A Long Way From Athens

THE isles of Greece! the isles of Greece!
Where burning Sappho loved and sung,
Where grew the arts of war and peace,—
Where Delos rose and Phoebus sprung!
Eternal summer gilds them yet,
But all, except their sun, is set.

– Lord Byron, The Isles of Greece

A stone’s throw from the Turkish coast, the island of Lesvos in the north-east Aegean was very late getting into modern tourism and has never come close to catching up with its better known rivals, like Corfu, Rhodes and Kos.  Despite being the third largest of the Greek Islands, there are many who have never heard of it.  And yet this is where Aristotle carried out his pioneering work in biology, where Achilles and his myrmidons reputedly stopped off for a little R&R on their way to give the Trojans a piece of their mind and where Sappho wrote overly enthusiastic poems about the girls in her care.  It is where the Emperor Claudius took his summer holidays, and it’s where I take mine.  It’s a long way from Athens.

We’ve arrived the day before the election re-run that may see Greece crash out of the Euro sooner rather than later, and it is fair to say that the level of tourism is well and truly down.  In truth, the only high season in Lesvos is August, when mainland Greeks descend in hordes to take their own Summer holidays.  The rest of the time, modest numbers of foreign holidaymakers looking for a quiet and authentic experience keep the tourism sector ticking over.  Usually.

I’m guessing numbers are around 50% down this year.  Our own 14-room family hotel is one of only two properties really popular with Brits in the village.  In previous year’s it’s been completely full, but currently only four rooms are occupied.  It’s not entirely down to the market.  Tui Travel took a sudden decision to re-purpose it’s First Choice brand as an ‘all inclusive’ product in the middle of last year’s contracting round.  Lesvos doesn’t have the giant hotels needed to provide the required level of splendid isolation from the local environment that such a product demands, so they abruptly pulled their flights from the island, after two decades.  Thomas Cook weren’t in the best of shape at the time and failed to pick up the business gifted to them.  So instead of four UK flights a week, there are now two.  All the same, when we left the UK, late bookings to Greece as a whole were down 30% and cancellations were at an all time high.

On the way from the airport to the north coast, our driver tells us about the taxi strikes that they’ve had – to protest against the deregulation that they think will see a flood of new drivers coming into the market.  “You’ll have to let us know when you have strike days coming up”, I say, “so that we can plan around them”.  He looks like I’ve suddenly lapsed into Martian.  “Oh no,” he says, aghast, “if we are on strike I shall simply come for you in my fathers car…”


“What do you mean we haven’t got a room?!  We’ve got a booking haven’t we?!”
“Booking, yes.  Room, no.”

– High Season, 1988


Lesvos is more or less an island of entrepreneurs.  Even the local police officer, not overly challenged by the criminal underworld, has his own gift shop.  And while it’s true that many (by no means all) conduct themselves with a kind of unhurried dignity, there’s no evidence of systematic  loafing in the private sector.  The small business owners that I know work very long hours indeed, by any standard.

So you would imagine that, with demand halved this year, competitive rivalry amongst accommodation owners, tavernas, gift shops and taxis would be crippling.  That the tourism sector would have more-or-less collapsed.  Indeed there is much grumbling, over ouzo and coffee.  There is also real apprehension about what the peak August season will (or won’t) bring.  But whereas soup kitchens in the Athens/Attica region are feeding 20,000 people a day, there is no sign here of anything like this kind of social meltdown.  In fact, apart from some cost cutting that occasionally spills over into service erosion,  there is little visible sign of any problem at all.  The island’s tourism sector is exhibiting a kind of strategic resilience.  I wonder why?

A mere five minutes after Mama takes our breakfast order, Papa waddles off towards his World War II moped to go and fetch us some eggs.  After a lengthy breakfast I try to pay.  “Meta” (later).

“It was the dancing. When my little boy Dimitri died…and everybody was crying… Me, I got up and I danced. They said, “Zorba is mad.” But it was the dancing — only the dancing that stopped the pain.”

– Nikos Kazantzakis, Zorba the Greek


The macroenvironment of course is deeply hostile:

A very corrupt and universally despised political establishment (a former defence minister was allegedly found to have €800m in a Swiss bank account, and politicians are currently immune from prosecution).  Set against this, the very real fear of a neo-communist government being elected (on a manifesto that includes ‘war reparations from Germany’ as a key plank in funding its extensive social spending aspirations).

In the days after we arrive, the centre-right prevails narrowly over the neo-communists (who actually win in Athens and Attica), and forms a coalition with two centre-left parties.  The new prime minister immediately falls ill, and his finance minister gives it 48 hours before throwing in the towel himself.

A grossly overvalued currency compared to competing markets (Turkey, Bulgaria).  A completely broken banking system.  70% of Greeks now have bank debts.  Unemployment is soaring and wage levels (together with GDP) are collapsing.  Do the math.

We notice that the bins don’t seem to be being emptied as regularly as usual.  A taxi driver and erstwhile insurance broker identifies the problem as being the shifting of power from the local village to the island capital.  But a taverna owner hints darkly that the bin men, whose wages have been slashed like everyone elses, are privately charging some businesses to have their garbage cleared.

Tax collection seems open to abuse, as is collection of utility charges.  I’ve no doubt that there is still a big wedge of black money in circulation, but as far as I can see people are paying significant taxes.  It just that the money collected doesn’t seem to be reaching the Treasury.

Supply of holiday accommodation and tavernas has for years outstripped demand.  Despite this, the EU has provided ‘solidarity funds’ to subsidise borrowing for such projects, distorting the market and discriminating against earlier-established businesses.  Incredibly, this practise continues.

Although the social impact on the islanders is nothing like as extreme as in Athens, the Greek people as a whole feel backed into a corner – not altogether healthy for rational and measured citizenship.  More to the point, their Western European customer base is being fed a steady diet of Athens unrest and looming ‘Drachmageddon’ by their media.  I’m reminded of the time I spent working in Belfast in the late 1980’s, where conditions on the ground were a good deal more benign than the impression gleaned through news consumption.

A local taverna owner tells me that their court case had to be deferred because, and I’m not making this up, “the lawyers were on strike”.  A few years ago a British expat we knew tried to buy a boat.  Every day he went to register the vessel, only to be told “avrio”, tomorrow.  It finally took three months to get it registered.  He named the vessel ‘Avrio’.

Let’s just move on shall we.

Greece’s principal exports are tourism, olive oil and songs of unrequited love

So if the macroenvironment is so hostile, demand for tourism has collapsed and competitive rivalry is high, why is the tourism sector looking relatively robust?

In 1980 Professor Michael Porter wrote ‘Competitive Strategy: Techniques for Analysing Industries and Competitors’.  Since then, virtually every business studies and MBA student has learned to identify the ‘five forces’ affecting a given sector – bargaining power of buyers and suppliers, threat of new entrants and substitute products, and competitive rivalry.  And left it at that.  But the book ran to almost four hundred pages.  Amongst other things, it broke down each of those forces into the specific considerations required to form a judgement, and examined each in detail.

Competitive rivalry, he said, is a function of the quantity and relative balance of competition, rate of industry growth, level of fixed or storage costs, level of differentiation or switching costs, capacity increments, diversity of competition, strategic stakes, and, finally, exit barriers.

In any given industry analysis, exit barriers are typically high, and often require corporate bankruptcy.  It turns out that here in Lesvos, although almost every other factor weighs against the tourism sector, exit barriers, at least in aggregate, are not so high.  People have their farms to fall back on.  And the supply of fresh produce this year is the best I’ve known it in two decades.

As I drink my early evening Amstel (brewed in Athens), my ‘bar man’ is placing a fifty euro bet on Greece to win against Germany in Euro 2012.  With the odds he’s getting, I’m not sure he’ll be here to serve me tomorrow night if Greece win.

The mountains look on Marathon—
And Marathon looks on the sea;
And musing there an hour alone,
I dream’d that Greece might yet be free

– Lord Byron, The Isles of Greece

And yet there is another factor in the hunt for competitive advantage – your own strategic resources.  As I sit here sipping my bira and pondering,  the ancient mountains and the wine dark sea smile knowingly, in infinite calm.  Our Lilliputian cares are like butterflies to them.

Occasionally we sit with the family and watch the news from Athens – the riots, the incandescent politicians, the starving poor, the gaggle of talking heads.  And at times it seems as far from here as it does from London.

We’re a long way from Athens.


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