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Tourism industry can resist crisis

28 April 09 | Carlos Vogeler
Carlos Vogeler

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17 October 17 Credit Suisse Asset Management Legal & General capital
30 August 17 GLP J-REIT Global Logicis Properties

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Do you believe that the shared ownership industry will deploy in Greece only if hospitality leaders such as Marriot, Starwood or Hyatt expand in the Greek market in a more aggressive way?

Do you believe that the shared ownership industry will deploy in Greece only if hospitality leaders such as Marriot, Starwood or Hyatt expand in the Greek market in a more aggressive way?

I think that the shared ownership industry in general offers enormous opportunities for large hotel brands, including Starwood, Marriot and Hyatt. Starwood for example, has been in the shared ownership business for quite some time in the US, so they have experience, they have a brand, they have good properties, and thus possess all the ingredients to be successful in that mode of business.

The same goes for all the leading international hotel brands. I also believe that demand trends are also pointing to that direction. These trends also present interesting opportunities for Greece, in terms of source markets that could have a demand for investing in fractionals, private residence clubs or condo hotels and Greece is in a good position to further explore these opportunities.

Which are the key drivers of the European Resort Real Estate Market?

Actually, I think that there are quite a few. A major key driver is obtaining the demand of those source markets which are eager to invest outside their countries and taking a good share of that market. There is important competition and to that respect, I think Greece needs to make a difference. In my presentation, I spoke about differentiation which I believe is fundamental; you cannot do the same as everybody else.

Other presentations during the symposium have demonstrated how people are investing in Spain, Portugal and other countries. I think Greece must look into the factors of differentiation, not as much where its selling price is concerned, but mainly in terms of quality, stability, seasonality and of course the attractiveness of the destination. In my opinion, all these factors combined are going to be the key drivers.

How strongly will the economic crisis affect the tourism industry?

I believe that the crisis will not have a significant impact in the long term. The tourism industry has demonstrated an enormous capacity of resilience to different types of events. It is true that we are currently facing a crisis whose effects are yet unknown, so it is very difficult to make predictions. Experience has shown thought, that going on holidays is very well in depth of the socioeconomic behavior of families around the world and I don't think that is going to change.

There might be some short term minor impacts, but in the long term, tourism is going to maintain its pattern of growth and will reach the forecasts made by the UNWTO up to the year 2020. So, no, I don't think there is going to be a significant long term effect and the tourism industry will probably prove as resilient as ever.

We have a huge growth in low cost airlines while at the same time we're in the middle of the economic crisis. Do you think that the growing wealthy class can be the single driver of the resort real estate market?

First of all, I don't think that low cost airlines are only bringing in low wealth people. I believe that many people that stay in five star hotels in their destination, also travel with low cost airlines to that destination. So I don't believe that things are as simple as that. My response would be that low cost airlines are modes of transport which make destinations more accessible in terms of linking more cities on direct flights and in terms of making it more affordable.

It is true that the lower income segments of the market are the first ones that have access to low cost airlines, but we are now observing how a growing number of wealthy people who prefer to make a better use of their money seem to prefer traveling with low cost carriers. So I don't think that in the future we are just going to be in the high end segment of the market. This is obviously the market that is less affected by an economic crisis, but I think tourism will prevail in middle class economies as well, although it might lead to different approaches. What we should focus on though, is providing quality to all segments of the market. Quality is not equal to luxury. There can be quality in a low cost property and there can be quality in a low cost airline.

Which forms of resort development would better suit the Greek market?

I don't think I am that knowledgeable in the Greek market to answer that question accurately. But I could say that the Greek market is probably not very different to many Southern European markets. Perhaps there is one aspect that makes it different and that is the strong demand for domestic travel as opposed to what might happen in Italy, for instance. So I think that this difference could be a key driver. Domestic Greek market could be of enormous potential both for investment on real estate as well investments on all types of shared ownerships, time shares, fractionals, etc.

Does RCI have any plans for Greece?

Yes, definitely. For RCI, Greece is one of the most important operations. We have been active in the Greek market for around 20 years and are observing a very positive market evolution. Actually, we are operating all Southeastern European countries from Greece, so definitely we see a tremendous future here. We believe that the modes of shared ownership to which we are involved, are very attractive for a destination because they make a good link between the customer and the destination, building up a certain amount of loyalty.

If you buy a shared ownership property in a given destination, you are going to be traveling to that destination year after year and if not, you are going to exchange it and then somebody else will come instead. As a result, that piece of real estate is going to be occupied by a tourist, and normally a tourist of a relatively high level of expenditure. So for us Greece is very important country we are definitely here to stay and to grow.

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