Saturday, 16 July 2011

Does George Papandreou fly with Ryanair?

Prime Minister George Papandreou visited Kos yesterday to meet with local authorities and the deputy minister of Tourism to discuss Greece’s tourism promotion policy in light of the increased arrivals in Kos. According to the prime minister Kos is an example, “[due to] its collective efforts, its communal efforts, we are showing our culture, we link this with development, with jobs, with quality tourism.” (Kathimerini, 16 July 2011).

Την Κω έφερε ως παράδειγμα, «όπου με συλλογική προσπάθεια, με κοινή προσπάθεια, αναδεικνύουμε τον πολιτισμό μας και τον συνδέουμε με την ανάπτυξη, με δουλειές, με τον ποιοτικό τουρισμό».

He probably should have asked Michael O’Leary why arrivals to Kos are booming. Ryanair has started direct flights to Kos, with departures from Baris, Bologna, Brussels, Kaunas, Liverpool, and Olso. It’s one of 17 new Greek routes the airline is launching this year. The airline estimates it will bring over 700,000 passengers to Greece in 2011, resulting in EUR 350 million in national tourism revenue.

I saw the success of this first-hand this week in Kaunas, Lithuania, where I was working with ISM University. Two of the professors in the case study development group I’m advising are flying to Kos next week for vacation on Ryanair from Kaunas, and are ecstatic about it. “The homeland of Hippocrates!” one professor told me, her eyes shining.

Yes, these are quality tourists: highly educated, upwardly mobile professionals. But being a “quality tourist” does not mean one is a stupid tourist, willing to pay EUR 1,500 for a week in Greece, when a week in an equivalent resort in Turkey costs less than half this amount. By offering low-cost flights to an unserved destinations, Ryanair enables tourists to put together their own packages dynamically by selecting the best price offers in different segments. Quite different from relying on tour operators or expensive flight access. 

Reading this article, I had to wonder if our Prime Minister or any other goverment ministers have ever flown with Ryanair before, or whether companies like Ryanair even enter into the political calculus of the antediluvian unionists who still dominate the upper reaches of PASOK. Judging by the previous law on cabotage passed by former Minister of Economics Louka Katselli in 2010, they do not.

I also have to wonder what our esteemed Tourism Ministry is doing about this. If Greece wants to open up new markets, why not grant Ryanair, Easyjet and various other airlines landing rights at Thessaloniki, Actium, Heraklion, Rhodes, Corfu and elsewhere? Why not fund their aircraft and crews to be based in Greece, at least seasonally?

The city of Paphos, for instance, recently negotiated with Ryanair to base 2 aircraft and crews at Paphos Airport, which is now run by Ermes, a private airport operator owned by the Shakolas Group. According to my sources in the hotel sector, the total annual funding request was EUR 400,000, which would have been split between the Municipality and the Paphos Hoteliers’ Association. This is a pittance compared to the money the Greek public sector wastes every day. In Paphos, the net gain from incoming tourist arriving on Ryanair will surpass this amount each month.

There are many other recommendations one could give the prime minister on promoting the Greek tourism product. We could start with Visit Greece, the abysmal website of the Greek National Tourism Organisation (EOT). Why is it that private companies such as The Margi or Costa Navarino manage excellent sites while EOT, with millions in EU funds and tax revenue available, has developed a website which looks like it was designed by a first-year web design student?

We could continue with tourism promotion spend. Given that tourism accounts for nearly 20% of Greece’s GDP, why isn’t Greece spending upward of EUR 300 million on international tourism promotion each year? When is the last time the prime minister has seen an advertisement of any kind for Greek tourism? When is the last time he’s seen an advert for Georgia, Turkey or Croatia?

Shall we discuss tax policy? We could inquire why VAT has a maximum rate of 23%, or why a hotel should have to pay 44% of payroll taxes for IKA, if we want this sector to be competitive.

Unfortunately, it’s painfully clear that either the elected leadership of Greece do not understand the tourism sector, or they don't see it as a priority. If they did, they would be spending as much time and attention on tourism (nearly 20% GDP) as they are on green energy (less than 1% GDP) or agriculture (less than 6% GDP).

The Prime Minister should be speaking at tourism industry conferences and visiting major exhibitions like World Travel Market or ITB. There should be a Deputy Prime Minister chairing a Cabinet working group which includes industry professionals and representatives to develop a 10-point plan for tourism which should be implemented before the 2012 season starts. There should be a national goal to raise arrivals from 15 million tourists in 2010 to 20 million in 2015 and 25 million in 2020. There should be a further goal to streamline the hotel licensing procedure to attract investment into integrated resorts and other special products. 

Unfortunately, there is no such group, and there is no such strategy. Piecemeal initiatives, meaningless conferences, and empty speeches are no substitute. Greece has the infrastructure, the tourism product and the tourism professionals needed to reverse the situation. What is lacks is a long-term, realistic tourism development strategy at the public level, and a realistic understanding of how the sector works.

© Philip Ammerman, 2011

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