INTERNATIONAL JOURNAL OF TOURISM RESEARCH
Int. J. Tourism Res. 1, 341±358 (1999)
Tourism on the Greek Islands: Issues of
Peripherality, Competitiveness and
Development
Dimitrios Buhalis*
Department of Tourism, University of Westminster, 35 Marylebone Road, London NW1 5LS, UK
ABSTRACT
The Aegean archipelago is the largest island
complex in Europe, accommodating 500 000
Greek people, living on 95 inhabited islands.
The region's economy depends heavily on
tourism, as it is estimated that tourism's
contribution varies between 50% and 90% of
the Gross Regional Product. The Aegean has
been an established destination since the
1960s, offering a great number of facilities.
The traditionally built islands and the
beautiful landscapes on the one hand, and
the unspoiled sea on the other, make it a
desirable destination. The major attractions
are `sun, sand, sea, sex' types of products,
often augmented to take advantage of the
cultural, heritage, natural, and historical
resources, as well as the events and festivals
taking place in the area.
Both tourism enterprises and the
destination as a whole experience an
overdependence upon conventional
distribution channels, and especially
integrated tour operators, for delivering their
products. As the majority of tour operators
aim to reduce their prices in order to increase
their competitiveness and market share, they
constantly aim to minimise the pro®t margins
of local principals. Consequently, despite the
unparalleled environmental and heritage
resources, the Aegean islands fail to attract the
desired `high-quality, high-expenditure'
* Correspondence to: Dr Dimitrios Buhalis, University of
Westminster, Department of Tourism, 35 Marylebone
Road, London NW1 5LS, UK.
E-mail: buhalid@wmin.ac.uk
CCC 1099±2340/99/050341±18 $17.50
tourists. The deterioration of the tourism
product and image leads to a lower
willingness to pay by consumers, which
consequently, leads to a further drop in
quality, as the industry attempts to attract
customers with lower prices. The
concentration of bargaining power in
European tour operators, in combination with
the inability of the Greek tourism industry to
promote itself effectively, inevitably reduce
the pro®t margins of principals and their
ability to yield decent returns on their
investment. As a result, tourists' expenditure
per capita deteriorates gradually, whereas
their volume increases. Consequently,
tourism enterprises ®nd it dif®cult to operate
and compete and the economic bene®ts for the
destination deteriorate dramatically. Socio-
cultural and environmental impacts also
decay local resources and jeopardise the
sustainability of the region in the long term. It
is therefore proposed that scienti®c research,
political debate and community action should
be utilised in order to rationalise the strategy
for tourism on the Aegean Islands. This will
enable the tourism industry to deliver the
bene®ts it owns to its main stakeholders in the
new millennium. Copyright # 1999 John
Wiley & Sons, Ltd.
Keywords: Greece; tourism impacts;
peripherality; development; marketing.
Copyright # 1999 John Wiley & Sons, Ltd.
342
TOURISM IN PERIPHERAL, REMOTE AND
INSULAR REGIONS: A CRITICAL
OVERVIEW
T
ourism has been instrumental in the
development of peripheral, remote,
and insular regions, which had failed
to establish a strong industrial basis, due to
their peripherality, isolation, fragility, scarcity
of resources, limited labour force and trans-
portation-cost competitive disadvantages Jen-
kins and Henry, 1982; Coccosis, 1987; (Britton,
1990; Conlin and Baum, 1995). Tourism has
also been used to reduce the prosperity gap
between developed and developing countries
(Jenkins, 1982). It has also been central in the
development of peripheral, remote and insular
regions by facilitating their transition from
agriculture-based economies to the service
industries King, 1993). McElroy et al., 1993;
(Ritchie, 1993; Dann and Potter, 1994; Wing,
1994; (Wanhill, 1997, Wilkinson (1989) sug-
gests that `there appears to be an almost
universal view that many island micro-
statesÐparticularly those that are tropical
islandsÐhave little economic choice but to
accept traditional tourism development (char-
acterised by mass tourism, control by multi-
national companies and large-scale facilities)
as being inevitable'. Lack of major industrial
development on most islands enabled them to
maintain their natural resources, which are
fundamental motivators for visitation. Tradi-
tionally, the tourism industry worldwide, is
based on a network of small and medium-
sized tourism enterprises (SMTEs), which
provide all types of tourism products and
services, while enabling closer interaction
between the host population and visitors, as
well as facilitating a rapid infusion of tourism
spending into the local economy (Cooper and
Buhalis, 1992).
Despite the rapid development of tourism,
increasingly researchers become more critical
about its real contribution to the prosperity of
indigenous people as well as to the sustain-
ability of local resources. Britton (1982) ob-
serves that `the international tourist industry,
because of the commercial power held by
foreign enterprises, imposes on peripheral
destinations a development mode which re-
inforces dependency on, and vulnerability to,
Copyright # 1999 John Wiley & Sons, Ltd.
D. Buhalis
developed countries. This is particularly true
for small [Paci®c] island economies. This
situation results in tourists at destinations
being channelled within that commercial
apparatus controlled by large-scale foreign
and national enterprises which dominate the
industry. The greatest commercial gains there-
fore go to foreign and local elite interests. The
majority of locals can only participate in
tourism through wage labour employment or
small petty retail and artisan enterprises.
Though highly differentiated in their activities,
these enterprises have one common attribute.
Their income generating potential is severely
limited'. As a result, great dependency levels
emerge, while the locus of control over the
tourism development and operation processes
shifts from the people that are most affected,
the host community, to the tourism generating
regions (Hall, 1994).
In addition, structural dif®culties reduce the
potential bene®ts for peripheral, remote and
insular destinations. Due to de®cient indus-
trial and agricultural output of their economy,
insular destinations have a limited ability to
achieve high multiplier effects, while their
competitiveness and tourism economic bene-
®ts are declining (Archer, 1989). Wilkinson
(1989) explains that governments and other
decision-makers often pursue policies which
are contrary to their own interests, despite the
availability of feasible alternatives. The result
may be a short-term gain, but it is almost
inevitably a long-term loss. The single tourism
development strategy magni®es dependencies
and jeopardises the long-term prosperity of the
local economy (Ritchie, 1993). Despite tourism
activity relying on the environmental quality
more than any other economic activity, this is
often disregarded in local planning. Moreover,
tourism development often contrasts sharply
with the protection of uniqueness, as it implies
modernisation, change in culture, urbanisation
and exploitation of resources (Coccosis, 1987).
The increasing concentration of the tourism
intermediaries, and their rigid control of the
distribution channel determine tourism de-
mand ¯ows by ruling the accessibility of
destinations as well as their promotional
activities. Thus, they reduce the ability of
peripheral, remote and insular regions to
preserve their sovereignty over their tourism
Int. J. Tourism Res. 1, 341±358 (1999
Tourism on Greek Islands
industries. This situation is often referred to in
the literature as neo-colonisation (Britton,
1982; Cooper and Buhalis, 1992; Bianchi,
1994; Hall, 1994).
This is reinforced due to SMTEs' domination
in the tourism industry as well as due to their
strategic marketing weaknesses. Increasingly,
therefore, it is evident that the tourism gains
for destinations and SMTEs are jeopardised
due to four major factors, namely: oversupply;
mass tourism; industry concentration; and
SMTEs' weaknesses. The rapid growth of
tourism supply, in parallel with the declining
pace of demand development, result in a
global oversupply of tourism products and
magni®es competition levels worldwide.
Hitherto, insuf®cient differentiation of tourism
product and marketing inevitably diverted
both principals and destinations to aim for
`cost competitive advantages', i.e. increase the
volume of activity and reduce the industry
pro®t margins. This resulted in affordable
holidays for everyone and proliferated mass
tourism. Based on rigidly packaged and low-
priced tourism products, mass tourism facili-
tated the rapid growth of demand towards
certain holiday resorts, which soon became
overcrowded and saturated. Mass tourism's
need for low priced holidays could only be
satis®ed with large organisations taking ad-
vantage of economies of scale and bargaining
power. Thus, a high degree of industry
concentration through vertical integration,
originated a number of multinational corpora-
tions which control a large part of the global
market. The concentration is particularly evi-
dent in the distribution channels, where
corporations take advantage of their market-
ing, planning and negotiating functions and
expand globally. Peripheral destinations and
SMTEs are increasingly forced to follow the
instructions of multinational corporations,
demonstrating a very high degree of depen-
dency. Their weaknesses in marketing, man-
agement, planning, and ®nancial resources,
jeopardise their competitiveness and the sus-
tainability of resources at destinations.
Middleton (1994) argues that `the major
issues of the next decade and beyond will
revolve around de®ning and attempting to
balance the often competing needs of Econo-
my, Ecology, EquityÐGlobally. Economy in
Copyright # 1999 John Wiley & Sons, Ltd.
343
this context means pro®t (or surplus on
operations for non-commercial organisations).
Ecology means environmental constraints,
broadly de®ned. Equity means a fairer dis-
tribution of the use of the earth's resources and
considerations for the need of present and
future generations as well as the interest of
economic expansion'. Within this conceptual
framework, this paper attempts to analyse the
tourism industry of the Aegean islands in
Greece and identify strategic issues which
affect their competitiveness. It argues that
tourism should be properly planned and
researched in order to develop a comprehen-
sive cost and bene®t analysis, which will
enable indigenous people to manage their
resources wisely and optimise their long-term
welfare. The aim should be to achieve equi-
table return on the resources that are utilised
for the provision of tourism services, whilst
ensuring the sustainability of socio-cultural,
environmental and economic assets.
TOURISM IN GREECE AND THE AEGEAN
ISLANDS: CONTRIBUTION AND
SIGNIFICANCE
Greece has a long tradition in tourism and
hospitality mainly due to its history and
ancient civilisation (Briassoulis, 1993; EIU,
1986). A dramatic increase in tourism ¯ows
to Greece in the late 1970s and 1980s was
experienced, facilitated by the maturity of
competitive destinations, the availability of
natural, socio-cultural and environmental
resources, the existing airport infrastructure
on major islands, and the lower cost of living in
comparison with most of Europe (Komilis,
1987; Papadopoulos, 1989; EIU, 1990;
Leontidou, 1991). On a regional basis, the
Aegean archipelago (illustrated in Figure 1) is
the largest island complex in Europe,
accommodating 4.5% of the Greek population
living on 95 inhabited islands (Buhalis, 1991;
Eurostat, 1993). Due to the insular character of
the region, a great nautical industry and
tradition has been established. Apart from
agriculture and ®shing, the economy depends
heavily on tourism, as its insularity, and lack of
infrastructure, deprive it of competitive
advantages in other activities (Konsolas,
1994). Thus, peripherality, distance from main-
Int. J. Tourism Res. 1, 341±358 (1999
344
Figure 1. Map of Greece
land Greece, historically unfriendly relations
with Turkey, scarcity of resources, inadequate
infrastructure and de®cient industrial devel-
opment are the major reasons for the region's
hampered development and prosperity in
comparison with the Greek and the European
Union (EU) averages.
Tourism is emerging as a major stimulant of
Copyright # 1999 John Wiley & Sons, Ltd.
D. Buhalis
the Greek economy. It contributes 4.4% of the
GDP and covers 26% of the country's trade
de®cit. However, these ®gures do not include
pre-purchases of drachma by tourists abroad,
credit card payments, payments for cruises
and other earnings, which have been estimated
to increase total receipts by up to 80%
(Papadopoulos and Mirza, 1985; EIU, 1990,
Int. J. Tourism Res. 1, 341±358 (1999
Tourism on Greek Islands
1993 1994; Economist, 1993). The Greek
National Tourism Organisation (GNTO, 1993)
estimates that in 1992, foreign currency im-
ported from all types of tourism expenditure
was $5.8 billion, contributing almost 8% of the
GDP and covering 41.7% of the international
trade de®cit. Tourism is also increasingly
recognised as an instrument for regional
development policies, especially for socio-
economically depressed areas and it is respon-
sible for the diminished pace of immigration.
Tourism is also a major employer as it is
estimated that 10.6% of the Greek labour force
or 350 000 employees are occupied in tourism
despite its great seasonality (Loukissas, 1982;
Zacharatos, 1989; OECD, 1992; GNTO, 1993;
Konsolas and Zacharatos, 1993). However, the
true contribution of tourism to the Greek
economy is substantially greater, as the of®cial
®gures ignore the `para-economy' (black or
parallel economy), estimated to be as high as
28±50% of the of®cial GDP (Zacharatos, 1988;
EIU, 1990, 1993). Unfortunately, there is
insuf®cient data to assess the contribution of
tourism to the Aegean region (Komilis, 1991,
1994). Naturally, the economic impacts of
tourism vary greatly according to the econom-
ic structure of each island (Loukissas, 1982). It
is estimated that 37.5% of the 28 000 Aegean
®rms are tourism enterprises, all of which are
SMEs, while almost two-thirds of the labour
force are employed in the service sectors,
mainly tourism (Eurostat, 1993; Litinas, 1993;
Logothetis, 1990). About 58% of the Gross
Regional Product on the Dodecanese Islands is
generated by the service industries (mainly
tourism), although the multiplier effect mag-
ni®es tourism's impact. The Dodecanese re-
gion has a surplus on its international trade
and contributes to the reduction of the national
balance of payments de®cit (Finas, 1991). The
Aegean islands' wealth depends almost exclu-
sively upon tourism, and hence supporting the
destinations and SMTEs is instrumental for the
prosperity of the local population.
Tourism supply in Greek and Aegean
tourism
The Greek tourism product is an amalgam of
natural, cultural and heritage attractions
spread throughout the country, as well as a
Copyright # 1999 John Wiley & Sons, Ltd.
345
wide variety of services offered predominantly
by SMTEs. Some 25 000 registered and pro-
tected monuments and archaeological sites,
numerous museums and about 500 character-
istic traditional settlements offer a unique
blend of attractions. A plethora of SMTEs
provide the entire variety of tourism amenities,
as a total of 7500 of®cial accommodation
establishments with a total capacity of half a
million beds are provided in different cate-
gories. An additional accommodation capacity
of about one million beds, in unregistered
and unregulated `rooms to let' and `self-
catering apartments' (often referred to as `para-
hoteleria') is provided also (EIU, 1990; Jenner
and Smith, 1993; Zacharatos, 1993).
Eurostat estimates that about 20 000 restau-
rants operate in Greece, while a countless
number of other types of catering and en-
tertainment establishments are on offer.
Furthermore, some 7000 travel agencies, 1500
coach rental and some 4000 car rental ®rms are
estimated to operate throughout the country
(EC, 1993b). Accessibility is facilitated through
32 airports, most of which can receive direct
international charter ¯ights. An extensive
Olympic Airways scheduled ¯ight network,
as well as newly established small carriers
facilitate domestic air transportation. Interna-
tional charter ¯ights offer direct services to
destinations. Moreover, a complex network of
sea, road and rail transportation enables
passenger transportation throughout the coun-
try. Unfortunately, the infrastructure in Greece
is incapable of supporting the superstructure
growth of the last decades, and thus, tele-
communications, transportation, police and
health services, water supply, and sewage
systems are under extreme pressure in the
summer peak months to satisfy the demand
density.
The implementation of the national tourism
policy is supervised by the Greek National
Tourism Organisation (GNTO), and the Min-
istry of Tourism. The two organisations share
the responsibilities for planning, implementa-
tion and promotion of Greek tourism at the
national and regional levels, as well as co-
ordinate the involvement of the public and
private sectors in all activities. Public invest-
ment in commercial facilities was undertaken
in the early days of Greek tourism to stimulate
Int. J. Tourism Res. 1, 341±358 (1999
346
both tourism demand and the con®dence of
the private sector to invest. The GNTO
operates 21 regional and 25 overseas of®ces
in 18 countries worldwide (Leontidou, 1991;
Konsolas and Zacharatos, 1993).
The Aegean islands have been a traditional
destination since the 1960s, offering a great
number of facilities. A variety of site and event
attractions can be identi®ed, as the Aegean
complex is unique in Europe. The traditionally
built islands and the beautiful landscapes on
the one hand, and the unspoiled sea on the
other, make the region a desirable summer
destination. The major attraction is the classi-
cal `sun, sand, sea, sex' in combination with the
cultural, natural, and historical resources, as
well as the event attractions taking place. In
1994, accommodation was provided in almost
2000 of®cial hotels with a total capacity of
almost 132 000 beds. About 90 000 beds in 7000
registered `rooms to rent' and self-catering
were provided. In total therefore, it is esti-
mated that the accommodation capacity of the
Aegean islands is about 220 000 beds, in 9000
of®cially registered enterprises. Nevertheless,
due to the `parahoteleria' phenomenon, which
is booming in the insular destinations, these
®gures are substantially underestimated.
In addition, thousands of catering, sports
and entertainment enterprises of every type
operate every summer. Essentially all princi-
pal enterprises in the region are SMTEs, as the
average hotel size is 66 beds per unit, while
only few enterprises occupy more than 100
employees. Accessibility is one of the most
important elements of the tourism product,
especially for insular destinations. The Aegean
islands have a very complicated and well-
developed transportation system which incor-
porates at least one major port in each island
and 16 airports, most of which are capable of
receiving charter ¯ights directly from Europe.
There is a great number of connections
between the mainland and the islands, as well
as between the islands themselves. In 1988,
about nine thousand charter ¯ights arrived at
the islands, carrying 1.2 million passengers
from 71 cities of the world. The Aegean islands
are also connected, by ferry services, with the
port of Pireaus in Athens, while a great
number of island to island connections facil-
itate inter-island transportation. Accessibility
Copyright # 1999 John Wiley & Sons, Ltd.
D. Buhalis
and transportation connections improved re-
cently with the introduction of modern, fast
and convenient vessels, such as hydrofoils and
catamarans (EIU, 1990; Buhalis, 1991, 1995).
The Aegean tourism products are distri-
buted to the international market predomi-
nantly through European tour operators. Some
800 tour operators were reported to operate in
Greece in 1994 (Tourism in Greece Business,
1993). In addition, there are more than 300
incoming travel agencies on the Aegean
islands which act as tour operators' handling
agents, and provide a variety of services
directly to consumers. They usually participate
in the negotiations between tour operators and
accommodation establishments, as well as
cooperate with tour operators' representatives
at the destination. The GNTO operates six
information of®ces, while several local autho-
rities provide tourist information as well as
distribute promotional material.
Furthermore, the global GNTO network
abroad distributes information material to
potential tourists, as well as undertakes all
the marketing and public relation functions,
both for individual and institutional custo-
mers. The GNTO and the Ministry of Tourism
is responsible for tourism planning, marketing
and legislation at both the national and re-
gional levels from its headquarters, centrally in
Athens. It has therefore, the entire responsi-
bility for all ranges of activities such as
marketing, publication and distribution of
promotional material, cooperation with tour
operators, design of incentives policy and
development regulations for every region.
There are two GNTO directorates locally on
the Aegean islands, one on Lesvos island
responsible for the Northern Aegean Periph-
ery, and one on Rhodes island for the Southern
Aegean Periphery. Furthermore, on most
islands local associations for each type of
tourism enterprise coordinate the private
sector and lobby the public sector in order to
improve their operational environment (Buha-
lis, 1991).
Tourism demand for Greece and the Aegean
islands
Greece has enjoyed a continuous growth in
arrivals since the early 1950s. Despite the lack
Int. J. Tourism Res. 1, 341±358 (1999
Tourism on Greek Islands
of any comprehensive tourism demand analy-
sis, several research documents address the
issue (Fotis, 1992; NSSG, 1993; Psoinos, 1994).
In 1950, 33 333 foreign tourists passed the
borders while this ®gure rose to almost 10
million in 1993. A concentration in the summer
months can be observed, as in the last ten years
37.5% of the average arrivals were in July and
August, while the period May to September
attracted 74.0% of total arrivals. The dominant
countries of origin are Germany and Britain,
with a share of 22% and 23% respectively in
1993. Tourism arrivals in Greece are forecasted
to double to 20 million arrivals by the year 2000
(Jenner and Smith, 1993). As far as arrivals on
the Aegean islands are concerned, there is a
lack of any reliable data for the entire region,
although it is estimated that the region attracts
slightly more than one-quarter of the national
®gures.
In 1993, about 48.5 million bednights were
recorded for all types of Greek accommodation
establishments, of which 75% were interna-
tional tourists. The Aegean islands have
enjoyed a steady growth which reached 12
million bednights in 1991, accommodating
one-quarter of the tourists arriving in Greece.
Each island resort has a different market
pro®le and there is a very wide variety from
island to island in the type and geographical
source of clientele. The vast majority of the
bednights spent in the area were by Euro-
peans, especially British, Germans, Swedish,
Finnish, Dutch and Austrian. As a result, these
nationalities are the dominant markets for the
destination, counting for more than three-
quarters of the bednights, with the British
and Germans contributing almost half of all
bednights. Domestic tourism is also a signi®-
cant contributor. In 1993, more than 75% of
tourists arrived in Greece by air and 57.8% of
the total arrived on charter ¯ights, because of
the distance from the country of departure.
This is expected to be higher for the Aegean
islands as travellers prefer direct charter
¯ights, rather than having a stopover in
Athens. In 1985, about 89% of the tourists'
arrivals to Greece were holiday-makers, while
7% travelled only for business, 2% for other
reasons and 1% were in transit (GNTO, 1985).
Similar results emerged in a recent research,
although the location of the data collection
Copyright # 1999 John Wiley & Sons, Ltd.
347
in¯uenced the motivation of the sample,
stimulating a higher percentage of business
travellers (Psoinos, 1994). The average length
of stay in the country was 14 days, while the
average expenditure per capita in 1993 reached
a level of $354: it is estimated that 53% of the
tourists arriving in Greece in 1985 had bought
an inclusive tour package (GNTO, 1985). This
®gure may have increased slightly, as almost
58% of travellers arrived by charter ¯ights in
1993, while tourists arriving on the Aegean
islands bene®t from direct accessibility and
tend to participate in organised tours more
frequently. The Aegean islands have all the
qualities and resources required to respond to
the `new tourism era', where a greater degree
of individuality and sophistication is critical.
ANALYSIS OF GREEK AND AEGEAN
TOURISM: STRUCTURAL WEAKNESSES
AND HANDICAPS
Despite its popularity, the Greek tourism
industry has reached a stage where both its
potential and competitiveness have become
questionable. `The seemingly unstoppable
growth of this market contributed to a degree
of complacency which has led to Greece
repeating some of the errors made in Spain.
Rapid price increases mean the country is no
longer perceived by mass market clients as
cheap in relation to comparable destinations in
the Mediterranean, but much of the country's
tourism infrastructure, hastily built in re-
sponse to demand for cheap accommodation,
does not meet the needs of a market less
sensitive to price and more concerned with
quality and value for money' (EIU, 1990).
Tourism development often takes place with-
out any Master Plan of the area, respect for the
landscape and environment, analysis of
whether there is demand and what the
demand is after, and regard to what is
happening in similar situations (Richter-
Papaconstantinou, 1992). Hence, unless the
Greek tourism industry addresses a number
of critical issues immediately, its future would
be seriously jeopardised, resulting in a
potential catastrophe of the Aegean region's
economy.
The structural weaknesses emerge both
from the inadequate policies and planning
Int. J. Tourism Res. 1, 341±358 (1999
348
Table 1. A SWOT analysis for the Aegean destination and SMTEs (Source:
adapted from Buhalis, 1991)
Strengths
Greek hospitality
Flexibility
Tailor-made product delivery
Entrepreneurial activity
Family involvement
Strong local character
Personalised relationships
Labour loyalty and low turnover
Opportunities
European Union support
European redistribution of labour
Increase in tourism demand size
Trends in tourism demand
Low cost of living in periphery
Information technology
processes of the public sector, as well as from
the strategic weaknesses of the private sector,
which consists almost entirely of SMTEs. The
SMTEs' lack of resources and professionalism,
in combination with the de®cient public sector
intervention has forced the industry to its
limits, where unless strategic action is taken
urgently the tourism activity will have very
limited bene®ts for both enterprises and the
destination. A strategic analysis is therefore
essential in order to identify the major
problems at both the micro- and macrolevels.
To facilitate the strategic management process
a `strengths, weaknesses, opportunities and
threats' (SWOT) analysis is undertaken for
Aegean islands' destinations and SMTEs, as
illustrated in Table 1. This analysis illustrates
the interrelations between the strategic perfor-
mance of SMTEs and destinations as a whole.
This demonstrates that a destinations' weak-
nesses and threats are re¯ected in the competi-
tiveness of SMTEs and vice versa.
As far as the strengths of the Aegean SMTEs
and destination are concerned, their ¯exibility
and ability to tailor products to consumers'
needs are of great importance to their
existence. This is also combined with the
Copyright # 1999 John Wiley & Sons, Ltd.
D. Buhalis
Weaknesses
Management and marketing
Information technologies illiteracy
Dependence upon tour operators
Lack of supporting markets
Lack of economies of scale
Human resources management
Transportation and accessibility
Financial management and resources
Seasonality
Lack of standardisation
Lack of quality assurances
Threats
Lack of visibility in CRSs
Environmental degradation
Concentration and globalisation
Oversupply
Infrastructure
Political unrest±Wars±Terrorism
Political intervention
renowned Greek hospitality which makes the
satisfaction of visitors a pride issue for hosts.
The SMTEs can identify pro®table niches in the
market place, establish the requirements of
that market and attempt to satisfy the spe-
cialised needs. Direct control by entrepreneurs
permits quick and ef®cient managerial reac-
tion to external challenges. Fewer hierarchical
levels facilitate closer and more effective
control over the service delivery process,
enabling personal services to customers. In
addition, an unparalleled wealth of natural,
heritage and cultural resources at the Aegean,
as well as the local character of SMTEs are also
signi®cant assets. As a result, Aegean destina-
tions and SMTEs bene®t from local resources
and are ideally situated to offer special interest
holidays. The SMTEs can also capitalise on
personal relationships with consumers,
suppliers, labour and the entire tourism
industry in general. Their small size enables
SMTEs to provide a personal ®nish to all
products provided, while it is not unusual for
customers to become friends, and to be treated
accordingly. Similarly, strong relations with
employees support labour loyalty and low
turnover. The proprietor's family is normally
Int. J. Tourism Res. 1, 341±358 (1999
Tourism on Greek Islands
directly involved with every aspect of the
business, reacting ef®ciently and promptly to
any problem arising. Their involvement in
running the enterprise provides considerable
bene®ts, especially in having a very ¯exible,
multiskilled and dedicated workforce, which
tolerates unsociable working schedules as
family members feel committed to the long-
term prosperity of the enterprise. Thus, a
better matching between tourism demand
and SMTEs' supply is achieved (Buhalis,
1991; Cooper and Buhalis, 1992). Finally,
Aegean SMTEs tend to achieve a cost advan-
tage, since they employ unpaid family mem-
bers, and they usually operate in inexpensive
peripheral regions, which have a lower cost of
living in comparison with metropolitan areas.
However, a close-up of the structural weak-
nesses of the destination and its SMTEs is
critical for the strategic analysis. Although
entrepreneurs' innovation and commitment
are normally an asset for SMTEs, it seems that
a number of managerial problems often arise.
Lack of operational management know-how
creates inconsistency in the creation and
delivery of the tourism product. This has
direct implications for consumers' satisfaction
and the projected image of SMTEs. More
importantly, there is often a complete lack of
strategic vision and it seems that enterprises
are often an extension of proprietors' domestic
environment. Entrepreneurs recruit family
members and relatives as personnel and
suppliers, even though more appropriate/
quali®ed alternatives can be found in the
market place. Therefore, the management of
SMTEs clearly projects proprietors' family
lifestyle and decision-making processes on to
an enterprise. Marketing is another signi®cant
weakness for most SMTEs, as they are often
unaware of the techniques available and thus
follow a product-orientation, rather than a
consumer-orientation approach. Conse-
quently, uncoordinated, isolated, trouble-
shooting marketing activities are occasionally
undertaken, rather than a consistent and well
planned marketing campaign. The insuf®cient
marketing activity from the public sector and
from each local community essentially means
that the destination is unable to create its own
image and brand name in the marketplace.
Lack of marketing research debilitates SMTEs'
Copyright # 1999 John Wiley & Sons, Ltd.
349
knowledge of their consumers' needs and
wants and prevents them from identifying
methods for improving services in order to
meet consumers' expectations. Inability to
execute and ®nance advertising campaigns
and other promotional techniques reduces
their visibility in their markets.
These weaknesses, in combination with
proprietors' lack of information-technology
(IT) expertise, originate further weaknesses,
as SMTEs are unable to promote themselves
through the emerging IT media and Computer
Reservation Systems (CRSs). As a consequence
of the above management and marketing
weaknesses, SMTEs suffer from overdepen-
dence on the tourism distribution channels to
promote and distribute their product. In
particular, intermediaries and especially tour
operators, concentrate enormous power within
the distribution channels, and are capable of
determining SMTEs' product, marketing, dis-
tribution and pricing mixes. The marketing
campaign and the visibility of the Aegean
islands and SMTEs are therefore determined
almost exclusively by the coverage, space,
photographs and description in tour operators'
brochures. In addition, European tour opera-
tors can also control accessibility, especially to
Mediterranean or long-haul destinations, as
they own or manage most charter airlines that
provide direct and inexpensive ¯ights to these
destinations (Wanhill, 1993). Transportation is
often a major weakness for peripheral, remote
and insular destinations, as their accessibility
often depends on charter ¯ights. Aegean
SMTEs tend to feel frustrated because they
are unable to attract consumers, simply
because they cannot provide convenient, reli-
able and affordable transportation. The
formulation of charter air carriers by destina-
tion areas, such as Turkey and Spain, as well as
the emerging deregulation policies in the
European Union may diminish this problem
in the near future.
As there is little economic development in
the region, the Aegean SMTEs have to import
essential raw and construction materials from
elsewhere, increasing their transportation,
delivery and purchasing problems and costs.
In addition, lack of economies of scale essen-
tially means that SMTEs have to pay higher
prices for products than their larger counter-
Int. J. Tourism Res. 1, 341±358 (1999
350
parts. Shortage of specialised personnel and
inadequate training procedures mean that
human resources management is a major
weakness of SMTEs. Often both entrepreneurs
and employees lack professionalism and have
dif®culties in dealing with external organisa-
tions or in maintaining standards of service. As
personnel have to cover a wide range of
positions, a loose job description is usually
provided and multiskilled personnel are re-
quired. The labour turnover, due to the
seasonality, reduces the availability of quali-
®ed and experienced personnel and makes
SMTEs' product delivery not only variable, but
also unpredictable. The small size of operation
provides little opportunity for the division of
tasks, professional employees and proper
training. As no quality standards are intro-
duced, service delivery often varies according
to the occupancy, service provider and timing.
Moreover, low bargaining power, and lack of
advanced facilities are additional operational
disadvantages.
Moreover, SMTEs face signi®cant ®nancial
constraints as on the one hand they are
required to invest in ®xed assets at the
beginning of their operations, and on the other
hand, there is a discrimination against them by
®nancial institutions, as they normally have
very few assets. Consequently, they are forced
to accept unfavourable ®nancial deals. The EU
has realised this problem and has taken action
to provide ®nancial resources for SMEs.
Finally, the Aegean SMTEs, similarl to other
peripheral destinations, suffer from seasonal-
ity problems and have to produce adequate
income within a limited period every year.
Lack of diversi®ed investment in other eco-
nomic activities forces proprietors to work
intensively for the peak months and rest in the
off-peak months, while their pay-back period
is inevitably unfavourable. As the tourism
industry becomes more professional, embraces
quality management and responds to an
increasingly discerning customer, SMTEs'
typical lack of business expertise and minimal
standardisation may become a liability, espe-
cially for some target markets (Cooper and
Buhalis, 1992).
Recent developments in the external envir-
onment present numerous opportunities for the
Aegean destinations and SMTEs. In the Euro-
Copyright # 1999 John Wiley & Sons, Ltd.
D. Buhalis
pean context, the European Union takes
several actions to support small and med-
ium-sized enterprises (EC, 1993a), while it
supports infrastructure development of per-
ipheral regions and contributes signi®cantly to
the prosperity of SMTEs. Development funds
have become available for the Aegean islands
through the Commission to improve the re-
gional infra- and superstructure. A gradual
European labour redistribution will also pro-
vide support for each region to specialise in the
production of goods and services where it can
achieve competitive advantages, bene®ting the
Aegean islands. The SMTEs bene®t from the
continuous growth of global tourism demand,
as more people require holiday services, while
the new demand trends favour SMTEs as they
can satisfy the emerging specialised and
sophisticated customer better than larger
organisations. Information and telecommuni-
cation technologies can provide strategic tools
for SMTEs' tourism products distribution and
thus, reduce their isolation. Despite the mar-
ginalisation of SMTEs from the mainstream of
IT developments in the tourism industry, and
their extreme vulnerability, the recent emer-
gence of Destination Management Systems
provides unique opportunities for enterprises
to reach a very wide market. New technologies
offer opportunities for developing innovative
products, such as teleworking for tourists who
may like to spend time working during their
stay at the destination (Buhalis, 1993, 1994).
In terms of external threats, environmental
degradation through inappropriate waste
management and excessive usage of natural
resources can be observed (Coccosis and
Parprairis, 1992). Inef®cient planning at the
Aegean islands enables SMTEs to pursue their
short-term pro®t tasks without focusing on the
long-term issues. Lack of know-how and funds
effectively makes SMTEs unable to deal with
environmental problems. Consequently, they
often generate environmental damage while
they feel unable to take remedial measures.
Moreover, the oversupply of principals (sup-
pliers) and lack of well de®ned carrying
capacity limits has placed Aegean SMTEs in
a disadvantaged position as they cannot
achieve suf®cient income. Similarly, concen-
tration of power in fewer multinational enter-
prises through the emerging globalisation, also
Int. J. Tourism Res. 1, 341±358 (1999
Tourism on Greek Islands
threatens the ability of Aegean SMTEs to
survive. The issue of infrastructure is closely
related to oversupply, which attracts higher
demand than planned. The Aegean islands
failed to develop their infrastructure provi-
sions according to the pace of tourism devel-
opment. As a consequence, there are pressures
on the existing inadequate facilities at a
destination level. Finally, the Aegean destina-
tions suffer the impacts of political unrest, as
well as the image of a potential con¯ict and
terrorism area, as their proximity to Turkey
and the Middle East makes them a sensitive
area. Irrational and unquali®ed political inter-
vention often damage the prosperity of
Aegean destinations and SMTEs. As SMTEs
have little lobbying power, they have limited
in¯uence over political decisions that deter-
mine their welfare.
TOURISM IMPACTS ON THE GREEK
ISLANDS: A NEGATIVE BALANCE?
The above strategic weaknesses have profound
implications for the Aegean host population,
as their economic, socio-cultural and environ-
mental resources are exploited, without ensur-
ing their sustainability. Lack of comprehensive
research and failure to initiate carrying-capa-
city limits or zoning systems contribute to the
anarchic development of tourism, as well as to
the expansion of the negative impacts on the
Aegean society and environment. Hence, the
Aegean region is required to bare the cost of
tourism development, without achieving equi-
table returns for the resources utilised by the
industry.
Despite the contribution of tourism to the
economy, mainly through the increase of local
employment, certain negative economic im-
pacts can be identi®ed due to the mass tourism
orientation of the industry. Not only is the
competitiveness and pro®tability of the indus-
try jeopardised, but also the region seems to
follow a single-development of tourism as a
regional development option, at the expense of
industrial and agricultural growth. This is a
result of limited investment in other sectors
and the competition between tourism and
agriculture for the limited labour resources
on islands. As a result, the economic structure
of the region is jeopardised, while a complete
Copyright # 1999 John Wiley & Sons, Ltd.
351
dependence on tourism and a reduction of the
multipliers become inevitable (Loukissas,
1982; Komilis, 1991). Public sector subsidies
to the private sector, as well as unemployment
bene®ts in the off-season period also reduce
the contribution of tourism to the economy at
the macrolevel (Mourdoukoutas, 1988; Leonti-
dou, 1991). In addition, multinational tour
operators exercise bargaining and coercive
power on local principals and often achieve
prices below the operational cost levels. This
practice undermines the pro®tability of local
principals and the economic bene®ts in gen-
eral. Both opportunity costs and displacement
effects are therefore evident (Fletcher, 1993).
However, lack of scienti®c research on the
economic impacts of tourism, makes the real
contribution of tourism in the economy spec-
ulative, rather than one based on hard evi-
dence (Zacharatos, 1988, 1989; Konsolas and
Zacharatos, 1993).
A number of negative socio-cultural tourism
impacts are reported for the Aegean society.
The islands used to be almost crime-free zones,
due to the personal relationships of the locals.
Tourism introduces criminal activity, through
visitors' misbehaviour, such as `lager-louts'
behaviour, hooliganism, and nudity, which
often offend the host population, who have no
option but to tolerate it (Tsartas, 1989, 1992).
Furthermore, the commercialisation of history
cultural traditions and human relations is also
evident (Papadopoulos, 1988a,b; Briassoulis,
1993), while locals overwork during the
summer season, altering or even neglecting
their social, family, religious and cultural
obligations (Mouidoukoutas, 1988; Castel-
berg-Koulma, 1991 Moore, 1992). Despite
environmental resources becoming central to
destinations' competitiveness, many regions
go through an unparalleled exploitation, due
to inadequate planning and reinvestment in
their sustainability (Buhalis and Fletcher,
1995). Coastal pollution, water shortages, sew-
age treatment, waste disposal, traf®c conges-
tion, noise pollution, overbuilding, and
aesthetic degradation are some of the impacts
already experienced in a number of resorts
(Papadopoulos, 1988b; Peterson, 1990; Econo-
mist, 1991; Leontidou, 1991; Van den Bergh,
1993). In addition, the disturbance of endan-
gered species' habitats is another problem
Int. J. Tourism Res. 1, 341±358 (1999
352 D. Buhalis

experienced on several islands (Ottaway, 1992;
Briassoulis, 1993; Prurier et al., 1993). The
aforementioned impacts illustrate that tourism
activity, and particularly the mass tourism
orientation, reduces the sovereignty of host
populations over their resources. As these
impacts are trade-offs for the economic gains
of tourism activity, it is important that con-
sistent, long-term strategic planning should be
undertaken, in order to enable the manage-
ment and sustainability of local resources.
These tasks should all be reinforced by
research, political will and strategic planning.
STRATEGIC IMPLICATIONS FOR THE
GREEK AND AEGEAN TOURISM
ENTERPRISES
Although the above weaknesses and negative
impacts are not unique to the Aegean context
and can be identi®ed in various peripheral,
remote and insular destinations around the
world, it becomes quite evident that unless
these issues are addressed urgently by both the
private and public sectors they will jeopardise
the competitiveness of the destination and its
SMTEs. As a result of the aforementioned
strategic weaknesses, Greece and the Aegean
islands fail to attract the desired `high-quality,
high-expenditure' tourists, as they are increas-
ingly unable to satisfy their requirements.
Thus, SMTEs fail to make adequate pro®ts in
order to reinvest and modernise so that they
can maintain their competitiveness. The
deterioration of the tourism product and
image leads to a lower willingness to pay by
consumers, which consequently leads to a
further drop in quality, as the industry
attempts to attract customers with lower
prices. This is a vicious spiral which has been
destroying the essence of developing tourism
in several Mediterranean destinations. The
concentration of bargaining power in Euro-
pean distribution channel intermediaries and
tour operators in particular, in combination
with the inability of the Greek tourism in-
dustry to promote itself and offer effective
distribution channels, inevitably minimise the
pro®t margins of SMTEs and their ability to
yield decent returns on their investment. As a
result, tourists' expenditure per capita in
Greece deteriorates gradually, while their
volume increases.
The unfavourable situation is already re-
¯ected in the declining pro®tability of Greek
tourism enterprises, as presented in Table 2.
Out of the majority of the larger principal
enterprises, only car-rental companies and
travel agencies managed to have an acceptable
return on equity (16.9% and 14.5% respec-
tively). In contrast, yachting and cruising
companies had a much lower pro®tability,
while accommodation establishments had a
negative return on investment (ÿ1.8%) and a

Table 2. Basic ®nancial data of Greek tourism enterprises in 1993 (in thousands of drachmas) (Source:
adapted from ICAP Tourism, as quoted in Tourismos ke Oikonomia, 1994, p. 15)
Yachting-
Car rental cruising Travel
enterprises enterprises agencies Hotels Total
Sample size 44 40 279 1,451 1,814
Personnel employed 1 068 29 3 831 ± ±
Bed capacity ± ± ± 253 227 253 277
Total assets 16 030 421 18 806 889 52 562 990 623 061 276 710 461 576
Fixed assets 20 515 996 16 488 921 22 440 360 832 633 899 829 079 176
Depreciation 6 772 166 1 945 660 7 773 910 326 108 906 342 600 642
Debts 10 316 801 12 050 095 41 278 428 296 869 161 333 514 535
Net worth (shareholders' equity) 5 713 620 6 756 694 11 284 562 353 192 115 376 946 991
Gross revenue 5 443 866 6 033 001 24 599 341 93 060 240 129 136 448
Net pro®t 968 013 276 881 1 637 237 (6 405 118) (3 522 926)
Return on shareholders' equity (10/8) 16.94% 4.10% 14.51% (1.81%) (0.93%)
Debt/total assets ratio (%) (7/4) 64% 64% 79% 43% 47%
Net pro®t margin (10/9) 17.78% 4.59% 6.66% (6.88%) (2.72%)

Copyright # 1999 John Wiley & Sons, Ltd. Int. J. Tourism Res. 1, 341±358 (1999
Tourism on Greek Islands
negative pro®t margin (ÿ6.9%). The average
return on shareholders' equity, as well as the
average pro®t margins, throughout the indus-
try are both negative (0.9% and ÿ2.7% respec-
tively), leaving little room for optimism. These
®gures can be compared with the 17% interest
rate obtainable from saving bank accounts in
1993; the 27.5% cost of capital; the 14.4%
in¯ation rate; or the 8.8%±11.1% average return
on equity of industrial investments (Epilogi,
1994). Surprisingly, 1993 was described as a
`good year', as it reduced 1992's losses drama-
tically by 68.3%, while the return on equity for
accommodation establishments improved by
69.32% (from ÿ5.9% to ÿ1.8%) (Tourismos ke
Oikonomia, 1994). Smaller tourism industry
companies are expected to have experienced
worse problems as they have less bargaining
power, knowledge of markets, marketing
activities, ®nancial resources, management
structures and expertise, and therefore are less
pro®table.
From the above analysis it is quite evident
that tourism ®rms with lower capital invest-
ment do better ®nancially than enterprises
with high ®xed assets, such as hotels and
yachting companies. This is attributed to the
fact that they employ less capital and have a
greater ¯exibility in employing their assets and
human resources according to the demand
¯uctuation. Underutilised resources during
the low-season period are often used on
alternative activities on the mainland.
The low pro®tability of hotels is of particular
importance, due to the fact that accommoda-
tion establishments employ the vast Majority
of the private sector assets in the Greek
tourism industry. In addition to the strategie
weaknesses analysed, several direct structural
problems are responsible for their inability to
achieve suf®cient returns on their investments.
The seasonality problem, which keeps most
hotels closed for more than 6 months per year,
effectively reduces the average annual occu-
pancy to less than 50%. In addition, Greek
hotels achieve low average room rates due to
pressures from tour operators to reduce prices
and due to ®erce competition at the local level,
originated by an oversupply of unregistered
premises. These two factors effectively mean
that the accommodation industry yields very
low pro®ts.
Copyright # 1999 John Wiley & Sons, Ltd.
353
The role of the tour operators determines the
pro®tability of principal enterprises in most
peripheral, remote and insular destinations.
The inability of Aegean destinations and
SMTEs to promote and distribute their product
ef®ciently to their markets, in combination
with the strictly regulated air transportation,
stimulated the growth of vertically integrated
mass tour operators. Tour operators are
instrumental in the development of mass
tourism. They increasingly accumulate almost
absolute control not only over the distribution
and promotion functions of the industry, but
also over the accessibility to peripheral, insular
and remote destinations, by providing in-
¯exible, but inexpensive and direct charter
¯ights. Faced with intense competition and
concentration in their marketplace and armed
with bargaining power at the destination level,
tour operators increasingly pressurise price
levels of the principal enterprises, minimising
their pro®t margins. This is facilitated by the
bargaining power provided by the volume of
their customers, as it is estimated that the top
six British and German tour operators operat-
ing in Greece supply 20% of the country's total
arrivals. Wanhill (1993) explains that `criticism
of major tour operators usually comes from
destinations, particularly in less developed
countries. The latter have expressed concern
over the strength of the economic power of
large wholesalers, which allows them to obtain
prices below those that would occur in markets
where competition prevailed. It is further
argued that their specialist knowledge allows
them to in¯uence consumer choice in tourism-
generating countries, and so gives them the
opportunity to switch sales to destinations
which are more pro®table to the company'.
Apart from the direct impacts on principal
enterprises, the power concentration by tour
operators has severe implications for the
survival and competitiveness of all other
distribution channel members, such as travel
agencies, small tour operators, and handling
agencies, as well as for the ability of destina-
tions to maintain their sovereignty and eco-
nomic bene®ts.
Horwath (1994) concludes that `unfortu-
nately, the results in terms of return on
investment in the tourism industry are not
very promising especially when compared
Int. J. Tourism Res. 1, 341±358 (1999
354
with those of other Greek economic sectors. It
is an indisputable fact that the average Greek
tourism entrepreneur is heavily dependent on
the tourist package price which is ruthlessly
negotiated by the international tour operators.
It is an ªunhealthyº dependency as a result of
the weak position of the Greek tourist product
in the international market. In addition, the
aforementioned dependency is the result of the
lack of marketing activities in an average
tourist enterprise. As we all know, effective
marketing activities are based on the product,
place, price, promotion which all contribute to
client satisfaction and further to a bigger share
in the international tourist market. Up to now,
three of the aforementioned important ele-
ments of marketing have been overlooked
which determine the weak negotiation power
of the Greek entrepreneur'. Hence, radical
measures are required in the product formula-
tion, the promotion strategy and the distribu-
tion channels to support the competitiveness,
pro®tability and prosperity of Aegean destina-
tions and SMTEs. Failure to react by strength-
ening the competitiveness of the Aegean
SMTEs would have severe implications for
the future of tourism activity in Greece, as the
essence of its existence is jeopardised, and its
economic contribution may be questionable.
THE NEED FOR RATIONALISATION OF
GREEK TOURISM
Several trends in international tourism are
expected to intensify the pressure on the Greek
tourism and to alter the competitiveness of the
industry. They can be summarised in the
following points:
(1) overdependence on tourism for regional
development and welfare;
(2) vertical integration of multinational tour-
ism enterprises;
(3) consumer protection through European
Commission legislation;
(4) international competition from new exotic
destinations;
(5) increasing sophistication of tourism
demand;
(6) deregulation of air and sea transportation;
(7) extensive utilisation of information tech-
nology by both industry and consumers;
Copyright # 1999 John Wiley & Sons, Ltd.
D. Buhalis
(8) environmental pressures;
(9) implementation of standardisation and
total quality management methods.
In order to address these issues and ratio-
nalise the tourism industry, a partnership
between the Greek private and public sector
should be formulated. The partnership should
facilitate the development of a Master Plan,
where a strategy should be adopted, based on
quanti®able objectives and tasks. Extensive
research should be undertaken by using
credible measurement methods, such as
input±output models and multiplier analysis,
not only for the economic, but also for the
social, cultural and environmental impacts
(Buhalis and Fletcher, 1995). In addition,
consumer satisfaction measurement tech-
niques should be utilised. Thus, a rational
planning process is required, in order to
facilitate the development and implementation
of a tourism strategy, through funds allocation
and monitoring, land use control, and exam-
ination of public and private sector practices.
The ultimate objective will need to be the
optimisation of tourism impacts and the
sustainability of resources for the long-term
welfare of the indigenous people.
The public sector will need to rationalise and
depoliticise its operations in order to play its
role as regulator, coordinator, infrastructure
provider and promoter of the destination.
Long-term policies, supported by the appoint-
ment of experts in tourism management,
marketing and planning on key positions will
be instrumental for the successful develop-
ment and implementation of the Master Plan.
The public sector should also engineer the
transformation of tourism management exper-
tise to both local SMTEs and authorities, in
order to provide essential tools for planning
and managing the industry. On the other hand,
the private sector should improve the industry
competitiveness by ameliorating its manage-
rial and labour force competencies, enhancing
the quality of services, designing appropriate
marketing mixes to attract and satisfy target
markets and cooperating closely in order to
achieve synergies and economies of scope. The
private sector should also adopt a responsible
attitude, where long-term bene®ts guide
serious investment opportunities. This implies
Int. J. Tourism Res. 1, 341±358 (1999
Tourism on Greek Islands
that the public sector should not any more be
regarded as the principal source of ®nancing
tourism investments, the sole advertiser of
the tourism product and the only infrastruc-
ture developer. A multi-integration of the
tourism industry with all the involved
bodies in the preparation, distribution and
delivery of the tourist experience needs to be
ensured.
The reverse of the decreasing-quality vicious
cycle is of critical importance for Greek
tourism. Better quality services would stimu-
late the competitiveness of the tourism
product, strengthen its position in the inter-
national market, provide distribution channel
power, enhance its customers' willingness to
pay, and enable the industry to increase its
prices, improving the pro®tability at the
microlevel and the economic impacts at the
macrolevel (Skoulas, 1994).
SYNTHESIS: PERIPHERALITY AND THE
FUTURE OF TOURISM ON THE GREEK
ISLANDS
Peripheral, remote and insular destinations experi-
ence greater dif®culties, due to their over-
dependence on the tourism industry, the
scarcity of physical, ®nancial and human
resources, as well as their inability to achieve
competitive advantages in other economic
activities. This often results to a single tourism
development strategy which inevitably mag-
ni®es dependencies and jeopardises the sus-
tainability of local resources. Inadequate
planning at the local level often enables the
private sector to pursue short-term economic
bene®ts, at the expense of the sustainability of
local resources. Further, the concentration of
the multinational corporations and intermedi-
aries, in particular, enable them to in¯uence
tourism demand. In addition, corporations can
determine the ability of principal enterprises
and destinations to attract their target markets,
by using marketing to manipulate the image of
destinations and transportation (mainly char-
ter ¯ights) to facilitate (or not) the accessibility
to the destination. As a consequence, national
governments and destinations, especially in
developing and insular regions, are unable to
gain control over their own tourist facilities,
despite the fact that they often subsidise both
Copyright # 1999 John Wiley & Sons, Ltd.
355
tourism demand and supply quite substan-
tially.
Destinations and SMTEs lack the resources
to reverse their dependence upon the concen-
trated, mass-tourism oriented multinational
corporations and, in particular, upon their
distribution channel partners. These depen-
dencies in combination with their inability to
reinvest in the sustainability of the resources
utilised and in the improvement of their
services due to low pro®t margins, force them
into a spiral of quality, competitiveness, train-
ing, demand, price, pro®tability and economic
impacts deterioration, which unavoidably
jeopardise the welfare of both destinations
and SMTEs. The concentration observed inter-
nationally also reduces the sovereignty of local
authorities over destinations and tourism
enterprises and it generates a new type of
neo-colonisation.
The analysis of Greek tourism clearly illus-
trates the importance of tourism activity at
both the national and regional levels, while it
indicates the structural disadvantages of
Greece and the Aegean islands as a tourism
destination. It demonstrates that the over-
dependence of the tourism industry on its
distribution channels, as well as the lack of
planning and the plethora of SMTEs, generate
numerous negative economic, socio-cultural
and environmental impacts. The structural
weaknesses and overdependence upon tour
operators have unfavourable implications for
the pro®tability of the Greek tourism industry,
illustrating the serious consequences and
urgency for action. The SMTEs are particularly
vulnerable as their marketing and manage-
ment decisions are often determined by their
multinational distribution partners. Conse-
quently, strategic planning is essential for the
prosperity of the Greek and Aegean tourism
industry. Therefore, a further investigation of
the SMTEs' needs and weaknesses should be
undertaken in order to identify mechanisms to
strengthen their competitiveness. A diagonal
integration strategy for SMTEs is therefore
proposed, based on a long-term strategy which
should aim to maximise consumer satisfaction,
optimise tourism impacts, achieve long-term
pro®tability for the private sector and ensure
prosperity and welfare for the indigenous
people at the destination level.
Int. J. Tourism Res. 1, 341±358 (1999
356
ACKNOWLEDGMENTS
The author would like to express his
appreciation to Professor Chris Cooper for
research guidance and to the Surrey Research
Group, the University of Surrey, the University
of the Aegean, and the Greek National Tour-
ism Organisation for ®nancial support during
the research.
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Briassoulis, H. (1993), Tourism in Greece, in Pompl,
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