What Can Save The Greek Tourist Industry?

by Paul Simister on March 28, 2012

Imagine that five years ago you owned a hotel in Greece.

Times were good.

Occupancy rates were high. You were making a lot of money.

You wanted to make more.

So what strategic options did you have?

Strategic Options For A Greek Hotel Business

The obvious strategic options are:

  1. To expand the hotel
  2. To buy another hotel in the same resort
  3. To buy another hotel in another resort in Greece
  4. To buy another hotel in another country
  5. To buy a restaurant or similar business which can cross-promote your hotel business
  6. Don’t invest – bank the money and save it for a rainy day

At the time, option 3 buy a hotel in another country looks the most difficult and the least attractive. Option 6, put the spare cash safely into a bank also looks very dull.

But that’s probably because you didn’t do a rigorous enough PEST Analysis.

You may have gone through the motions but you probably wouldn’t predict the Greek financial crisis which, with hindsight, is the inevitable result of a crazy economic system.

Even worse, being locked into the Euro means that currency deflation won’t automatically re-balance the economy.

What Can Be Done To Save The Greek Tourist Industry?

For the last couple of weeks I’ve been thinking about how leisure businesses in Greece can save their future when things look so bleak.

The Euro rate of €1.10 to €1.20 to £1 means that holidays in Greece are expensive to the British when a few years ago the euro was consistently around $1.50.

The currency issue is not there for other Euro countries but the austerity measures imposed on Greece mean that the Germans are hated. And the Spanish, Italians, Portuguese and Irish don’t have any money to fritter on holidays.

The civil unrest doesn’t help either. We’ve seen the rioting on the TV. We can understand why the workers want to go on strike.

But it makes people even less likely to visit because Greece can no longer promise a nice, relaxing holiday.

Then there’s the local issues like the volcano in Santorini that’s giving off alarming signs that an eruption is likely.

So what can be done for the Greek tourist industry?

Well if you had a time machine, you could go back and reverse the strategic decisions you made five years ago. Cash in the bank suddenly looks very good because it provides a buffer against these difficult times. Diversification outside Greece also sounds good.

If only the PEST Analysis had been combined with scenario planning.

The Options For Greek Leisure Businesses

Sometimes it is good to know when you’re in a situation that can only lose you money so you can get out early and save what cash you can. It reduce competitive rivalry and helps to rebalance supply and demand. This stops the everyone slashing prices on the marginal costing logic.

If you’ve got the money, you could help your competitors to get out of the market by removing exit barriers.

The government could step in to support the tourist industry to prevent unemployment growing as hotels and restaurants close… but the Greek government doesn’t have the money to provide any funding and is having to make alarming cutbacks in its expenditure.

It’s tough.

Communities can group together to stop civil unrest before it starts by making sure that everyone understands that scaring away the tourists will only make things much worse.

Local area tourist organisations can promote their area and make sure that it’s not forgotten. Pooled money on a general attraction campaign often goes much further than many individual businesses spending their own cash and promoting their own brand and differentiating factors.

The weather is reliable – hot and sunny.

Greece has still got its tourist attractions from amazing history and culture to terrific beaches.

People still want holidays and the sterling / Euro problem applies to France, Spain, Italy and many other popular destinations for British tourists.

If hotel companies have built up email lists of former guests, they can make sure that the right messages get out to the people who are most likely to buy. Of course, they need to confront what’s on the mind of people and reassure them

Can they make irresistible offers?

Cutting prices is obvious but tough to do. Low prices are often combined with poor service as companies economise to save money to make money.

Adding value is an option although it can’t cost too much. Increasing variable costs when you know you have the guests is much better than pushing up your fixed costs.

The challenge for Greek tourist businesses will remain very tough.

The Profit Tipping Point & the Five Pathways To Profit

In my free report, the Profit Tipping Point, I explain the five pathways to profit:

  1. Working in an attractive market
  2. Having competitors who are sensible and don’t over-compete and drive prices down to destroy industry profitability
  3. Having a competitive advantage that either gives you a way to magnetically attract some customers to your business or that gives you an operational advantage
  4. Having excellent management, planning and control skills – talk to any insolvency practitioner and they will emphasise the importance of good management
  5. Having a strong inner game where the business owner is committed, focused and clear on his or her priorities.

I believe that weakness in one of two areas must be compensated by excellence in the others.

Do You Have Ideas For Ways To Stimulate The Greek Tourist Industry?

I’d be very interested to hear if you have any ideas for stimulating the tourist trade in Greece so please leave a comment.

It’s a great example of what happens when the external environment turns against you very sharply.

Paul Simister is a business strategy coach who helps business owners to differentiate their businesses and develop winning strategies. Get your free copy of my ebook The Six Steps Profit Formula.

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greek tourist industry

{ 11 comments }

Mike April 1, 2012 at 7:52 am

I can’t really say for the Greek economy in particular, but I know that in Thailand where I live, when tourism takes a hit, all the businesses start slashing prices to draw in the customers. This of course cuts significantly into profits so much that most of these businesses can barely turn a measly profit. Another side effect is that these new lower prices draws in a much more frugal crowd that don’t like to spend any money. If Greece were to head in this direction they would likely be pretty screwed. The only businesses that are going to survive are the ones that have cash reserves that will allow them to continue onward without having to drastically cut their prices. Eventually the weak businesses will close and the strong will survive.

Paul Simister April 1, 2012 at 8:49 am

Thanks Mike for your comment.

You reached a similar conclusion to me which is why I decided to use it as a case study for people not looking at the strategic decisions in the right way, some years ago.

Vestuviu Skelbimai April 3, 2012 at 2:49 pm

Great analysis. Thanks for sharing your case study on future of Greek tourist industry. Well one way to promote Greece tourism is that Government should come out with T.V. ad & publish it on national T.V. channels of different parts of the world.

Paul Simister April 6, 2012 at 5:14 am

The big problem is that the Greek government doesn’t have any money although there is certainly the issue of priorities. Even if it has to cut pensions for retired people, is it worth spending to accumulate? And if so, would the government be willing to do it because of the civil unrest it may cause (strikes, demonstrations, riots) that may put off tourists?

Jane April 5, 2012 at 5:44 pm

Hey,

Very informative article. I was not aware of the Greek tourism getting a hit. When a country’s economy mainly depends on tourism, planning is very important to attract tourists.

Cornelis de Maijer April 28, 2012 at 6:30 am

It takes more then just sun, sea and beaches to attract. There is something like attitude towards holidaymakers. From the past I know that the Greek government helped the industry with VAT lowering of 6%, did it lower the prices for the guests on the isliand? No, ofcourse not, the business owners took an extra profit.
Guests what a riaable holiday destionation. How many times a Greek is on strike, no water supply, then a few hours no power supply, roads are bad and everyone in the tourism industy seems to have one mindset: Money, money, money….money! give me your money and they dont care about quality or services.
The current crisis is not the one to blame, it helped to reach this attitude issue to the surface and now is everyone paying the price sadly enough because Greece itself is very beautiful.

Wanda June 12, 2012 at 7:34 pm

Your analysis and options are great! But I would say not just Greece, the economic atmosphere is the same everywhere!

Paul Simister June 13, 2012 at 5:32 am

Things are much worse in Greece at the moment in terms of the uncertainty and level of crisis, the depth of the austerity cuts and recession plus teh continuing risk of civil unrest as difficult decisions are made.

The other particular problem with Greece is that it has a particularly high reliance on the tourist industry.

However I do accept that there are plenty of economic problems in other countries as the world has got horribly out of balance. I am shocked when I see how total debt levels rose so rapidly in the last decade – that’s government debts, corporate debts and personal debt. Much of the world went on a spending splurge with borrowed money, pulling forward demand and pushing up prices.

RICHARD June 21, 2012 at 9:36 am

Well, I don’t think that you should use the time machine for going back to avoid the bad situation and the uncertainty is all business and I think it has happened for the recent economic fall. So, people have to be frugal to survive but it doesn’t mean that the celebration has thrown out from the people. Please, keep patient and carry on the walk. Good luck.

Araceli O'Neil June 29, 2012 at 8:39 pm

If ancient Greece was able to get up where it left off during its lowest moment, then I believe that the present Greek government will stand a chance to save its economy from this present dilemma.

If the government is losing finances to support its expenditure and ailing economy, then they should ask for support from international agencies. Government officials should exhaust all their efforts to keep with the demanding needs of the people to run its daily affairs.

Paul Simister June 30, 2012 at 6:04 am

Well the have certainly been asking for the support of the international agencies but the conditions imposed to get the money are savage from the Greek perspective.

But if the money is easy, few or no changes are made and they have to return time and again with the begging bowl. There’s no reason why any international organisation should keep giving the money of other nations’ tax-payers to fund lavish welfare in Greece.

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