Dissertation

Final Year Project

BS31003

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

Fotis Panagiotakopoulos
Reg No: 040020352
Business Studies Part 3
Cass Business School
2007

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 hypothesis

1.3 Research Objectives

1.4 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 Strategies

2.1.1 Porters three generic strategies

2.1.2 Gilbert’s Strategic Framework

2.2 Golf’s Position in Global Tourism

2.3 Economic Contribution of Golf

2.4 Golf Development’s Effect on Summer Home Market

2.5 Golf Development’s Effect on Expanding Tourism Season

2.6 Golf’s Effect on the Sustainability of Greek Tourism

2.6.1 New Tourism

2.6.2 Golf: New Tourism

3. METHODOLOGY AND RESULTS

3.1 Introduction

3.2 Research Approach

3.3 Research Strategy

3.4 Data Collection Methods

3.5 Primary Data

3.6 Greek Golf Market: Projected Latent Demand

3.6.1 Latent Demand Forecasting

3.6.1.1 Results

3.6.1.2 Analysis

3.7 Qualitative Research

3.8 Qualitative Data Results

3.8.1 Case Study Navarino Bay Resorts

3.8.2 Potential for Development of Golf in Greece

3.8.3 Golf Tourism versus Mass-Tourism

3.8.4 Land Registry

3.8.5 Residential Zoning

3.8.6 Bureaucracy

3.8.7 Sustainability

3.8.8 Investment Laws

3.9 Discussion of the Qualitative Data

3.10 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
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.

1
Yorghos Apostolopoulos. Mediterranean Tourism.2001
2
Woodhouse, C.M. (1998). Modern Greece a Short History
3
Businessfile, March 2006, Robert McDonald
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
“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
4
www.sete.gr
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.

Strategic Advantage
Perceived Product Cost Advantage
Uniqueness
Target Market Industry Wide Differentiation Cost Leadership
Particular Segments Differentiation focus Cost Focus
only
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’
5
Porter, M. (1985). Competitive advantage. New York: Free Press.
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.

“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.
6
http://www.gnto.gr/pages?pageID=42&langID=1
7
National Bank of Greece SA (NBG) Research report, June 2005
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

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
8
The Travel & Tourism Competitiveness
Report 2007, Jennifer Blanke,
Thea Chies
9
Financial Times, Tuesday June 21 2005
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.

Gilbert’s Strategic Framework 2.1.2

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

1984, 1990)10.

Status Status
area area
Status
area

Commodity
Commodit area
y area

10
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.
“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.

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

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 Participation

12
BusinessFile, March ’06, Survey of Tourism Prospects in Greece, Robert McDonald
13
GolfBenchmark Survey in the EMA Region 2006, KPMG, Andrea Sartori (www.golfbenchmark.com)
 Course 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,
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

14
Source: EGA and national golf federations with KPMG elaborations

15
http://www.golfbusinessforum.com
16
http://www.golfbenchmark.com/index.thtml/en/Reports/
17
http://www.golf-mediterranee.com
18
“The Golf Economy Report,” SRI International and World Golf International 20/20.
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
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

19
M. Thea Sinclair and Mike Stabler
20
Dr. Angel Zarca
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.

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.

21
Businessfile, March 2006, Robert McDonald
22
Golf Development in Greece, a special report by INVgolf
23
Businessfile. May 2006. Robert McDonald
“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.

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
24
Dr. Stratos Papadimitrou, former Chairman, Hellenic Centre for Investment (ELKE),
http://www.invgolf.com/golf_greece.htm
25
www.ekathimerini.com/info 2005
26
GolfBenchmark Survey in the EMA Region 2006, KPMG, Andrea Sartori (www.golfbenchmark.com
27
Yannopoulos, Dimitris, Time for Teeing off in Greece? Athens News business editor
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.

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.

28
http://www.invgolf.com/golf_greece.htm
29

New Tourism:
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

29
Sustainable Tourism Development: Guide for Local Planners, 1993
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

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

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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
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
31
http://www.invgolf.com/
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.

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

32
“Scenario planning: A new tool for strategic thinking.” sloan management review, Winter
1995
33
www.golfbenchmark.com
34
www.statistics.gr
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

% of Population Latent Demand for
Country that Plays Golf Tourist Arrivals per Country in 2005 Golf in Greece
UK 2.2% 2,718,721 59,812

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

35
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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

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

36
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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
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

% of Population Latent Demand for
Country that Plays Golf Tourist Arrivals per Country in 2005 Golf in Greece
UK 2.200% 2,718,721 59,812
USA 12.900% 205,656 26,530
Sweden 6.100% 316,042 19,279
Canada 20.500% 69,532 14,254
Germany 0.600% 2,241,942 13,452
Iceland 7.000% 159,409 11,159
Netherland
s 1.600% 666,287 10,661
Denmark 2.500% 288,858 7,221
Japan 8.000% 79,276 6,342
Norway 2.700% 210,847 5,693
Austria 1.100% 464,470 5,109
Ireland 7.000% 69,027 4,832
Finland 2.100% 150,198 3,154
France 0.300% 676,658 2,030
Belgium 0.500% 371,790 1,859
Switzerland 0.700% 223,360 1,564
Italy 0.100% 1,128,506 1,129
Spain 0.700% 151,140 1,058
Czech
Republic 0.228% 28,575 65
South
Africa 0.300% 13,912 42
Slovenia 0.374% 4,435 17
Portugal 0.100% 11,013 11
Hungary 0.021% 50,027 11
Slovakia 0.049% 15,386 8
Lebanon 0.026% 28,096 7
Serbia 0.003% 208,084 6
Poland 0.004% 75,773 3
Romania 0.001% 225,570 2
Estonia 0.087% 2,010 2
Lithuania 0.008% 2,068 0
Total 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 subsidy

OR
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