Haris Makryniotis, Managing Director, Endeavor Greece
In the years following the Greek crisis, entrepreneurship in Greece has emerged as a key lever for growth restoration and job creation, in the absence of career alternatives and in pursuit of national competitive advantages.
However, Greece has always exhibited a strong tendency towards entrepreneurship. With ~75 established businesses per thousand inhabitants and more than 55,000 new businesses established every year, pre-crisis Greece demonstrated almost double the average EU figure in terms of per capita business activity. The vast majority (97%) of these businesses were classified as micro (1-9 employees). Therefore, while productivity in larger business segments had been comparable to other European countries, the low productivity associated with micro-businesses drove down the overall productivity of Greek companies.
In this environment dominated by small businesses, a significant portion of economic activity had focused on low-value-adding sectors. Retail and wholesale were dominant, manufacturing and agriculture constituted a small share of the economy, and focus on R&D and technology was minimal. What’s more, with the exception of a few companies, the overall sophistication of products and service offerings had been low.
The crisis shifted interest towards entrepreneurship as the way out and forward, in an environment of unforeseen unemployment levels and almost complete lack of traditional employment options. In particular, four types of business opportunities in the Greek market became attractive to entrepreneurs and investors. These are either structural or have emerged during the recent crisis:
- Opportunities in areas in which Greece possesses competitive advantage (e.g., tourism, agri&food), that is still untapped;
- Opportunities in sectors that undergo a broader restructuring (e.g., financial services, energy), allowing for market shares to move between existing or to new players, typically in a consolidation manner;
- Opportunities driven by global trends (e.g., in ICT) which can be captured by Greek entrepreneurs at local, regional or global level;
- Sector-agnostic opportunities in individual companies, with significant upside that can be unlocked if they address their current liquidity issues and/or go through operational and organizational restructuring.
Focusing on tourism and travel, where Greece exhibits competitive advantage and a huge growth potential, the starting point is a largely uncompetitive, unsophisticated and mono-thematic product, severely constrained by current liquidity drainage. However, the entrepreneurial and investment opportunities are driven by 5 trends and needs that should be addressed:
- Need for total upgrade of product offering – to compensate for higher cost versus neighboring countries- but also for clearer distinction between the various traveler segments: budget/mass, upscale, luxury; this upgrade will entail acquisition and restructuring of old units, better management and services in existing units, but also new targeted developments in certain geographical areas and thematic segments;
- Need for higher sophistication and infrastructure in less-traditional, but rapidly growing products, e.g., cruises, sailing/yachting, mixed-use resorts integrating golf courses, vacation homes and/or marinas;
- Need for better services beyond accommodation to create a holistic experience to the traveler and establish links with other locally relevant activity, e.g., in food sector or culture;
- Need for more sophisticated support services and customer care, covering also pre-visit experience, booking and transportation;
- Need to utilize technology to allow for disintermediation, establishment of online marketplaces to bring together travelers, providers and locals, and offer tailor-made, locality-driven experiences; this could include not only domestically developed communities but also support to local providers to establish reliable presence in international schemes, such as AirBnB.
Out of the opportunities described above, a fraction is already being addressed by a small share of entrepreneurs and their companies. There is a gradually growing number of new ventures, with focus on digital travel services/experiences, hospitality management and online travel agencies that manage to effectively compete internationally and are likely to go through consolidation in the mid-term. There is also a new generation of companies focusing on online communities and marketplaces as well as devices and tools for improved travel experience (e.g., in museums and cultural sites) for ‘local’ experiences which do need to further prove their business model and aggressively grow.
However, there is still need for higher quality accommodation in the various traveler segments and other tourism themes (e.g., sailing, gastronomy, culture) and in offering an end-to-end experience to the traveler, customized to their needs, budget and personal preferences, which could also be offered as a B2B service to accommodation or cruise providers.
There is a golden window for entrepreneurial activity in Greece, as the country goes through a period of total restructuring, structural advantages are being addressed, and local players start competing at a regional and global level. There is also a golden window for investors, who shift focus on Greece as a potential investment destination. This golden window is not expected to last too long; most likely it will have duration of 12-24 months, before it gradually scales back to steady-state levels and we have to capture this potential.