September, 2004 - Hotel performance boomed in Athens during the Olympic Games with a record growth in revenue per available room (revPAR) performance. Despite spiralling costs and last minute preparations, the Athens organising committee can be proud of themselves after hosting a successful Olympics. The Games gave Athens the opportunity to improve its image and reinvent itself to be one of the great European capitals. This should continue to have a positive impact on hotel performance for some years to come.

Gold rush � hotel performance in Athens booms

Some hoteliers in Athens were expecting high demand in the lead up to the Olympics to start in June and July. However, according to figures from the HotelBenchmark Survey by Deloitte this expected demand did not materialise. Despite year-to-July 2004 figures showing a revPAR increase of 12.5 percent on the previous year, this is a reflection of weak performance in 2003. The increase in revPAR was mainly driven by improving average room rates, not demand, with occupancy levels remaining below the 60 percent mark.

Once the Games officially started on 13 August, the picture changed dramatically. Latest preliminary figures, as detailed in the table below, show that in August Athens revPAR rocketed up 489 percent compared to the prior year. Growth was driven mainly by a 261 percent increase in average room rates. These reached €398, as hoteliers took advantage of high demand and limited supply in the city centre.
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To compensate for the shortage of rooms, the Olympic organisers sought alternative accommodation for visitors such as private homes and 11 cruise ships including the new Queen Mary II. As new supply in Athens was limited, it is unlikely that the city will experience the same post-Olympic drop in occupancy that both Barcelona and Sydney suffered when new supply outstripped demand.

Boosting tourism

Greece received some 12 million visitors in 2003, some 1 million visitors more than its total population. However, since the introduction of the Euro in 2001 Greece has seen a decline in visitor numbers, as it has struggled to compete with cheaper destinations in the Mediterranean such as Turkey and Croatia.

In 2004 expectations were high that the Olympic Games would really help boost visitor numbers. The travel industry estimated an extra two million visitors would visit Greece during the summer months but preliminary numbers show that less than half of these actually arrived.

Latest figures for July 2004 show a decline in visitor numbers of 12 percent compared to last year. This trend is not surprising in the run up to the Olympics, given that many traditional visitors chose to avoid the crowds as well as increases in the price of airfares and accommodation. In the case of Athens, increased concerns about security as well as the volume of construction work taking place are also likely to have had an impact on visitor numbers. Despite this the success of the Games should not be underplayed. The Olympics have helped raise Greece�s profile as well as improving the country�s image. Recent reports also suggest that bookings for September and October are up 10 percent compared to last year.

Not without a cost

The cost to Greece of hosting the Olympics is expected to reach around €10 billion, more than double the first estimates of €4.6 billion. Significant investment went into improving transportation and infrastructure � to help visitors and athletes move more quickly and easily around the city. Projects included the development of a new airport, train and tram system as well as a new road network. These long-term investments in infrastructure will however benefit the city for many years to come.

The question remains as to how long it will take Greece to pay off the €10 billion cost. Montreal, host city in 1976, is expecting to pay off its Olympic debts by 2005-06; some 30 years after the event. Although it is unlikely that Greece will be in the same situation, it is expected that the Greeks will be paying off the costs of the Games for some years to come.

What�s the future for Athens?

The Olympics have definitely helped Greece improve its image as well as raise its profile. To capitalise on the success of the Games, Greece has introduced a new strategic plan to help increase the ratio of tourism revenue to gross domestic product (GDP) from 18 to 40 percent by 2010.

After hosting the Olympics, Barcelona experienced an increase in tourism arrivals of 40 percent and today the city enjoys annual occupancy levels of around 75 percent. Although it is unlikely that Athens will experience the same increases, it is in a much stronger position than previously. The city is now better placed to package itself as a short-break destination and promote itself as a strong venue for international incentive and conference business, particularly once the new convention centre opens in 2006.

Notes: All analysis in Euros.

The HotelBenchmark Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,000 hotels and 1.2 million rooms every month.