THERE’S no doubt that President Demetris Christofias struck a raw nerve when he berated the tourist industry for failing to match the state’s investment in the industry with a corresponding move on prices that would make the service they offered more attractive in a time of crisis.
Many will have sympathised with his tirade against the rip-off mentality, the €10 pitta of souvlakia, the hotel and restaurant prices that seem to rise even as we can afford less. And there is no doubt that Cyprus has – not just now in the current crisis, but over the past few years – increasingly priced itself out of the market, too often charging five star-prices for a two-star product.
It’s been a general tendency across the retail industry in Cyprus, but whereas domestic consumers are trapped in a captive market where a combination of unspoken price collusion and passive herd mentality have allowed businesses to survive and even thrive, the ruthlessly competitive international tourist market has been unforgiving on a market widely perceived as overpriced in relation to its increasingly tarnished quality.
But while the President is right to identify high prices as a major stumbling block in the industry’s efforts to haul itself back from the brink, his attack on the rip-off mentality does little to address the underlying causes of the problem. The picture of a caring government pumping cash into the pockets of greedy bosses who refuse to pass on the saving to the customer is as facile as it is populist.
True, the trademark €10 souvlakia are extortionate, especially when charged in tourist areas, where customers are in no position to build up habits and shop around – and similar examples unfortunately abound. But the fact is that most hotels and restaurants are currently operating at a loss, with very little leeway to bring prices down. The reality is that hotel and restaurant prices merely reflect the ridiculously expensive prices that consumers are facing every day.
When we complain about a restaurant bill, we very often forget just how expensive our own grocery bills have become in the past couple of years. If you add to that the overheads of renting a space (again reflecting silly property prices), and the need to pay ever increasing wage bills, you begin to realise that the mark up on your food and wine is not as excessive as you thought, and that, unless the restaurant is full, it is actually not sufficient to cover the owner’s costs.
So beyond the obvious rip-offs, there is perhaps very little the industry can do about prices. Christofias is right to identify high prices as a root cause of the industry’s woes, but there is no magic wand that can be waved to bring them down overnight to levels that would make Cyprus competitive. And while recent government investment is undoubtedly welcome, the authorities have failed to grasp the nettle at its root.
The truth is that you can get away with high prices if you can offer a product to match. Indeed successive governments have repeatedly cast quality tourism as the Holy Grail to pull the Cyprus product out of the slump. And yet all they have done is to offer incentive after incentive to developers to build luxury complexes, without a matching commitment to the overall product. On the contrary, their cavalier attitude to the implementation of planning laws, their willingness to twist and bend the rules to accommodate anyone with the slightest modicum of influence, has left our coastal areas a hideous, sprawling concrete mess. At the same time, successive administrations have encouraged the perception that tourism was the ultimate blank cheque, that the more tourist infrastructure was built, the more foreign visitors would come and leave their money in our pockets.
The result is that while tourists pay prices that entitle them to expect the best, we have a product that is almost without exception, tacky, ugly and unpleasant. Even those lucky enough to stay in those hotels that do offer a service to match the price will invariably be disappointed when they venture beyond the front door into the harsh reality outside the five-star compound.
These are the fundamental issues that Cyprus needs to address; this is where the money needs to go, to give incentives to people to leave a saturated industry, to pull down the third rate shabby tourist infrastructure and restore the scarred landscape of our coastal resorts, to crack down on the unlicensed concrete jungle and enforce standards that will finally match our aspiration to attract discerning and free spending tourists. These are the real problems that have undermined the tourist product. On top of those, high prices are the mere coup de grace, the final blow to an ailing industry that grew fat in the arrogant complacency that the good times were a divine right rather than a blessing to be earned.
