Increased revenues due to increased arrivals - Pressures on profits due to taxation

The domestic hotel sector is examined in a recent study of Infobank Hellastat S.A. According to Alexis Nikolaidis, Economic Research & Sectorial Studies Senior Analyst, in 2017, Greek tourism continued its upward trend in terms of arrivals, while revenues returned to a positive sign. In detail, during the first three quarters, a further rise in international arrivals by 10.3% was recorded, at 23.5m travelers, while receipts boosted to the rate of 11.1%, at €12.7bn. 

These figures translated into a per capita expenditure of €538.2 for the first three quarters of 2017, having risen by 0.8%, compared to 2016, lagging significantly behind, however, the corresponding figure for 2015 (€602.5). This value has continued to remain at a fairly low level, compared to other Mediterranean countries.

However, as opposed to the growth in revenues, over the last two years, the results of most hotels subsided, mainly due to: a) the high tax burden, and b) the spread of the sharing economy.

In detail, in 2016, over-taxation reduced considerably the profits of the sector, discouraging the implementation of investments, and downgrading the competitiveness of Greek tourism. Domestic hotels are currently burdened with nearly double the amount of tax, compared to VAT on packages from competitor countries, without having the ability to adjust their prices. Therefore, the absorption of a significant part of the additional cost has reduced profit margins. The climate will become more adverse this year, due to the imposition of the overnight stay tax.

The escalation of unfair competition from the illegal lease of properties to foreign tourists is another negative aspect, and this practice has currently become widespread in both urban centers and popular destinations. The issue has not been addressed through proper statutory regulation yet, which makes several rented room owners think of the possibility of handing over their licenses, and shift to illegal leases.

According to Mr. Nicolas Gouzelos, Chairman & CEO of Infobank Hellastat, The performance of domestic tourism in recent years has attracted the interest of both domestic and international investment consortiums, which intend to either purchase existing facilities or build new ones. Moreover, well-known management chains have already started to enter the Greek market by undertaking the management of luxury units. This event will affect positively the growth of receipts, ensuring, at the same time, direct access to international markets, and is expected to intensify over the next three years.”.

Financial analysis

In the study conducted by IB.HS, an analysis takes place of the financial statements of 570 companies running 3-, 4-, and 5-star hotels. The key conclusions drawn are summarized as follows:

  • Turnover rose by 4.8% in 2016, at €1.56bn.
  • With the exception of extremely positive influence exerted by a big player in the sector, EBITDA and EBT dropped by 4% and 24%, respectively.
  • The EBITDA and EBT margins subsided to 21.7% and 3.2%, respectively.
  • Capital leverage remained at 0.4 over 1.
  • Receivables were collected within a period of 70 days.

For the full version of the sectoral studies please contact 210 8939017 or email to This email address is being protected from spambots. You need JavaScript enabled to view it. & This email address is being protected from spambots. You need JavaScript enabled to view it..

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