What are TUI Group’s All-Inclusive Crete Intentions?

I was reading a report from 2017 on how TUI claimed they are supporting Crete becoming a “showpiece for sustainable food on holiday.” With the 2018 tourism season on Crete ending in such an unsustainable fashion, TUI launching a PR campaign seems hypocritical. As most retailers on Crete try to stay afloat, and as oranges rot on the ground in Chania, TUI claims it wants to change things for the better. There are “other” indications – a mountain of circumstantial evidence that all-inclusive (AI) tourism can be devastating.  

Now Open – The Cretan Buffet

TUI Group is an Anglo-German travel and tourism company out of Hannover, Germany that is a profit machine like any other corporate endeavor – period. It is no secret that TUI and companies like it seek what amounts to monopolistic control over markets in order to achieve ever-increasing growth. And as many experts have shown, sustainable tourism has nothing at all to do with the mega-resorts, dirt cheap flights, and the type of all-inclusive packages TUI and other travel companies offer. Furthermore, the demographic that TUI flies to Crete for cheap poolside banquets is not what will save the land of the Minoans from a grisly future. There, I said it. Sure, there’s room for the “all-inclusive” feast TUI and others offer at big resorts on the beach, but this company is not about balance and logic. Here on Crete, the locals have a nickname for the concept of all-inclusive tourism – they refer to it as a “curse.”

Just so everything is out in the open on TUI, the mega-conglomerate employs some 67,000 plus employees, operates more than 1,800 travel agencies, has 6 airlines with 130 aircraft, and runs more than 300 hotels and resorts including Sensatori and Sensimar worldwide. As for the hotels selling rooms to the German company, rest assured tens of millions in potential revenue is being lost because of TUI’s buying power. A casual look at a Crete hotel that appears to be overbooked to TUI shows a discrepancy of more than £100 pounds sterling in between the hotel’s normal rate and the TUI advertised price per night in Hersonissos.

I am not privy to the exact details of TUI’s contracts, but with hundreds of rooms listed on their website, you can imagine the potential revenue loss to this hotelier. This brings to mind the amenities that might be available and the staff wages that could be paid out, not to mention the owner’s P&L statement at the end of the year. This study (PDF) in the European Journal of Tourism, Hospitality, and Recreation outlines the economic impact unbridled all-inclusive tourism leads to.

If we look past the desirability statistics for AI we find that marketing’s investigations into customer wants have misguided us. Marketing’s job is done with the data-crunching of the inbound market, and now public relations is seeing a role reversal. Instead of advising corporations to adhere to truly ethical behaviors, the marketing-centric new PR just fluffs up the landscape. I’ll prove this out in a later paper, but it’s important to understand that excessive AI operations will ultimately destroy Crete’s economics and touristic offering. This quote from the above-mentioned study is telling: 

According to Suklum (2006) almost one-third of tourists hosted in Bodrum, Turkey, never participate in any economic, social, or other activities outside the hotel premises.

Furthermore, this study goes on to show that 80% of traveler expenditures go for airlines, hotels, and other international concerns, with little or no positive impact on local economies. Add to this the point that AI tourism is directed at mostly disadvantaged or underdeveloped countries, and you find a portrait of TUI that resembles a mob figure wearing one of those Hawaiian leis. 

TUI Growth: Unsustainable to the Core

Two issues are important for understanding how TUI and the companies tied to it are not sustainable businesses. First, despite the fact that investment advisors continue to rate TUI as a “buy” stock proposition, any sane economist will tell you that double-digit “growth” in the current macroeconomic situation is impossible over the long term. In other words, companies can no longer get double-digit profits by practicing unsustainable business. The world is not expanding, now is it? Secondly, and more importantly, TUI operates on small margins in the same way a company like Walmart or a grocery store does. While the company rakes in almost €23 billion in total revenue, the largest chunk of that revenue in 2017 came from TUI’s own hotels and brands. In other words, TUI managed, and partner hotels were not big profit drivers. If you look at the full report, you’ll also find that many TUI fully owned operations were big losers in 2017. 

In my opinion, TUI and other tourism operators are destroying the very product they sell to consumers. Here on Crete, for instance, overbooked hotels with cheap tourists from Germany are not helping the wider economy. A simple example is the four-star all-inclusive with a normal room rate of €300 euro per night, selling at half of that for TUI and others. I know of at least a dozen hotels that are thankful to God TUI sends them enough business to stay afloat. But nobody is making off like a bandit in the Crete hotel business, nobody except TUI that is. All this does not even address the fact that the large hotels TUI favors are far less efficient than the smaller family-owned ones. A report from Responsible Travel from 2011 frames my arguments for me in discussing all-inclusive operations:

“..the resort (which is usually owned by an overseas company) sequesters most of the tourists’ cash, leaving little behind in the local community who are impacted by the presence of the resorts. Holidaymakers also use vast quantities of energy and water (significantly more per person than local people) and create large amounts of waste, which some feel is a high price to pay for little commercial return.”

Now, what if you own a giant luxury resort outside Ierapetra? Your costs are hammering nails in your coffin with every guest sent by a tour company like TUI that leverages volume. Food costs murder you. Your help is unhappy because most of them cannot buy milk for their kids. You make a bigger, cheaper banquet – a buffet like a feeding trough for hungry German highway builders. And your four-star hotel becomes a fat farm that destroys the local economy. That traditional taverna up the road, its owners stare out at empty tables across a cold glass of raki. The shop owner waits all day for a passerby from Dusseldorf who might be able to buy some famous Cretan olive oil. And from Athens, the taxes come, the austerity, and roads never get paved. I am sorry to be blunt, but this is where I live. I am not blind. Look at what the TUI PR people slung together for this new initiative for Crete. They essentially blame farm closings and the plight of Cretans on the Cretans themselves:

“Olive oil and wine – both are foods that are indispensable to Greek culture and play an important role in Crete’s economy. At the same time, the conventional cultivation methods create a variety of sustainability challenges. In particular, environmental pollution, loss of profits and the closure of many small farms are the result.”

A History of German Operations on Crete

As I sit here sifting through TUI profit and loss statements, I am wondering if anybody in Hannover has considered what happens when there is nothing left on Crete but 50 beach resorts and no agriculture, history, or cultural pursuits. Remembering German operations on Crete from the early 20th century, I think I know why TUI insists on throwing a few dollars at a PR hyperbole of a sustainability effort. In a world dominated by economic warfare, a strategy of launching an invasion of non-spenders toward an economy is strategically brilliant. It’s also inherently evil in my book.

Instead of finding ways to send people to Crete who can afford a “real” traditional vacation, third-party sellers want to “own” the market. When everything else is dried up, closed up, and dilapidated, maybe TUI’s executives have plans to buy it all up for peanuts to start more resorts? Sorry TUI, you asked for it by cutting the throats of so many this season, and for being typically Machiavellian in announcing peanuts for the poor Greeks. The TUI Cares for Crete – Sustainable FoodPR campaign (because that is all it is in my opinion) loops in other German companies via an arm of the German Travel Association (DRV) known as Futouris.

Looking underneath this organization, I find the same old strings attached to every corporate/governmental effort these days. Short story there – TUI well supported and the people of Crete 90% likely to be on the losing end of things.

I don’t see TUI raising prices for Crete vacations in order to empower the local economies. I doubt that even one TUI board member will weep over another failed hotel here on the island, for certainly there is someone in Hannover ready to invest. And I’m also certain the only farms the Germans are interested in will be all or part-owned by German investors.

It would be interesting to see if this European bank plan through Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank has anything to do with leasing foreclosed properties to the merchants who lost their businesses to banks in the first place. We already know Germany’s Fraport-Slentel consortium already took over 14 Greek airports, what’s to stop Frankfurt investment firms from “optimizing” toxic assets?

Like every other look into the financial dealings of major corporations, at the end of the tunnel, somebody is losing. This is the nature of supra-capitalism, I guess. These corporate entities hire teams of public relations people in order to convince the public they are not totally profit machines. I know, since companies have hired me in the past in order to turn tax write-offs into philanthropy. The uptick in requests for unscrupulous PR is one reason I decided to retire early. Business has become rabid dog-eat-dog since the digital phenomenon caused a paradigm shift. Mind you, I’m not suggesting hotels or resorts operate this way, but larger corporations use BIG PR to effect.

Striking the Balance

In conclusion, large travel entities like TUI influence local economies in ways most Crete hoteliers have not understood. The business models of the all-inclusive have never been focused keenly on the social (Research published 2017) or environmental (Tourism in Crete by Konstantinos Andriotis) perspective. TUI and others are responsible for mass tourism and uncontrolled overdevelopment in many places. Meanwhile, Russian investor Mirum Hellas is making a massive investment from a more upscale perspective in Elounda near Agios Nikolaos. It remains to be seen if this investment group has its eyes set on a more sustainable model, but self-catering luxury villas will attract big spenders to the island.

I hope the reader does not misunderstand, big resorts are fun and provide a value that millions of people enjoy. My point is, there’s enough of them on Crete. For the island to continue to flourish as a touristic destination, some hoteliers are going to have to stand up to pressure from TUI and others. And they will have to wise up to the fact that networking some wineries on the island is not a sustainability movement. The world hates hypocrites, so heaven forbid TUI’s Care Foundation turns out to be a segway into Germans investing in olive oil, beermaking, and wineries.

I urge you to read this report by UK citizen Jon Sutherland, entitled “All-inclusive disaster,” from the West Crete Blog from back in 2012. The author talks about the situation on Rhodes with regard to the effects of mass tourism and all-inclusive on the tourism infrastructure. This quote sums up the argument:

“Family-run taverns, small shops, car rental companies, and others have disappeared over the course of the past five years. What had been a vibrant local economy has been transformed into a sad wasteland.”

This lucid opinion piece also discusses Crete in the same fashion. In the end, Sutherland issues a plea to the Tourism Ministry to pay attention to the trend. As an adopted Cretan, I would like to make the same plea. Please, reconsider the long reach of your decision to bend a knee to the Walmart of travel. From my experience as an American, I’ve watched too many suppliers go broke once the corporate boys monopolize the market.