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:
- To expand the hotel
- To buy another hotel in the same resort
- To buy another hotel in another resort in Greece
- To buy another hotel in another country
- To buy a restaurant or similar business which can cross-promote your hotel business
- 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.
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.
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:
- Working in an attractive market
- Having competitors who are sensible and don’t over-compete and drive prices down to destroy industry profitability
- 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
- Having excellent management, planning and control skills – talk to any insolvency practitioner and they will emphasise the importance of good management
- 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.
The Best Of The Differentiate Your Business Blog
If you’ve enjoyed this article about the prospects for the Greek tourist industry, I think you’ll enjoy these popular articles:
How Much Will Your Business Results Improve When You Know More About The Strategies For Profitable Growth?
I invite you to take a 30 day trial of my small business growth membership club at www.ProfitableGrowthStrategies.org so that you can see for yourself the benefit of applying more and better strategies and tactics for profitable growth.