Europe -  Athens, Greece

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Athens is the commercial and financial centre of Greece, situated in Attica on the southern tip of the Greek mainland. Given its rich history, monuments and buildings, the city naturally attracts the leisure segment, but it also attracts a substantial corporate market, owing to its many government institutions. Athens has a somewhat broad seasonality whereby the strongest periods are spring and autumn, due to business- and conference-related demand. The summer months are less busy as people travel to the island destinations, and winter is a very low-demand period.

Greece’s political and economic situation is still in recovery. Although ‘Grexit’ was a possibility, talks about exiting the Eurozone faded and the completion of the second EU programme review in June 2017 buoyed confidence, supporting activity. According to the OECD, after a 2.1% increase in 2018, GDP growth is projected at 2.2% in 2019, and then at 2.1% in 2020. The large contribution of exports to growth is expected to decline, but the recovery of household consumption and investment will gain traction with rising confidence. Continued implementation of the government’s reform programme is expected to support the recovery, and unemployment, while still high, will continue to fall.

In line with the stabilisation of the economic situation, the Greek tourism industry has been on the way to a strong recovery and Athens has celebrated a comeback over the past four years. Between 2014 and 2018, RevPAR grew at a compound annual rate of 6.0%, driven by both occupancy and rate increases, reaching pre-crisis levels. Visitation to the city has shown a very positive trend with airport passenger arrivals data showing a strong 11.0% growth in 2018 compared to 2017, fuelled by international arrivals (+14.0%), especially from the US and Asian markets. Athens comes third (4.0%), after Paris in first place with 18.0% and London in second with 5.0% in terms of the preferences of Chinese travellers planning their holidays for the next 12 months, an indication of the popularity of Greece in those new markets.

Athens is in the top 15 European destinations of 2019, according to the results of the eighth European Best Destinations (EBD) online competition. It was also included in the top 10 worldwide meeting and incentive destinations in the 2017 Global Destination Index released by Global DMC Partners.

The market is experiencing ongoing changes in supply, as some of the hotels that closed during the crisis in 2010/11 have been reopening and others are investing to modernise their product. The rise in demand was followed by an investment surge in the accommodation sector of Athens. Investment in Airbnb-type properties continues its impressive growth in many places in and around the city centre, while new, non-branded boutique hotels are opening or under construction, primarily through the conversion of disused office space. However, barriers to entry remain extremely high in Athens and construction could potentially become very expensive given the volume of old and protected structures. The Astir Palace Vouliagmeni was purchased for €444 million (€875,000 per key) in October 2016. Situated on the Athens Riviera, the 303-room property will become the Four Seasons Astir Palace Hotel Athens and is expected to open in April 2019. The Metropolitan Hotel underwent a US$15 million (€13.2 million) renovation and reopened with 366 rooms under the core Marriott brand in November 2018.

Although the transaction market dried up almost completely after the financial crisis, in addition to the transaction mentioned above, three other important sales have taken place in the market over the last few years. In 2016, the Hilton Athens sold for a reported €142 million (or €281,000 per room); in 2017, the 102-room King George Hotel was acquired for €43 million (or €422,000 per room) by Lampsa Hotels; and the Athens Ledra Hotel was purchased for €33 million (or €105,000 per room) in June 2017 in a joint venture between Henderson Park and Hines. These deals show that opportunistic investors are increasingly interested in the market.

Israel-based Fattal Hotel company, widely known by its Leonardo brand name, has reportedly secured the long-term lease of the former Esperia Palace property in central Athens, with the contract worth €1.2 million annually. The property lies across from the old Parliament building, within walking distance of Syntagma square. Under the terms of the tender, Fattal will be required to proceed with renovation and upgrade works on the 12,235m2 building and relaunch the hotel as a five-star unit, budgeted at a minimum of €10.5 million.

Greek hotel management and consulting company Zeus International, which also manages Wyndham hotels in Greece, has been named preferred bidder for the former Kaningos 21 hotel and will take on the property’s 30-year lease. The property on Kaningos Square in central Athens is a former 77-room, four-star hotel and is set to reopen as a hotel once again later this year, following renovation works that are reportedly expected to reach some €3 million.

The Lebanese Yazbeck group is currently renovating a property located on the corner of Academia Street and Omirou Street in Athens city centre, to transform it into Marriott’s five-star Academia of Athens, Autograph Collection. The hotel, which has been rented for 30 years by Greece’s EFKA social security fund, will feature 60 rooms.

The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide. Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the hospitality investment market.

In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.

Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide insights on the likely trajectory of decline and recovery for hotel values.

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