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All-Inclusive - Budget Thriller or Hospitality Killer?

Since the dawn of time, Greece has been synonymous with hospitality. The principle of filoxenia is deep rooted in every Greek, meaning that there is no distinction between strangers and guests, and that they will be afforded friendship and hospitality by default. Its simplest form is a piece of fruit offered to a passer-by; a glass of water for the thirsty or a basic bed for the night in a shepherd hut high in the mountains. Hospitality, in its purist sense, is in the Greek blood.

The Marrakech-Express hippy trails of the 1960s and the advent of accessible air travel in the 1970s meant travellers were able to enjoy the very best Greek hospitality and in ways to suit their individual dreams. Spartan but homely rooms in tiny mountain villages satisfied bohemian ideals; over time a gamut of garish concrete hotels provided access to sand and sun for the first time while the jet set hired luxurious villas from billionaires.


Sleepy coastal villages gradually learned what their new visitors wanted and catered for all of them, building new properties to suit their needs and which, perhaps without much planning, ended up as the happy tourist resorts we know today. Shops emerged selling postcards and sponges; new accommodation was built in the form of big independent hotels, aparthotels and studio blocks with swimming pools; the old kafenions became bustling tavernas and the proliferation of car hire places meant that tourists from the UK, France, Germany, The Netherlands and all over could now choose from a wealth of modern accommodation and facilities.


Hospitality businesses flourished alongside the hotels because there was room for everyone, whatever the guests’ board status. Hotel guests would happily go to the beach, have lunch and dinner in a taverna, drinks at night in the local bars and hire a car the next day for a trip across the island.


That, however, is rapidly changing, and from what the local hospitality businesses tell me it is due to the “all-inclusive” phenomenon.


Back in July 2019 I rode my motorcycle from my home in Crete along the old national road, headed for the villages of Axos and Anoygia, high in the Psiloritis mountains. I had been to both before, many years ago, when my guidebooks waxed lyrical about why we should. Both villages are examples of “proper Crete”: off the beaten track, unique in character, proud, independent with their own traditions and stories to tell.


Axos is a centre of local textile production, with guide books showing photographs of the colourful shops on the main streets with their plethora of woven rugs, lace table cloths and other locally produced paraphernalia on display. Tourists would go there in droves on organised excursions, disembarking from huge buses to walk ponderously the old streets and haggle for a bargain souvenir.


Further along the old road, Anoygia stands proudly as the last major settlement before the steep ascent to the peak of Psiloritis. It is a curious place, with a lack of tourist facilities being its main attraction. A working town with banks, butchers shops and countless kafenions (coffee shops) where the local stock breeders gather to exchange their news over tiny cups of Greek coffee, it is, for tourists at least, a privileged peek at Cretan authenticity.


Except there weren’t any tourists here when I visited this time, and there were none in Axos. The monuments commemorating the Nazi atrocities in Anoygia stand empty and forlorn; the displays of textiles swaying in the breeze of Axos’ famous shops is pitiful. Come to think of it, there were almost no rental cars on the road either.


Back in my local resort it is dinner time so I head for one of my favourite tavernas. In years gone by it could be hard to get one of the twenty or so tables here, such was the place’s popularity with the tourists. As the sun melted into a warm, fiery orange ball across the darkening sea, we’d eat fresh fish or beautifully cooked grilled meats washed down with harsh red wine and raki. The bouzouki-filled atmosphere would be anything from serene to electric, but it was always an experience shared with scores of other diners.


Not tonight, though. There are no other guests, not one. And this is Crete in July. I ask the owner, Manolis, what happened and he answers with a sad shrug.


“The good times are over, Johnny”. Then he speaks the two words I am to hear again and again from business owners: “All Inclusive”.


Similarly, I have known Yiannis for many years, his being the first face I saw behind a bar when I explored my local beach resort all those years ago. The establishment has a great location right on the sea front and is the de facto place to have a drink after dinner, or come for lunch the next day. Yiannis has been here for twenty five years and in his hands the café has experienced many refits.


It has been lovingly cared for and in its current incarnation has wicker tables and chairs, an electric sliding roof, mood lighting, a very fit-for-purpose internet connection and brand new quality tableware and cutlery. Behind the bar is a huge modern barista and row after row of bottles containing liquids for cocktails of every type. I remember when this place used to be packed with tourists from all over Europe.


It is nine o’clock in the evening on this July Saturday night, in Yiannis’ bar. The mood lighting has tastefully kicked in, casting a soft pastel glow over the bar while the sea swishes invisibly in and out a few yards away. The cocktail-bar piano music plays delicately as I watch a fishing boat leave the harbour, the green light on its mast getting weaker as the vessel disappears with a “phut phut” into the blackness.


It’s just magical, but again I am the only visitor. Just me. I ask Yiannis where the people are, given that the main beach was packed to the gunnels earlier in the day, but with a heavy heart I think I know what the answer will be.


Since my experiences in Axos, Anoygia and my two favourite establishments, I have begun to notice the same phenomenon almost everywhere. Despite Crete seeing thousands of visitors this year, so many bars and restaurants are empty. The previously thriving car rental agencies’ forecourts are full of unwanted hire cars, the proprietors sitting in their offices looking defeated. Only the shops, particularly those selling cheap souvenirs, canned drinks, cigarettes and plastic beachwear appear to be doing well.


According to The Hellenic Civil Aviation Authority, nearly ten million passengers passed through Greek airports in July 2019 and four million of those were international arrivals. Crete's main airport was the country's busiest after Athens (which itself had a record breaking 2019, with passenger traffic reaching 25.5 million), with 1.3 million passengers. Moreover, inward tourism is up 13% year on year, according to the Greek Tourism Ministry. So why is everywhere so deserted? Even the museums’ visitor numbers are down by 5.5%, according to The Hellenic Statistical Authority (“ELSTAT”) and admissions to free entry sites are down by 14.8%. It would appear that guests are simply staying in their hotels, not wanting culture – even for free.


What were once bustling resorts are still thronged with tourists, but the local food & beverage economy is far from thriving. Indeed, the Greek government in 2010 proposed that the subsidies available to hotels be reduced or removed altogether for those offering all-inclusive, after complaints from sector professionals that all-inclusive deals were depriving local businesses of potential customers and income. It would appear this problem isn’t a new one, then.


Nonetheless, all-inclusive is sweeping this area by storm and looks here to stay. Even back in 2014, according to the Greek Tourism Confederation (“SETE”)’s Intelligence figures, the total income from all-inclusive travel to Greece amounted to €2 billion a year.


So, why is all-inclusive so popular? Put simply, it is the “one stop shop” nature of the vacation. The booking is paid up front, and the price of all-inclusive will often include travel, accommodation, food and drink, entertainment and excursions. Children frequently go free.


What’s not to like? Well, it depends on which side of the fence you sit, of course.


To the guest, all-inclusive represents fantastic value and is great for budgeting in-resort. There’s no need to worry about over-spending, dealing with multiple payments or foreign exchange. Likewise, for convenience, all-inclusive is hard to beat as everything is taken care of, leaving the guest to relax around the pool and eat where and when they want in the hotel’s many restaurants and snack bars.


One thing is clear to me, however. Food, beverage and associated businesses are on their knees and the locals say it is due to the all-inclusive phenomenon. Restaurants are empty because everyone eats in their hotel; bars are empty because drinks are “free” there, too.


Despite this, figures recently released by ELSTAT suggest growth in the F&B sector, rather than decline. In quarter two 2019, turnover increased by 6.2% against the same quarter of 2018. However, a closer look at the figures suggests they include F&B spending in all-inclusive hotels rather than just those restaurants and bars external to them.


There is further conjecture about where all-inclusive guests spend their money. A 2014 SETE report indicated that spending outside the hotel for “shopping” “…is no smaller on average compared to spending by other visitors…” and amounted to €144 euros per visitor in that year. That’s great, but from what I see that money is going into souvenirs and beach apparel, not the restaurants and bars.


Surely, then, with the majority of accommodation and F&B revenue now being channeled through the all-inclusive hotels, those hotels are the winners at the expense of the independent bars and restaurants? Certainly much of the independents’ former F&B revenue is now finding itself supporting the cuisine within all-inclusive hotels.


However, that great value vacation comes at a cost, with many local hoteliers telling me of being “forced” into offering only all-inclusive packages to the big tour operators at ludicrously low margins, or face the operator pulling out altogether. This allows the tour companies to offer bargain-prices, which even at huge volume will not equal the revenues which used to come in to all businesses in the resort.


I bump into Philippe and Anja, a holidaying couple from Belgium who tell me of their delight at paying €20 per night for all-inclusive. While I am thrilled for them, sadly I can picture the hotel owner crying into his raki.


Depressed hospitality business owners may have themselves to blame for their decline in fortunes, caused by a lack of innovation and creativity. Certainly there has been a culture among some of “if it isn’t broken, don’t fix it”, with some bars and restaurants failing to embrace contemporary trends, causing customers to look elsewhere for a different experience, including all-inclusive. It is a thought which was echoed in 2015 by the President Greek Confederation of Tourist Accommodation Enterprises (“SETKE”):


“The differentiation and the modernization of the tourism product our country can offer should be our only concern; a fact which seems to be difficult to realize for some of the professionals in the sector as well as for the politicians who are in charge”.


But in the cases of Manolis and Yiannis, they have done everything to stay fresh and their respective businesses want for nothing, other than customers.


Perhaps businesses could do more to work together, rather than watch each other’s establishments fizzle while all-inclusive proliferates. SETE president Andreas Andreadis recognised this back in 2015:


“Why not explore a new model of all-inclusive hotels that supports the wider community by tying neighboring restaurants and cafes into the holiday experience? Sourcing products locally and working alongside companies that offer experiences and services in the surrounding areas”.


The independent F&B businesses could, and should, try to strike such deals with the hotels, offering special promotions to all-inclusive guests - authentic Greek music and dance nights, local cuisine, special excursions and so on are all possibilities. But in truth it is very difficult to entice all-inclusive guests with such offerings when they can have them all for nothing in their hotel. It is a lovely idea to think that the hotels would use local tavernas to provide their guests with meals, but why would they when the hotels already have kitchens, dining rooms and staff at their disposal?


It would seem then that all-inclusive does not particularly benefit the hotelier, and it certainly doesn’t favour the independent restaurants and bars. Only the guest benefits and only then if a lack of cultural experience is okay with them.


If we follow this trend to its logical conclusion we will see hotel closures and restaurants, bars and car hire businesses go to the wall. The paradox here is that nobody will want to holiday in a resort showing signs of decline and decay, so eventually the resort will fall out of favour with the tour operating companies. The whole all-inclusive circus will pack up and move somewhere else, leaving the resort to die.


Ironically that maybe what’s needed, if you accept bar owner Yiannis’ point of view:


“We need to start again from nothing” he says, leaning on the counter top and staring across his empty tables and out to sea. “Get a better quality tourist to the town. Start boutique hotels, that kind of thing”.


Maybe SETE's Andreadis was onto something in 2015. That is, redefining all-inclusive into at least two streams: it could mean financially all-inclusive but with facilities spread across the resort, with smaller accommodation owners partnering with neighbouring F&B businesses and travel services. Breakfast at Athena's, lunch at Dimitris', dinner at Angeliki's and a hire car from Stelios. That kind of thing. Alternatively, for those customers who wish to stick to the less culturally rewarding or adventurous formula, all-inclusive as-is.


And in a move to stimulate more innovation and year-round revenues, Greek Tourism Minister Harry Theoharis said in November that support would be extended to the Region of Crete for the development of "special interest tourism products" which would attract travelers to the island all year long.


What's needed is a more open-minded approach to business collaboration, and a focus on innovation. By working with the larger hotels and provided their product offer is compelling, there is room for smaller hospitality businesses to dovetail their services with all-inclusive.


Owners of smaller hospitality businesses would do well to take stock of their position and plan for positive change, by having an honest look at their current offer and comparing it with international norms. Small changes in decor, menus, marketing and technology can make a huge difference to the customers' experience; moreover the operational structure, including staffing, can always be optimised further.


Sometimes what seems like a hopeless situation just requires the business owner to seek inspiration. That can come from freinds, family, comparitor businesses, freindly competitors and empathetic hospitality consultants such as Xenowledge.


One thing is clear: all-inclusive is here to stay and it provides a great opportunity for smaller hospitality businesses, if they can embrace a collegiate approach and innovative thinking. Assuming, of course, the all-inclusive hotels play ball.


For my friend Yiannis, however, this discussion is too late to be of interest. Even though this bar has been his life since he was in his early twenties, he’s sold it. In 2020 it will be a souvenir shop peddling towels, plastic lilos and alabaster statues of Greek gods.

Ti tha kanoume (‘What can we do?’), Johnny” he says. “All-Inclusive is killing us. The good times are over”.


It isn’t the first time I have heard that, and it won’t be the last. I think that is a Greek tradgedy.



About the author

John Jones is an ex-hotelier who went on to manage one of the UK’s foremost hotel software companies. He is now director at Xenowledge Ltd, a provider of consultancy and software for the hospitality sector.


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