
659,688
126,992
226,282
548,339
186,147
28,084
127,417
122,647
13,713
63,439
467,617
198,999
378,095
344,261
295,731
1,711,942
45,409
71,314
533,303
131,441
160,457
464,144
145,192
27,017
200,794
101,793
13,125
51,854
472,481
174,068
30,383
1998*
586,182
450,195
273,674
197,347
486,201
2,136,515
1997
298,843
388,118
229,310
182,338
426,678
1,994,670
174,508
46,217
103,077
128,051
336,248
308,138
2,433,033
48,649
99,288
745,915
139,386
269,419
616,807
123,280
32,843
104,910
115,152
21,034
72,689
468,793
1999*
673,061
501,602
332,913
202,848
545,981
2,450,137
Current Issues in Tourism
447
1991
216,131
80,995
4,850,174
7,356,995
57,902
36,989
15,637
53,531
4,226
5,474
44,859
218,618
20,020
13,527
17,948
51,495
5,092
8,523
3,642
80,429
47,101
10,983
255,770
66,566
8,489
75,055
78,194
8,036,127
235,131
8,271,258
1992
172,099
104,394
6,521,010
8,419,663
109,680
35,065
15,922
73,650
6,794
8,048
55,467
304,626
19,525
16,944
14,660
51,129
8,655
8,999
6,535
278,941
59,807
15,254
378,191
69,658
8,035
77,693
100,058
9,331,360
424,652
9,756,012
1993
116,518
205,373
6,636,291
8,470,616
89,907
45,815
14,924
149,390
7,615
8,014
54,506
370,171
19,609
14,687
14,242
48,538
8,794
8,555
5,336
256,719
51,472
12,468
343,344
56,064
6,930
62,994
117,160
9,412,823
500,444
9,913,267
1995
102,553
32,882
7,855,784
9,363,829
89,457
54,264
15,651
49,018
5,960
7,919
111,547
333,816
21,449
12,062
15,175
48,686
9,703
10,851
4,539
239,684
50,309
8,694
323,780
54,453
5,613
60,066
10,130,177
581,968
10,712,145
1994
137,434
25,209
7,519,381
9,865986
95,367
41,405
13,974
73,388
6,458
5,623
63,611
99,826
18,540
12,559
12,145
43,244
11,530
10,744
5,318
270,777
56,650
9,043
364,062
61,556
7,268
68,824
10,641,942
588,912
11,230,854
* Former Yugoslav Republic of Macedonia
Source: Greek National Tourism Organisation and National Statistical Service of Greece
Country
Finland
Other European
Total EU
Total Europe
Japan
Israel
Lebanon/Syria
Turkey
Iran
Other Middle East
Other Asian
Total Asia
Egypt/Sudan
SouthAfrica
Other Africa
Total Africa
Argentina
Brazil
Mexico
USA
Canada
Other American
Total America
Australia
Other Oceanic
Total Oceania
Former USSR
Total
Cruises
Grand total
9,233,295
548,766
9,782,061
1996
120,837
80,128
6,592,701
8,419,060
87,135
74,980
18,357
47,416
5,319
12,410
167,380
412,997
19,865
8,909
14,797
43,571
8,176
9,661
3,385
222,130
43,966
10,826
298,144
54,311
5,212
59,523
10,070,325
518,164
10,588,489
1997
148,461
57,541
6,843,216
9,277,762
85,029
82,386
16,165
44,741
3,730
8,300
145,515
385,866
19,363
8,748
14,324
42,435
4,408
8,062
2,258
240,555
47,722
11,052
314,057
46,692
3,513
50,205
10,916,046
447,776
11,363,822
1998*
149,337
34,967
7,663,483
10,174,303
87,130
89,402
17,798
69,875
3,848
6,382
84,139
358,574
17,604
7,339
13,795
38,738
4,238
6,299
2,052
219,362
50,512
9,044
291,507
42,796
10,128
52,924
2,164,088
441,840
12,605,928
1999*
188,971
37,063
8,789,371
11,320,013
83,971
154,987
18,347
80,502
3,809
7,854
84,806
434,276
24,045
10,196
13,799
48,040
5,089
4,531
4,200
229,314
51,680
10,447
305,261
50,516
5,982
56,498
448
Tourism in Greece: Strategic Analysis and Challenges
Tourism in Greece: Strategic Analysis and Challenges
449
Tourism supply in Greek tourism
A modern industry has emerged since the 1950s to cater for the tourism
demand. The Greek tourism product is an amalgam of natural, cultural and heritage attractions spread throughout the country, as well as a wide variety of services
offered predominantly by SMTEs. Moreover, 15,000 miles of coastline; 2500
islands; an average of 300 sunny days annually; a unique fauna and flora; as well as
climatic superiority with mild winters and warm summers are some of its natural
attractions. The Greek civilisation of more than 3500 years also provides plentiful
cultural heritage throughout the country. Some ’25,000 registered and protected
monuments and archaeological sites, numerous museums and about 500 characteristic traditional settlements’ offer a unique blend of tourist attractions (Buckley
& Papadopoulos, 1986: 96; EIU, 1986). As far as amenities are concerned, a plethora
of SMTEs provide the entire variety of services.
In January 2000, a total of 8100 official accommodation establishments with a
total capacity of almost 600000 beds are provided in different categories, as
demonstrated in Table 4. Another 450,000 beds are provided by some 28,000
secondary accommodation establishments such as ‘rooms to let’ and self-catering
apartments often referred to as ‘parahoteleria’. In addition, 11,000 beds in cruise
liners and 12,000 in yachts as well as 329 camping sites with 30,354 pitches and
83,000 camping spaces accommodate all types of demand (GNTO). Eurostat estimates that about 20,000 restaurants operate in Greece, while a countless number of
catering and entertainment establishments are on offer. Furthermore, some 7000
travel agencies, 1500 coach rental and 4000 car rental firms are estimated to operate
throughout the country (EC, 1993a).
Accessibility is facilitated through 32 airports, most of which can receive direct
international charter flights. An extensive domestic scheduled flights network is
provided by Olympic Airways, as well as by newly established private carriers
which take advantage of the increasingly deregulated skies. The proliferation of
private airlines (e.g. Aegean, Cronus, Axon, Air Greece) during the last five years
and the price wars with the state-owned Olympic Airways have increased both
domestic and international traffic. Moreover, a complex network of sea, road and
rail transport enables passenger transportation throughout the country
(Briassoulis, 1993: 291). During the last decade there has been a remarkable
improvement to the quality and ability of vessels as the Greek shipping industry
prepares for the lifting of cabotage in 2002, which will enable European shipping
lines to operate on Greek routes. However, recent tragedies involving older
Greek ferries pressurised the Ministry of Merchant Marine to take action in order
to improve the safety and security of the vessels and to ensure the adequate training of crews. In addition, Piraeus port needs the development of a modern
passenger terminal to provide adequate service.
Unfortunately, the Greek infrastructure is incapable of supporting the tourism
superstructure growth of the last decades, and thus, telecommunications, transportation, police and health services, water supply, and sewage systems are under
extreme pressure in the summer peak months to satisfy the demand density
(Konsolas & Zacharatos, 1993: 63 and EIU, 1990: 61). Nevertheless during the last
decade several major projects have been initiated including the Metro and the new
airport in Athens, a wide network of motorways and the gradual development of
Beds
C Category
Rooms
18,193
8,818
11,928
2,362
4,427
20,123
16,375
8,357
5,723
12,407
868
109,581
Units
603
326
380
99
199
678
495
367
241
491
28
3,907
Region
Sterea
Peloponisos
Ionio
Ipiros
Northern Aegean
Crete
Dodekanisa
Cyclades
Thessaly
Macedonia
Thrace
Total
Source: GNTO, Dept of Accommodation Establishments
33,965
16,648
22,722
4,515
8,400
36,903
30,686
15,977
10,778
23,497
1,614
205,705
Beds
92,877
43,846
63,683
9,385
20,792
113,960
104,366
35,248
22,939
72,943
4,675
584,714
Rooms
49,398
23,010
33,286
4,868
10,872
60,489
54,507
18,406
11,995
33,513
2,470
302,814
Units
1,236
660
595
242
550
1,214
887
737
575
983
70
7,749
Region
Sterea
Peloponisos
Ionio
Ipiros
Northern Aegean
Crete
Dodekanisa
Cyclades
Thessaly
Macedonia
Thrace
Total
Total
194
94
57
19
28
97
61
100
53
351
11
1,065
Units
Units
22
4
6
1
4
21
8
3
4
4
0
77
3,712
1,350
1,114
356
404
1,631
1,076
1,522
962
6,870
259
19,256
D Category
Rooms
Rooms
5,368
661
1,340
54
501
5,085
3,242
176
399
1,046
0
17,872
Luxury
Table 4 Accommodation establishment by region and category in 1999
7,038
2,625
2,121
682
773
2,995
2,939
2,922
1,861
13,066
493
37,515
Beds
Beds
10,144
1,377
2,553
116
1,090
10,034
6,227
341
781
1,842
0
34,505
146
42
36
14
33
51
56
104
59
60
5
606
Units
Units
80
55
78
11
23
166
127
96
50
55
4
745
2,263
467
650
172
427
759
729
1,419
780
835
60
8,561
E Category
Rooms
Rooms
7,805
4,889
9,308
446
1,364
18,893
22,484
3,108
1,505
2,319
181
72,302
A Category
4,481
924
1,269
344
830
1,516
1,429
2,821
1,590
1,700
120
17,024
Beds
Beds
14,644
9,250
17,911
884
2,574
35,608
42,924
5,870
2,980
13,698
345
146,688
Units
191
129
139
38
98
263
201
140
67
168
22
1,456
Rooms
12,057
6,825
8,946
1,478
3,749
13,998
10,601
3,824
2,626
10,036
1,102
75,242
B Category
Beds
22,605
13,022
17,107
2,844
7,125
26,904
20,161
7,317
4,949
19,140
2,103
143,277
450
Tourism in Greece: Strategic Analysis and Challenges
Tourism in Greece: Strategic Analysis and Challenges
451
the railtrack. These developments will change the entire infrastructure of the
country.
The implementation of the Greek national tourism policy is supervised by the
Greek National Tourism Organisation (GNTO), and the Ministry of Tourism.
The two organisations share the responsibilities for planning, implementation
and promotion of Greek tourism at national and regional level, as well as coordinating the involvement of the public and private sectors in all tourism activities.
Public investment in commercial facilities was utilised in the early days of
Greek tourism to stimulate both tourism demand and the private sector’s confidence to invest. The GNTO operates 21 regional and 25 overseas offices in 18
countries worldwide (Konsolas & Zacharatos, 1993: 59; Leontidou, 1991;
Briassoulis, 1993).
The Greek tourism product is distributed to the international market predominantly through European tour operators, which organise package holidays and
include resorts in their programmes. Some 800 tour operators distribute the Greek
tourism product. More than 7000 incoming travel agencies often act as tour operators’ handling agencies, while providing a variety of tourism services, such as
organisation of excursions, currency exchange, and accommodation bookings
directly to consumers. They usually participate in negotiations between tour operators and accommodationestablishments as well as cooperate with tour operators’
representatives at destinations. In addition, the GNTO operates several information offices at major resorts, whilst several local authorities provide tourist information as well as distribute promotional material and make local bookings. The
global GNTO network distributes information material to potential tourists, as
well as undertakes all the marketing and public relations functions, both for individual and institutional customers.
SWOT analysis for Greek tourism and small and medium-sized tourism
enterprises
A SWOT analysis is undertaken for the Greek tourism as well as its SMTEs in
order to assess their present and projected competitiveness, based on strategic
management research undertaken for the Aegean islands (Buhalis, 1991; Cooper
& Buhalis, 1992). The interrelations between SMTEs and destinations are quite
apparent, illustrating that a destinations’ weaknesses and threats are reflected in
the SMTEs’ competitiveness and vice versa. As illustrated in Table 5, the SWOT
analysis concentrates on the strategic, rather than operational, strengths and
weaknesses of SMTEs.
As far as strengths of the Greek tourism and SMTEs are concerned, their flexibility and ability to tailor products to consumers’ needs are of great importance
to their existence. SMTEs can identify profitable niches in the market, establish
their requirements and attempt to satisfy specialised needs. Direct control by
entrepreneurs permits quick and efficient managerial reaction to external challenges. Fewer hierarchical levels facilitate closer and more effective control over
the service delivery process, enabling personal services to customers. In addition, archaeological heritage, natural and cultural resources, as well as the local
character, are also significant assets. As a result, tourists benefit from local
resources which are ideally situated to offer special-interest holidays. SMTEs
also capitalise on personal relationships with consumers, suppliers, labour and
Current Issues in Tourism
452
Table 5 Greek tourism and SMTEs’ SWOT analysis
Strengths
Weaknesses
Flexibility
Management
Tailor-made product delivery
Marketing
Entrepreneurial activity
Information technologies illiteracy
Family involvement
Dependence upon tour operators
Natural and cultural resources
Supporting markets
Strong local character
Lack of economies of scale
Personalised relationships
Human resources management
Labour loyalty and low turnover
Education and training
Transportation and accessibility
Financial management and resources
Seasonality
Lack of standardisation
Lack of quality assurances
Opportunities
Threats
European Union support
Environmental degradation
European redistribution of labour
Concentration and globalisation
Increase in tourism demand size
Oversupply
Trends in tourism demand
Lack of visibility in CRSs
Low cost of living in periphery
Infrastructure
Information technology
Wars/terrorism
Infrastructure development
Political intervention
Transportation
Olympic Games
Source: Adapted from Buhalis 1991: 60c and Cooper and Buhalis 1992: 108
the entire tourism industry in general. Their size enables the provision of a
personal finish to all products provided, while it is not unusual for customers to
become friends, and to be treated accordingly. Similarly, strong relations with
employees support labour loyalty and low turnover. The proprietor’s family is
normally directly involved with every aspect of the business, reacting efficiently
and promptly to any problem arising. Their involvement in running the enterprise provides considerable benefits, especially in having a very flexible,
multi-skilled and dedicated workforce which tolerates unsociable working
schedules. Family members feel committed to the long-term prosperity of the
enterprise and often do not distinguish between their professional and family
life. Thus, a better matching between tourism demand and SMTEs’ supply is
achieved.
A close-up of the weaknesses of Greek tourism and SMTEs is critical for understanding the ability of the industry to compete in the global tourism arena.
Although entrepreneurs are normally an asset, it seems that a number of manage-
Tourism in Greece: Strategic Analysis and Challenges
453
rial problems often arise. Lack of strategic and operational management
know-how generates inconsistency in the creation and delivery of tourism products. This has direct implications for consumers’ satisfaction and the projected
image of the industry. There is often a complete lack of strategic vision and enterprises are often treated as an extension of proprietors’ domestic environment.
Entrepreneurs recruit family members and relatives as personnel and suppliers,
even though more appropriate/qualified alternatives can be found in the marketplace. Therefore, the management of SMTEs clearly projects the proprietor’s
family life-style and decision-making processes onto an enterprise. Marketing is
another significant weakness for most entrepreneurs and Greek resorts, as they are
often completely unaware of the techniques available and thus follow a product-oriented rather than a consumer-orientated approach. Consequently, uncoordinated, isolated, trouble-shooting marketing activities are occasionally
undertaken, rather than a consistent and well-planned marketing campaign. Lack
of marketing research debilitates knowledge of consumers’ needs and makes it
difficult to identify methods for improving services in order to meet consumers’
expectations. Inability to finance and execute advertising campaigns and other
promotional techniques reduces their visibility in their markets. These weaknesses, in combination with the fact that many entrepreneurs are unfamiliar with
information technology (IT), add to the problems of SMTEs in promoting themselves effectively. Consequently, both Greek SMTEs and destinations suffer
from over-dependence on the tourism distribution channels to promote and
distribute their product. In particular, intermediaries and especially tour operators, have enormous power within the channel and are capable of determining
the Greek tourism product, marketing, distribution and pricing mixes (Buhalis,
1995). Hence, the marketing campaign and the visibility of Greek tourism to its
main target markets are often determined by the coverage, space, photographs
and description in tour operators’ brochures. European tour operators also
control accessibility to Mediterranean or long-haul destinations, as they own
most charter airlines which provide direct and inexpensive flights to these destinations.
As most resorts are located in peripheral areas, there is usually little economic
development in the supplying sectors. Therefore, remote destinations have to
import essential raw and construction materials from elsewhere, while SMTEs
often face transportation, delivery and purchasing problems and excessive
transportation costs. Moreover, lack of economies of scale in purchasing raw
material, low bargaining power, and lack of advanced facilities are additional
operational disadvantages. This essentially means that SMTEs have to pay
higher prices for products than their larger counterparts. Lack of specialised
personnel and inadequate training procedures mean that human resources
management is a major weakness of Greek tourism. In most SMTEs, personnel
have to cover a wide range of positions, a loose job description is usually
provided and multi-skilled personnel are required. The labour turnover, due to
the seasonality of the tourism industry, reduces the availability of qualified and
experienced personnel and makes tourism product delivery not only variable,
but also unprofessional. The small size of operation provides little opportunity
for the division of tasks, professional employees and proper training. Since no
quality standards are introduced, service delivery varies according to the occu-
454
Current Issues in Tourism
pancy, service provider and timing. Transportation and accessibility to remote
destinations may also be a weakness, as most enterprises are located in peripheral and often inaccessible regions. SMTEs tend to feel frustrated because they
are unable to attract consumers, simply because they cannot provide convenient, reliable and affordable transportation. The formulation of charter air
carriers by destination areas, such as Turkey and Spain, as well as the emerging
deregulation policies in the European Union, may diminish this problem in the
near future. Moreover, SMTEs face significant financial constraints as on the
one hand they are required to invest in fixed assets at the beginning of their
operations, and on the other hand, there is a discrimination against them by
financial institutions, since they normally have very few assets. Consequently,
they are forced to accept unfavourable financial deals. Finally, the Greek tourism industry and SMTEs suffer from seasonality problems and have to produce
adequate income within a limited period every year. Lack of diversified investment in other economic activities forces proprietors to work intensively in the
peak months and rest in the off-peak months, while their pay-back period is
inevitably unfavourable. As the tourism industry becomes more professional,
embraces quality management and responds to an increasingly discerning
customer, SMTEs’ typical lack of business expertise and minimal standardisation may become an increasing liability especially for some target markets
(Cooper & Buhalis, 1992: 102).
Recent developments in the external environment present numerous opportunities for the Greek tourism industry and SMTEs. Firstly, the European Union
takes several actions to support small and medium-sized enterprises (EC, 1993b:
72), while it supports infrastructure development of peripheral regions and
contributes significantly to the prosperity of SMTEs. The country is going through
a major transformation as a result of several public projects supported by the
European Commission, including the Attico Metro, the new Athens Airport, the
development of the peripheral motorway Elefsina-Spata and the peripheral
motorway of Immitos. The unification of the heritage sites and the
pedestrianisation of the Athens city centre aims to develop an open archaeological park and deal with the traffic and pollution problems. The Olympic Games in
2004 provide a unique challenge and opportunity for the city and the country to
rebrand and redevelop itself and demonstrate its unparalleled heritage and
cultural resources. The Games also provide the resources and funding as well as
a ‘deadline’ for several infrastructural projects that were already scheduled but
perhaps delayed. In addition, several projects are anticipated to improve the
superstructure of the industry through both renovation of existing properties
and through the development of new hotels and other facilities. It is anticipated
that the regeneration of the city and the country in general will provide major
opportunities for the attractiveness and competitiveness of the tourism industry
(Buhalis, 2000b; Papanikos, 1999; Romanos, 1998).
It is anticipated that there will be a gradual redistribution of European
labour, providing support for each region to specialise in the production of
goods and services where it can achieve competitive advantages. Traditionally,
remote and insular destinations, where most Greek resorts and SMTEs are
based, achieve a competitive advantage in tourism, and therefore greater
support is anticipated. Greek tourism benefits from the continuous growth of
Tourism in Greece: Strategic Analysis and Challenges
455
global tourism demand, as more people require holiday services, while SMTEs
are expected to increase their share as they tend to satisfy the emerging specialised and sophisticated demand better than larger organisations. Information
and telecommunication technologies can provide strategic tools for tourism
destinations and SMTEs enabling them to manage their product more efficiently, disseminate information and establish a distribution mechanism
through destination management systems (Buhalis, 1994). New technologies
also offer opportunities for developing innovative tourism products, such as
teleworking for tourists who would like to spend time working during their
stay at the destination. Finally, Greek tourism tends to achieve a cost advantage, since it employs unpaid family members and operates in inexpensive
peripheral regions which often have a lower cost of living in comparison with
metropolitan areas.
In terms of external threats, environmental degradation through inappropriate
waste management and excessive usage of natural resources can be observed.
Lack of know-how and funds effectively increases environmental problems.
Consequently, several resorts suffer severe damage while entrepreneurs and local
authorities feel powerless to take remedial measures. Moreover, oversupply of
tourism service providers and lack of well-defined carrying capacity limits in
several destinations have placed numerous Greek resorts and SMTEs in a disadvantaged position as they cannot achieve sufficient income. Similarly, the concentration of power in fewer tourism industry enterprises through emerging
globalisation also threatens the ability of Greek SMTEs to survive, as international
vertically integrated tourism organisations acquire control over local enterprises.
The dependence upon channel partners for the promotion and distribution of
Greek tourism is exaggerated by the relatively low presence of Greek suppliers in
the major CRSs (Computer Reservation Systems) which is caused by the seasonality and scale of the tourism production on the one hand and the tariffs of these
systems on the other. The issue of infrastructure is closely related to the oversupply which attracts higher demand than planned. Destinations often have limited
infrastructure provisions which fail to follow the pace of development, generating
pressure on the existing inadequate facilities. Finally, the tourism industry suffers
from its geographical proximity to the Balkans and the Middle East and as a consequence is often associated by consumers with wars and terrorism activities. Greek
tourism and SMTEs have limited means of dealing with unfavourable situations
and thus are more vulnerable to their impacts. Political intervention, perhaps
through the public sector decisions and the legislator framework often damages
the prosperity of SMTEs. As SMTEs have little lobbying power they have limited
influence over political decisions which determine their welfare.
The SWOT analysis demonstrates quite clearly that the Greek tourism industry faces a wide range of problems and threats which will jeopardise its ability to
provide suitable tourism products in the future as well as its ability to make a
contribution to the national welfare. However, several opportunities and challenges emerge and they need to be addressed in order to strengthen the competitiveness of the industry. Further analysis is therefore required in order to assess
the factors which generate these problems and also to identify ways to respond to
the challenges they present.
456
Current Issues in Tourism
Why Are We There and What Are the Implications? Structural
Problems and Challenges
Despite its popularity and growth over the last 40 years, the Greek tourism
industry has reached a stage where both its potential and competitiveness have
become questionable.
The seemingly unstoppable growth of this market contributed to a degree
of complacency which has led to Greece repeating some of the errors made
in Spain. Rapid price increases mean the country is no longer perceived by
mass market clients as cheap in relation to comparable destinations in the
Mediterranean, but much of the country’s tourism infrastructure, hastily
built in response to demand for cheap accommodation, does not meet the
needs of a market less sensitive to price and more concerned with quality
and value for money. (EIU, 1990: 45)
Richter-Papaconstantinou (1992: 27) explains that tourism development in
Rhodes ‘takes place without any Master Plan of the area; respect of the landscape
and environment; analysis whether there is demand and what the demand is
after; regard to what is happening in similar situations’. At the micro level, the
European travel trade and intermediaries warn that the Greek tourism product is
no longer competitive (Conway, 1996: 41; Touloupas, 1996; Douvitsas, 1994),
whilst Chitiris (1991: 148–150) outlines a range of managerial problems and
mistakes in Greek resort hotels, which diminish the quality of the tourism
services. Hence, unless the Greek tourism industry addresses a number of critical
issues immediately, its future might be seriously jeopardised, resulting in a
potential catastrophe of the national economy. The major structural problems
and challenges for the Greek tourism product can be summarised in Table 6.
As a result, Greece fails to attract the desired ‘high-quality, high-expenditure’
tourists, as it is increasingly unable to satisfy their requirements (Conway, 1996:
41). The deterioration of the tourism product and image leads to a lower willingness-to-pay by consumers, which consequently leads to a further drop in quality,
as the industry attempts to attract customers with lower prices. This is a vicious
spiral which has been destroying the essence of developing tourism in several
Mediterranean destinations. The concentration of bargaining power in European distribution intermediaries and tour operators in particular, in combination with the inability of the Greek tourism industry to promote itself and
establish effective distribution mechanisms, inevitably minimises the profit
margins of SMTEs and their ability to yield decent returns on their investment.
As a result, tourists’ expenditure per capita in Greece gradually deteriorates,
while their volume increases (SETE, 1993: 35).
Thus, the tourism policy often consisted in a ‘freezing’ of the selling price of
the tourist package abroad, a measure which combined with the devaluation of the drachma and its continuous parity losses succeeded in securing a
‘fictitious competitiveness’ for the Greek package. This competitiveness,
however, was seriously threatened each time there was an attempt at a
substantial increase because of important rises in cost elements.
(Kalogeropoulou, 1993: 2)
Tourism in Greece: Strategic Analysis and Challenges
457
Table 6 Structural problems and challenges
Image of Greece as cheap, simple, unsophisticated, undifferentiated, sun-sea
destination;
Gradual deterioration of tourism product and lack of reinvestment in improvements;
Increase of tourism arrivals but decrease of tourism expenditure per capita;
Inadequacy of the Greek planning process;
Dependence upon major tour operators for promotion and distribution;
Plethora of anarchically developed and behaving SMTEs, aiming at short-term
profitability;
Inappropriate and ill-timed marketing campaign which has little effectiveness;
Inadequacy of infrastructure to serve the ever-expanding demand;
Lack of coordination at the destination and disrespect for tourists’ needs;
Lack of professionalism and training in both state and private tourism establishments;
Individualistic behaviour by SMTEs and unwillingness to cooperate on a
destination basis;
Unsuccessful and inconsistent programmes of government intervention;
Almost unregulated environment, with nearly complete lack of control;
Political intervention which allows exception policies and employment of unqualified staff;
Development of tourism as a single regional development option;
Oversupply of tourism amenities and fierce price competition;
Failure of the private sector to invest in long-term projects;
Deterioration of natural, social and cultural resources;
SMTEs’ inability to resist in global concentration of the tourism industry;
Inadequate distribution mechanisms which generate overdependence on
intermediaries;
Failure of both the private and public sectors to learn from internationally gained
experience in tourism development and marketing;
Lack of tourism research to identify the impacts of tourism;
Negligence with regard to new tourism demand challenges.
The above issues illustrate that the Greek tourism product becomes increasingly incompetent. Hence, the inadequate ‘product’, ‘promotion’ and ‘place’
(distribution) elements of the tourism marketing mix reduce the willingness of
prospective consumers to pay and has disastrous implications for the pricing
policies, deteriorating the profitability of the SMTEs and the tourism economic
impacts on the destination.
Ultimately the economic impacts of tourism in Greece become debatable,
especially due to the inadequacy of tourism economic research and data, while
the destination has to bear the environmental, social and cultural decay. Encouragingly, articles in recent tourism industry publications acknowledge these challenges and appreciate the dangers, urging both the private and public sector to
take action (Touristiki Agora; Tourismos ke Oikonomia; Travel News; XENIA), as well
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Current Issues in Tourism
as several influential members of the tourism industry (Josephides, 1993, 1994,
1995; Skoulas, 1994; Daskalantonakis, 1994; Divanis, 1994b; Plevris, 1995;
Papandropoulos, 1995).
Political intervention, limited research, lack of tourism policy and
planning
Perhaps the largest obstacle in developing a competitive tourism industry in
Greece has been the inconsistent and irrational political intervention. Unfortunately,
tourism has extensively been utilised as a political vehicle, where each government uses it to gratify its political needs and friends. This can be experienced in all
levels of recruitment in the public sector institutions, as a change of government or
even minister results in immense changes throughout the GNTO as well as to
major policies and regulations. Thus, in the last 35 years (since 1966) the leadership
of the GNTO has changed 28 times, allowing each General Secretary to stay in
office for an average of 13.8 months. Political allies of each government use political pressure and intensive lobbying in order to achieve amendments in regulations, incentive policies and business environment. Hence the short-term
profitability and commercial interests of the friends and political allies of each
government often overrule the long-term strategy and set an improper example
for the entire industry. These practices result in a great inconsistency in Greek tourism policy and disrupt its rationalisation. Therefore, a ‘depolitisation of Greek
tourism’, towards a professionally managed public sector, guided through a
compromised strategic Master Plan is urgently required (Josephides, 1995).
The limited existing scientific tourism research highlights the lack of comprehensive examination of tourism impacts in Greece, while it illustrates that tourism
policy is based on insufficient documentation (Zacharatos,1989: 278 and 1988: 22).
Public sector research is almost non-existant, while the authorities seem uninterested in consulting the Greek-tourism research produced by academics (for example Zacharatos, 1984, 1986; Komilis, 1987; Loukissas, 1977; Papadimitris, 1988;
Papadopoulos, 1985; Moore, 1992; Tsartas, 1989; Velissariou, 1991; Fotis, 1992;
Buhalis, 1991, 1995, 2000c, Buhalis & Diamantis, 2000), or the international tourism
‘body of knowledge’ (Zacharatos, 1988: 24). In addition, tourism consumption
being characterised as a particular category of private consumption in the national
accounts, it fails to reflect the real tourism impact on each economic sector. Thus,
the process of collecting information for tourism expenditure in Greece prevents
the assessment of tourism expenditure impacts on the national and regional economy and therefore cannot be used in drawing scientifically founded tourism
policy (Zacharatos, 1989: 277; Konsolas & Zacharatos, 1993: 58). Consequently,
tourism policy follows conventional wisdom and concentrates on attracting a
larger volume of tourists, ignoring scientific methods to assess the economic,
social, cultural and environmental impacts of each tourism segment, assuming
that the greater the tourism volume, the better for the national economy.
The lack of a comprehensive and rational tourism policy and planning or a Master
Plan for Greek tourism is primarily responsible for the aforementioned structural
problems. Policy is usually based on unsubstantiated statements published by the
Tourism Ministry or the GNTO (GNTO, 1985b, 1989a, 1993) often as pre-election
promotional material. In essence Greek authorities attempt to intervene aiming to
stimulate arrivals, as well as to facilitate the operation and development of the
Tourism in Greece: Strategic Analysis and Challenges
459
Table 7 Greek tourism policy targets
Development of demand;
Training of tourism employees;
Increase arrivals and foreign exchange income;
Increase competitiveness of tourism product;
Improvement of services in the industry;
Reduction of seasonality and expansion of tourism season;
Attraction of high spenders and alternative types of tourism;
Construction of facilities appealing to the upper end of the market, such as luxury
hotels, golf courses, congress centres, casinos and marinas;
Development of tourism infrastructure, with emphasis on transportation;
Support of social tourism for low-income domestic tourists;
Geographical redistribution of tourism.
tourism industry. Based on the assumption that tourism arrivals to Greece would
increase indefinitely, the general directions of the Greek tourism policy focus
almost invariably on the targets summarised in Table 7 (Euromonitor, 1992: 61;
GNTO, 1989b: 4.1 and 1993:1; OECD, 1992: 70; Skoulas, 1985:194; Leontidou, 1991:
88–91; Apostolopoulos, 1990; Zacharatos, 1989: 275 and 1988: 21).
However, as these tasks are not quantified and there is no time schedule or
planning process for their achievement it is inevitable that their implementation
and assessment is subject to irrationalities and personal judgement. Occasionally, incentives for tourism development; responses to lobbying from tourism-related associations and regions; training programmes; and general
legislation attempt to direct the Greek tourism industry towards the described
policy directions. In addition, an inconsistent and untargeted, promotional
campaign is implemented yearly (Touloupas, 1996: 130). The campaign attempts to
achieve the above unspecified policy tasks, while it is often a ‘last minute’ reaction
measure to a forecasted decline of bookings for the current season, rather than a
coordinated, long-term marketing policy (Jenner & Smith 1993: 143;
Papadopoulos, 1989: 304). Despite the advertising campaign’s positive impact on
arrivals, the feedback to the campaign is rather speculative, as no formal research
is undertaken to identify the most cost-effective media and communication methods for each target market (Papadopoulos, 1989: 311 and 1987: 82).
Because the deficient scientific examination of Greek tourism and its impacts
prevents the authorities from establishing quantifiable and measurable tourism
policies, their policies are based on subjective and personal judgements, while feedback
practices are rarely followed. In addition, the implementation of the vaguely
defined tourism policy as well as the targets, regulations and standards are often
bent to accommodate lobbying and political pressures (Zacharatos, 1989: 279).
Komilis (1993: 225) suggests that tourism planning in Greece is generally realised
and exercised within a socio-political environment characterised by several
factors: a limited degree of political commitment; lack of social awareness and
acceptability of planning actions; inadequacy of scientific and technical founda-
460
Current Issues in Tourism
tion to support planning intervention; and a centralised administrative-institutional system gathering a plethora of functions, but failing to perform its
coordination and enforcing role. When the conflicting interests and power of each
member of the tourism industry are brought into the equation, where different
partners attempt to influence legislation in order to maximise their own short-term
profitability, regardless of the impacts on the destination and other enterprises, the
planning process becomes more complicated. This results in an ineffective planning system and process, which produces policies unable to provide an appropriate balance between restrictive policies and control planning implementation.
Moreover, the plethora of SMTEs in combination with inadequate legislation
concerning their establishment and operation, seem to affect adversely the
competitiveness of the industry and the ability to diversify and enrich local tourism products (Komilis, 1992: 11; EIU, 1990: 59).
Consequently, several structural problems are originated, jeopardising the
prosperity of both SMTEs and destinations, especially in overdeveloped regions.
On the supply side, failure of the infrastructure to follow the dramatic expansion
of the superstructure, in combination with the lack of solid institutional context of
tourism policy and long-term regulation, result in the exploitation and inadequacy
of environmental and socio-cultural resources, as well as the inability of the industry to generate the level of economic benefits desired and expected. On the tourism
demand side, after the meteoric growth in the 1970s and 1980s, the Greek tourism
industry has been trying to transform ‘the country into a destination which can
compete not just on price, but on value for money’ (EIU, 1990: 45). It is becoming
apparent that the tourism population in not infinite and an adaptability and
responsiveness to tourists’needs is of great importance(Sezer & Harrison, 1994:83).
Structural problems jeopardise the profitability of the private sector
Because of the aforementioned structural problems, most tourism industry
enterprises are experiencing a decline in profitability. Hotels in particular are
badly affected due to the high fixed assets, as well as their immobility and inflexibility which prevents them from adjusting to demand fluctuation. Several reasons
determine their low profitability and inability to increase prices in line with inflation. The low occupancy levels achieved yearly is a key problem. Smith and Jenner
(1995: 17) estimate that the ‘year-round bed occupancy over the range of licensed
accommodation is slightly under 30%’. As most of the properties are closed during
the winter months due to the seasonality problems, they rely on three to six months
to generate sufficient returns on their investment. The occupancy levels of accommodation establishments in Greek tourism are often determined by their
co-operation with travel intermediaries. Based on the different seasonality patterns
of different markets, rooms are normally allocated a year before the summer season
to tour operators on ‘allotment’ or ‘commitment’ contracts which effectively determine the prices charged according to the security provided by tour operators for
using and paying for hoteliers’ rooms. Once the contracts are signed hoteliers effectively lose their control on their inventory and their right to market their rooms to
other business sources before the release period (typically 7–14 days before arrival)
in order to avoid overbooking. However, should their bookings fail to match their
programme tour operators often utilise their buying power to cancel unwanted
rooms at the beginning of the tourist season without paying compensation. Smaller
Tourism in Greece: Strategic Analysis and Challenges
461
hoteliers are often left with unoccupied rooms they which are unable to promote at
the ‘last minute’ unless they drop their prices to unacceptable levels. As a result of
their deficient intra-channel power, hotels often suffer a significant cut-back of their
occupancy levels, which has direct implications for their profitability (Buhalis, 1995,
2000c: 460; Ktenas, 1996).
Similarly, the seasonality of the Mediterranean and Greek tourism industry has
always been a problem for the profitability of SMTEs, since enterprises operate
only for a limited period (Jenner & Smith, 1993: 70; Drakatos, 1987; Donatos &
Zairis, 1991). Attempts to promote winter tourism by developing cultural and
special interest tourism in the islands and winter sports in several ski resorts in
Greece have proved fairly unsuccessful (EIU, 1986: 56). This is attributed to the
image of Greece as an exclusively summer-sun destination, as well as to the uncoordinated attempts to maintain tourism enterprises active during the winter
months (EIU, 1990: 57).
The average room rate is the second major determinant of hotel profitability. It is
becoming apparent that employment costs and cost of capital, in combination with
a relatively strong currency policy, reduce the ability of Greek accommodation
establishments to offer competitive pricing and maintain their profitability.
Marketing inadequacies and inability to promote the tourism product as a differentiated entity, the rapid increase of supply in comparison to demand, and the
overall dependence upon the oligopsonistic tour operators for the Greek tourism
product promotion, force hoteliers to accept contracts by tour operators which
minimise their profit margin and adversely effect the quality of their product.
Increasing levels of pressure by tour operators prevent SMTEs from renovating
and investing in their properties and therefore a gradual deterioration of the properties is inevitable (Richter-Papaconstantinou 1992: 14, Skoulas, 1985: 189). European tour operators, faced with fierce competition in their markets, are essentially
willing to pay an annual price increase equal to little less than the depreciation of
the drachma, plus the inflation at the place of origin of the tourists (Ktenas, 1994).
This policy progressively deteriorates the profitability of the Greek tourism industry and has severe impacts for its prosperity. The situation is worse for smaller
accommodation establishments which manage to negotiate even smaller price
increases, due to their exclusive dependence upon fewer intermediaries
(Logothetis 1992: 14).
The oversupply of tourism services both in Greece and worldwide, also contributes
to global competition for a less rapidly increasing demand (Josephides, 1993: 54).
In Greece, the average annual increase of the official hotel bed supply in 1983–1992
was 4.7%, while the annual average increase in international tourist bednights was
2.7% (Epilogi, 1994:271). The investment incentive Law 1262/82 boosted this oversupply as it generated small, infeasible and uncontrollable accommodation units,
unable to offer high quality of services, while it increased the concentration of tourism units in infrastructure-undersupplied resorts (Kriebardis & Marmagiolis,
1990: 51; Stavrou, 1989b: 5). The vast majority of the capacity growth is on the ‘illegal’, unregistered, self-catering and self-serviced ‘parahoteleria’ sector, which
provide very low quality and priced accommodation, and therefore, appeal to
mass tour operators’ clientele. This not only increases unfair competition for the
officially registered hotels, but also reduces both tax revenues and employment at
the macro level.
Current Issues in Tourism
462
Horwath (1994: 3) concludes that
unfortunately, the results in terms of return on investment in the tourism
industry are not very promising especially when compared with those of
other Greek economic sectors. It is an undisputable fact that the average
Greek tourism entrepreneur is heavily dependent on the tourist package
price which is strongly negotiated by the international tour operators. It is
an ‘unhealthy’ dependency as a result of the weak position of the Greek
tourist product in the international market. In addition, the aforementioned dependency is the result of the lack of marketing activities in an
average tourist enterprise. As we all know, effective marketing activities
are based on the product, place, price, promotion which all contribute to
client satisfaction and further to a bigger share in the international tourist
market. Up to now, three of the aforementioned important elements of
marketing have been overlooked which determine the weak negotiation
power of the Greek entrepreneur.
This situation has also resulted to several European companies expanding
their operations into Greece or purchasing shares in Greek partners in order to
improve their vertical integration. Should this vertical integration expand significantly, however, ‘Greek tourism will be in fact controlled by foreign decision-making centres which will certainly operate on the basis of their own
interests and not according to the overall interests of our national economy’
(Kalogeropoulou, 1993: 2). Hence, radical measures are required immediately in
product formulation, promotion strategy and distribution channels to support
both Greek destinations and SMTEs to enhance their competitiveness, profitability and prosperity. Failure to react would have severe implications for the future
of the Greek tourism private sector as the essence of its existence would be jeopardised, its costs may exceeding its returns.
Structural problems generate negative tourism impacts
In addition to the profitability problems of the private sector, the aforementioned structural problems have profound implications for the welfare of host
populations in various Greek destinations, as their economic, social, cultural and
environmental resources are exploited without ensuring their sustainability.
Lack of comprehensive research and failure to initiate carrying-capacity limits or
zoning systems contribute to the anarchic development of tourism, as well as
expand negative impacts of tourism on local societies and environments. The
following section highlights some of the costs Greek destinations are called to
pay for their tourism activity, whilst it suggests that these issues should be
addressed in the strategic planning process.
Macro-economic negative impacts
Despite the contribution of tourism to the Greek economy, certain potential
risks can also be identified. Not only is the competitiveness and profitability of
the tourism industry jeopardised, but also several destination regions seem to
follow a policy of developing tourism at the expense of industrial and agricultural growth (Stavrou, 1989a: 6; Vernicos, 1987: 105). Instead of tourism stimulating agriculture, it seems that it hastens its decline, as the two economic activities
Tourism in Greece: Strategic Analysis and Challenges
463
compete for land and labour. The lack of structural investments in industrial or
agricultural sectors, combined with the popularity of tourism professions in the
workforce, endanger the balance of the regional economy, while reducing the
tourism multipliers (Briassoulis, 1993: 295). As a result, the economic structure of
the destination is jeopardised, while a complete dependence upon tourism
becomes inevitable (Komilis, 1992: 7). Both opportunity costs and displacement
effects are therefore evident. Moreover, there is evidence that the progress of
destinations through their life-cycle, and especially the introduction of mass
tourism, decreases their economic impacts, while it makes local control of the
industry far more difficult (Loukissas, 1982: 537). ‘Because of the high degree of
dependence of Greek tourist enterprises on tour operators, the actual amount of
tourist spending remaining in the country is only the 40–50% of total tourist
spending’ (Briassoulis, 1993: 296). Public-sector subsidies to the private sector, in
various forms such as incentives, cooperative marketing campaigns and unemployment benefits in the off-season as well as tax evasion and ‘paraeconomy’ also
reduce the real benefit at the macro level (Mourdoukoutas, 1988; Drakatos, 1987;
Leontidou, 1991: 102). Lack of scientific research, on the economic impacts of
tourism makes the real contribution of tourism in the economy speculative,
rather than based on hard evidence (Zacharatos, 1988, 1989; Konsolas &
Zacharatos, 1993).
Social and cultural negative impacts
The development of mass tourism and the lack of effective planning and
management are also responsible for a number of negative social and cultural
impacts observed in Greek host societies (Tsartas, 1989, 1992; Stavrou, 1978,
1979, 1980, 1986b). Although the degree of interaction of the population with
tourists depends heavily on the geomorphology of destinations and the location of resorts (Loukissas, 1982: 538), tourists’ behaviour is often offensive to
the host population, but tolerated due to the economic benefits (CastelbergKoulma, 1991: 201; Kousis, 1989; Wickens, 1994: 823). Most Greek tourism
destinations are almost crime-free zones during the winter, due to the small
population and personal relationships of locals. Tourism, however, introduces
several types of criminal activity, often unknown to local people. As police
forces are usually allocated according to needs of the permanent population in
a destination, they are often incapable of handling the demands of the summer
months and are unable to deal with visitors’ misbehaviour such as hooliganism
and ‘lager-looting’.
The commercialisation of history, cultural traditions and the Greek lifestyle is
a phenomenon met in several destinations. This regrettably affects the renowned
Greek hospitality, commercialises human relations with tourists and reduces the
ties of solidarity and cooperation between locals, since they compete for the tourism market (Papadopoulos, 1988b: 24). As the average employee works 60.5
hours weekly for 29.5 weeks a year, there is little time left for social, religious and
cultural obligations during the season (Mourdoukoutas, 1988: 325). Although a
certain degree of ‘demonstration effect’ and ‘xenomania’ can be attributed to
tourism, the country is equally influenced by the mass media as well as by the
Greek students and professionals living abroad (Papadopoulos, 1988a: 30;
Wickens, 1994: 822). Moore (1995) also explains that tourism not only has had a
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Current Issues in Tourism
contribution to the increase of alcohol consumption by Greeks, but has also
shifted their taste away from locally produced wine to imported spirits and beer.
Briassoulis (1993: 296) perhaps describes best the change in labour force values
when as she suggests that tourism has created a
peculiar parasitic group of tourist entrepreneurs operating tourist-serving
enterprises, like tavernas, cafeterias etc., the principal characteristics of
which are high profits and tax evasion. Consequently, a particular personality type is created: the ‘successful’ entrepreneur who earns a lot with little
work, has a rich erotic life and is professionally independent (in contrast to
public and private employees). This model is followed by many young
people who abandon other productive, year-round occupations, ‘work’
only during the tourist season, stay idle for the rest of the year and eventually, suffer from the volatility of the tourist market.
The family relations and values are therefore under great transition and
perhaps threat (Castelberg-Koulma, 1991: 201; Kousis, 1989; Moore, 1992).
Negative environmental impacts
Despite environmental resources becoming central to destinations’ competitiveness, most Greek destinations go through an unparalleled exploitation due to
inadequate planning and reinvestment in their sustainability, jeopardising their
future (Buhalis & Fletcher, 1995). Boniface and Cooper (1994: 141) suggest that
geographical concentration of tourism
has led to the view that Greece will become saturated with tourists and that
damage will be done to the environment and cultural heritage in the more
popular areas. Already the environment has suffered from haphazard,
uncontrolled building, and pollution of the sea and the flora and fauna are
being effected by waste disposal.
Coastal pollution, water shortages, sewage treatment, waste disposal, traffic
congestion, noise pollution, overbuilding, and aesthetic degradation are some of
the impacts experienced already in a number of resorts (Briassoulis, 1993: 297;
Coccosis & Parprairis, 1992; Peterson, 1990; Marinos, 1983; Stavrou, 1988: 19 and
1989a: 5; Papadopoulos, 1988b: 24). Most of the islands also face water shortage
due to the inability of natural supplies to provide sufficient water for the tourism
demand. Imported mineral water from the mainland is an expensive way to
solve this problem due to the transportation cost, while it creates more waste and
environmental damage. In addition, the destruction of endangered species’ habitats is another problem experienced on several islands (Zakynthos:
Caretta-Caretta and Allonissos: monk-seals) (Ottaway, 1992; Van Den Bergh,
1993: 70; Prurier et al., 1993). Urgent coordination with all tourism actors at the
local level is essential, while regulation is required to set objective and measurable
limits and targets, in order to preserve local environmental resources. Financial
difficulties in the industry only exacerbate these impacts as the private and public
sectors feel unable to reinvest in the conservation of resources.
The aforementioned negative impacts emerge as a result of the structural
problems of the Greek tourism industry and illustrate that the mass tourism
orientation of the industry reduces the sovereignty of the host population over
Tourism in Greece: Strategic Analysis and Challenges
465
their land and resources whilst jeopardising their expected benefits and future
welfare. As these impacts are trade-offs for the economic gains of the tourism
activity, it is important that consistent, long-term strategic planning should be
undertaken in order to enable the preservation of the local resources and achieve
sustainability at tourism destinations. These tasks should all be reinforced by
research, political will and strategic planning.
Where Do We Need to Go and How Are We Going There?
Towards Strengthening the Competitiveness of Greek Tourism
and SMTEs
Based on the situation analysis, as well as on the strategic weaknesses and
structural problems, the paper attempts to provide a framework for strategic
planning which will enable the strengthening of the competitiveness of Greek
tourism and SMTEs. Porter (1985: 1) suggests that competitive strategy ‘is the
search for a favourable competitive position in an industry’ which is a function of
the attractiveness of the industry and the relative competitive position within
that particular industry. He also argues that ‘competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition’. Competitiveness is, therefore, defined as the effort undertaken
by organisations to maintain long-term profitability, above the average of the
particular industry within which they operate or above alternative investment
opportunities in other industries.
Traditionally, the tourism industry in the majority of destinations worldwide
is based on a network of SMTEs which provide all types of tourism products and
services, while enabling closer interaction between the host population and visitors, as well as facilitating a rapid infusion of tourism spending into the local
economy. As ‘tourists’ overall experience is composed of numerous small
encounters with a variety of tourism service providers’ (Moutinho, 1990: 104),
there is a great overlap between the customer perception of local SMTEs and
destinations, which makes them almost indistinguishable. Consequently the
competitiveness and prosperity of destinations and SMTEs are closely interrelated, as the fortune of the one depends heavily upon the management and
competitiveness of the other. Therefore the generic strategy for destinations
involves SMTEs and vice versa.
Grand strategy: Strategy formulation for Greek tourism and SMTEs
Based on the strategic analysis, a grand strategy is proposed for the Greek
tourism industry and SMTEs, in order to demonstrate the directions the destinations should follow in their attempt to increase their competitiveness and reduce
their vulnerability. As different resorts, destinations and SMTEs have dissimilar
needs only generic strategies can be drawn. However, these guidelines can be
applicable to destinations and SMTEs worldwide as they address strategic rather
than operational issues. The analysis is based on the assumption that SMTEs
formulate leisure value-added chains or networks of wealth creation, which
essentially comprise the entire destination. Therefore, an integrated approach is
followed, as there is a great complementarity between the strategies and strategic directions for both the Greek tourism industry and SMTEs.
Current Issues in Tourism
466
STRATEGIC ADVANTAGE
Perceived product uniqueness
TARGET
MARKET
Cost advantage
Industry
wide
Differentiation
Cost Leadership
Particular
segments
only
Differentiation Focus
Cost Focus
Figure 1 Porter’s three generic strategies
Source: Porter, 1980: 39
The grand strategy analysis is based on an examination of three general strategy models, namely Porter’s generic strategies, Gilbert’s proposition for ‘differentiation of the destination’ and Poon’s analysis for ‘flexible specialisation’. A
grand strategy is then proposed for both Greek tourism and SMTEs, based on
inference emerging from these three models. Figure 1 illustrates the three main
generic strategies proposed by Porter (1980: 34–46) in order to ‘outperform other
firms in an industry’: overall cost leadership, where the firm is required to minimise
its costs, based on mass production and strict cost control of the main business
functions; differentiation of products or services by ‘creating something that is
perceived industry-wide as being unique’; or focus on a ‘particular buyer group,
segment of the product line or geographical market’ and achieve either cost leadership or product differentiation (Porter, 1980: 37–8).
Furthermore, Gilbert (1984, 1990) argues that destinations should differentiate their tourism products in order to be able to achieve a unique ‘tourist product
benefit’ which would enable them to establish their position in the international
tourism market, as well as to attract high spenders and loyal tourists. Tourism
destinations, therefore, should attempt to achieve a ‘status area’ image, rather
than a ‘commodity area’ one, as illustrated in Figure 2. In the first case, the destination is heavily substitutable, very sensitive to price and economic changes,
while consumers have a low awareness of any unique benefits or attributes of the
region. Thus, holidaymakers base their decision to visit the area merely on price,
while the demand for the destination is incidental and destinations are unable to
attract high spenders. In contrast ‘status areas’ achieve intentional demand as a
result of the unique product attributes perceived by the tourism market. These
unique attributes may be genuine or imagined and thus, a destination is
regarded as irreplaceable increasing consumers’ loyalty and willingness to pay.
Gilbert (1990: 24–5) asserts that destinations should attempt to become ‘status
areas’ in order to improve their image, loyalty and economic benefits.
A third strategic approach is proposed by Poon (1987, 1988, 1989, 1990, 1993),
based on the concept of ‘flexible specialisation’ of the tourism business. In
essence, Poon examines the industry processes and proposes a strategy to enable
tourism organisations to improve their competitiveness. Poon argues that ‘flexible specialisation’ is a strategy of ‘permanent innovation’ and ‘ceaseless change’
which provides for the ‘new tourism’. This new tourism is flexible, segmented,
customised to the tourist’s needs and diagonally integrated. In contrast, the old
tourism can be characterised as ‘mass, standardised and rigidly packaged’
(Poon, 1989: 91–3).
Tourism in Greece: Strategic Analysis and Challenges
467
The main sources of flexibility for service firms lie in the organisation,
management, marketing, distribution and other forms of interaction and
interrelationships among guests, hotels, suppliers, distributors. What is
important however is not each of these stand alone aspects but how they
are coupled to create competitive advantages and hence, capabilities to
move with the market. (Poon, 1988: 24)
Examination of these three main strategies illustrates that they share a similar
base. Porter’s ‘differentiation’, Gilbert’s ‘status area’ and Poon’s ‘flexible
specialisation’ describe the attempt undertaken by firms and tourist destinations
to achieve value competitive advantages. In contrast, the ‘cost leadership’, ‘commodity area’ and the ‘standardisation or Fordism production model’ describe
the effort to achieve ‘cost competitive advantage’, where destinations and
SMTEs offer their products for less than their competitors. In the first case,
consumers perceive the product as unique and are willing to pay a premium,
while in the second case, the decision is merely based on price. Thus the classical
strategic decision of ‘low volume-high profit margin’ or ‘high volume-low profit
margin’ is the underlying concept of the two alternative strategies.
Both Gilbert and Poon agree that destinations should aim to achieve ‘status
area’ or niche orientation, through differentiation, in order to increase consumer
satisfaction as well as to maximise the benefits for both regions and SMTEs. As a
result, Greek tourism and SMTEs need to focus towards the differentiation strategy, define their niche markets and serve them accordingly. This strategy is
already adopted in several resort areas, such as Valencia in Spain, where it is
recognised that the need for diversification and differentiation ‘has now become
essential owing to the level of competitiveness that has been attained (and can be
foreseen) in the world tourist market’ (Fayos-Sola, 1992: 49). Differentiation is
also particularly useful for insular destinations in microstates, where a limited
number of economic and financial resources are available (Wilkinson, 1989: 170).
As most destinations consist of SMTEs, networks, there is an overlap between
their strategic orientations, and therefore the above analysis is applicable to both
the Greek tourism industry and SMTEs.
Destinations implementing a ‘status area’ strategy can enhance the satisfaction of tourists, as well as their competitiveness. The formulation of unique and
Willingness to
pay higher prices
Status
Area
C o m m o d ity
Area
Product attributes
Figure 2 Gilbert’s differentiation strategy
Source: Adapted from Gilbert 1990, 25
S ta tu s
a re a
C o m m o d ity
A re a
Product attributes
468
Current Issues in Tourism
customised products by using flexibility and cooperation also increases tourists’
willingness to pay and wins their loyalty, while it responds to the new tourism
demand trends. However, the proposed strategy should not be seen as an excuse
for SMTEs and destinations not to attempt to improve their efficiency and minimise their production costs. Although the unique service for tourists’ needs should
be their priority, offering perceived value for money would determine their
competitiveness in the marketplace. As a result, all Greek resorts and SMTEs
should assess their assets and strengths for serving specific target markets, taking
advantage of their small size which facilitates flexibility and specialisation.
It is quite apparent that the cost advantage strategy has to be avoided in
management of tourism destinations, as regions need to preserve their scarce
environmental and sociocultural resources and achieve sustainable development. As cost advantage is based on mass production and consumption, it
assumes an unlimited production capacity, which is inapplicable in the tourism
industry. The inseparability of the tourism product determines that consumers
should be present at the time of product delivery, and when combined with tourism seasonality, it generates demand peaks, which drain destinations’ scarce
environmental, sociocultural resources. The ‘high volume-low profit margin’
strategy has therefore harmful social and environmental impacts on destinations. Destinations have maximum carrying capacities beyond which both the
welfare of local populations and the satisfaction of tourists are jeopardised.
Although economic benefits can also be achieved by using the ‘commodity area’
or the ‘standard product model’, it is argued that these approaches reduce tourists’ satisfaction and their willingness to pay, and are opposed to the demand
trend towards individualisation.
Unfortunately, however, some destinations can no longer be positioned as
irreplaceable unique products, due to their overdevelopment. Tourism supply
has exceeded the carrying capacity of these resorts, and their product has
reached the saturation or decline phase of their life-cycle. Several Spanish costas
and some Greek resorts, such as Benitses, Kavos, Faliraki, Malia, Hersonissos, and
Nidri (Josephides, 1994), have been overdeveloped to such an extent that only a
‘high-volume, low-profit margin’ strategy is feasible. When resorts reach their
saturation level only a ‘cost leadership’ or ‘mass production’ strategy can be
proposed, as they are unable to provide any specific ‘tourist product benefit’. The
attraction of the lower end of the market is inevitable and as a consequence, there
are no alternative strategies. The minimisation of further sociocultural and environmental damage, as well as attempts to improve the surrounding environment,
should also be a primary objective of both tourism destinations and SMTEs in this
case. The ultimate aim should be to regenerate the resources of the area and to
relaunch the tourism destination to attract specific markets which will be willing to
pay a higher price for the destination.
Strategic directions, objectives and tasks for Greek tourism and SMTEs
Table 8 presents three pivotal strategic directions which are identified in order
to stimulate the competitiveness of both Greek tourism and SMTEs. This section
illustrates how the aforementioned grand strategy can be implemented for tourist destinations and SMTEs, through a number of strategic directions, objectives
and tasks, as presented in Table 9.
Tourism in Greece: Strategic Analysis and Challenges
469
Table 8 Pivotal strategic dimensions for Greek tourism
(1)
(2)
(3)
Enhance the satisfaction of tourists and delight the customer;
Strengthen the long-term profitability and competitiveness of Greek tourism and
SMTEs;
Develop Greek destinations sustainably, and ensure prosperity of host population.
Enhancing the satisfaction of tourists and delighting the customer are pivotal
to ensuring the well-being of Greek destinations and SMTEs in the long term and
thus, the entire range of tourism service providers should aim to delight their
clients. As a result of the tourism product integration, consumer satisfaction
cannot be achieved by independent businesses separately, but by the entire
network of SMTEs in Greek destinations. The improvement in services is
perhaps the most important strategic objective. Consistency of promises through
standardisation of service delivery and implementation of a total quality
management philosophy throughout the industry are essential strategic tasks for
achieving this objective, while flexibility in service delivery and improvements
in training are critical. In line with the grand strategy, the production of
tailor-made tourism products should be ensured in order to satisfy the specific
needs of particular niches and the requirements of the emerging new tourism
demand. Product augmentation would enable also the Greek tourism product to
exceed the expectations of consumers and hence enhance their satisfaction. Life
style segmentation would enable Greek tourism and SMTEs to design appropriate tourism products. As tourist demand elasticity has increasingly become
doubtful in recent years, the price of the holiday is no longer considered to be the
most important attribute in the decision-making process. Consequently, the
Greek tourism industry should concentrate on providing value for money at all
price levels, as well as offering at least whatever they have promised to the
consumer.
Supporting the long-term competitiveness and profitability of Greek tourism and SMTEs is by far the most important strategic objective for the tourism
industry. The first strategic objective for every SMTE has to be the increase in
revenue, by maximising its occupancy or load factors and the rates it achieves.
The lengthening of the operating season, as well as the identification of new
markets and the penetration into existing ones, and the effective utilisation of
distribution channels, will contribute to this strategic direction. Higher rates
can be achieved by targeting specialised and smaller tour operators, attracting
alternative types of tourists and expanding the distribution channels mix as
well as by attempting a certain degree of ‘disintermediation’ by encouraging
direct sales to outgoing travel agencies or consumers. Aggressive marketing
and establishment of partnerships with other enterprises should be essential
functions of Greek tourism and SMTEs. Motivation of ‘front-of-house’ employees as salesmen and sale incentives would also increase average spending per
customer. The use of CRSs and destination management systems may also be
an appropriate method for achieving higher prices and better occupancy rates
(Buhalis, 1994). Finally, yield management techniques should be utilised by all
types of SMTEs to assist them in pricing and maximising revenue. Cost control
Current Issues in Tourism
470
Table 9 Strategic directions, objectives and tasks for SMTEs and destinations
Strategic directions
Strategic objectives
1. Enhance the sat- 1.1 Improvement of services
isfaction of tourists and delight
the customer
Strategic tasks
a. Standardisation of service delivery
b. Development of quality control
systems
c. Consistency of promises
d. Improvements in operational
management
e. Flexibility in services delivery
f. Training and education improvements
g. Smile and personal relationships
h. Augmentation of tourism
product
i. Total quality management
1.2 Specialisation of tourism
product
a. Niche marketing
b. Lifestyle targeting
1.3 Value for money
a. Quality at each price level
2. Strengthen the 2.1 Increase revenue
long-term competitiveness and
profitability of
Greek tourism
and SMTEs
a. Increase tourist volumes
b. Target new markets and penetration in existing markets
c. Use yield management
d. Expand distribution channel
mix
e. Aggressive marketing
f. Achieve high average spending
per customer
g. Select high-quality specialised
tour operators
h. Attract alternative types of
tourism
i. Use alternative distribution
channels
j. Motivate front-of-house employees as salesmen
2.2 Cost control and rational
management
a. Standardise service delivery
b. Increase productivity
c. Reduce labour costs
d. Rationalise supplies management
e. Education/training for managers and employees
f. Use of new technology
g. Integrate service delivery
within SMTEs
2.3 Human resources management
a. Internal marketing
b. Empowerment
c. Satisfactory salary and working
conditions
d. Long-term relations with employees
e. Motivation and rewards
Tourism in Greece: Strategic Analysis and Challenges
471
Table 9 (cont.) Strategic directions, objectives and tasks for SMTEs and destinations
2.4 State and public tourism
organisation support
a. Destination development and
control
b. Incentives policies for improvement
c. Attract European Union assistance
d. Promotional activity
e. Provide financial resources
3. Develop Greek 3.1 Environmental protection a. Carrying capacity identification
b. Zoning system application
destinations
c. Architecture preservation
sustainably, and
d. Installation of sewage treatensure prosperment systems
ity of host popue. Reduction of noise pollution
lation
f. Natural supplies management
3.2 Infrastructure amelioration
a. Accessibility improvements
b. Telecommunication improvements
c. Public facilities advancements
3.3 Transportation improvements
a. Improvement of local timetables
b. Punctuality and reliability
c. Improvements of vehicles
d. Flexibility to meet demand
needs
3.4 Economic integration
a. Integration with raw material
production
b. Utilisation of local labour force
c. Integration of tourism services
d. Diagonal integration of destination’s economy
3.5 Equitable return on resources utilised
a. Establish mechanism for
reinvestments
b. Provide services for host
community
c. Invest in sustainability of
resources
d. Ensure equity in distribution
of wealth produced
Source: Adapted from Buhalis 1991: 83a.
and rational management is the second strategic objective needed to increase
efficiency and profitability of both Greek destinations and SMTEs in the long
term. Standardisation of the service delivery process and minimisation of the
labour cost through better operational management would be primary recommendations. Managers and employees should improve their productivity and
marketing skills by intensive training. In addition, the rationalisation of supply
management and the use of new technology is expected to reduce operational
costs. Finally, integration of service delivery enables SMTEs to provide complementary services and achieve additional revenues without immense costs.
472
Current Issues in Tourism
Human resources management is crucial in the delivery process of tourism
products. The concept of ‘internal marketing’, where employees are perceived
and treated as ‘internal customers’ has to be utilised in order to ensure their
satisfaction. As Berry (1981: 34) states ‘the satisfaction of the needs and wants of
the internal customers can upgrade their capacity for satisfying the needs and
wants of their external customers’ and as a consequence, it can contribute to the
competitiveness and profitability of Greek tourism and SMTEs. Satisfactory
salary and working conditions are prerequisites for the well-being of SMTEs’
employees. Long-term relationships between employees and SMTEs minimise
turnover, enabling a better performance, while they reduce recruitment and
training costs. Empowerment would enable employees to be involved in the
management of SMTEs and authorise them to respond more efficiently to
consumer requests, while contributing to their job satisfaction. Finally, the
support of the GNTO is vital for the long-term survival of SMTEs. Apart from
the improvement in infrastructure, the GNTO is expected to hold the strategic
responsibility of the destination, as well as to regulate the competition in order
to enable smaller enterprises to survive. Incentive policies need to reflect the
specific requirements of each resort and enable development or improvement
of certain types of enterprises. The GNTO is also instrumental in attracting
assistance from European development funds while it should also coordinate
the majority of Greek tourism promotional activity. A promotional mix which
maximises the effectiveness of the communication message needs to be drawn,
while budgets need to be available at the time consumers go through their decision-making process in order to influence their choice of destination. Finally, the
need for the public sector to provide affordable financial resources for SMTEs is
highlighted by the EU (EC, 1993b: 73).
The third strategic direction for Greek tourism and SMTEs should be the
sustainable development of destinations and local areas, not only for the host
population but also because this is vital for both consumer satisfaction and the
profitability of SMTEs. Although in most cases SMTEs are unable to incorporate
these types of strategic objectives and tasks on their own, they can initiate a
framework of necessary actions for sustainable destination development
through their associations. Environmental protection is naturally the most
important strategic objective as consumers’ environmental consciousness has
been raised recently. Carrying capacity limits should be identified and strict
regulations and guidelines for tourism development need to be drawn. A zoning
system should be implemented in order to locate tourism activities according to
the geographical morphology of the destination. In addition, natural resources
management is necessary, as tourism demand may exhaust the resources and
especially the water supplies. The installation of sewage treatment systems and
the reduction of noise pollution should be considered especially for resorts
which suffer the consequences of these problems. In addition, infrastructure
amelioration must be one of the primary objectives, as it is an essential prerequisite for both consumers’ satisfaction and SMTEs’ development. The improvement of accessibility, public services, as well as telecommunications facilities is a
crucial factor. Transportation is also significant in increasing both consumer
satisfaction and profitability of SMTEs, as it determines whether consumers can
access the destination easily, while it also provides the first impression to tour-
Tourism in Greece: Strategic Analysis and Challenges
473
ists. Improvements of timetables, and services, reliability; increasing transportation capacity; and an enhancement of the fleet in terms of speed, cleanliness and
leisure facilities are all required. Furthermore, greater flexibility is needed by
transportation operators in order to meet demand needs. Economic integration
can improve the economic and social benefits of tourism in the region and the
efficiency of SMTEs. Ultimately tourism should be utilised as the catalyst and
major stimulant for regional development. Tourism enterprises should make
every effort to use local raw materials and labour, in order to maximise the multiplier effects within Greece. Diagonal integration of destinations’ economy can be
achieved by rearranging the goods and service production in order to support
the tourism industry demand, and thus minimise imports. Finally, SMTEs and
tourism organisations need to offer a fair return-on-resources utilised back to the
host community. A mechanism should be established in order to reinvest part of
the revenues in the sustainability of resources; provide services for the host
community, such as education, training, health services; and generally ensure
equity in distribution of wealth produced from local resources. As the private
sector cannot be expected to behave altruistically towards the host community,
the GNTO and other public-sector departments should probably utilise regulation and taxation for this purpose.
Conclusion: Greek Tourism Needs a Long Overdue Master Plan
and Comprehensive Policy
The emerging international tourism competition; the hitherto mass tourism
orientation of the industry; the transformation of demand; the development of
the volume of tourists visiting; the dependence upon intermediaries for the
distribution of the tourism product in the major target markets; the lack of a wide
range of managerial skills by Greek tourism entrepreneurs; and the lack of a
comprehensive tourism policy or Master Plan by the public sector has led the
competitiveness of Greece tourism to decline. This has several unfavourable
implications for the profitability of the private sector as well as numerous negative economic, sociocultural and environmental impacts for the host population.
As a result the return on resources utilised for the production of Greek tourism
services is inadequate and the sustainability of Greece as a major tourism destination is rapidly becoming doubtful. Based on a strategic analysis, the paper illuminates the strategic weaknesses and structural problems of both the private and
public sectors, and demonstrates that a rationalisation of the tourism industry is
urgently required. Consequently, a grand strategy as well as a wide range of strategic directions, objectives and tasks are proposed for both Greece as an entity
and its SMTEs. Although no quantitative targets are set in this paper, it is
expected that each destination will analyse its resources and adapt its strategic
planning accordingly.
The GNTO is urged to rationalise its strategy and to draw up a Master Plan and
a comprehensive strategy for the entire country and for each resort, where a strategy
would be adopted based on quantifiable objectives and tasks. Extensive research
needs to be undertaken by using credible measurement methodologies, such as
Input-Output models and multipliers analysis, not only for the economic, but also
for the social, cultural and environmental impacts (Zacharatos,1988, 1989; Buhalis
474
Current Issues in Tourism
& Fletcher, 1995). A holistic tourism management system is demanded to facilitate
the development and implementation of the tourism strategy, through funds allocation and monitoring, land use control, and examination of tourism public- and
private-sector practices. A thorough examination of tourism impacts in each
region would be a prerequisite for tourism planning as it will establish and
provide scientific backing to strategic targets. Komilis (1994: 71) explains that
although the various levels of planning (sectoral, national/EU, spatial or regional)
are not mutually exclusive, but rather complementary, the regional level planning
is more suitable for drawing sustainable strategies, especially for areas with
dissimilar needs like the Greek destinations. The regional planning should ‘contribute to the maximisation of regional development benefits in a way that utilises
and mobilises the regional resource base, realises regional inter-sectoral linkages
and is compatible with regional economic interests, societal values and environmental assets’. It should also take into consideration the uniqueness of insular
economies, as well as the cultural and environmental resources of each particular
region and the complexity of rural and urban functions. The planning process
should encourage the complementarity and coexistence of economic activities,
rather than promote sectoral separation and single-sector developments. In addition, it needs to improve the balance between regional self-sufficiency and
dependence upon external inputs and finally it should promote integration within
the European Union.
The public sector has to play its long overdue role as regulator, coordinator,
infrastructure provider and promoter of the destination, while a multi-integration
of the tourism industry, with all the involved bodies in the preparation, distribution and delivery of the tourism experience, needs to be ensured (Wanhill, 1993;
Hall, 1994; Skoulas, 1994:10; Stavrou, 1988: 46). The private sector also has an important role to play as it should improve the Greek tourism industry competitiveness
by improving its managerial and labour force competencies, enhancing the quality
of services, designing appropriate marketing mixes to attract and satisfy target
markets and cooperating closely in order to achieve synergies and economies of
scale (Briassoulis, 1993: 300; Cooper & Buhalis, 1992). To reverse the vicious circle
of decreasing quality is of critical importance for the Greek tourism industry.
Better quality services would stimulate the competitiveness of the Greek tourism
product, strengthen its position in the international market, provide principals
with distribution channel power, enhance its customers’ willingness to pay and
enable the industry to increase its prices, improving the profitability at the micro
level and the economic impacts of tourism at the macrolevel. Ultimately a diagonal
integration strategy for both Greek tourism and SMTEs should aim to delight
consumers, enhance the long-term prosperity of SMTEs, and improve the welfare
of the host populations. The Olympic Games in 2004 offer a unique opportunity to
regenerate and rebrand Greek tourism, a cause which the entire industry should
champion!
The Author
Dimitrios Buhalis is Senior Lecturer and course leader MSc in tourism at the
University of Surrey. He holds a BBA from the University of the Aegean as well
as an MSc and a PhD in tourism management from the University of Surrey. His
research interests focus on information systems and technology, strategic
Tourism in Greece: Strategic Analysis and Challenges
475
management, distribution channels of tourism, destination management and
planning and destination integrated computer information reservation management systems.
Acknowledgements
The author would like to acknowledge Prof. C. Cooper and Prof. J. Fletcher for
their invaluable contribution to this research. Financial support from the Surrey
Research Group, ConTours Consultants, as well as field research sponsorships
by the University of Surrey, the Greek National Tourism Organisation and the
University of the Aegean are gratefully appreciated.
Note
1. An earlier version of this paper was published as a monograph, Planning/Development by the International Centre for Research and Studies in Tourism,
Aix-en-Provence, France.
Correspondence
Any correspondence should be directed to Dr Dimitrios Buhalis, Senior
Lecturer in Business Information Management SMSSS, University of Surrey,
Guildford GU2 7XH, UK (
[email protected]).
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