articles | 03 October 2019

Cyprus needs to diversify its tourism product

Thomas Cook’s collapse is a warning for Cyprus to diversify its tourism model, by moving away from focusing on several key markets or relying on a few big tour operators to bring in tourists.

Upon its collapse, the UK tour operator pulled a part of Cyprus tourism down with it as initial estimates show the sector could lose out on some €188 million in annual revenue from the 250,000 tourists brought by Thomas Cook.

Despite these figures being revised after news the firm’s Scandinavian and German (Condor Air GmbH) subsidiaries were salvaged, Cyprus tourism industry is in for a bumpy ride next year.

Cyprus hoteliers have asked the state and local authorities to lend a helping hand as they find themselves heavily impacted by the demise of the once-thriving global tour operator.

A large number of hotels depended heavily on Thomas Cook to fill rooms with package holidays. Hotels are around €50 million out of pocket due to unpaid bills for services rendered, while 45,000 fewer visitors will be coming to Cyprus this winter.

President of the Association of Cyprus tourist enterprises (ACTE), Akis Vavlitis said the majority of hotels had a 70% dependency on Thomas Cook business while a small proportion had a 100% cooperation with the historic UK travel agent.

Experts and stakeholders said it’s about time Cyprus broadens and diversifies it tourist markets.

Cyprus tourism received serious blows when low budget carriers Cobalt Air and Germania went under last year, with many flights from the UK and Germany lost. The void created has yet to be filled.

Meanwhile, there are growing concerns over a possible domino effect on tourist flows from Russia as Thomas Cook owned 93% of Biblio Globus, a Russian tour operator carrying 500,000 tourists to the island annually.

Fanos Tekelas, UCLAN Cyprus lecturer in Innovation and Entrepreneurship, told the Financial Mirror that the fallout of the latest blow has yet to be realised.

Tekelas expects the scale of Thomas Cook’s demise is to be evident in a few months when losses and cancellation of reservations and events start coming in.

“Hotels in coastal towns have a large number of weddings of couples from mainly the UK, booked over the coming months.

Many guests at these weddings have booked flights with or through Thomas Cook. Not only have they lost their tickets but booking new tickets will cost significantly more as Cyprus’ connectivity is suffering as a result of the collapse.”

Tekelas said the collapse did not come out of the blue, and stakeholders could have softened the blow by diversifying Cyprus tourism and the markets it draws from.

“Cyprus has taken a series of blows over the years but has not learned from its past experiences. For decades our strategy saw all of our eggs in one or two baskets and only diversified slightly when trouble occurred.”

He added: “We once relied heavily on the British market. When the flow from Britain was waning, we turned to the Russians. Now the Russians are going for cheaper destinations in the region, we are turning to the Israelis.”

New markets

The UCLAN lecturer does find recent moves made by the Deputy Ministry of Tourism to be on the right track towards diversifying the basket of destinations from which Cyprus attracts tourists but argues more needs to be done.

“The memorandum between Cyprus, Greece and Israel to offer joint holiday packages is a good move in also diversifying our tourist product, offering more to tourists eyeing Cyprus for their holidays. This will give us an advantage over other neighbouring destinations.”

However, Tekelas says big markets in Central European countries are being neglected.

On a visit to the Czech Republic, Tekelas said he saw adverts for tourist destinations in “Northern Cyprus” but not a single one promoting the Cyprus Republic.

He said the future of Cyprus as a tourist destination relies on moves to be taken by stakeholders, especially the Deputy Ministry of Tourism to market the product correctly and close the gap created by the collapse of airlines once carrying thousands of tourists to Cyprus.

Vasilis Stamataris, president of the Association of Cyprus Travel Agents (ACTA) told the Financial Mirror said once stakeholders help to repatriate stranded holidaymakers, they will get down to business to improve connectivity.

He said that Cyprus exhibited its hospitality during the crisis caused by the collapse of Thomas Cook, sweetening the pill for thousands of tourists.

“Whereas hotel units in other countries were threatening tourists to cover their packages, Cyprus hotels sought to offer holidaymakers best the island has to offer”.

“The priority will be to enhance connectivity with countries from which flights already take place, especially with neighbouring countries,” said Stamataris.

He said that efforts to keep the German and the Scandinavian markets alive was made easier after the local Thomas Cook subsidiaries were salvaged but keeping the numbers of holidaymakers from the UK – the island’s largest market -- high will be a task.

“That is why the World Travel Fair in London has become important for stakeholders in the industry, who are preparing to make an impact.”

Stakeholders will also take steps towards diversifying the markets from which Cyprus attracts tourists, eyeing Central Europe.

On whether Cyprus should make the switch to online platforms and not rely so heavily on big tour operators, Stamataris stressed tourism has traditionally relied on tour operators to which it owes its growth.

Cyprus Hotels Association’s Zacharias Ioannides said that Cyprus tourism stakeholders pulled together to ensure holidaymakers stranded by the collapse of Thomas Cook left the island with a good impression.

“Over the coming period, we will look into how we can save hotel units in distress because of their dependency on Thomas Cook, and then, more importantly, how to fill the void created by the collapse of the airline.”

Ioannides said hoteliers will turn to Cypriot clientele and online travel platforms over the coming months in an attempt to bolster hotel revenue, but he is under no illusion these measures will be sufficient to close the chasm created by Thomas Cook’s demise.

Source: Financial Mirror


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