THE CYPRUS Hotel Association (Pasyxe) yesterday said that higher tourism arrivals and receipts should not give the impression that all was well in the industry.
Speaking at Pasyxe’s annual general meeting (AGM) yesterday, its president Avgerinos Nikitas said that the positive results had been assisted by unusual external factors affecting the island’s tourism competitors.
Nikitas said the hotel industry still had to face challenges, such as the poor competitiveness of Cyprus’ tourist product. The island’s prices are 20 to 40 per cent higher than those of its main competitors.
He said that the Cyprus hotel industry also suffered from low productivity levels, estimated to be around half of those enjoyed by the competition and from Cyprus’ comparatively high cost of living.
Nikitas said the recent two-point rise in Value Added Tax (VAT) to 10 per cent was expected to further aggravate the problem, while operational costs continued to rise, with labour expenses representing about 40 per cent of total costs.
Diminishing profitability due to low occupancy and millions of pounds in outstanding debts were further problems, along with "exchange rates fluctuations in relation to foreign loans, which in many cases exceeded the rate of 25 per cent of the initial loan."
Nikitas said that this indicated that the hotel industry subsidised the economy at the expense of its own performance, "A fact that explains the trend for an increasing number of hotel investments by Cypriot hoteliers in Greece."
He said a shrinking summer season contributed to the negative picture but that all the problems could be fought by "thinking in a European spirit and direction, both in terms of intentions and of action."
He said this included improvements to airports and ports and more aggressive advertising promoting Cyprus as a quality destination.
One third of Cyprus’ tourism revenues should be invested to this end, he said, as happened in many European countries, "without the tourist entrepreneurs being asked to contribute to this end."
The government this year reintroduced a three per cent food and beverage tax to subsidise the Cyprus Tourism Organisation (CTO) after withdrawing a state subsidy introduced in its place to keep the industry afloat during the Gulf War.
Pasyxe also called for a Collective Agreement binding those involved in the hotel industry to be reviewed. "Ten years had elapsed since its original signing and the circumstances have changed significantly since then."
But Nikitas had words of praise for Commerce, Tourism and Industry Minister Nicos Rolandis for bringing the Miss Universe 2000 pageant to Cyprus.
Rolandis told the AGM yesterday that more than 2.4 million tourists had visited Cyprus in 1999 bringing in revenue of £1.02 billion. Revenues from tourism in recent years have made up around one fifth of the island’s GDP.
Echoing Nikitas, he said that "tourism’s very good course should not be taken for granted."
The Minister also said that Cyprus would have little problem in harmonising its tourism sector with EU standards.
