The Contribution of the Hotel Industry to the Greek Economy

Abstract

This paper estimates the contribution of the hotel sector to the main macroeconomic figures of the Greek economy. For this purpose, we use a combination of input-output models as well as survey-based data. The analysis of the intersectoral relationships in the Greek economy indicates that the hotel sector constitutes a key sector of the economy. The total (direct and indirect) contribution of the hotel sector to the gross domestic product of the economy is estimated at 4.8% for the year 2023, whilst its total contribution to employment is estimated at 6.6%. Moreover, from the sectoral decomposition of the cost of the hotel product, it is found that almost 20% of the price of the final hotel product is composed of taxes, a percentage that is almost twice that of the other sectors of the economy. Finally, the evaluation of the results of the current study offers useful insights for policymakers.

1. Introduction

The tourism sector is a cornerstone of the Greek economy, significantly contributing to the country’s overall development and economic stability. For instance, according to data from the Bank of Greece, international travel receipts reached EUR 20.6 billion in 2023, that is, almost 42% of the service exports and about 21% of the total exports.1 However, there are no official data about the contribution of tourism to the gross domestic product (GDP) or other basic macroeconomic figures of the Greek economy because Greece is one of the few European countries that has not developed the statistical system of Tourism Satellite Accounts (TSA). As a result, there are only indirect estimates about the contribution of tourism to the Greek economy, with most of them reporting that tourism’s contribution to GDP is in the range of 10% to 30%. More recently, Hackl and Hatzimarinakis (2023), in an attempt to develop a pilot TSA for the Greek economy, estimated that, in the period 2010–2019, the direct contribution of tourism to GDP was in the range of 3.1% to 6.0%, while the so-called tourism ratio, i.e., the ratio of total (inbound and outbound) tourist consumption to the total supply of the economy, was estimated at 4.79%. Similar estimations have been provided by Rodousakis and Soklis (2020, 2021) on the basis of a combination of input–output techniques with national accounting data. More specifically, Rodousakis and Soklis (2020) estimated that the tourism ratio for the year 2018 was in the range of 4.6% to 5.6%, while Rodousakis and Soklis (2021) estimated that the direct contribution of tourism to GDP for the year 2019 was in the range of 6.0% to 7.2% and the total, i.e., direct and indirect, contribution of tourism to GDP was about 12%.2 As far as the multiplier effects of tourism are concerned, Kasimati (2016) estimated the so-called tourism output multiplier, i.e., the effects in the economy’s output of an increase in tourism demand by 1 unit, at the level of 1.21, while more recently, Rodousakis and Soklis (2020) estimated that a unit increase in tourism demand increases the Greek GDP by 1.076 units.

Regarding the role of tourism on the economic system, there is a significant amount of research exploring whether tourism promotes economic growth or vice versa. On the one hand, the findings of Brida and Pulina (2010), Brida et al. (2016), Alcalá-Ordóñez et al. (2023), inter alia, support the so-called “tourism-led growth hypothesis”, i.e., the increase in tourism demand is expected to promote economic growth, but, on the other hand, there are also studies that provide support to the so-called “economy-driven tourism growth”, i.e., overall growth in the economic system is expected to promote the growth of the tourism sector as well. For instance, according to Oh (2005), who investigated the role of tourism on the Korean economy, it is more likely economic growth promotes tourism development. Furthermore, according to Lin et al. (2019), who investigated the role of tourism on various regions in the Chinese economy, the “economy-driven tourism growth” seems to be verified in the regions that are less developed compared to other regions. Specifically, in the case of the Greek economy, there are only a few studies that explore the relationship between tourism and economic growth. Dritsakis (2004) has found that there is a bidirectional relationship between economic growth and tourism growth, while, according to Kasimati (2011), the “tourism-led growth hypothesis” is not validated for the case of the Greek economy. Recently, Rodousakis and Soklis (2024), using input–output techniques, demonstrated that the role of tourism in the Greek economy is more as a seller of inputs to the other sectors than a buyer of inputs, thus proving support to the “economy-driven tourism growth” hypothesis.

Within the tourism sector, the hospitality industry, and especially the hotel industry, plays a critical and prominent role. Moreover, the industry’s focus on enhancing quality and sustainability has positioned Greece as a competitive destination, adding resilience to the economy. By continually upgrading facilities and implementing sustainable practices, Greek hotels attract high-value tourism, contributing to GDP growth, improving the employment rate, and promoting regional development in areas dependent on tourism. The hotel industry in Greece is not only a service provider but also a significant driver of economic activity across various related sectors. From construction and agriculture to transportation and retail, the ripple effects of this sector extend far beyond its immediate contribution. Tourism-related economic multipliers have been widely recognized as a mechanism for amplifying economic benefits, particularly in nations with strong tourism profiles (Miller & Blair, 2009; Dwyer et al., 2010). Over the years, tourism has shown remarkable resilience in the face of numerous crises, including the global economic downturn of 2008. However, this resilience was starkly challenged during the global pandemic crisis of COVID-19, when tourism emerged as one of the most severely affected sectors, experiencing unprecedented disruptions and a dramatic decline in activity worldwide. In this regard, it is worth mentioning that Mariolis et al. (2021) estimated the COVID-19 multiplier effects on the Greek economy and found that for every decrease in international travel receipts by EUR 1 billion, the GDP decreases by 0.57%, the employment levels decrease by 0.61% and the trade balance deficit increases by EUR 0.676 billion. In this precarious environment, the Greek hotel sector was significantly impacted, experiencing substantial losses. In 2020, only 60% of Greek hotels operated by implementing health protocols. During the period of July–September 2020, the average occupancy rate for operating hotels was 41%, but when projected across the total hotel capacity, the occupancy rate dropped to just 23%. In August 2020, the peak season for Greek tourism, the occupancy rate of operating hotels declined to 28%, compared to 87% in August 2019. Additionally, the average room rate experienced a notable decline, dropping by 16% in August 2020 and 11% in September 2020 compared to the same months in 2019. These trends led to a dramatic 78% reduction in total hotel turnover for 2020 compared to 2019 and an accordingly high reduction in hotel employment (−74% August 2020: August 2019). However, in 2022, the Greek hotel sector demonstrated significant recovery, with overall performance improving notably. By August, hotel occupancy rates had returned to 2019 levels, reaching 88%, while the average room rate recorded a 20% increase compared to August 2019, leading to a 2.4% rise in total hotel turnover relative to 2019. From the above, it follows that there is not an unambiguous estimate of the contribution and the role of tourism in the Greek economy. It goes without saying that the hotel industry, being a part of the overall tourism activity, also lacks an estimate of its contribution to the Greek economy. The purpose of this paper is to fill this gap by providing a comprehensive analysis of the Greek hotel industry’s contribution to the national economy. More specifically, the first objective of this paper is to estimate the multipliers that characterize the Greek hotel sector. The estimation of the multipliers of the Greek hotel industry will reveal how a unit change in the demand for hotel services affects the Greek economy and will also reveal the intersectoral relationships of the hotel sector, i.e., which sectors of the Greek economy are mostly affected by the operation of the hotel sector. For this purpose, we apply methods of input–output analysis and relevant data from the input–output tables of the Greek economy. The second objective of this paper is to provide estimates about the total contribution of the Greek hotel sector to the basic macroeconomic figures of the Greek economy. In order to implement this objective, except for the multipliers of the hotel sector, we also need an estimation of the turnover in the hotel sector, which we retrieved from the annual surveys of the Research Institute for Tourism (RIT). Section 2 provides a thorough outlook of the Greek hotel sector for the period 2008–2023, which is the period for which there were available comparable data. Section 3 gives the methodological framework and our empirical estimations regarding the contribution of the hotel sector to the basic macroeconomic figures of the Greek economy. Section 4 discusses the results and concludes.

2. Outlook of the Greek Hotel Industry

2.1. Hotel Evolution 2008–2023

Over the last 16 years, from 2008 to 2023, a 7% increase in the total number of hotels has been recorded, which, in terms of hotel rooms, equates to a 20% increase (see Figure 1). However, the increase for 5-star hotels (hereafter referred to as 5*) reached 244% in hotel numbers and 167% in terms of rooms (see

Table 1. Evolution of the Greek hotel sector, 2008–2023.

Year		5 *	4 *	3 *	2 *	1 *	Total
2008	Hotels	230	1102	2058	4387	1608	9385
	Rooms	39,614	95,790	89,142	116,318	29,586	370,450
2016	Hotels	444	1412	2472	3990	1412	9730
	Rooms	67,407	104,562	96,033	111,842	27,302	407,146
2020	Hotels	651	1708	2784	3605	1304	10,052
	Rooms	93,687	121,906	101,997	95,655	25,049	438,294
2023	Hotels	792	1846	2919	3313	1177	10,047
	Rooms	105,596	128,813	101,592	85,979	22,409	444,389
D% 2023/2008	Hotels	244.3%	67.5%	41.8%	−24.5%	−26.8%	7.1%
	Rooms	166.6%	34.5%	14.0%	−26.1%	−24.3%	20.0%

Source: Hellenic Chamber of Hotels. Note: The symbol * denotes the category of the hotels.

). The three upper hotel categories experienced a 64% increase in the number of hotels and a 50% increase in rooms, while a 25% decrease was observed in the number of hotels in the two lower categories.

During 2008–2023, the Greek hotel sector has undergone significant upgrades, reflecting a shift towards higher-quality accommodations (see Figure 2).

The capacity of 5-star hotels, measured in room terms, more than doubled, growing from 11% in 2008 to 24% in 2023. In 2023, over half (53%) of all hotel rooms in Greece are in the top two hotel categories (4-star and 5-star), a significant increase from 36% in 2008. In contrast to the growth in upscale accommodations, hotel rooms in the lower two categories (1-star and 2-star hotels) have experienced a notable decline. In 2008, these budget accommodations made up 39% of total hotel room capacity, but by 2023, this share had fallen significantly to just 24%.

2.2. Main Hotel Features, 2024

Τhe Hotel Registry maintained by the Hellenic Chamber of Hotels (HCH) is continuously updated on a daily basis, making it a dynamic and evolving source of information. Consequently, the data extracted from this registry represents only a temporary “snapshot” that reflects the status of hotel listings at the specific time of extraction. This means that figures, capacities, and categorizations within the registry may change regularly as new hotels are added, upgrades are completed, or categorizations are adjusted, ensuring that the registry remains accurate and up-to-date in capturing the current state of the Greek hotel sector. According to the latest data from the Hellenic Chamber of Hotels (HCH)3, the Greek hotel sector comprises 10,110 hotels with a total capacity of 447,352 rooms. Hotels of the three upper categories (5*–3*) represent 56.3% of the hotels, corresponding to 76.2% of total hotel room capacity (see Figure 3).

Nearly 80% of hotels in Greece are relatively small in size, each offering up to 50 rooms (see Figure 4). This indicates that the Greek hospitality sector predominantly consists of smaller establishments, which contrasts with the large-scale hotel chains often found in other tourism-heavy regions. These hotels are often family-owned and locally operated, providing guests with a more authentic and culturally immersive experience that is closely tied to the local character of Greece’s diverse regions.

Greek hotels are typically classified based on their operating period, divided into seasonal hotels and year-round hotels, each catering to different types of travelers and located in distinct areas (see Figure 5).

• Seasonal hotels operate primarily during the peak tourist season, usually from spring through early autumn, and are predominantly found in popular island destinations.
• Year-round hotels, unlike seasonal hotels, remain open throughout the year and are mainly located in big cities, as well as other inland destinations.

In addition to operating periods, Greek hotels are also classified based on their location and altitude, which often dictates the type of experience they offer and the kind of guests they attract. This classification highlights the geographical and environmental diversity of Greece, with hotels situated in a range of unique settings, each providing different amenities and catering to distinct visitor preferences (see Figure 6 and Figure 7).

More than half of all Greek hotels are situated in popular island destinations, underscoring the crucial role these regions play in both Greece’s tourism industry and its broader economy. These island destinations, combined with the regions of Central Macedonia and Attica, collectively account for over 70% of the country’s total hotel capacity. This focus on high-demand regions highlights Greece’s strategic investment in areas with the most significant impact on tourism revenue, reinforcing the tourism sector’s importance as a primary economic driver for the country.

Finally, after analyzing the distribution of hotel ownership in Greece, it becomes clear that a relatively small portion of enterprises controls a large share of the country’s total hotel capacity. Specifically, just 18% of hotel-owning enterprises account for 46% of the total capacity in terms of rooms. This indicates that a limited number of owners manage a disproportionately large number of rooms, likely through larger hotel chains or extensive properties that cater to higher guest volumes. This concentration suggests a trend toward consolidation within the Greek hotel industry, where a few key players hold substantial influence and resources, enabling them to invest in larger facilities and upscale accommodations. Meanwhile, the remaining 82% of hotel enterprises, many of which are small or family-run, share the remaining 54% of the room capacity. This structure reflects a dual market, with both large-scale hotels and smaller, independently-owned establishments contributing to the diversity and resilience of Greece’s hospitality sector.

In conclusion, the Greek hotel sector has undergone significant transformation over the past years, driven by a focus on quality upgrades and strategic development. The shift toward higher-end accommodation, with a notable increase in 4- and 5-star hotels, underscores Greece’s efforts to attract high-value tourism and meet the demands of an evolving global market. Over this 16-year period, the number of 5-star hotels grew by 244%, while 4-star hotels recorded a 68% increase. This growth was accompanied by a 25% decline in the number of 1- and 2-star hotels. Furthermore, the average size of 5-star hotels decreased from 172.2 rooms in 2008 to 133.3 rooms in 2024, highlighting a shift towards offering more personalized and high-quality services to their guests. Greek tourism remains predominantly summer-oriented, as evidenced by the concentration of hotels in popular island destinations, which represent nearly 50% of the total hotel capacity. However, the growing hotel capacity in certain mainland regions, such as Epirus, highlights the rising popularity of destinations catering to alternative tourism. The concentration of hotels in popular island destinations, as well as in key regions like Central Macedonia and Attica, reflects the country’s targeted investment in high-demand areas to maximize tourism revenue. Despite the increase in upscale accommodations, the sector retains its diversity, with a large proportion of smaller, family-owned hotels that contribute to Greece’s unique and personalized tourism experience. Additionally, the trend of consolidation in hotel ownership highlights the presence of larger enterprises with significant influence in the market, though smaller businesses remain vital to the sector’s structure. Overall, the Greek hotel industry has positioned itself as a resilient and competitive player in global tourism, enhancing its contributions to Greece’s economic stability and growth by attracting a wide spectrum of visitors, from luxury travelers to those seeking authentic local experiences.

3. The Contribution of the Hotel Industry to Basic Macroeconomic Figures of the Greek Economy

3.1. Methodology

The intersectoral, or input–output, relationships of an economy can be described either by the system of physical quantities of the economy or by its “dual” system, i.e., the system of prices (see, e.g., Pasinetti, 1977, Chapter IV). The choice between the two systems depends on the purpose of the analysis. In this section, we want to describe the relationships between the demand for various products and the total output and total employment in the economy, i.e., between physical quantities of the economic system. Thus, it is appropriate to start from the system of physical quantities.4 The system of physical quantities of Leontief’s open input–output system can be described by the following equation (see, e.g., Leontief, 1986):

$$\mathbf{x}=\mathbf{A}\mathbf{x}+\mathbf{f},$$

(1)

where $\mathbf{x}\equiv \left[x_i\right]$ is the $n\times 1$ vector of domestic gross output, $x_i$ is the gross output in product $i$, $\mathbf{A}\equiv \left[a_{ij}\right]$ is the $n\times n$ technical coefficients matrix of the economy, $a_{ij}$ denotes the amount of product $i$ used as an intermediate input by industry $j$ per unit of output, $\mathbf{f}\equiv \left[f_i\right]$ is the $n\times 1$ vector of final demand, $f_i$ denotes the final demand for product $i$, and $n$ the number of products and industries in the economy. Re-arranging Equation (1) we obtain

$$[\mathbf{I}-\mathbf{A}]\mathbf{x}=\mathbf{f}.$$

Now, if the economic system is productive enough to produce surplus or, in mathematical terms, the Perron–Frobenius eigenvalue of the technical coefficients matrix, $\mathbf{A}$, is less than 1, then the inverse of the matrix $[\mathbf{I}-\mathbf{A}]$ exists and, therefore, the system has a unique economically meaningful solution, given by5

$$\mathbf{x}={[\mathbf{I}-\mathbf{A}]}^{-1}\mathbf{f},$$

(2)

where ${[\mathbf{I}-\mathbf{A}]}^{-1}$ is the well-known inverse Leontief matrix, which connects final demand with gross output. Equation (2) connects the exogenously given final demand for the products of the economic system, $\mathbf{f}$, with the sectoral gross output, $\mathbf{x}$, through the Leontief inverse matrix, ${[\mathbf{I}-\mathbf{A}]}^{-1}$. Since the technical coefficients are considered as given and constant, it follows that ${[\mathbf{I}-\mathbf{A}]}^{-1}$ is also given and constant. Thus, by giving any values to the elements of final demand, i.e., the vector $\mathbf{f}$, we can estimate through Equation (2) the gross output that is necessary to produce each sector of the economy in order to meet this demand.

In the case of an open economy, Equation (1) can be decomposed as follows:

$$\mathbf{x}=\left[{\mathbf{A}}^{\mathrm{D}}+{\mathbf{A}}^{\mathrm{M}}\right]\mathbf{x}+\left[{\mathbf{f}}^{\mathrm{D}}+{\mathbf{f}}^{\mathrm{M}}\right]-\mathbf{m},$$

(3)

where $\mathbf{A}=[{\mathbf{A}}^{\mathrm{D}}+{\mathbf{A}}^{\mathrm{M}}]$, ${\mathbf{A}}^{\mathrm{D}}\equiv \left[a_{ij}^{\mathrm{D}}\right]$ is the $n\times n$ matrix of domestic input coefficients, $a_{ij}^D$ denotes the amount of domestically produced product $i$ used as an intermediate input by industry $j$ per unit of output, ${\mathbf{A}}^{\mathrm{M}}\equiv \left[a_{ij}^{\mathrm{M}}\right]$ is the $n\times n$ matrix of imported input coefficients, $a_{ij}^{\mathrm{M}}$ denotes the amount of imported product $i$ used as an intermediate input by industry $j$ per unit of output, $\mathbf{f}=[{\mathbf{f}}^{\mathrm{D}}+{\mathbf{f}}^{\mathrm{M}}]$, ${\mathbf{f}}^{\mathrm{D}}\equiv \left[f_i^{\mathrm{D}}\right]$ is the $n\times 1$ vector of final demand for domestic production, $f_i^{\mathrm{D}}$ denotes the final demand for domestically produced product $i$, ${\mathbf{f}}^{\mathrm{M}}\equiv \left[f_i^{\mathrm{M}}\right]$ is the $n\times 1$ vector of the final demand for imported products, $f_i^{\mathrm{M}}$ denotes the final demand for imported product $i$, $\mathbf{m}=[{\mathbf{A}}^{\mathrm{M}}\mathbf{x}+{\mathbf{f}}^{\mathrm{M}}]$, $\mathbf{m}\equiv \left[m_i\right]$ is the $n\times 1$ vector of total imports of the economy and $m_i$ is the total imports of product $i$ in the economy. Based on the above, Equation (3) can be reduced to

$$\mathbf{x}={\mathbf{A}}^{\mathrm{D}}\mathbf{x}+{\mathbf{f}}^{\mathrm{D}}.$$

(4)

Solving Equation (4) for $\mathbf{x}$ we obtain

$$\mathbf{x}={[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}{\mathbf{f}}^{\mathrm{D}},$$

(5)

where ${[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}$ is the domestic inverse Leontief matrix, which connects final demand for domestic products with gross domestic output. Furthermore, ${\mathbf{A}}^{\mathrm{M}}\mathbf{x}$ gives the requirements for imported intermediate inputs necessary to produce the domestic gross output, $\mathbf{x}$.

Finally, let $\mathbf{a}\equiv \left[a_j\right]$ be the $n\times 1$ vector of labor requirements of industry j per unit of output. Then, pre-multiplying Equation (5) with the vector ${\mathbf{a}}^{\mathrm{T}}$ (where “T” is the sign of the transpose) we obtain

$$L={\mathbf{a}}^{\mathrm{T}}\mathbf{x}={{\mathbf{a}}^{\mathrm{T}}[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}{\mathbf{f}}^{\mathrm{D}},$$

(6)

where $L$ is the total labor necessary to produce the domestic gross output, $\mathbf{x}$.

On the basis of the previous analysis, the gross output (${\mathsf{\Delta }}_x^i$), import (${\mathsf{\Delta }}_m^i$) and employment (${\mathsf{\Delta }}_L^i$) multipliers of each product $i$ of the economy are derived as follows:

$${\mathsf{\Delta }}_x^i={\mathbf{e}}^{\mathrm{T}}{[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}{\mathbf{e}}_i,$$

(7)

$${\mathsf{\Delta }}_m^i={\mathbf{e}}^{\mathrm{T}}{\mathbf{A}}^{\mathrm{M}}{[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}{\mathbf{e}}_i,$$

(8)

$${\mathsf{\Delta }}_L^i={\mathbf{a}}^{\mathrm{T}}{[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}{\mathbf{e}}_i,$$

(9)

where ${\mathbf{e}}^{\mathrm{T}}$ = [1,1,…,1] is the summation vector and ${\mathbf{e}}_i$ the $i$-th unit vector. Finally, the net output of the economic system, say $\mathbf{y}$, is given by $\mathbf{y}=[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]\mathbf{x}$. Thus, by setting $\mathbf{x}$ equal to the solution given by Equation (5), we may calculate the net output multiplier for each product $i$ of the economy, ${\mathsf{\Delta }}_y^i$, as:

$${\mathsf{\Delta }}_y^i={\mathbf{e}}_i^{\mathrm{T}}{[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}\mathbf{x}$$

(10)

3.2. Data and Construction of the Relevant Variables

3.2.1. Construction of the Input–Output Data

In order to estimate the multipliers for the Greek hotel industry (see Equations (7)–(10)) and, subsequently, the contribution of the hotel industry to the basic macroeconomic figures of the Greek economy, we need to extract the domestic inverse Leontief matrix, ${[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}$, the matrix of imported input coefficients, ${\mathbf{A}}^{\mathrm{M}}$ and the vector of labor requirements per unit of output, $\mathbf{a}$. Also, in order to calculate the total contribution of the hotel industry to the Greek economy, we need an estimate of the total demand for the product of the Greek hotels.

The necessary input–output data were retrieved from the latest (corresponding to the year 2018) input–output table for the Greek economy provided via OECD’s input–output database, https://data-explorer.oecd.org/vis?tenant=archive&df[ds]=DisseminateArchiveDMZ&df[id]=DF_IOTS_2021&df[ag]=OECD&dq=...&lom=LASTNPERIODS&lo=5&to[TIME_PERIOD]=false (accessed on 16 November 2024). The input–output data provided by OECD describe 45 production activities. As is well-known, an input–output table consists of three parts. The main part of the input–output describes the intersectoral relationships within the economy under consideration and consists of the so-called transaction matrix of the economy. Each column of this matrix refers to a specific sector of the economy and shows the intermediate inputs that this sector uses from all the sectors of the economic system. Each row of the transactions matrix refers to a specific product in the economic system and shows how this product is used by the other sectors of the economy. The second part of an input–output table refers to the final uses (household’s final consumption, government’s final consumption, capital formation, exports, etc.) in the economy under consideration and is positioned on the right of the transactions matrix. As mentioned above, the rows of the transactions matrix show how each product of the economy is used. Thus, since the part of the final uses is positioned on the right of the transactions matrix, it follows that it shows how each product is used in terms of final uses. Finally, the last part of an input–output table gives the value-added elements (compensation of employees, net taxes on production, consumption of fixed capital, operating surplus, etc.) of the economic system and is positioned below the transactions matrix. As mentioned above, the rows of the transactions matrix refer to a specific sector of the economic system. Thus, since the part of the is positioned below the transactions matrix, it follows that it shows the value-added generated by each sector of the economy. As it is easily understood from the above, the input–output table gives a complete and detailed description of the economic system and, therefore, constitutes the core of the national accounts.

Since OECD’s input–output tables describe 45 production activities, it follows that the vector entities in our analysis are of dimension $45\times 45$. More specifically, the domestic inverse Leontief matrix, ${[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}$, is directly available in OECD’s database. The database also includes the matrix of total intermediate purchases, say $\mathbf{Z}$, as well as the matrix of domestic intermediate purchases, say ${\mathbf{Z}}^{\mathrm{D}}$. Thus, we may derive the matrix of imported intermediate purchases, say ${\mathbf{Z}}^{\mathrm{M}}$, as ${\mathbf{Z}}^{\mathrm{M}}=\mathbf{Z}-{\mathbf{Z}}^{\mathrm{D}}$. Then, by using the usual assumptions of input–output analysis, i.e., we set the physical measurement unit for each product, the quantity of each product that costs 1 monetary unit (see, e.g., Miller & Blair, 1985), we derive the matrix of imported input coefficients as ${\mathbf{A}}^{\mathrm{M}}={\mathbf{Z}}^{\mathrm{M}}{\widehat{\mathbf{x}}}^{-1}$, where $\widehat{\mathbf{x}}$ is a diagonal matrix formed from the elements of the vector of domestic gross output, $\mathbf{x}$, directly available from the input–output tables. Finally, the total employment in each industry was retrieved from OECD’s Structural Analysis (STAN) database, https://data-explorer.oecd.org/vis?tenant=archive&lc=en&df[ds]=DisseminateArchiveDMZ&df[id]=DF_ISTAN_2022&df[ag]=OECD&df[vs]=1.0&av=true&dq=.FTEN.&lom=LASTNPERIODS&lo=5&to[TIME_PERIOD]=false (accessed on 16 November 2024). Using this data we may construct the vector of total employment, say $\mathbf{L}$, and, therefore, the vector of labor requirements per unit of output is derived as ${\mathbf{a}}^{\mathrm{T}}={\mathbf{L}}^{\mathrm{T}}{\widehat{\mathbf{x}}}^{-1}$.

3.2.2. Methodology and Results Regarding the Annual Turnover from the Greek Hotel Annual Survey

One major effect of the restrictive fiscal policies imposed by the EU during the period of the Greek debt crisis (2009–2017) was the compression of the public investment program (Petrakos et al., 2021). At the same time –after a short initial period of stability and excluding the two years of COVID-19—the Greek Hotel industry (GHI) shows a significant upward trend in the total annual turnover (Petrakos et al., 2020), scoring above the EUR 10 billion threshold in 2023, according to the official data (see Figure 8) published by the Research Institute for Tourism (RIT, 2024).

According to the same source, Greek hoteliers invest about a billion euros in total every year during that period for renovations and extensions in their enterprises, pushing in that way the economies of other sectors, like construction and manufacturing. The average annual turnover per hotel in 2023 was estimated at EUR 1.054.065. Half of the Greek hotels had a turnover below EUR 241.842, while the rest of them were above this value. Also, 50% of the Greek hotels had an annual turnover between EUR 241.842 and EUR 723.924, while 25% of the hotels had a turnover under EUR 86.860 and another 25% above 723.924. The large deviance between the mean and median is due to the existence of outliers and is reflected in all classifications. There are significant differences in the distributions of annual income among categories (see Figure 9) and regions (see Figure 10). Besides the differences in the measures of location (mean and median), we can observe differences in variability, skewness, and the number of outliers among the various distributions. For example, there is a positive relation between variability in terms of IQR and category, with the 5* hotels scoring between EUR 500,000 to EUR 36 M.

On the other hand, there are significant differences in the shape of the distribution between regions with cities and regions with seasonal hotels. It is also noticed that hotels in the Ionian Islands have a much larger variation in turnover than other summer destinations like South Aegean and Crete, regardless of the fact that that in those regions, we can find (as outliers) the enterprises with the largest annual turnover.

The ratio of the August inbound tourism expenditure over the annual one is quite stable during the last 15 years—excluding the years of COVID-19 Pandemic—according to the official data, yearly published by the Bank of Greece. The corresponding percentages vary from 21% to 25%, with a mean of 23.3 (median 23.4) and a standard deviation of about 0.9. Interestingly enough, coming from the annual Greek Hotel survey in 2019, the percentage of the August turnover to the annual one was quite similar—22% for the total and 25% for the seasonal Greek hotels.

The estimation of the annual turnover in the GHI is based upon data from the official Greek Hotel Annual Sampling Survey on the population of the Greek hotels, regularly implemented at the end of the year by the RIT. According to the SIMS quality report published by the Institute, data collection is based on a stratified random sample of 1200 units, with various non-response rates among categories (stars), regions, and size and post-stratification—triple weighting on these classifications. The estimation of the total annual turnover is based on the detailed and accurate information imposed by the Greek Hotel Registry, which was developed and updated by the Greek Chamber of Hotels (GCH).

It is widely recognized that the Hotel Industry encompasses all activities and services offered by hotels. In Greece, the hotel sector, with over 10,000 establishments, represents the largest segment of the broader hospitality industry and is one of the main pillars of the Greek economy. The hotel industry is a multifaceted sector offering a wide range of services, including accommodation, dining, recreation, and various other amenities. In the annual surveys, we estimate the total turnover of hotels, which includes revenues from all the services they offer, with accommodation representing the largest share (see

Table 2. Distribution of the hotel turnover.

Services	2023	2022	2021	2019
Accommodation	81%	79%	79%	75%
F & B	16%	16%	17%	19%
Conferences and Other Services	4%	5%	4%	5%

Source: Annual Surveys. Several years. Research Institute for Tourism.

).

The analysis has shown that the accommodation share of total turnover has been consolidated at around 80%.

3.3. Empirical Results

We begin with the estimation of the multipliers of the hotel sector, using Equations (7)–(10) derived above. In order to evaluate the relative strength of the hotel sector in the Greek economy, we also estimate the multipliers for all the sectors of the economy. The results of our estimations are summarized in

Table 3. The multipliers of the Greek hotel industry.

Multipliers	Hotels	Economy’s Average
Gross output	1.55	1.48
Net output	0.84	0.80
Employment	29.8	18.4
Imports	0.157	0.198

Source: Authors’ estimations.

below. The rows in the table report the gross output, net output, employment, and imports multiplier, respectively. The second column of the table reports the multiplier for the hotel sector, while the third column gives the respective average multiplier for the Greek economy.

Thus, it follows that each increase in demand for a hotel’s product by EUR 1 million, causes an increase in gross output by EUR 1.55 million, an increase in net output by EUR 0.84 million, an increase in employment by 29.8 full-employed persons and an increase in imports by EUR 0.157 million. Since all the estimated multipliers for the hotel sector are more favorable than those of the economy’s average, i.e., the hotel sector is characterized by higher output and employment multipliers and lower import multipliers than the economy’s average, it follows that the hotel sector can be characterized as a key sector of the Greek economy.

Except for the hotel sector, our estimations indicate that there are also six other sectors in the Greek economy that can be characterized as key sectors. However, the relative importance of a sector within an economy depends not only on its multiplier effects but also on the relative size of the sector, which is directly connected with the levels of demand for each product in the economy. In

Table 4. The total contribution of the key sectors to the Greek economy.

Sectors	Gross Output	Employment
Hotels	4.5%	6.6%
Restaurants	6.3%	9.3%
Agriculture, hunting, forestry	3.6%	8.0%
Land transport and transport via pipelines	2.2%	2.6%
Publishing, audiovisual, and broadcasting activities	1.0%	1.0%
Administrative and support services	2.1%	2.5%
Other service activities	2.1%	3.1%

Source: Authors’ estimations.

, we report the seven key sectors we have detected for the Greek economy, along with their total (direct and indirect) contribution to the gross output and employment of the economy.6 For the estimation of the total contribution

The results reported in Table 3 indicate that the hotel sector is among the three key sectors of the Greek economy with the highest contribution in terms of output and employment, to the Greek economy. More specifically, the hotel sector contributes about 4.5% of the total gross output of the Greek economy, which is the second highest contribution after this of restaurants, which contribute about 6.3% of the total gross output of the economy. Moreover, the hotel sector contributes about 6.6% of the total employment of the Greek economy, which is the third highest contribution after this of restaurants, which contribute about 9.3% of the total employment of the economy, and agriculture, which contributes about 8.0% of the total employment of the economy.

Now, we turn our focus on the evolution of the contribution of the hotel sector to the basic macroeconomic figures of the Greek economy in the latest years. For obvious reasons, we exclude from our analysis the COVID-19 years of 2020 and 2021, where the operation of the hotel sector was essentially put on hold due to travel restrictions. Thus, our estimations focus on the pre-COVID-19 year of 2019 and the post-COVID-19 years of 2022 and 2023. Our estimations for the contribution of the hotel sector to the gross value added, gross domestic product (GDP), and employment of the Greek economy for these three years are reported in

Table 5. The total contribution of the hotel industry to the basic macroeconomic figures of the Greek economy.

Year	Gross Value Added	GDP	Employment
2023	4.7%	4.8%	6.6%
2022	4.0%	4.2%	5.3%
2019	4.4%	4.6%	5.3%

Source: Authors’ estimations.

.7

Thus, according to our estimations, in the year 2023, the hotel sector contributed (both directly and indirectly) about 4.7% of the gross value added, 4.8% of the GDP, and about 6.6% of the total employment of the Greek economy. These values for the year 2023 constitute the highest for all the three years considered in our analysis. It is interesting to note that only two seasons after the devastating, COVID-19 period for the tourism-related businesses, the Greek hotel sector seems to have exceeded its pre-COVID-19 contribution to all the basic macroeconomic figures of the Greek economy.

From the above findings, it follows that the operation of the hotel sector contributes significantly to the output and employment of the Greek economy. As we have already mentioned, this contribution is both direct, i.e., an increase in output and employment within the hotel sector, and indirect, i.e., an increase in output and employment of the sectors that produce the necessary inputs for the operation of the hotel sector. In what follows, we delve more into the intersectoral relationships of the Greek hotel sector by decomposing the direct and indirect effects of an increase in demand for the product of the hotel sector. The decomposition of the direct and indirect effects from the operation of the hotel sector on output is derived by focusing on the column that refers to the hotel sector of the domestic inverse Leontief matrix, ${[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}$, while the decomposition of the direct and indirect effects of the operation of the hotel sector on employment is derived by focusing on the column that refers to the hotel sector of the matrix ${\widehat{\mathbf{a}}[\mathbf{I}-{\mathbf{A}}^{\mathrm{D}}]}^{-1}$, where $\widehat{\mathbf{a}}$ is the diagonal matrix formed by the element of the vector of labor coefficients, $\mathbf{a}$. The decomposition of the direct and indirect effects of the operation of the hotel sector on output is presented in Figure 11.

Thus, it follows that from the increase in output caused by the operation of the hotels sector, only 65% corresponds to an increase in the output of the hotel sector, while the remaining 35% corresponds to an increase in the output of the other sectors of the Greek economy. The sectors with the highest intersectoral relationships with the hotel sector in terms of output are “Wholesale and retail trade”, “Food products”, “Agriculture”, “Real estate” and “Energy”. Finally, Figure 12 presents the decomposition of the direct and indirect effects of the operation of the hotel sector on employment.

Thus, it follows that from the increase in employment caused by the operation of the hotel sector, only 74% corresponds to an increase in employment within the hotel sector, while the remaining 26% corresponds to an increase in employment in the other sectors of the Greek economy. The sectors with the highest intersectoral relationships with the hotel sector in terms of employment are “Agriculture”, “Wholesale and retail trade” and “Food products”.

3.4. Decomposing the Cost of the Greek Hotel Product

In order to decompose the cost of the Greek hotel product, we adopt the supply and use model first employed by Rodousakis et al. (2022) to decompose the cost of the energy sector. The price of a supply and use table is described by (see, e.g., Eurostat, 2008; Soklis, 2009):

$${\mathbf{e}}^{\mathrm{T}}\mathbf{M}={\mathbf{e}}^{\mathrm{T}}\mathbf{U}+{\mathbf{v}}^{\mathrm{T}}$$

(11)

where $\mathbf{M}\equiv \left[M_{ij}\right]$ is the so-called make matrix of the economy of dimensions $n\times n$, $M_{ij}$ gives the amount of product $i$ produced in industry $j$, $\mathbf{U}\equiv \left[U_{ij}\right]$ is the so-called use matrix of the economy of dimensions $n\times n$, $U_{ij}$ gives the amount of product $i$ used in the production process of industry $j$, $\mathbf{v}\equiv \left[v_j\right]$ is the $n\times 1$ vector of value added, $v_j$ denotes the value added of industry $j$. From Equation (11) it follows that

$${\mathbf{e}}^{\mathrm{T}}={\mathbf{v}}^{\mathrm{T}}{[\mathbf{M}-\mathbf{U}]}^{-1}$$

(12)

where ${[\mathbf{M}-\mathbf{U}]}^{-1}$ is the so-called “generalized inverse Leontief matrix” (see, e.g., Bidard, 1991). The right-hand side of Equation (12) gives the total requirement, i.e., direct and indirect, in value-added necessary to produce the final product of each industry. Thus, Equation (12) decomposed the price of the final product of each industry to the costs involved in its production process. We can then define the matrix $\mathbf{C}\equiv \left[C_{ij}\right]$, which is of dimensions $k\times n$, where $k$ is the number of the categories of cost of each industry (e.g., wages, taxes, etc). Each element $C_{ij}$ of the matrix $\mathbf{C}$ gives the requirements of the $i$-th category of the cost necessary to produce the output of industry $j$. Finally, we may multiply the matrix $\mathbf{C}$ with ${[\mathbf{M}-\mathbf{U}]}^{-1}$ and we obtain

$$\mathbf{D}=\mathbf{C}{[\mathbf{M}-\mathbf{U}]}^{-1}$$

(13)

where $\mathbf{D}$ is a matrix of dimensions $k\times n$, each element $D_{ij}$ of which represents the total (i.e., direct and indirect) contribution of the $i$-th category of cost to the formulation of the price of the final product of industry $j$.

For our empirical estimations, we use the supply and use tables of the Greek economy for the year 2019. Although the most recent available table refers to the year 2020, since this was a COVID-19 year, we decided, for obvious reasons, to not apply our analysis to this data. In order to capture the evolution of the structure of cost of the hotel sector, we also applied our analysis to the year 2010. We obtained the supply and use tables of the Greek economy for the years 2010 and 2019 from the website of the Hellenic Statistical Authority (ELSTAT), https://www.statistics.gr/ (accessed on 16 November 2024). These tables describe the production of 64 products by 64 industries, while from the examination of the elements of the value-added sector included in the use tables, we were able to distinguish six categories of cost, i.e., “Net taxes”, “Employers’ contributions”, “Wages”, “Depreciations”, “Imports”, and “Operating surplus”. Our estimations on the decomposition of the cost of the Greek hotel sector are based on Equation (13) and are reported in

Table 6. Decomposition of the cost of the Greek hotel sector.

	2010		2019
Cost Categories	Hotels	Economy’s Average	Hotels	Economy’s Average
Net taxes	15.6%	9.0%	19.1%	10.2%
Employers’ contributions	4.3%	5.6%	4.4%	5.4%
Wages	20.4%	21.8%	19.6%	21.1%
Depreciations	8.1%	12.0%	5.7%	9.0%
Imports	13.7%	28.8%	17.2%	32.7%
Operating surplus	37.9%	22.9%	33.9%	21.6%

Source: Authors’ estimations.

. In order to be able to evaluate the structure of the cost of the hotel sector relative to the structure of the cost of the other sectors of the Greek economy, we apply our estimations to all the sectors of the economy. In the first column of the table, we have the six categories of cost in which the price of the products is decomposed. In the next columns, we compare the composition of the cost of the final product of the hotel sector for the years 2010 and 2019 and we compare this composition with the composition of cost of the other sectors of the Greek economy. By definition, the participation of the various categories of cost to the total cost adds up to 100%. For example, in the second column of Table 6, we read that, in the year 2010, the cost of the final product of the hotel sector is decomposed to 15.6% of net taxes, 4.3% of employers’ contributions, 20.4% of wages, 8.1% of depreciations, 13.7% of imports and 37.9% of operating surplus. It should be noted that these costs represent not only direct costs paid within the hotel sector but total, i.e., direct and indirect costs. That is to say, the costs of the intermediate inputs that the hotel sector buys from the other sectors of the economy to support its operation are included in these figures since they have been estimated as the direct and indirect net taxes, employers’ contributions, wages, depreciations, imports and operating surplus that have been used employed to produce these intermediate inputs. The other columns of the table are read in the same way.

According to our findings, the cost of the final hotel product (based on the input–output data for the year 2019) consists of 33.9% operating surplus, 19.6% wages, 19.1% net taxes, 17.2% imports, 5.7% depreciation, and 4.4% employers’ contributions. Compared to the other sectors of the Greek economy, the hotel sector is characterized by relatively higher operating surplus and net taxes and relatively lower costs for imports and depreciations. Compared to the structure of cost of the hotel sector in 2010, we observe that the contribution of operating surplus and depreciation to the cost of the hotel product has declined, whilst the contribution of imports and net taxes has risen.

4. Discussion and Policy Recommendations

The findings of this paper confirm the pivotal role of the hotel industry in the Greek economy, with the sector contributing 4.8% to GDP and 6.6% to employment in 2023. The higher-than-average output and employment multipliers and, at the same time, the lower-than-average reflect the hotel sector’s capacity to drive extensive economic benefits beyond its immediate operations while providing robust reliance on domestic inputs, aligning with findings in the literature that emphasize tourism’s potential to strengthen local economies (Dwyer et al., 2010; Sharpley & Telfer, 2015). Since the multipliers that characterize the hotel sector are more favorable than those that characterize, on average, the other sectors of the economy, the hotel sector can be characterized as a key sector of the Greek economy. This means that the economic policy authorities could use, at least in the short-run, the hotel sector as a basis of a growth-oriented policy by implementing measures that would stimulate demand for hospitality services. According to our findings, such a policy would significantly benefit not only the hotel sector itself but the overall economic system since, according to our estimations, about 35% of the increase in total output and about 26% of total employment caused by an increase in demand for hospitality services is distributed to other sectors of the economy. Our findings could also be helpful in the implementation of indirect policies to benefit the development of sectors that are closely interconnected with the hotel sector. For instance, we have found the food industry, agriculture and wholesale and retail trade are sectors that benefit significantly in terms of output and employment when the output of the hotel sector increases. Therefore, economic policy authorities could implement policies towards the development of these sectors not only directly but also indirectly through the hotel.

Despite the significant contribution of the hotel sector in terms of output, employment, and the generation of income among various sectors of the Greek economy, the recent pandemic demonstrated the vulnerability of the hotel sector and, more generally, the tourism sector to this kind of global shock. On the other hand, the sector’s post-COVID-19 recovery, evident in its exceeding pre-pandemic levels of contribution to the basic macroeconomic figures, aligns with global observations of tourism’s resilience in crises when supported by strong policy interventions (UNWTO, 2022). Another finding of our analysis worth mentioning is that the participation of net taxes on the cost of hotel production is almost twice that in the other sectors of the economy. On the one hand, this finding highlights another positive contribution of the hotel sector to the Greek economy, i.e., that on public revenues, but, on the other hand, the excessive taxation on hospitality services could have negative effects on the international competitiveness of the sector and also reduces the amount of income distributed to the factors of production of the hotel sector. Thus, a policy towards the improvement of the competitiveness of the hotel sector and/or the increase of incomes distributed to employers and employees could be implemented by reducing the excessive taxation on hospitality services.

5. Conclusions

The evolution of Greece’s hotel industry reflects global shifts in tourism preferences, particularly toward experiential and luxury travel. The remarkable growth in high-end accommodation underscores the importance of aligning with international trends to attract high-value tourists (UNWTO, 2021). However, the persistence of small, family-run hotels, which constitute 80% of the sector, reflects Greece’s unique positioning in the global market by offering culturally authentic experiences—a critical differentiator in an increasingly homogenized industry (Papatheodorou et al., 2010). Regional disparities in turnover and capacity also underscore the need for geographically targeted investments. While islands such as Crete and the South Aegean dominate in terms of capacity and revenue, there is potential for growth in less-developed regions through the strategic promotion of niche tourism markets, such as eco-tourism or cultural heritage tourism (Gössling & Hall, 2019).

The findings offer several insights for policymakers aiming to enhance the hotel industry’s economic impact. Continuing investments in infrastructure and sustainability initiatives can maintain the momentum of 4- and 5-star hotel growth while ensuring long-term environmental and economic viability. Evidence suggests that sustainability-oriented policies in tourism can enhance destination resilience (Gössling et al., 2016). Moreover, incentives for small and family-run hotels to modernize and innovate can help preserve the cultural identity of Greek tourism while improving competitiveness. Policy frameworks promoting local entrepreneurship have been shown to foster inclusivity in tourism development (Ashley et al., 2007). Finally, encouraging hotels to provide local goods and services can amplify the economic spillover effects, particularly in rural areas. Programs that integrate local producers into the tourism supply chain have demonstrated significant socio-economic benefits (Mitchell & Faal, 2008).

As far as the limitations of our analysis are concerned, this paper’s reliance on input–output models, while effective for understanding static relationships, may not fully account for dynamic intertemporal effects or rapid external changes, such as geopolitical tensions or shifting global tourist preferences. Future research could incorporate computable general equilibrium models or agent-based simulations to better capture these dynamics. Additionally, examining the socio-cultural impacts of the hotel sector, particularly on local communities, could provide a more holistic view of its contributions and challenges. Exploring the effects of emerging trends, such as digitalization and climate change adaptation in the hotel industry, would also yield valuable insights for sustainable development. Moreover, since our analysis is based on pre-pandemic input–output data, it follows that our findings are based on the assumption that the structure of the Greek economy is sufficiently represented by the pre-pandemic structure. When more recent input–output data become available, the analysis should be extended to more recent years in order to validate the central conclusions of this paper. Also, data on an increased level of accuracy could give us more accurate estimates for the role of the hotel sector within the Greek tourism sector when tourism satellite accounts become available.