Greek Islands Strain Under Growing Tourism Demand, New Report Warns

Published on December 23, 2025

Even as Greece’s tourism industry is setting records in terms of demand, there is a reality check from the National Bank of Greece (NBG), as the country’s infrastructure is not keeping pace with the rapid tourism growth. The findings from the NBG’s presentation during the SETE Annual Conference reveal the imminent start of the ‘stress phase’ for the tourism industry in Greece. Even as the problem of not drawing tourism is now a bygone era for Greece, the difference between the tourism influx and the infrastructural development is leading to sustainability problems for Greece’s tourism sector.

A Promising Future for Greek Tourism

The report offers an optimistic outlook for Greece’s tourism sector in the coming decades. Jessie Voumaki, Deputy Director of Economic Analysis at NBG, emphasized the country’s potential if it can maintain its 2.5% share of the global tourism market. Projections suggest that by 2040, Greece could see up to 55 million non-cruise visitors annually, significantly boosting its tourism revenue. The travel receipts are expected to grow by €14 billion, reaching a total of €36 billion. Furthermore, there is an anticipated shift toward year-round tourism, fueled by emerging non-European markets, which could extend the peak tourism period from the current two months to six months.

These numbers reflect the immense opportunity within the tourism sector, with Greece positioned to continue attracting tourists, especially from non-European markets that are expected to increase their visitation in the coming years. However, this growing demand places significant strain on the country’s infrastructure, which is struggling to keep up with the rapid expansion of the tourism industry.

The Infrastructure Gap: A Growing Concern

The report identifies a critical issue at the heart of Greece’s tourism challenges: the imbalance between the private sector’s growth and the stagnation of public infrastructure. Over the past decade, private investments have flourished, especially in luxury hotels and short-term rentals (STRs), while public infrastructure investments have not kept pace.

Private Sector Surge in Tourism

In the last decade, Greece has experienced a significant increase in private sector investments. Luxury hotel capacity has grown from 40% of the market share in 2010 to 56% today, catering to a wealthier tourist demographic. Additionally, short-term rentals have exploded, with more than 1 million beds now available across Greece. These developments have helped accommodate the increasing number of visitors, but they have also created pressure on public resources, particularly in terms of energy, water security, waste management, and local transport.

Public Infrastructure Stagnation

On the public side, real investments in key infrastructure sectors, such as energy, waste management, water security, and local transportation, have remained stagnant, particularly during the economic crisis years of 2010-2019. While there has been some recovery post-2020, the overall pace of development has been insufficient to meet the needs of the growing tourism sector. This gap is most evident in Greece’s islands, which are experiencing the most strain due to the overwhelming number of visitors. The island areas, while beautiful and rich in culture, are not equipped with the necessary infrastructure to support the booming tourism industry in a sustainable way.

Air Transport: A Success Story Amid Challenges

One notable exception to the infrastructure lag is air transport. Greece’s airports have successfully kept up with increasing demand, primarily due to privatizations and enhanced connectivity. These developments have allowed the country to handle a growing number of international flights, ensuring tourists can easily access popular destinations. However, even air transport is at risk of being stretched thin if overall infrastructure development does not continue at a steady pace.

The Strain on the Greek Islands

The Greek islands are particularly vulnerable to the infrastructure shortcomings. These islands account for 44% of the country’s total tourism, contributing significantly to Greece’s national tourism revenue. Seven of Greece’s islands rank among the top 30 global tourist islands, but the local resources on these islands are increasingly under pressure.

The islands, many of which are small and have limited resources, are struggling to cope with the sheer volume of tourists, especially during peak season. As a result, the quality of life for local residents is declining, and the experience for tourists is being compromised. In order to maintain the islands’ appeal while safeguarding local well-being, substantial infrastructure investment is required.

Critical Infrastructure Needs and Investment Requirements

To address these challenges, the NBG has identified three essential components for the sustainable growth of Greece’s tourism sector:

1. Investment in Infrastructure: The Greek islands alone need an estimated €2 billion to €2.3 billion in annual infrastructure financing. This includes investments in water and waste management, energy infrastructure, and local transportation systems to cope with the growing demand.
2. Cost Distribution: A national conversation must take place regarding how the financial burden for these infrastructure improvements will be distributed. The government, private businesses, residents, and tourists will all need to contribute to the cost, possibly through targeted levies or taxes, to ensure sustainable funding for these critical projects.
3. Spatial Planning and Coordination: Effective spatial planning and coordination between national and local authorities are essential. Ensuring that the growing number of tourists does not degrade the experience for visitors or the quality of life for locals requires strict planning. This will ensure that tourism development is balanced with the preservation of the environment and the local way of life.

The Path Forward for Greek Tourism

The message from the National Bank of Greece is clear: while tourism demand remains strong and promises significant economic gains, capacity issues could become a serious obstacle if infrastructure development does not keep pace. Without a structured approach to funding infrastructure and ensuring institutional coordination, Greece risks turning its greatest economic asset into a source of instability.

Tourists flock to Greece for its rich cultural heritage, stunning landscapes, and vibrant local life, but without careful planning and investment in the necessary infrastructure, the country may struggle to offer a high-quality experience for visitors while also preserving its resources for future generations. Bridging the infrastructure gap is the key to Greece’s tourism sustainability, and it will require a collaborative effort from both the public and private sectors to ensure the long-term success of the industry.

Balancing Growth with Sustainability

Greece is at a critical point in its tourism growth. Given that the demand for Greek tourism has been rising and its contribution to the Greek economy is immense, there arises an acute requirement to invest in infrastructure. The report by the National Bank of Greece suggests that a comprehensive plan needs to be made keeping in view the needs of the locals and tourists. If Greece manages to fill this infrastructural deficit, it would be on its way to ensuring that it retains its position amongst the leading tourist destinations in the world in the long run. Otherwise, it risks not being able to sustain its own thriving tourism sector.