A boutique hotel in the Psyrri district of central Athens. A boom in foreign visitor arrivals has largely bypassed 1- and 2-star hotels, leading to a wave of closures over the past 15 years.

The boom in foreign visitor arrivals has passed 1- and 2-star hotels by, leading to a wave of closures over the past 15 years.

In 2009, there were 1,568 1-star hotels in Greece and 4,368 2-star units. At the end of 2024, according to Hotel Chamber data, 1-star hotels had declined to 1,147 and 2-star ones to 3,251, a total loss of 1,538 hotels or nearly 2 per week.

It is a development totally obscured by the dominant narrative, of a massive tourism boom, especially following the Covid-19 pandemic, billions in investments and hotel upgrades and the construction of brand-new resorts.

One can see in many places the abandoned husks of the former hotels, some with boarded windows, others obviously raided and stripped of their fixtures.

A small number have been converted into housing for seasonal employees in larger, more luxurious units, not always offering acceptable living conditions. An even smaller number have been converted into boutique hotels.

These were all family businesses hurt by the decade-long financial crisis, followed by the pandemic, which made continuing their operations impossible. Saddled with debt, they never had serious access to bank loans.

They also had to contend with the government strategy of aiming for visitors with higher per capita spending, offering incentives to 3- and 4-star establishments to upgrade.

But, despite that, most of the more modest hotels still survive. 

According to Hotel Chamber data, 1- and 2-star hotels account for 43.6% of the total number (4,398 out of 10,104 at the end of 2024). Financially unable to offer upgraded services and raise their prices, they operate either at a loss or, at best, a very modest profit.

The introduction in 2024 of the digital card to monitor employee working hours was another blow to 1- and 2-star hotels. It did reveal employers’ overworking of their staff and led to an explosion in overtime pay, in the tourism sector above all. “Yes, this practice [of overworking] was illegal and morally unacceptable, but it also revealed the inability of a great number of Greek tourism businesses to be competitive under conditions of regulatory and tax compliance,” an economist told Kathimerini.