At a time when Greece remains, despite intense competitive pressures, at the top of the world tourism map, it is called upon, led by its islands that welcome almost half of the country’s foreign visitors, to face the most critical challenge: maintaining its attractiveness through modern, sustainable and durable infrastructure.

In particular, according to the new study by the Economic Analysis Department of the National Bank, the investment needs in the Greek islands are estimated at 35 billion euros over a decade, with the aim of upgrading critical sectors such as transport, energy, water and waste management.

The challenge is not only to find sources of funding, but also to create a modern governance framework capable of coordinating priorities, directing resources with predictability and turning funding into completed projects. It will depend on this ability whether the current success of the Greek islands will be gradually undermined by yesterday’s inadequate infrastructure or whether it will evolve into a strategic advantage that will consolidate their position among the top destinations in the world, turning them into a “pilot” for the sustainable upgrading of Greek tourism.

As reported, Greece is an island tourism destination par excellence, with its islands having achieved a doubling of arrivals in the last 15 years, reaching 16 million in 2024. It is impressive that they stand out globally, accounting for 11% of global island tourism, while 7 Greek islands are included in the list of the 30 most popular destinations worldwide (respectively with iconic islands such as Bali and Hawaii).

This dynamic, however, comes with increasing pressures on infrastructure: during the peak months, the tourist density reaches 33 visitors per km² per day, compared to only 2-3 in the rest of Greece and the Mediterranean. Despite this explosive seasonal increase in needs, infrastructure investment per inhabitant over the last 20 years has remained in line with that of the mainland, although island regions face significant peculiarities.

First of all, the population on the islands increases by an average of 50% compared to the permanent one (in some cases reaching even more than 100%), which puts a much stronger pressure on their infrastructure.

On the mainland, although isolated outbreaks are detected (such as Halkidiki where the increase approaches 50%), the phenomenon remains more limited, with the average increase not exceeding 5%. Secondly, the islands incur additional costs of around 15%, due to increased logistics, lack of economies of scale and the need for reserves in isolated areas. Without a targeted infrastructure upgrade, the islands’ tourism development risks being trapped at its limits.

Specifically, according to the estimates of the National Bank, in order for the island economies to respond to the increased needs, the current annual investments – which amount to approximately 2 billion euros and mainly concern transport projects and basic infrastructure (such as energy and water supply) – should be additionally added:

(i) about €1 billion per year to cover seasonal population growth of 50%, and

(ii) another €0.5 billion to address the additional “island burden” estimated at around 15%. In total, the required investment effort amounts to around €3.5 billion per year or €35 billion by 2035 – a requirement to absorb the growing demand (without breaking the carrying capacity) and strengthen the productive base of the island economies.

In this context, new international trends offer an opportunity to change this equation, as they significantly increase the return on the necessary investments. The strengthening of demand from distant high-spending markets (such as the US and Asia) and the shift towards travel to unexplored destinations and off-peak periods create the conditions for a strategic shift from quantitative to sustainable growth. If the Greek islands effectively capitalize on these trends, they can increase spending per tourist by around 15% by 2035 and reduce the concentration of July-August arrivals from 42% to 34%.

With the window of opportunity created by the new international trends open, the priority is to create a stable and predictable financial mix that will allow the realization of the necessary investments.

The first and most important source is the resources themselves: Today, the islands collect about 0.4 billion euros per year from accommodation and cruise fees, an amount that corresponds to almost half of the additional need resulting from seasonal population growth. The issue is the institutionalization of full reciprocity (ring-fencing), so that these revenues return to the regions where they come from and are invested in critical local infrastructure.

Additional sources of funding are (i) the mobilization of private capital through Public-Private Partnerships and concessions and (ii) the utilization of European and international financial tools through a combination of grants (RRF, NSRF) and low-interest EIB loans.

The challenge, the National Bank emphasizes, is not only financial, as without an appropriate governance architecture the available resources will continue to be locked up in projects without being converted into functional infrastructure. In particular, the fragmentation of responsibilities between ministries, regions and municipalities delays projects and prevents their prioritization, while ¾ of the island municipalities do not have technical services, with the result that many projects remain stagnant at the study stage.

While governance at the level of destination management, branding and tourism promotion can potentially work effectively through decentralized schemes and proper coordination of local organizations (in the standards of Law 4875/2021), governance at the infrastructure level requires a more centralized and institutionally strong mechanism, able to act as an executive tool for planning, financing and implementation of critical projects that local organizations need to succeed.

Under these circumstances, the basis of a coherent proposal could be the establishment of a single organization that would gather the projects and resources. In particular, the creation of a National Island Infrastructure Authority could function as a central hub for strategic planning, with responsibilities:

– gather and allocate resources with predictability,

– to prioritize projects based on objective data coordinating national priorities with the specific needs of the islands, and

– to speed up the implementation through unified digital mechanisms of fast-track licensing.

However, such an Authority to function effectively needs to be framed by two critical complementary pillars:

(i) First of all, important in this direction is the forthcoming Special Spatial Framework for tourism, which can form the institutional basis for the coherent preparation of development plans on the islands and their connection with the required infrastructures.

(ii) Secondly, a technical support and monitoring mechanism is required, with centralized project maturation, inter-municipal engineering clusters and institutionalized performance indicators. Successful examples such as the Balearic Islands and the Azores show that the integration of these three pillars into a coherent “institutional triangle” significantly increases the efficiency and accelerates the implementation of projects, with its application in the Greek islands being able to become a model for all the country’s tourist destinations.

In conclusion, infrastructure investment is the defining factor of the next decade. Without this necessary shift in strategy, today’s success will reach its limits under the weight of inadequate infrastructure.

On the part of the State, the formation of an “institutional triangle” of planning, coordination and implementation can ensure that investments are directed to real needs and yield maximum results. On the business side, upgrading accommodation and local partnerships enhance the appeal and value of the product offering.

The result of this investment strategy is measurable: In a ten-year horizon, tourism receipts can increase by 45% (+5 billion euros) and the GDP can be strengthened from Euro24 billion to approximately 30 billion euros with significant multiplier effects on employment and exports.

Thus, Greece can consolidate its presence at the top of global island tourism and turn growing demand into long-term growth potential. This is the real stake of the next decade: not the number of arrivals, but the ability of Greece – and primarily its islands – to manage their success and turn it into a sustainable advantage.