Greece Tourism Report Q3 2008

Tourism Overview Although incomplete, data suggests that there was a slight slowdown year-on-year (y-o-y) in foreign tourist arrivals to Greece in 2007, but this would represent three years of steady growth in the tourism sector. In the hospitality sector though, recent data releases for the first three quarters of 2007 record strong growth compared with the previous year (see below).

Forecast Scenario We expect Greek GDP growth to average just over 3.2% in the coming three years, well below the 4.0% it achieved in 2007. Our chief concerns are waning competitiveness, and a slowdown in the eurozone business cycle, both of which will negatively impact the tourism sector, which is so crucial to the Greek economy. Consequently, BMI expects the annual growth rate in foreign tourist arrivals to slow noticeably in 2008, with some slight recovery anticipated in the following year. The continuing strength of the euro is also hampering the competitiveness of the Greek tourism industry, while boosting the attractiveness of non-eurozone rival countries such as Croatia, Turkey, Tunisia and Egypt.

Hospitality Provisional data for the first nine months of 2007 show that foreign tourist arrivals in collective accommodation establishments, which accounted for some 59% (near 7.6mn) of the total, increased a healthy 11.3% y-o-y. There was particularly strong growth in foreign arrivals in May and June, up a buoyant 18.6% and 16% y-o-y respectively. Foreign tourist arrivals from Germany and the UK were also up a relatively favourable 8.2% and 6.4% y-o-y respectively in the period January to September 2007. In addition, foreign visitors accounted for around 41.7mn nights (75% of the total) in collective accommodation establishments, an increase of about 7% y-o-y. Interestingly, the increase in the number of nights spent by tourists from Germany and the UK was weak. Over the same period, occupancy rates for hotels (and similar accommodation establishments) were slightly weaker at 61.5%, compared with just over 64% in the corresponding period a year earlier.

Athens International Airport After strong growth of around 10% y-o-y in total and international passenger numbers at Athens International Airport (AIA) in 2007, growth this year appears to be slowing. The most recent traffic data for Q108 show total passenger numbers increased 5.1% y-o-y, with international passenger numbers up a favourable 8.8% y-o-y to over 1.9mn passengers (but down from some 10% y-o-y growth in Q107).

Aegean Airlines Aegean Airlines reported very favourable results for 2007, with revenues totalling nearly EUR483mn (US$705mn), an increase of 20% y-o-y. Net profit rose a marked 39% y-o-y to EUR35.8mn (US$52.3mn). In the wake of impressive growth in passenger numbers in 2007, the airline reported strong growth of 10% y-o-y in passenger traffic in Q108 to just over 1.0mn passengers.