Mis­man­age­ment and ex­ces­sive debts bur­den ho­tel en­ter­prises

Kathimerini English - - Front Page - BY YIAN­NIS PAPADOYIANNIS

Much as tourism has been grow­ing to record lev­els in re­cent years in Greece, ho­tel en­ter­prises are not meet­ing their obli­ga­tions to banks, a phe­nom­e­non that ex­perts at­tribute to a com­bi­na­tion of fac­tors.

Com­pared to 2009, an ad­di­tional 11 mil­lion peo­ple vis­ited Greece in 2015, up by 73 per­cent, while tourists spent an ex­tra 4.1 bil­lion eu­ros, or 39 per­cent. These are im­pres­sive fig­ures, given that gross do­mes­tic prod­uct con­tracted by over 25 per­cent in the same pe­riod.

How­ever, de­spite the strong growth in rev­enues, the sec­tor’s per­for­mance has been poor by com­par­i­son: In 2013 – a record year for tourism at the time – the ho­tel sec­tor posted losses, while in 2014 pre­tax prof­its amounted to just 150 mil­lion eu­ros.

Fur­ther­more, a re­sound­ing 40 per­cent of the loans ho­tel en­ter­prises have re­ceived from banks is not be­ing ser­viced. Bank of­fi­cials have told Kathimerini that ho­tel own­ers have re­ceived a to­tal of 7 bil­lion eu­ros, of which 2.8 bil­lion con­cerns non­per­form­ing loans.

In re­sponse to that para­dox, an­a­lysts say that one would have ex­pected a far bet­ter per­for­mance, at a time of record tourism ar­rivals, given also that a large part of the in­fra­struc­ture has been fi- nanced by state sub­si­dies. They add that the neg­a­tive pic­ture of the sec­tor is at­trib­uted to a num­ber of rea­sons, which in­clude mis­man­age­ment, the over­charg­ing of units, un­ortho­dox prac­tices to avoid show­ing any prof­its (and pay­ing ad­di­tional taxes), and the sig­nif­i­cant drop in do­mes­tic tourism.

This pic­ture re­flects to a great ex­tent the coun­try’s gen­eral prob­lem when it comes to com­pet­i­tive­ness, whereby even sec­tors where Greece has a com­pet­i­tive edge are un­able to yield any sig­nif­i­cant re­turns due to in­ef­fi­cient man­age­ment, ex­ces­sive loans etc. It is no co­in­ci­dence that other sec­tors where Greece also has an ad­van­tage, such as fish farm­ing, are also sink­ing un­der the weight of ex­ces­sive bor­row­ing and mis­man­age­ment.

Tourism pro­fes­sion­als say that although there cer­tainly are cases of poor man­age­ment and other bad prac­tices, the prob­lem of overindebt­ness and high losses mainly con­cerns a small num­ber of ho­tel groups, which makes the en­tire sec­tor look bad.

Out of the coun­try’s 9,700 ho­tel en­ter­prises, some 30 groups are re­spon­si­ble for more than half the bad loans. They ac­count for 1.8 bil­lion eu­ros of the non­per­form­ing loans – i.e. 65 per­cent of all NPLs in the sec­tor. Sec­tor pro­fes­sion­als stress that with­out those groups, the bad loans would have had a share of less than 20 per­cent.

Ho­tel Pen­te­likon in Ki­fis­sia, north­ern Athens, shut down in May due to fi­nan­cial prob­lems af­ter 88 years of op­er­a­tion.

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