Dissertation

DissertationFinal Year Project

BS31003

Greek Tourism Industry: Can the Development of Greece’s Golf Industry benefit this Essential Industry?

Fotis PanagiotakopoulosReg No: 040020352Business Studies Part 3Cass Business School2007

Supervisor: Prof. Clive Holtham

Acknowledgements:

I would like to specially thank my parents and family for their help and support with the project. In addition, I would like to thank my supervisor, Professor Clive Holtham for help regarding the dissertation. I would finally like to thank Peter Heilmann for going out of his way to help me make this research project a reality.

Abstract:

This dissertation focuses on the tourism industry in Greece and how the development of a golf

industry can facilitate further growth. In order to answer this question the researcher looked in

depth at the Greek tourism industry and discussed different differentiation strategies with a key

component being differentiation into the European golf market.

The economic benefits of an expansion of the golf industry were discussed as well as the current

competitive nature of the market in Europe. Golf is a powerful industry as it attracts high

spenders and spawns the development of ancillary tourism facilities. It is also an industry that

has tremendous growth potential in South East Europe due to the saturation of Western

Mediterranean markets.

Due to the fact that golf is a new concept in Greece there is very golf awareness, finding

secondary research pertaining to the subject was quite difficult and therefore was mainly done

through the World Wide Web. The author also found two very reliable sources of primary data in

the Mayor of Gargaliannoi and the Founding Chairman of INVgolf, the leading independent

boutique brokerage and specialist in the golf industry and leisure real estate sector

The research undertaken by the author proved through an exploratory method, that the Greek

tourism industry has lost some competitiveness due to increasing costs and must regain it

through repositioning and differentiating its tourism product. This dissertation will show that

golf is the ideal vehicle of differentiation and can reposition the industry in an elite area where

price sensitivity will no longer dictate the trajectory of the industry.

TABLE OF CONTENTS

1. INTRODUCTION

1.1 Motivation for the study 1.2 Research hypothesis1.3 Research Objectives1.4 Background information about Greek tourism Industry:

1.4.1 Tourism in Greece: Past 1.4.2 Tourism in Greece: Present

2. LITERATURE REVIEW

2.1 Repositioning Strategies2.1.1 Porters three generic strategies2.1.2 Gilbert’s Strategic Framework

2.2 Golf’s Position in Global Tourism2.3 Economic Contribution of Golf2.4 Golf Development’s Effect on Summer Home Market2.5 Golf Development’s Effect on Expanding Tourism Season2.6 Golf’s Effect on the Sustainability of Greek Tourism

2.6.1 New Tourism2.6.2 Golf: New Tourism

3. METHODOLOGY AND RESULTS

3.1 Introduction3.2 Research Approach3.3 Research Strategy3.4 Data Collection Methods

3.5 Primary Data3.6 Greek Golf Market: Projected Latent Demand

3.6.1 Latent Demand Forecasting3.6.1.1 Results3.6.1.2 Analysis

3.7 Qualitative Research3.8 Qualitative Data Results

3.8.1 Case Study Navarino Bay Resorts3.8.2 Potential for Development of Golf in Greece3.8.3 Golf Tourism versus Mass-Tourism3.8.4 Land Registry3.8.5 Residential Zoning3.8.6 Bureaucracy3.8.7 Sustainability3.8.8 Investment Laws

3.9 Discussion of the Qualitative Data3.10 Conclusion

4. BIBLIOGRAPHY

5. APPENDIX

Introduction Chapter 1

Greece has long been one of the most popular tourist destinations in the world. Its vast amounts

of beautiful islands, rich culture, pleasant climate, and its historically significant attractions such

as the Parthenon, are all factors that have led to the development of its tourism industry. Tourism

revenue constitutes a significant portion of the Greece’s total GDP and thus it is imperative that

it continues to grow. But the prospects of a simple beach and sun vacation will not suffice any

longer as cheaper alternatives such as Turkey, Egypt, and Croatia are capitalizing on the same

target group of tourists. As prices increase and service deteriorates, holidays in Greece have

steadily been losing their value for money. Thus what can Greece do to sustain its competitive

advantage in the region?

This dissertation aims to show that in order for further growth is to be realized, the Greek

tourism model must be revamped with a greater emphasis on specialized tourism and in

particular, golf. This specialized tourism should target higher income tourists by offering a wide

array of niche holiday experiences. Although millions of tourists visit Greece every year, few of

them can be classified as high spenders. This lack of high class tourist establishments such as

golf courses, thalassotherapy spas, and 5 star integrated resorts, greatly reduces the country’s

potential threshold of expansion. One of the key industries missing from Greece’s tourism

portfolio is undoubtedly the golf industry. Considering the temperate Mediterranean climate

coupled with an ideal natural topography for golf, it is surprising that Greece has not yet joined

Spain and Portugal as one of the leading golf destinations in the Mediterranean. The Greek

government has much to do with this as bureaucracy and a non-existent land registry have driven

off many foreign investors over the past few years. It is not possible to create a golf course on

ones’ one. Extensive collaboration is needed between the state, the municipality, the church (as

they own most of the land in Greece), hotels, the archeological service, and the forest service. By

reducing bureaucracy and facilitating the influx of FDI through governmental agencies, the

government has the ability to transform Greece into one of the greatest golf destinations in the

Mediterranean.

Golf is a year-round tourism driver and can have a significant impact on the Greek economy if it

is developed properly. Our research will evaluate to what degree specialized tourism and

especially golf, can restructure and differentiate the Greek tourism market.

Motivation for the study 1.1

Motivation for this study partly stems from the author’s desire to see his hometown in Greece

exhibit economic growth as a result of golf development. His origins are from the village of

Gargaliannoi which has been neglected by governmental tourism policies for the past five

decades. But now due to the slated development of the biggest integrated golf resort in the

Mediterranean, Navarino Bay Resort, this under developed and forgotten region will have the

opportunity to develop its infrastructure and establish its position in the burgeoning upper market

tourism industry. Due to the author’s close ties with the region, and the significance of the

Navarino Bay Resort development, this specific development will be used as a case study to

explain the dynamics of Greek tourism and the golf industry.

Hypothesis 1.2

On the basis of our literature and primary research, we believe that through the development of a

golf industry will Greece be able to retain competitiveness in the Mediterranean tourism market.

Golf is a facilitator for the growth of the Greek tourism industry as it:

Differentiates the Greek tourism product

Attracts high spending tourists

Stimulates enabling industries

Stimulates residential tourism

Promotes sustainability of Greek tourism

Will reposition the Greek tourism industry

Research Objectives 1.3

The main focus of this dissertation will be to evaluate to what degree the development of the golf

industry, can restructure and differentiate the Greek tourism market as to facilitate further

growth.

To evaluate the effects developing Greece a golf industry will have on the

tourism industry, the following needs to be researched:

Effectiveness of current Greek strategic tourism policies

Differentiation Strategies

The development of golf in a global context

Economic benefits of golf tourism

Case study of Navarino Bay Resort development in Messinia,

Greece

Background information about Greek tourism Industry: 1.4

Tourism in Greece: Past 1.4.1

To understand the present complexities of Greece’s tourism industry, one must first take a glance

at the past events that have molded it. During the 19th century, Greece was considered an

obligatory part of the Grand Tour for the northern European high society interested in the

classical sites of Athens and Rome. But it was only after WWII and the Greek civil war of the

1950’s that Greek politicians began to plan a serious tourism strategy. Up until the late 1950’s

there were practically no hotel developments on the coastline rendering Greece’s comparative

advantage practically non-existent. But In the late 1950’s, American advisors began advocating

the concept of comparative advantage to Greek policy makers (Apostolopoulos)1.

But the specific government policies implemented to develop tourism during this period were

extremely inefficient. The government had been giving tourism secondary importance in

comparison with manufacturing and industry preventing growth from being evenly distributed

around the country as only 12 out of 52 regions felt the full force of tourism between 1960 and

1980. There was also very little regard for the environment and tourism sustainability was an

issue left untouched.

The military dictatorship years (1967-1974) played a large role in defining Greece’s touristic

presence in the years to come by basing it on inexpensive hotels and cheap labor (Woodhouse

1998)2. During this period, loans for the establishment of low quality tourism facilities were

readily given out mimicking the 1950’s strategies of Italy, Switzerland, Austria and Spain of

expanding their low budget facilities. The Greek policy for the next three decades would be to

target the demand of travelers of average means, which were considered the dynamic component

of modern tourism. This policy of targeting lower income travelers was extremely short-sighted

1 Yorghos Apostolopoulos. Mediterranean Tourism.20012 Woodhouse, C.M. (1998). Modern Greece a Short History

focusing only on short term returns and very little on the long term effects on the country’s

image. These low quality facilities have tarred Greece’s image internationally and have seriously

undermined the prospects of balanced development. The effects of these policies are still felt

today as 90% of hotel stock in Athens is at least 10 years old3.

Tourism in Greece: Present 1.4.2

The mass tourism model of the past half century has carried on to the new millennium as most

tourists travelling to Greece demand a similar leisure oriented product offering, sunny weather

and clean beaches. However this means that the majority of the tourists must visit during the hot

summer months in order to reap the full benefits of this product.

This has resulted in more than half of the tourists arriving in a brief three month period putting

great pressure on public infrastructure, the environment, and last but not least Greek tourism

investors, who must decide what to do with their facilities throughout the rest of the year4.

Furthermore, Greece’s non-eurozone regional competitors are making it increasingly difficult to

retain any degree of price competitiveness. This leads to thinner margins for local service

providers as they are forced to cut prices to remain competitive. The end result of excessive cost

cutting is deterioration in quality and service proliferated by the service providers’ inability to re-

invest funds for facility improvements.

In order to overcome these problems, the government has finally begun to promote specialized

forms of tourism in order to diversify the product offerings of Greece as to attract tourists year

round. Efforts are finally being taken to shed the “mass tourism” image and position Greece in a

more “status” market. The President of the Greek National Tourism Organization, Mr. A.

Kalogeropoulos, stated that, “leaders of the tourist industry must change their long-term plans,

focusing attention on higher quality tourism and offering more choice in terms of theme

holidays.” Developing golf in Greece would be the ideal medium to satisfy the proposed

strategic points Mr. Kalogeropoulos has outlined. But this requires a pro-active effort by the

Greek government to reposition the Greek tourism market through the creation of a focused

3 Businessfile, March 2006, Robert McDonald4 www.sete.gr

“Master Plan.” The Master Plan would outline 3, 5, and 10 year goals which would be based on

strategies and directives that would remain concrete even as different political administrations

come and go.

LITERATURE REVIEW Chapter 2

Repositioning Strategies 2.1

This section will evaluate various tourism strategy models which demonstrate the advantages of

differentiating the Greek tourism product as opposed to developing price competitiveness and

homogeneity of the product. Developing the golf market in Greece is an integral step towards the

creation of a more differentiated tourism industry which will operate year round and not only

during a brief three month period as is the case today. Golf is an up-market leisure activity that

attracts higher spending tourists thus its proliferation in the Greek market can reposition the

tourism industry into a more “status” or high-class category of destinations. The following

models illustrate that tourist destinations are better off in the “status” segment of the global

market.

Porter’s three generic strategies 2.1.1

The first model suggests that competitive strategy “is the search for a favorable competitive

position in an industry” (Porter 1985)5. Competitiveness in an industry concerns the

sustainability of long term profitability. Porter states that competitive advantage can be

established through the selection of a generic strategy that best fits the industries competitive

environment. These three strategies are differentiation, cost leadership and focus. Differentiation

and cost leadership apply to an entire industry while particular segments of an industry can adopt

either differentiation focus or cost focus.

5 Porter, M. (1985). Competitive advantage. New York: Free Press.

Strategic Advantage

Perceived Product

Uniqueness

Cost Advantage

Target Market Industry Wide Differentiation Cost Leadership

Particular Segments

only

Differentiation focus Cost Focus

Differentiation:

The first generic strategy is differentiation. This involves increasing customers’ perceived value

allowing a price premium to be added. Government policy is focusing around increasing tourists’

perceived value by enforcing through marketing that the Greek tourism product is unique thus

justifying a price premium. The central theme of the 2006 advertising campaign was “Live your

Myth in Greece.6” While Turkey may have wonderful beaches, history, Mediterranean climate,

and culture, they do not have Greece’s islands and while Spain boasts more integrated resorts

and golf courses, it is lacking in historical attractions. This is an example of an industry-wide

differentiation strategy which emphasizes the uniqueness of a destination. But it is important to

note that the aforementioned unique attributes of Greek tourism are inherited attributes which

can wear out their value if prices increase faster than actual quality of the destination. Porter

mentions that differentiation softens competition because price competition is fiercest when

products are perceived to be close substitutes. Thus by differentiating the Greek tourism product,

sensitivity to competitors’ price cuts is reduced which in turn reduces the competitions’ desire to

cut prices.

6 http://www.gnto.gr/pages?pageID=42&langID=1

“In order for Greek tourism to achieve a sustainable growth over the long run, several important

challenges need to be addressed, as price competitiveness continues to deteriorate faster than

the upgrade in the quality of offered services, a fact that even a “marketing revolution” cannot

overturn for long7.”

In order for Greek tourism to achieve sustainable growth, one of the challenges needing to be

addressed is how to best differentiate the Greek tourism industry as to sustain year round

tourism. This can be done through improving quality and through diversifying the tourism

product. The quality component can be achieved through upgrading services, infrastructures such

as airports and sea ports, and through investing in luxury resorts and ancillary facilities.

Developing specialized branches of tourism such as health tourism, cultural and urban tourism,

nature tourism, sea tourism, and sports tourism can also help differentiate the industry.

Cost Leadership:

This strategy dictated the progression of the Greek tourism industry for over three decades. The

pitfalls of implementing such a strategy are that it is easily imitated by competitors. The 2007

Travel and Tourism Report ranked Greece 103rd out of 124 in price competitiveness, thus

officially relegating Greece out of the budget destination group. Turkey (83rd), Egypt (5th), and

Croatia (96th) have developed stronger price competitiveness than Greece and are increasingly

attracting more price sensitive tourists away from Greece8. Cost leadership also may lead to

deterioration in quality as the primary objective is cutting costs and not offering value for a high

quality product or service

7 National Bank of Greece SA (NBG) Research report, June 2005

8 The Travel & Tourism CompetitivenessReport 2007, Jennifer Blanke,Thea Chies

Focus:

The focus strategy consists of utilizing either a cost leadership strategy or differentiation strategy

to focus on a narrow segment of the market and serve their specific needs. There are two

approaches to the focus strategy. The first approach is to focus on achieving lower costs than

rivals in a well-defined segment. An example would be marketing Greece as a lower price golf

destination in comparison to Portugal or Spain. The second approach is to focus on offering a

unique tourism product which appeals to a well-defined segment. This is the strategy that must

be undertaken for golf to succeed in Greece.

"Golf travelers want half dozen top class courses within a couple of hours' drive from a tourist

centre. If Greece can build several clusters of courses, it has the scenery and climate to become

a world-class golf destination." -- Roddy Carr9, Vice President, Director of Tourism, IMG

Consulting; former Irish international golfer

If one looks at the success of golf in Spain, Portugal, or Florida, they will see that it is due to the

variety of courses at golfer’s disposal. For example, the Corfu Golf Club is rated as one of the 19

best championship golf clubs in Europe, but it is the only course on the island. This fact deters

many potential golf travelers from making the trip to Corfu as they will not have the variety that

makes golfing trips worthwhile.

9 Financial Times, Tuesday June 21 2005

Gilbert’s Strategic Framework 2.1.2

Destinations can be classified on a continuum between a “status” and “commodity” (Gilbert

1984, 1990)10.

“Status Areas”

A status area is reached when a tourism industry offers unique and irreplaceable benefits. These

offerings will in turn create intentional demand as a result of special attributes perceived by the

tourism market. The advantage of creating status areas is that tourists are more willing to pay

more for services as they view the destination as having irreplaceable qualities.

“Commodity Area”

Commodity areas are destinations that are substitutable and replaceable and display higher price

elasticity of demand. The Greek “sun and sea” tourism product is easily replaceable by other

cheaper locations such as Turkey and Egypt. By focusing on this consumer group, Greece runs

the risk of losing a predominant share of its tourists due to cost increases whereas if tourists are

made aware of special attributes associated with the destination or tourist product, they will be

less likely to substitute on a price basis.

10 Gilbert, D. (1984) The need for countries to differentiate their tourist product and how todo so. Seminar papers for Ministers of Tourism and Directors of National TouristOrganisations: Tourism Managing for Results, University of Surrey, Guildford.

Status area

Status area

Commodity areaCommodity

area

Status area

Gilbert suggests that destinations should strive towards becoming status areas rather than

commodity areas11. A negative element of commodity area tourism stems from the scarcity of

natural and human resources of a destination making the sustainability of mass tourism difficult.

This takes a toll on the environment, the local community and ultimately leads to a degradation

of the destination’s appeal due to pollution (coastal and noise), overbuilding, traffic congestion,

and waste disposal. This phenomenon is evident in many Greek islands such as Faliraki, Crete,

and Ios. Thus by differentiating the Greek tourism industry and developing high class tourism

facilities such as integrated golf resorts, Greece can achieve a “status area” which would

strengthen their international competitive advantage, attract loyal high spending tourists, and also

minimize the environmental toll on the local region.

One pitfall that Porter warns about is riding in the middle, expecting to differentiate and have

cost leadership. Nikos Papathanassis managing director of TUI Hellas (which is a leading tour

operator in Europe) states, “There is no way, and no point, in trying to compete on prices (with

other cheaper regional destinations). We have to go for higher standards and charge more.12”

11 Gilbert, D. (1990). Strategic marketing planning for national tourism.The Tourist Review, 1, 18}27

12 BusinessFile, March ’06, Survey of Tourism Prospects in Greece, Robert McDonald

Golf’s Position in Global Tourism: 2.2

The development of golf courses is the most ideal method in which to reposition an industry in a

“status area.” Portugal, Spain, Italy, and France, which share the same mild Mediterranean

climate as Greece, have been successful in this respect due to their highly developed golf

markets. According to the golf benchmark survey of 2006, there are around 1,180 golf courses in

this south-western region of Europe with 600,000 registered players13. Since the early 90’s, the

number of golf courses in south-western Europe has doubled and the number of golfers has tripled.

Figure 1 in Appendix 1 shows the rapid growth of the European golf industry since 2000. The following

table displays the number of courses and registered player per country but does not take into account

visiting golfers which make up the majority of revenues for golf courses in the region.

Golf Participation Rate in Western European Countries (2006)

Countries Courses Players Golfers per

Course

Participation

Rates

France 543 197,454 364 .3%

Italy 238 81,100 341 .1%

Portugal 76 13,521 178 .1%

Spain 325 294,441 906 .7%

Total 1,182 586,516 496 .3%14

It is estimated that 3,000 new golf courses will be built in next 15 years in Europe. The KPMG

forum which met in Cyprus in June, 200615 said that the development of the golf industry is

going to be even more rapid in areas of East Europe and Mediterranean. (KPMG meeting

gathered 210 international experts in the industry of golf from 31 countries, including investors,

13 GolfBenchmark Survey in the EMA Region 2006, KPMG, Andrea Sartori (www.golfbenchmark.com)14 Source: EGA and national golf federations with KPMG elaborations

15 http://www.golfbusinessforum.com

people in the government, etc.) KPMG estimates that by 2020 the number of golf courses in

Europe will reach 10,000 and the number of golfers 7 million.

KPMG also forecasts that the Mediterranean countries, East Europe and the Middle East will be

in the first line of growth in golf. Except in Portugal and Spain, there are great prospects in

markets of Cyprus, Greece, turkey, south Italy, and Croatia16.

Economic Contribution of Golf: 2.3

Country Direct and Indirect

Economic Contribution of

Golf

Portugal €1.8 billion

Spain €2.4 billion17

USA $62.167 billion18

In countries such as Portugal, Spain and the USA, golf has been shown to be an extremely

powerful economic driver. This is because golfers not only spend money on their rounds of golf

but also purchase goods and services from supporting industries. Golf courses are essential to the

Greek tourism product mix as they spawn the development of supplementary facilities such as

hotels, conference centers, housing units, and marinas bringing the Greek tourism industry closer

to the differentiated “status area” envisioned by Gilbert’s strategy. As these businesses capitalize

on the extra revenues incurred from the neighboring golf course, they will hire additional

employees and buy more inputs from other businesses. This process of wealth transfer, initiating

from the golf courses, will work its way throughout the entire local economy benefiting the core

golf industry, but also the ancillary industries spawned by the demand of golf. This is called the

multiplier effect and golf tourism (Sinclair and Stabler)19, perhaps more than any other tourism

niche, exhibits a particularly high multiplier due to the numerous interdependencies between

operators as can be seen from the figure 2 diagram in appendix 1. It is beneficial to increase the

intensity of the low seasons through differentiation because tourist expenditures and investments 16 http://www.golfbenchmark.com/index.thtml/en/Reports/17 http://www.golf-mediterranee.com18 “The Golf Economy Report,” SRI International and World Golf International 20/20.19 M. Thea Sinclair and Mike Stabler

vary over the tourism season causing different related short and long-run multiplier values

(Sinclair and Sutcliffe, 1989). It is estimated that 50% of golf tourist expenditure is on items

other than hotel, and only 15% of the total expense is towards golf fees. That means that 35% of

golfers’ expenditures are on travel and transportation contributing to a greater multiplier for the

local economy20. Although golf may have a positive aggregate effect on the welfare gains of a

community, there may be adverse effects on particular individuals and groups, particularly those

who do not own the land used in the service sector surrounding the golf course (Copeland, 1991).

Thus the creation of a large integrated resort may provide additional income for property owners

and developers who benefit from real estate premiums, but it may create negative externalities

for poorer people such as fishermen who might suffer from pollution.

Golf’s business model deviates from the traditional supply chain model because the viability of

golf is highly reliant on supporting businesses. The following example illustrates the degree of

interdependency needed to sustain a golf course. Kritika Golf Club is the newest golf course in

Greece, opening in autumn of 2003 in Chersonnisos, Crete. With 18-holes and an array of well

positioned hazards such as trees, rocks, and lakes, Kritika Golf Club is far superior to the

neighboring Elounda Mare Complex which only has a small 9-hole pitch21. But it has one

disadvantage to the Elounda Mare Complex. There is little hotel accommodation in the

immediate area. Spyros Kokotos, owner of Elounda Mare Complex states, “Guests who use my

9-hole course at Elounda generally decline to make the 45 minute journey necessary to play

Chersonnisos – as a journey it’s nothing but they visit once and then they prefer to stay and play

here.”22 This has led the owners of Kritika Golf Club to look to acquire property adjacent to the

course for villa and accommodation development.

20 Dr. Angel Zarca21 Businessfile, March 2006, Robert McDonald22 Golf Development in Greece, a special report by INVgolf

Golf Development’s Effect on Summer Home Market: 2.4

The case of Kritika Golf highlights the dependency golf courses have on neighboring residential

communities and lodging. In locations with a mature golf market such as Spain, Portugal and

Florida, golf courses are many times built in conjunction with new residential communities that

often consist of second or retirement homes. The importance of residential communities to the

development of golf can be exhibited through the experiences of the Porto Carras integrated golf

resort in Greece. Porto Carras is the only integrated golf resort in Greece, comprised of a marina,

vineyard, casino, three hotels, and an 18-hole golf course. Although land is available for the

construction of a further 18-hole course, its expansion is being halted due to difficulties in

getting clearance for a planned residential development23.

The cash flow generated by the sale of houses gives golf developers the means to finance their

resort facilities, thus if Greece is to become a golf “destination” it must simultaneously develop

its summer home market.

“The core months of November through to April are key. Golfers do not wish to play in the full

heat of Greek summer... 65 million Europeans will be retiring full-time to Southern Europe.

Approximately 9 million will retire in Greece. And we expect approximately 1-1.5 million

retirees [to] be settling in Greece in the next 5 years."24

Developing Greece’s golf market would help attract many Northern European retirees as Dr.

Papadimitriou stated. Studies have shown that 10% of golf tourists buy homes close to their

preferred holiday golfing destination with a starting price of 120,000 Euros, moving upwards in

relation to income allowances25. Thus the development of golf tourism in Greece could be the

catalyst for a real estate boom in Greece as foreigners prefer buying summer homes adjacent to

golf courses. This development becomes more important when one considers that a modern golf

course has a major impact on a region’s property market. As previously mentioned, golf courses

are usually accompanied by hotels, housing units, conference centers and marinas, therefore

becoming complete tourism resorts, creating jobs and lifting the price of properties in those

areas.

23 Businessfile. May 2006. Robert McDonald24 Dr. Stratos Papadimitrou, former Chairman, Hellenic Centre for Investment (ELKE), http://www.invgolf.com/golf_greece.htm25 www.ekathimerini.com/info 2005

Golf Development’s Effect on Expanding Tourism Season 2.5

With an estimated 8 million golfers in Europe26 and growing, golf is the ideal form of specialized

tourism to alleviate dependency on the three peak summer months.

“It is inexcusable for a country like ours with an exceptional climate, a rich culture and varied

inland scenery to have a tourism period of four or five months. Our goal is for Greece to be a

destination all 12 months. We can achieve this by attracting high-income tourists who can afford

much more than the sea-sun-sights combination and we can offer that." -- Dimitris

Avramopoulos, Tourism Development Minister, Greece27;

The Tourism Development Minister states that it is inexcusable to have a tourism period of four

or five months and also mentions the need to attract more “high-income” tourists. Golf tourism

solves both of these issues. In regards to attracting more “high-income” tourists, golfers tend to

be an affluent niche of tourists spending 20-40% more than typical leisure tourists, an average of

€370 per day. Furthermore, 40% of golfers internationally make at least three trips per year to try

out new courses with an average stay of one week per trip. 52% of UK golfers and 70% of

German golfers take golf-related holidays with a common tendency to favor sunshine

destinations in the Mediterranean as to temporarily escape their harsher climates28.

The peak golf season for countries with Mediterranean climates such as Spain and Portugal, are

the shoulder months of November to April, which are coincidentally the months that Greek

tourism is typically stagnant. Golf tourism during these traditionally off-season months can

extend the tourist period allowing tourist infrastructure to remain open. This would lead to the

year-long sustainability of tourism related employment positions, ceasing the pattern of winter

economic hibernation. This would benefit the entire tourism industry by making it easier for the

small medium tourist enterprises (SMTE) to reinvest into improving their facilities, thus

improving the image of the entire industry. At the same time golf is a crucial element in the

viability of SMTE, as this is a basic condition for hotels and other tourism facilities to enter the

winter plans of major tour operators.

26 GolfBenchmark Survey in the EMA Region 2006, KPMG, Andrea Sartori (www.golfbenchmark.com27 Yannopoulos, Dimitris, Time for Teeing off in Greece? Athens News business editor 28 http://www.invgolf.com/golf_greece.htm

Golf’s effect on the Sustainability of Greek Tourism: 2.6

Differentiating the tourism industry shouldn’t be done for the sole purpose of economic growth.

In fact, it’s not possible as tourism must be environmentally sustainable in order to be

economically sustainable. The economic benefits of developing the “status area” contrary to the

“commodity area” of the Greek tourism industry are outweighed by the environmental benefits

because mass-tourism is based on the concept of unlimited production capacity. But natural

resources are not unlimited and adopting a mass-tourism approach with an emphasis on cost

advantage will only lead to the degradation of Greece’s environmental and socio-

culturalresources.

29

New Tourism:29 Sustainable Tourism Development: Guide for Local Planners, 1993

Many locations in Greece such as Chersonnisos, Faliraki, Malia and Idra have been

overdeveloped as a result of the mass-tourism strategy (Andriotis, K.). This abuse of resources

and has led them towards the end of their destination life-cycle (R.W. Butler), see appendix 1

figure 3. One method of curtailing the progression towards decline is by imposing self-limiting

measures, such as higher prices and also by targeting what Ahluwalia Poon has termed, “New

Tourists (Poon 1993). New Tourism is based on the concept of “flexible specialization” of the

tourism industry. This tourism is characterized by “permanent innovation” and “constant

change” and is the opposite of the rigid, mass-market holidays which are based on economies of

scale.

Golf: New Tourism

This idea of “new tourism” is the flexible and adapting tourism that would give Greece the

maximum benefit. Poon considers the New Tourist to be more educated, independent of mind,

and ethically aware (Poon 1993). This “thinking tourist” fits the description of an average golfer

as they tend to be more educated (60% have university degree)30 and are extremely destination

oriented. Thus the development of the Greek golf industry would not only induce the

aforementioned economic benefits but also enrich the tourism demographics by attracting more

environmentally aware tourists.

METHODOLOGY AND RESULTS Chapter 3

30 http://www.pgamarketingcenter.com/golfconsumers.pdf

Introduction: 3.1

In this chapter, the research methods selected for this project will be considered. The

methodology of this research consists of multiple stages which support the premise of the

hypothesis which states that the development of a golf industry in Greece will greatly facilitate

the growth of the tourism industry.

Research Approach and Strategy: 3.2

In order to meet the stated objectives of this research, an inductive approach will be taken where

data is collected and conclusions formulated as result of data analysis. The inductive approach

strategy consists of the collection and studying of empirical data which allows for a pragmatic

approach to the analysis of the data (Saunders 2003). This approach is also characteristic of the

researcher’s significant involvement in the research and collection of data. Due to the non-

existence of a developed golf industry in Greece, there was a limited amount of quantitative

primary data regarding the subject matter. Hence primary data was collected based on a

qualitative approach through the use of an interview. In comparison, a deductive approach is

where a hypothesis is developed and through the collection of data, the hypothesis is proven. But

due to the high level of uncertainty regarding the hypothesis and the time constraints, this

approach was deemed unfeasible.

Research Strategy: 3.3

Initially the author had planned to research the effects of golf development on Spain’s, Ireland’s,

or Portugal’s GDP and tourism arrivals over a period of 10 years. Then through extrapolation,

the author would generate an estimation of the effects golf development could have on the Greek

tourism industry and economy. But as tourism deals with people, it is seldom predictable and this

method would yield inaccurate and most likely spurious results. Furthermore, the extrapolation

of raw data does not take into account intangible measurements such as cultural traits and

differences in political or legislative policies. Greek tourism policies and legislations present

significant differences from those of Portugal and Spain rendering pure extrapolative methods

unreliable. It is for this reason that an exploratory approach was adopted including various

sensitivity and scenario analyses. The first component of the research will be based on analyzing

the growth potentials of golf in the Greek tourism industry using quantitative data. This will be

done by calculating the latent demand of golf in Greece based on the current demographics of

tourism arrivals. The latent demand can be expressed as the potential demand for golf when the

market becomes developed and accommodates supply in an efficient manner. The findings

regarding to latent demand will then be used throughout the next segment of the analysis to

predict what effects golf may potentially have on residential tourism. As mentioned in the

literature review, the proliferation of residential tourism in Greece has the potential to be a major

economic driver in the Greek economy, rendering its discussion in the context of tourism

development imperative. Primary data in the form of an interview with the most distinguished

expert in the field will then be discussed. And finally qualitative data will also be used to create a

SWOT analysis of the golf industry investigating the strengths, weaknesses, opportunities, and

threats of expanding this industry in Greece.

Data Collection Methods: 3.4

Primary Data: 3.5

Primary data was collected this essay through the use of an interview. The interviewee was Peter

Michel Heilmann, the founding Chairman of INVgolf. INVgolf is one of the leading independent

boutique brokerage and specialist companies in the golf industry and leisure real estate sector.

Since 2003, INVgolf has successfully organised and helped organise a number of international

golf and real estate investment conferences, including the 2003 European GOLF and Real Estate

Conference & Exhibition, the 2005 INVgolf Investment Forum and others. Interviewing Peter

Heilmann was extremely informative as he is the golf development authority in Greece and also

of the most renowned experts on the international scene31. He is also Founding Chairman of the

GORDI Foundation, the Global Organisation of Responsible Developers & Investors

For this interview there were a series of open ending questions in order to cover all aspects of the

subject and also a few specific questions on which I wanted to focus on. The interview was quite

31 http://www.invgolf.com/

difficult as once it commenced, it could very easily move off from the topic in question. The

author is not an experienced interviewer and was surprised to find how difficult it is to maneuver

the interviews back to his list of questions when the interviewee became sidetracked. He was

also constantly checking to see if the particular queries had been answered already during the

course of the conversation. During the beginning of the interview keeping the interview focused

was the priority, but many times the conversation shifted to other areas which were not expected.

This was very valuable as it brought up points that otherwise would not have been thought of.

The author would like to thank Peter Heilmann taking time to meet with me in Greece to discuss

my topic. The questions posed concerned the potential of golf development in Greece and

particularly focused on the case study of the Navarino Bay Resort in order to focus the national

progressions of golf in the context of an example.

Greek Golf Market: Projected Latent Demand 3.6

Latent Demand Forecasting: 3.6.1

Before the golf industry can be developed in Greece, it must first be ascertained that there is

significant demand to sustain the industry. There are currently only 1,500 registered golfers in

Greece. Thus current domestic market demand would not suffice as to accommodate the creation

of more golf courses. However, there were over 16 million tourist arrivals in Greece during

2006. This represents a significant market of latent or dormant demand which will be examined

in the following segment. The underlying concept behind latent demand is that additional

capacity or supply will bring corresponding increases in demand (Schoemaker 1995)32 thus if

golf courses are built, golfers will inevitably come. But there are many limitations to demand

forecasting as it is difficult to make forecasts for development of new markets for reasons such

as poor quality data, unexpected future events, or poorly applied forecasting techniques. But

even the most uncertain business environments contain strategically relevant information such as

trends in the market and market demographics.

32 “Scenario planning: A new tool for strategic thinking.” sloan management review, Winter 1995

In order to approximate the latent demand for golf in Greece certain statistics were necessary.

The author had to find the statistics showing the number of tourist arrivals from each country

into Greece and the percentage of their respective population that plays golf. The percentage of

the populations from various countries that play golf were obtained from a KPMG survey

conducted in 200633 and the statistics showing tourist arrivals to Greece were obtained from the

Greek Ministry of Finance’s statistics agency.34 The timeframe of this investigation is one year,

2005. To obtain the latent demand, tourist arrivals for each country entering Greece, were

multiplied by the percentage of their population that plays golf. For example, 2.2% of the UK

population plays golf and 2,718,721 tourists came to Greece during 2005. Through these figures,

one is able to estimate the latent demand of UK golf tourists visiting Greece. The full table

showing the latent demand for golf from each nationality of tourist can be seen in appendix 2.1.

Latent Demand for Golf in Greece

Country% of Population that Plays Golf Tourist Arrivals per Country in 2005

Latent Demand for Golf in Greece

UK 2.2% 2,718,721 59,812

33 www.golfbenchmark.com34 www.statistics.gr

Results: 3.6.2

In 2005, Greece welcomed 14,276,465 tourists of which 1.36% (195,309) can be considered

potential golfers. This is a stark contrast to the 1,500 registered golfers in the domestic Greek

market. As can be seen from the graph above, the UK exhibits the largest potential market for

Greek golf with close to 60,000 potential golfers vacationing in Greece. The UK also makes up

the 20% of tourist arrivals in Greece with 2,718,721 tourists in 2005 thus making it an extremely

important target group for golf developers. The USA is the second most attractive market due to

its high golf participation rate of 12.9% and predicted increases in tourist arrivals. Official

figures have not been released yet but American arrivals were the highest recorded in 2006.

Furthermore, the North American Greek National Tourism Organisation Director, George

Tambakis, has predicted a further 35-37% increase in American tourist arrivals for 2007. Sweden

exhibits great potential and it is worth noting that Sweden’s golf industry was expanded not due

to increased demand but rather by increased supply proving that latent demand can be easily

transformed into real demand. It is interesting to note in the graph that the top eight countries

(excluding parts of the USA) all exhibit poor winter weather. Spain, which has a large golf

market, has negligible demand as does Italy. Portugal is grouped in others with predominantly

Eastern European countries.

Analysis: 3.6.3

As can be seen from the data, the countries displaying the highest latent demand all display very

poor winter weather making them perfect candidates for a potential Greek golf market. They are

also the leading golfers in Europe. 70% of Swedish and German golfers take golf holidays as

well as 52% of UK golfers. Targeting Northern European golfers could reduce the effects of

seasonality. Although Americans display the second highest latent demand, the statistic is not

reliable as they do not tend to travel overseas for golf holidays due to their large domestic supply

and also due to an unfavorable exchange rate. One limitation to this approach is that the majority

of these tourists came to Greece for leisure and relaxation. In a study done by the Greek National

Tourism Organisation, it was discovered that 78.5% of British tourists visited Greece for its

history and culture and only 16.5% visited for “fun.” However, these figures do not take into

account the foreign tourists that visit Portugal and Spain due to its golf. Golfers might have

travelled to Greece but choose not to as they enjoy golf more than leisure or beach/sun tourism.

Thus building Greece as a golf destination would entice many foreigners that otherwise would

not have considered coming to Greece due to its lack of golf facilities. It must be pointed out that

latent domestic demand has not been calculated. An estimation of potential domestic demand

given the development of the golf industry is not feasible due to uncertainty. But if golf

awareness is created, potentially through the hosting of major tournaments or through the

emergence of a Greek golfing “star pro,” then the participation rate may reach European

standards of .53%. If this was accomplished, the Greece would boast a latent demand of 58,300

against the 1,500 current registered golfers.

Qualitative Research: 3.7

The aim of this section is to analyze the results of the qualitative research.

Primary data was collected for this dissertation through the use of interviews. The interviewees

were Peter Michel Heilmann, the founding Chairman of INVgolf. Interviewing Mr. Heilmann

was extremely useful as his brokerage firm, INVgolf, is one of the leading independent boutique

brokerage and specialist companies in the golf industry and leisure real estate sector. He is

known as the golf development authority in Greece and also of the most renowned experts on the

international scene35. For this interview there were a series of open ending questions in order to

cover all aspects of the subject and also a few specific questions on which focus was directed.

The interview was quite difficult as once it commenced, it could very easily move off from the

topic in question. The author is not an experienced interviewer and was surprised to find how

difficult it is to maneuver the interviews back to his list of questions when the interviewee

became sidetracked. He was also constantly checking to see if the particular queries had been

answered already during the course of the conversation. During the beginning of the interview

keeping the interview focused was the priority, but many times the conversation shifted to other

areas which were not expected. This was very valuable as it brought up points that otherwise

would not have been thought of. The author would like to thank Peter Heilmann for taking time

to meet with him in Greece to discuss the topic. The questions posed concerned the potential of

golf development in Greece and particularly focused on the case study of the Navarino Bay

Resort in Gargaliannoi in order to focus the national progressions of golf in the context of an

example. The key issues posed were as follows:

Qualitative Data Results: 3.8

35 http://www.invgolf.com/

Case Study: Navarino Bay Resorts 3.8.1

The interviews were conducted in Gargaliannoi, the municipality in which TEMES (Tourism

Enterprises of Messinia) are constructing an €866mn integrated golf resort which upon

completion will be the largest in the South East Mediterranean. Due to a non-existent land

registry and zoning problems, it took over 20 years to aggregate the 7.25km2 plot from over

1,300 individual deed holders. Due to the magnitude of this project, the Greek government has

placed it under a legal regime called POTA, which deals with Integrated Tourism Projects. To

classify for this one must not create just resorts or golf courses but complexes of resort villages

large enough to constitute regional development. This project is the prototype of tourism

differentiation and strategic repositioning as it will be composed of four sub-developments, each

with its own theme. The first phase of the project, Navarino Dunes, will have a greater family

orientation while later phases will be composed of higher class country clubs, tour oriented

developments, and sports oriented developments. Peter Heilmann estimates that upon opening,

Navarino Bay Resorts will directly and indirectly create over 2,000 jobs for the local community.

Although TEMES has announced that they will be open in time for the 2008 tourist season, Peter

Heilmann says that this is impossible due to various construction delays. He was the consultant

for TEMES four years ago and was responsible for enlisting the world renowned golf architect

Robert T. Jones II. The following is a picture of construction efforts as of February 22nd 2007.

Navarino Dunes Resort Construction 1

Potential for Development of Golf in Greece: 3.8.2

Peter Heilmann was optimistic citing Greece’s natural beauty and culture as significant

advantages over rival countries. Peter Heilmann expressed how “In terms of climate, beauty, and

the sea coast then yes it has one of the most beautiful destinations…” This strength is the

underlying factor behind Greece’s past success in the mass tourism market. Greece must

capitalize on their natural resources and mild fall/winter Mediterranean climate. Greece has an

intrinsic strength of rich cultural heritage which should be used to its advantage. Peter Heilmann

stated, “I think that what’s essential is to keep the unique character of the area alive.”

Repositioning Greece as a more high class destination is essential but keeping the cultural

identity intact is what may give Greece the competitive advantage over other neighboring

countries that are also developing their golf markets.

Golf Tourism versus Mass-Tourism 3.8.3

This issue is particularly relevant as it compares the current tourism strategy to golf tourism. The

past two years have seen a significant increase in all inclusive tourist packages in Greece. Now

over 50% of the Greek tourism market is comprised of all inclusive packages. Peter Heilmann

has expressed concerns that money earned by tourism operators does not go to the local

community due to the all inclusive packages. Firstly they are foreign owned, secondly due to the

nature of all inclusive packages, there is little motive to spend more money in the local towns as

the tourists are guaranteed food, drink, and bed. Furthermore, all inclusive packages contribute to

the seasonality of the country. During winter months in Corfu, tour operators do not send tourists

to Greece thus all charter flights to the island are suspended till summer season commences. This

leads to cannibalization of the tourism market by preventing golf courses from developing.

“These are the months that it’s terrible weather in the north…but if flights are stopped then

golfers cannot go to the Corfu golf course either.”

Land Registry: 3.8.4

The key hindrance highlighted by both interviewees was the lack of a land registry. In Greece

there is no central computerized system with a database of land titles. Each local area has its own

Land Registry where all transactions regarding real estate are filed. Furthermore these files can

only be accessed and researched by attorneys36. Peter Heilmann expressed how it is difficult for

large developments to take place because there is no land registry in Greece stating the

ownership of every property and its zoning classification. This leads to confusion as there are

very few large parcels of land and it is difficult to find out who is the owner of each piece of

land. “Imagine you pay for 180 hectares of land but in reality you only get 100 because you find

out that you bought a forest area.” This type of confusion leads to serious delays for major

projects.

Residential Zoning: 3.8.5

Mr. Heilmann was particularly worried about residential zoning laws which curtail the building

coefficient. In the municipality of Gargaliannoi, residential zoning laws allow the construction of 36 http://hellenicnews.com/readnews.html?newsid=2641&lang=US

only 200m2 of residential building per 4,000m2 of land. He stated, “regional development to me

is equal to residential development, unlike many of my neighbors I have no problem selling land

to foreigners because I know the multiplier effect will help them as well.” After the completion

of Navarino Bay Resort in the province of Messinia, there will be intense demand from

foreigners for second homes in the region and limiting the building coefficient is deterring many

developers from investing in the region. The viability of most golf courses depends on the ability

to develop residential communities nearby. An interesting side point brought up by the Mr.

Heilmann was the construction of a six kilometer road from the village of Gargaliannoi directly

to the site of the major golf resort development and its implications. He stated that, all private

property 125m left and 125m right of the road will be deemed unbuildable by the zoning

commission except for construction of agricultural facilities. This will result in local property

owners not being able to capitalize on the future real estate premiums they will gain due to the

construction of the project.

Bureaucracy: 3.8.6

The interviewee acknowledged that bureaucracy was a serious impediment to development.

Ministers change every two years in Greece and bring new politicians. Thus it is very difficult

for specific policies to be carried through the long term. Peter Heilmann stated that “In 2003 a

whole bunch of people had their own opinions, ministry of development, ministry of tourism

development, minister of tourism, the sports minister,” thus the implementation of a Master Plan

is complicated due to conflicting interests. Furthermore, there is an extreme fragmentation of

authority. Peter Heilmann expressed this through an example. “Every time you set up a new

company in Greece you get a FEC. But since you have to report to multiple ministries in tourism

to set up a golf course you need to get 2 FEC’s. This type of bureaucracy has to stop.” Most

functions of tourism are being administered by different ministries. This horizontal hierarchy is

less transparent than a vertical implementation and hinders the implementation of national

tourism policy by creating an unnecessarily bureaucratic system. The following are functions of

the tourism industry that are all regulated by different ministries:

Land use – YPEHODE Ports and Harbours, Ferries, Marinas, and the Seabed – Ministry

of Merchant Marine

Airlines and Airports, Road and Rail Services – Ministry of Transport and

Telecommunications

Archaeological sites, museums, cultural festivals, and sporting events - Ministry of

Culture

Churches and Religious Sites – Ministry of Education and Religion

Visas and Border Controls – The Ministries of Foreign Affairs and of the Interior, Public

Administration and Decentralization

Training – The Ministries of Education and Religion and of Tourism

Investment Incentives, Competitiveness, and Information Technology Programmes – The

Ministries of Development and of Economy and Finance

Sustainability: 3.8.7

The respondents both supported developing sustainable tourism. Mr. Heilmann mentioned a past

example in southern Spain in which water shortages were the cause for 300,000 homes to be

vacated. “Costa del Sol which is known by the locals as ‘Costa del Golf’ has become like

Morocco. There is serious draught.” This is due to the large number of golf courses in the region

which are estimated to consume as much water as a community of 12,000. He was concerned

about Navarino Bay Resort’s water usage and feared that it may in the future lead to the creation

of a water pipeline to help the region cope with water shortages. But people intimately involved

with the project are not as concerned about the toll of Navarino Bay Resort on the sustainability

of the region citing plans to recycle the water used in the resort, reducing consumption by up to

40%. Another issue raised was the ecology of the region. A large portion of his municipality is

NATURA 2000, an area deemed ecologically important and protected by EU legislation. Peter

Heilmann raised concerns about the safety of the endangered loggerhead sea turtle, stating that,

“There should be awareness so that the tourists know to shut off their lights at night because the

turtles follow the light from the moon after giving birth” But many critics believe the benefits

that the golf course will have on the ecology of the region outweigh the cons, stating that "golf

courses provide many benefits to the environment such as haven for birds.”

Investment Laws: 3.8.8

Investment incentives law 3299/2004 (appendix) provides for the subsidization of the

“establishment, expansion and modernization of golf courses, along with a variety of other

specialized tourism establishments.” Special provisions are taken if the investment surpasses €50

million so that the construction of special infrastructure works is done at the expense of the

public. Peter Heilmann has stated that TEMES has already received €150mn in subsidies and is

expecting €150mn more upon completion of the second phase of development. A positive aspect

of this incentive law is that underdeveloped regions, such as Messinia in which Navarino Bay

Resort is being developed, are pro-rated giving higher incentives to develop in these regions. Up

to 40% of the total costs of investments are subsidized if projects are done in these regions. It is

vital that such incentives are given to investors without bureaucratic impediments, as they have

the ability to induce mass FDI in the country. The influx of FDI from EU firms wanting to

capitalize on these investment laws would provide short term benefits through the injection of

private equity but furthermore would protect the Greek tourism industries long term

competitiveness and viability though the differentiation and diversification of the industry’s

offerings.

Discussion of the Qualitative Data: 3.8.9

As we can see from the results of the primary data, the development of the golf industry in

Greece has already begun. Its expansion would differentiate and reposition the tourism industry

though the development of ancillary facilities such as marinas, spas, conference centers, and

luxury resorts as has been shown through the case study of Navarino Bay Resorts. Peter

Heilmann has stated that the development of Navarino Bay Resorts will bring at least 2,000 new

jobs to the region benefitting the local community and the entire region of Messinia. Increased

awareness of the region will in turn stimulate residential tourism which is a critical component of

FDI. Despite the benefits, government policies make the process of restructuring the tourism

industry more difficult. Fragmentation of authority makes the process of developing golf courses

more bureaucratic and time consuming. Moreover, the stringent residential zoning laws and the

lack of a land registry, deter developers from constructing large integrated golf resorts as the

primary method of funding such developments is through construction of large residential

communities. As Peter Heilmann noted, golf tourism is the ideal alternative to all inclusive

packages which have taken over 50% of the Greek market. Golfers are high spender (€370 per

day) and will contribute to the local economies unlike all inclusive tourists who tend to spend

very little. In conclusion, the qualitative data confirms the hypothesis but consideration must be

taken as to the reliability of the sources considering potential biases they may have.

Conclusion: 3.8.10

Following this extensive analysis, certain results are derived. The future of the Greek tourism

industry is to a large degree dependent on the transformation of Greece into an established golf

“destination.” Greece can no longer sustain a tourism strategy based on price competitiveness as

countries such as Egypt and Turkey have established a price oriented competitive advantage. But

if focus is diverted to differentiating the market and creating an elite area positioning, the

potentials are great. This process of repositioning the Greek tourism industry could be easily

expedited through the pro-active promotion and development of the golf industry. The Greek

market should exploit its ability to market its cultural and historical significance, its natural

beauty, and success of the Olympic Games to increase demand for specialized forms of tourism

such as golf courses.

One of the priorities should be extending the tourism season as currently 50% of tourists arrive

during three peak summer months. The majority of golf tourists that travel to Mediterranean

destinations arrive during the shoulder months of November to April, which are the months that

Greek tourism is typically stagnant. The research has further shown that golf development can be

used as a tool for further diversification and regional development. The case study of Navarino

Bay Resorts exemplifies this. Its development in Messinia is highly reliant on other forms of

specialized tourism such as spas, conference centers, and residential tourism to achieve viability

as golfers tend to demand high quality ancillary tourism facilities.

Our analysis of the latent demand of golf in Greece further proves the hypothesis that golf is a

key to future growth. With a latent demand of almost 200,000 foreign tourists, Greece can begin

developing its supply base without worrying about demand for the product.

The ideal time for development is now. The Western European countries Spain, Portugal, and

France have become oversaturated causing an increased demand for alternative golfing

destinations. Other more direct competitors are responding to this increase in demand. Turkey

has set a goal of 100 golf courses by 2010 and there are 22 proposed golf developments in

Croatia. One can therefore deduce that if Greece does not respond swiftly with active measures

to reduce bureaucratic obstacles and loosen restrictions on residential zoning laws, it could lose

its opportunity to create first mover advantage in the emerging golf market.

On a concluding note, the author had initially chosen another topic for his dissertation. Although

changing dissertation topics is not suggested due to increased time constraints, the author

deemed it necessary as the previous topic proved itself unworkable. This experience has been a

lesson for him as the decision to take the uphill road and change topics led to many increased

difficulties.

Bibliography:

1. Woodhouse, C.M. (1998). Modern Greece a Short History

2. Robert McDonald. Businessfile, March 2006,

3. Sustainable Tourism Development: Guide for Local Planners, 1993

4. Porter, M. (1985). Competitive advantage. New York: Free Press.

5. National Bank of Greece SA (NBG) Research report, June 2005

6. Tribe, J (1997) Corporate Strategy for Tourism. London: Thomson, Chapter 3.

7. The Travel & Tourism Competitiveness Report 2007, Jennifer Blanke, Thea Chies

8. Gilbert, D. (1984) The need for countries to differentiate their tourist product and how to

do so. Seminar papers for Ministers of Tourism and Directors of National Tourist

Organisations: Tourism Managing for Results, University of Surrey, Guildford.

9. Gilbert, D. (1990). Strategic marketing planning for national tourism. The Tourist

Review, 1, 18}27

10. Sinclair, M.T. and Stabler, M.J. 1991. The Tourism Industry: An International Analysis,

Wallingford: Cab International

11. “Scenario planning: A new tool for strategic thinking.” Sloan management review,

Winter 1995

12. Nasia Giakovaki “Locating ancient Greece: Europe and the emergence of a new country

in the modern era” in Synchrona Themata, 64/1997

13. “Golf Course Development and Real Estate.” Desmond Muirhead. Urban Land Inst (June

1994)

14. Evans, N Campbell, D and Stonehouse, G (2003) Strategic Management for Travel and

Tourism. Oxford: Butterworth-Heinemann, Chapter 15.

15. Figure 2, Appendix 1: Based on model from “The Golf Economy Report,” SRI

International and World Golf International 20/20.

16. http://www.golf-mediterranee.com

17. Dr. Angel Zarca, “Golf Tourism Analysis: The Importance of the Province of Malaga.”

www.turismocostadelsol.org

18. “Greece's expensive image a turn-off for tourists,” Reuters. June 2, 2004

19. Golf Development in Greece, a special report by INVgol

20. Dr. Stratos Papadimitrou, former Chairman, Hellenic Centre for Investment (ELKE),

http://www.invgolf.com/golf_greece.htm

21. GolfBenchmark Survey in the EMA Region 2006, KPMG, Andrea Sartori

(www.golfbenchmark.com)

22. http://www.golfbusinessforum.com

23. www.ekathimerini.com/info 2005

24. Yannopoulos, Dimitris, Time for Teeing off in Greece? Athens News business editor

25. http://www.pgamarketingcenter.com/golfconsumers.pdf

26. “The Golf Economy Report,” SRI International and World Golf International 20/20.

27. Financial Times, Tuesday June 21 2005

28. www.gnto.gr

29. www.statistics.gr

30. http://www.minenv.gr/

31. www.yen.gr

32. www.yme.gr

33. www.culture.gr

34. http://asem.inter.net.th/asem-info/greece/leader.html

35. http://www.mof-glk.gr/en/home.htm

Primary Sources:

1. Peter Michel Heilmann: Founding Chairman of INVgolf

Appendix 1:

1

2

3

Appendix 2:

Latent Demand for Golf in Greece

Country% of Population that Plays Golf Tourist Arrivals per Country in 2005

Latent Demand for Golf in Greece

UK 2.200% 2,718,721 59,812USA 12.900% 205,656 26,530Sweden 6.100% 316,042 19,279Canada 20.500% 69,532 14,254Germany 0.600% 2,241,942 13,452Iceland 7.000% 159,409 11,159Netherlands 1.600% 666,287 10,661Denmark 2.500% 288,858 7,221Japan 8.000% 79,276 6,342Norway 2.700% 210,847 5,693Austria 1.100% 464,470 5,109Ireland 7.000% 69,027 4,832Finland 2.100% 150,198 3,154France 0.300% 676,658 2,030Belgium 0.500% 371,790 1,859Switzerland 0.700% 223,360 1,564Italy 0.100% 1,128,506 1,129Spain 0.700% 151,140 1,058Czech Republic 0.228% 28,575 65South Africa 0.300% 13,912 42Slovenia 0.374% 4,435 17Portugal 0.100% 11,013 11Hungary 0.021% 50,027 11Slovakia 0.049% 15,386 8Lebanon 0.026% 28,096 7Serbia 0.003% 208,084 6Poland 0.004% 75,773 3Romania 0.001% 225,570 2Estonia 0.087% 2,010 2Lithuania 0.008% 2,068 0Total 10,856,668 195,309

Appendix 3:

1. Does Greece have what it takes to become a dominant player in the European Golf

Market?

This question was aimed to gather the interviewees’ generalize the opinions on the strengths and

weaknesses in the Greek tourism climate and how they contribute to Greece’s potential to

become a major golf “destination.” Although the question is broad, the author deemed it

necessary in order to extract the general opinions and viewpoints of the interviewees.

2. Has the absence of a land registry in Greece affected the progress of golf resort

developments?

This open question is intended to specify if the absence of a land registry is an obstacle, and to

what degree it can thwart potential investments in golf.

3. Sustainable tourism refers to more than just the natural environment. The surrounding

villages and locals (community), environment, and the financial interests funding tourist

product must act as collective unit if sustainable tourism is to be achieved. But are there

risks that large integrated golf resorts may not have the interest of the community in their

sights?

This question is meant to discuss the implications of golf tourism on the local communities. The

issue of whether golf development is beneficial for the Greek tourism industry should not be

based solely on economic contribution but also on sustainability. The sustainability of such

developments is a serious issue as many factors such as water supply, waste production, and

effects on natural wildlife can be effected.

4. Bureaucracy has plagued Greece for decades and has shunned off many potential

investors. But investment incentives law 3299/2004 has opened the doors for many

foreign and domestic investors by funding up to 40% of business ventures’ costs in

Messinia. What other steps do you think the public sector could take to entice investment

in the region?

Greek tourism policy has not been very efficient at passing legislations that they propose but

investment incentives law 3299/2004 was one success that facilitated the start of many ongoing

golf developments. This question aims to find what other steps the government could take to

further help the process of its tourism repositioning strategy.

5. These developments of high-class tourism resorts are reminiscent of Spain 40 years ago.

Agriculturally dependent villages transformed into Country Clubs with sprawling golf

courses surrounded by luxurious villas. Would such a metamorphosis be possible (or

even desired?) in Gargaliannoi, Sitia (Minoan Group Crete), or any other future golf

location? How do you envision the region 10 years from now?

This question poses the issue of how far into the “elite area” described by Gilbert does Greece

want to push its tourism product. Considering the current tourism sustainability problems that

Spain is facing, the author believed that such a question would be beneficial as to touch on the

negative aspects of over development.

6. How can golf tourism be compared to the leading form of tourism in Greece today: “all

inclusive” vacations?

This question was asked to probe into the current state of the tourism market and to what degree

golf tourism is superior, if at all.

7. Is there efficient cooperation and communication between the Greek Ministries

responsible for tourism strategy as to achieve the goal of differentiating and

repositioning the industry away from the mass tourism market?

This question intends to assess the whether there the different Greek Ministries responsible for

tourism growth have a clear, transparent, and mutual goal.

Appendix 4:

Name: Peter Michel Heilmann

Position: INVgolf Founder & Director, Dutchman Peter Michel Heilmann; also Founding Chairman of the GORDI Foundation, the Global Organisation of Responsible Developers & Investors

1. Does Greece have what it takes to become a dominant player in the European Golf Market?

This is a really broad question but let me begin by saying this. It is important to know that roles models are important to follow. When I was young I watched Per-Ulrik Johansson which brought me closer to golf. Pele, Diego Maradona brought me close to soccer, same with tennis. Role models encouraged young people to play. It is naïve to base golf on foreign tourists only. There are only 1000 registered players in Greece, 60% of which came from abroad where they started playing with friends who conveyed their enthusiasm. Then they transferred that enthusiasm to their friends. If they would never had been in contact in golf they would never play it. The other 40% of golfers in Greece are foreigners. These include CEO’s of multinational companies and other business people. The CEO of the international airport and his wife play golf. It was this foreign CEO that is trying to revive the market plan to include more commercial real estate and to include a golf course at the airport. If this guy wouldn’t be playing golf and it was a Greek general manager he wouldn’t do this.

In terms of climate, beauty, and the sea coast then yes it has one of most beautiful destinations, a lot of sun, I’m looking out of the window and it’s just beautiful, around 17 degrees Celsius with a soft breeze. I think it would be a shame if Greece didn’t become a dominant golf destination.

2. Has the absence of a land registry in Greece affected the progress of golf resort developments?

Negatively, if you’re an investor and want to buy 2million square meters of land of which you don’t really know who the owner of that land is or you know of some parts but not others or vague titles or people who say I have some papers who prove that this is the ownership of the land but other says he has papers or another has paper that shows his grandfather has papers that show that actually that specific tree in between is the real boundary then there’s going to be extreme confusion. Imagine you pay for 180 hectares of land but in reality you only get 100 because you find out that you bought a forest area. You don’t know if land is forestry or not forestry, certain pieces of land that have no trees on them are for sale, but they are still forestry. If you register the land you want to know the use of it. Is it coastal, residential, or commercial? What’s the deal?

Corfu has pretty good land registry, because it has foreign influences. The European Union gave funds before 2004 for the development of a land registry but the Greek government misused the funds.

Land ownership is so complicated that the Constatakopoulos had to search for 20 years to find enough land to develop their project. There were no big pieces of land available. And they aren’t all clean, might be forestry, or the people that have the titles live abroad. Then you have to go and find them. Have to have their consent; if you had a piece of property here they’d have to find you in London to buy the land. Then you have the scattered families, inheritance problems, families between themselves arguing between who owns what and who has the title. All this would be much more simplified if there was land registry and everything was registered. There are even offices that solely investigate land and clean them up. It sounds strange to foreigners but it can take years, 1,2,3,4,5,20. Depends on how patient investors are, and how fast they want a return on investment. Many would rather go to Turkey Bulgaria etc. where they can make money. Complications of land registry, even if you found who owns they still have to agree to sell. You see that guy sitting over at that table (points to a 70 year old farmer drinking a coffee in the café in the town square) he refused to sell 9.3 thousand square meters of land to Constatakopoulos (Owner of TEMES) and he took him to the council state to get eminent domain. This can stop or delay seriously a project. This is why in Greece very few developments are rolling. They take ages!

3. Sustainable tourism refers to more than just the natural environment. The

surrounding villages and locals (community), environment, and the financial interests

funding tourist product must act as collective unit if sustainable tourism is to be

achieved. But are there risks that large integrated golf resorts may not have the

interest of the community in their sights?

In Spain a couple of years ago with previous government, there was such a problem with water that more than 300,000 houses were vacated in due to water shortage in the southern region of Spain. Costa del Sol which is known by the locals as “Costa del golf” has become like morocco. There is serious draught. No water. The project by Constatakopoulos will have a serious load on water reserve, and that’s just the beginning. In Spain the golf courses lobbied the government to lead the river from northern Spain to Costa del Sol through a man made pipeline. Well guess what, they want to do that in Greece as well in anticipation of the monumental project happening in this region were in right now. YPEHODE (the ministries of Agricultural Development and Food and of Envirnoment, Town Planning and Public Works) wants to make a pipeline from Evros to

the center of Greece in Thessalia. Around there they have major agricultural dependency and agriculture uses water, lots of it, especially cotton. 84% of water use in Greece is due to agriculture, 7% is industry and rest is home. Self regulation is one way to stop this waste but when you make a investment you must think of environment. You should learn from other companies’ mistakes. For example, the Caretta caretta sea turtle. They nest on the beach where theyre building the golf resort right now. There should be awareness so that the tourists know to shut off their lights at night because the turtles follow the light from the moon after giving birth. Many follow the wrong lights though…

4. Bureaucracy has plagued Greece for decades and has shunned off many potential

investors. But investment incentives law 3299/2004 has opened the doors for many

foreign and domestic investors by funding up to 40% of business ventures’ costs in

Messinia. What other steps do you think the public sector could take to entice

investment in the region?

200,000 foreign tourists entering Greece each year are golfers. Now these tourists are tourists that are not here for golf. They have come to enjoy the historical and natural splendors of Greece. But I’ll tell you what; if there were golf courses in Greece they’d play. That means without any effort, Greece already has a market of 200,000 golfers each year. This excludes the numbers that have never been to Greece or would consider but it if Greece would offer golf. Thousands would say, “Now that Greece has golf I’ll go and visit!” Where I’m going with this is that 10% of golfer travelers buy a home at their favorite location. The local community benefits big time! If 20,000 golfers decide to buy a house with an average price of €3000 per meter and it costs €1000 per meter to build, that is an unbelievable injection in the economy. Porto Carras golf course almost toppled the PASOK socialist government in 2003 in a scandal where politicians in one of last months in power tried to rush through a law which could get the Porto Carras to develop a residential community around the golf course. If the government eases laws concerning the construction of large residential communities then I think that they’d be able to entice a plethora of investment. Because what makes the most money in golf is real estate. As for as subsidies are concerned Greece has done a commendable job. TEMES has received €150 million subsidies so far.

5. These developments of high-class tourism resorts are reminiscent of Spain 40 years ago.

Agriculturally dependent villages transformed into Country Clubs with sprawling golf

courses surrounded by luxurious villas. Would such a metamorphosis be possible (or even

desired?) in Gargaliannoi, Sitia (Minoan Group Crete), or any other future golf location?

How do you envision the region 10 years from now?

I think that what’s essential is to keep the unique character of the area alive. What makes this area special is the local cultures and traditions, the unspoiled nature, and this is the competitive advantage we have over the highly developed areas of Spain and Portugal where their resort areas are entirely consumed by concrete, its just chaotic. So would a metamorphosis be possible? Yes. But is it desired? No.

6. How can golf tourism be compared to the leading form of tourism in Greece today: “all

inclusive” vacations?

In the island of Corfu at the moment people are going crazy because of the package holidays Tourists pay the foreign tourist operators abroad who then proceed to stuff the British and Italian tourists into airplanes. They negotiate a price of around €50 a day, may times €30. And for this price the inclusive package consists of bed, breakfast and a meal. They slap on a wrist band and this gives them all inclusive privileges. This translates into no motive to spend more money, go to fancy restaurant etc. And the money earned by tourist operators does not go to local community, not even to the Greek economy as a whole, but rather to share holders of tour operators – foreigners. Tourist packages have over 50% of Greek market. And the winter period is dead, the 5 months perfect for golf. These are the months that its terrible weather in the north. The thing is people want to go to Greece, but if there is no demand there are no flights. But if flights are stopped then golfers cannot go to the Corfu golf course either. And its not worth flying into Athens and then taking another charter to Corfu just to play on one golf course. So they go to the Algarve or Majorca instead. And while they’re there they buy homes. In Cape Verde islands, Brazil and the Canary islands, Irish and British home buyers are buying like crazy. One Irish investor invested 2 billion euros to develop spa’s and beauty centers in Cape Verde. The reason is that golf tourists aren’t going to go to play only golf, they want spa for the wife and things for the kids. In Croatia someone making polo and golf resort, A Dutch company wants to make winery, conference center, accompanying golf in Turkey. That’s the beauty of golf investment, it leads to further diversification of the tourism product.

7. Is there efficient cooperation and communication between the Greek Ministries responsible

for tourism strategy as to achieve the goal of differentiating and repositioning the industry

away from the mass tourism market?

Bureaucracy and corruption go hand in hand. The key word in Greece is “symferonta,” (interests). It’s about power and jealousy. Why does he win and I don’t. Greece can make a different tourism image. The bracelets are a disgrace. Everyone knows that the Greek way of life is unique. But the policies must blend that into a western context. Ministers change every 2 years and take their own people, general secretary, EOT (greek tourism organization), all the policy makers change. In 2003 a whole bunch of people had their own opinions, ministry of development, ministry of tourism development, minister tourism, sports minister falls under culture minister. There is an extreme fragmentation of authority and unless they make a Master Plan that they all can follow the outlook looks terribly bleak.

Appendix 5:

INCENTIVES ON OFFER

For the investment projects which fall under the provisions of the Law, the following incentives are available:

Cash grant, which covers part of the expense for the investment project by the State

AND OR

Leasing subsidy, which covers part of the payable installments by the State relating to a lease which has been entered into for the use of new mechanical and other equipment

OR

Wage subsidy for employment created by the investment.

OR

Tax allowance. This incentive allows income tax exemption on non-distributed gains. The allowance is effective upon completion of the investment for the first ten (10) years of operation. It is created through a tax exempted reserve. 

The above incentives are offered under the terms and conditions set out in the Investment Incentives Law.

For the investment plans, the following incentives are offered according to zone and category, i.e.: 

Cash grant / Leasing subsidyOR

Wage subsidy for employment created

Investment Category  Zone A  Zone B Zone C

Category 1  20%  30% 40% 

Category 2  15% 25% 35%

OR

Tax allowance 

Investment Category  Zone A  Zone B Zone C

Category 1  60%  100% 100% 

Category 2  50% 100% 100%

SPECIAL CASES UNDER THE PROVISION OF THE INVESTMENT INCENTIVES LAW

By joint decisions of the Ministers of Economy and Finance, and Development, as well as any jointly responsible ministers as the case may be, there are set out the necessary divergences from the regulations of the law, which relate to the investor’s participation by own funds, the procedure for the award of the grants, the percentages and the amount of subsidy, the amount of bank loan, the percentages of leasing subsidies, the cash grants for wages expenses and the tax exemption, the conditions of company shares' transfer as well as the possibility of public corporations participating in the investment, in case of investments of fifty (50) million EURO, which have a significant effect on the international competitiveness of the country and the employment (creation of least one hundred and twenty five (125) permanent job positions, out of which a certain number may be created in satellite enterprises as a direct result of the proposed investment).

Further, by the same decisions, the construction of special infrastructure works at the expense of the public may be determined for the facilitation of the operation of the unit in general.

Investment incentives law 3299/2004 as was modified by law 3522/2006, Article 37,Government Gazette 276 A', December 22, 2006