The Athens Hotel Industry after the Athens Olympics. What was the impact of the Athens Olympics on the Athens Hotel Industry?

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The Athens Hotel Industry after the Athens Olympics
Dr. Aris Ikkos, ISHC, MAE, Managing Partner
Stefan Merkenhof, Managing Consultant
So, what was the impact of the Athens Olympics on the Athens Hotel Industry?
Comparing the performance of the Athens Hotel Industry with 2 competitive sets of
27 European cities and 8 Mediterranean cities1 for the period of 2003 – 2007, one
can conclude that Athens’ occupancy picked up substantially after the 2004 Olympics
reaching the average European level and exceeding the average Mediterranean level
in 2007. Furthermore, although Athens’ Average Room Rate (ARR) followed the
European and Mediterranean trend, it still is at a much lower level. As a result
Athens’ Revenue Per Available Room (RevPAR) remains below that of European and
the Mediterranean but the gap is slowly closing.
Looking first at the Occupancy figures, we can see that the Athens Hotel industry (3*
to 5* hotels) has a significantly better
75.0% occupancy performance than both
Occupancy competitive sets, as shown in the
graph on the left. Occupancy levels
increased from a level of about 62%
70.0%
in the period 2003 – 2005 to 68% in
2006 and almost 71% in 2007,
slightly below the European average,
65.0% but above the Mediterranean level in
that year. The increase in occupancy
is even more significant, considering
60.0% also that the Athens hotel supply (3*
2003 2004 2005 2006 2007 to 5* star) increased by 15 hotels,
adding 1,535 extra rooms in the
Athens Europe Mediterranean period 2003 - 2006. This represents a
15.3% increase in room supply.
1
The competitive set “Europe” comprises of the following 27 major European cities:
Amsterdam, Paris, Dublin, London, Brussels, Geneva, Milan, Budapest, Bratislava, Vienna,
Munich, Berlin, Prague, Copenhagen, Oslo, Stockholm, Helsinki, Tallinn, Edinburgh, Lisbon,
Madrid, Barcelona, Valencia, Rome, Venice, Florence and Istanbul
The competitive set “Mediterranean” comprises of the following 8 major cities in Portugal,
Spain, Italy and Turkey: Lisbon, Madrid, Barcelona, Valencia, Rome, Venice, Florence and
Istanbul
Data for Athens are derived from our database, while data for the other cities are derived
from the Bench.

2. The Athens Hotel Industry after the Athens Olympics
Seasonality of
Athens’ Occupancy
Further analysis of occupancy data 90%
shows that the increase is mainly 85%
in the months of March to 80%
75%
September. The creation of a
70%
Metropolitan Conference Centre 65%
and an active CVB would greatly 60%
contribute to reducing seasonality 55%
by increasing occupancy in the 50%
other months. 45%
40%
Nov
Feb
Aug
May
Dec
Jan
Jun
Sep
Apr
Jul
Oct
Mar
2003 2007
Average Room Rate While the occupancy is
140 (ARR) outperforming in comparison with
both competitive sets, the gap in
135
terms of ARR remains stable after
130 2004 as shown in the graph on the
125 left. After the exceptionally high ARR
120 in 2004 due to the Olympic Games,
115 the ARR fell back in 2005 to around
Euro 106, slightly under the average
110
rate of 2003. The years 2006 and
105
2007 showed improvement to about
100 Euro 111 and Euro 117 respectively,
2003 2004 2005 2006 2007 but stayed behind that of the
European and Mediterranean cities.
Athens Europe Mediterranean
Revenue per available room
(RevPAR)
Overall, with the closing gap in 95
occupancy and the difficulty of Athens to
90
keep up with the trend in ARR, the
RevPAR of Athens remains below the 85
European and Mediterranean RevPARs 80
with the gap closing very slowly.
75
70
65
60
2003 2004 2005 2006 2007
Athens Europe Mediterranean
2

3. The Athens Hotel Industry after the Athens Olympics
So what is the verdict?
Clearly, the hope after the Olympics was that the performance of the Athens hotels
would have been much better than the average of Europe or the Mediterranean.
On the other hand, the period prior to the Olympics had been disastrous for Athens
hotels and the Olympics clearly marked a reversal of this (see graph below). Long
term trends have been even more pronounced as Athens had 8.9 mn overnight stays
in 1980 compared to 4.5 mn in 20032! As a result of this, 85 hotels3 of various
categories closed down in the 80’s and 90’s.
Arrivals - Overnights 2006 - 2000
2,600,000 5,500,000
2,500,000 5,250,000
2,400,000
5,000,000
Overnights
Arrivals
2,300,000
4,750,000
2,200,000
4,500,000
2,100,000
2,000,000 4,250,000
1,900,000 4,000,000
2000 2001 2002 2003 2004 2005 2006
Arrivals Overnights
In conclusion one could say that the Athens Olympics marked a reversal of fortune
for the Athens Hotel Industry but more could have been achieved if Conference
Tourism had been developed and if the Tourism Product of Athens was marketed
effectively. Particularly as the Olympics helped transform Athens into an attractive
city with its must-see unique archeological sites and Europe’s largest archaeological
park around the Acropolis, beautiful islands within one hour’s reach, efficient public
transport, clean beaches (EU ‘Blue Flag’ carriers), extensive shopping, vibrant night
life and much more. Furthermore a UBS study4 has shown that a city break in Athens
was among the five cheapest of the 27 cities in the competitive set ‘Europe’ and the
cheapest in the competitive set ‘Mediterranean’.
2
Source: National Statistical Service of Greece
3
Source: Athens Hotel Association
4
UBS, Price and Earnings, 2006. 4 cities were not listed in the UBS study, namely
Edinburgh, Valencia, Venice and Florence. A partial update of the study in 2008,
relating to cost-of-living data, shows that Athens is still cheaper than 18 cities and more
expensive than 5 of the cities in the 2 competitive sets.
3