Reopening

Ikos backs staff over profit

Lambis Pahiyiannakis, acquisition manager, Sani & Ikos Group, told this week’s In Focus that, for the group “to operate at a loss as we employ as many of our staff as possible is a win for us”.

The company said that it planned to operate at around 50% occupancy, to ensure the safety of guests as it sought to open for the summer.

Pahiyiannakis said: “Greece has done pretty well as regards the health side of the coronavirus  and given the fact that Greece relies very heavily on tourism there have been many strides made by the Greek government to ensure that the country opens as quickly and as safely as possible to get back to some form of normality in the 2020 season. It wants to make sure that some revenue can be generated, although everyone understands that won’t be very easy to do this year.

“We are closely monitoring what our government is allowing us to do and what safety protocols we will follow so that our guests are safe and feel comfortable.

“Our resorts are generally pretty spread out, we generally have a lot of space, we look for properties which are 100,000 sqm or more, for 300 to 400 rooms. We’re looking to fill our bungalow and suite rooms first which are by nature more remote, but in terms of F&B we will be operating based on Greek guidelines - table and chairs 2m apart. Indoor pools will be closed, checkin will be done outdoors if possible, and our rooms will reman vacant for 24 hours after departure and they will be steam cleaned and sanitised.

“The guidelines are clear and leave enough room to play within, to help to satisfy our guests and our costs. We plan on occupancy of 50%, as opposed to our usual 90%, because we want guests to be safe. The question this year is not whether we can be profitable, it’s whether can we employ as many employees as possible. To operate, to not operate our hotels at a loss doesn’t offer much for our loyal employees. A lot of these people depend on the summer season to make it through the rest of the year.”

Prior to the pandemic, resorts had been coming onto the radar of both brands and investors. Pahiyiannakis said: “Resorts are a great way to diversify an investor’s portfolio and I think this crisis proves our business plan. What we’re seeing is that, coming out of the crisis, a lot of consumers are choosing to sacrifice a lot of things before they sacrifice leisure travel. In the demographics that we cater to - high income families - they want to get away. They want to enjoy their summer break with their kids and their family and there are few things that will come between them and their summer vacation.

“The problem in Greece is that barriers to entry are quite high. What we go after are destinations that are close to big airports, that are on the beach, that enjoy some privacy and that are big enough to execute our business plan. I don’t think we’re unique in that, other luxury brands are also looking to copy what we’re doing but go after the same properties that we are after, but there just aren’t that many properties in Greece. To develop them is quite difficult and that what’s creates barriers.

“Additionally, seasonality in Greece is something that will be hard to flatten the curve - to use a modern phrase - to have resorts open all year ‘round is difficult because Greece is associated with sun, sea and sand and a lot of these resorts are closed during the winter months. It’s very hard for someone like Hilton, Marriott, IHG or Hyatt to pitch branding an existing hotel when seasonal resorts already enjoy very high occupancies during the summer months. Usually what a brand can bring you is very good demand and sales during shoulder months when our hotels in Greece are closed in those months, so it’s quite an expensive proposition to have an owner of an existing hotel that’s doing well decide to brand their hotel and undergo some significant annual costs to be part of a programme that doesn’t really benefit them during the months that they are open and operating at very good margins.”

 

Insight: Greece is hoping to see an improvement in room stock as a result of the pandemic, although as Pahiyiannakis noted later in the interview, those under-renovated hotels which should have been washed out by the virus closures have been supported by banks and government and given a stay of execution. So no swooping in and launching your luxury brand just yet.

Or at all, because locations such as Greece are, well, not in need of the brands. The sun-starved Northern Europeans will head there regardless. This is a shame for the brands, because as we have seen in recent years, they have started to work out that they need resorts, because their loyalty members need resorts. And this summer more than ever, given the stresses of the past months and what resorts can offer in terms of splendid isolation.

So the brands which have to work to hoist their flags and get into some destination marketing. This is getting easier by the year as people look to healthy holidays. Ski destinations have marketed themselves for hiking in the summer. Hilly Mallorca is beloved by cyclists. Greece has much to offer - if the brands can sell it, it won’t just be the global operators which benefit.