FIGURES given by the President of the Cyprus Hoteliers Association Haris Loizides at the Association’s AGM on Wednesday painted a very gloomy picture of tourism industry in terminal decline. “In 2009 we recorded the biggest drop in arrivals compared to all our competitors,” he said. Arrivals fell by 11 per cent but, worse still, revenue shrank by 17 per cent compared to the previous year.
While the recession contributed to these poor figures, the decline had begun much earlier. Loizides pointed out that from 2001 the global tourism business had grown by about 28 per cent, whereas in Cyprus, over the same period, arrivals had fallen by 20 per cent. Average annual occupancy rates for hotels were a disappointing 37 per cent last year, despite the reduced number of beds available – there are now 10,000 fewer than there were six years ago.
Loizides did not tell us anything we did not know in blaming the decline on the erosion of our competitiveness as a destination. This erosion started many years ago, but we ignored it pretending that it was a minor problem and the tourists would soon flock back to Cyprus. Wages kept spiralling, pushing up prices, but nobody realised that we were condemning the tourist industry to its death – nobody saw that the competition was offering packages at significantly lower prices and that Cyprus had lost its name as a ‘value for money’ destination.
In his speech on Wednesday Loizides claimed that we could regain our competitiveness and recover our ‘value for money’ tag, but his suggestions for achieving this were not very convincing. Would we really become more competitive by fast-tracking infrastructure projects such as golf courses and marinas? The more practical suggestion of reducing taxes, duties and other levies paid by hotels to the state and local authorities may have a small impact, but it would not arrest the decline. Temporary measures would only slow down the decline for a while.
Unfortunately there are no easy answers. Cyprus has become an expensive destination compared to most other Mediterranean sun and sea resorts – air fares are high, accommodation is costly and eating out is expensive. The government is finding it extremely difficult to persuade budget airlines to put on regular flights to Cyprus, because demand has tumbled and the reason is high prices. The ‘value for money’ we used to boast has been lost for good.
The only way we could regain our competitiveness would be for hotels, restaurants, clubs, bars etc in the tourist resorts to bring in big numbers cheap labour from abroad and this would never be allowed to happen. In fact the labour minister is currently involved in a drive to reduce the number of work permits issued to workers from non-EU countries, so that more Cypriots are hired. This may be a good thing socially, but it will certainly not help the tourism industry regain its lost competitiveness.
