By Jean Christou
IMPROVING tourism’s prospects is not a one-way street with the state providing incentives to hoteliers, President Nicos Anastasiades said yesterday, addressing members of the Cyprus Hotels Association (PASYXE) at their AGM.
Outlining the incentives the government does offer, Anastasiades made it clear that investing in tourism was not the “exclusive obligation of the state”, but a collective obligation of all the players involved.
“We recognise that there are institutional, procedural, legislative and regulatory distortions that hinder this effort,” said Anastasiades but he pledged that the government would correct any distortions in order to make Cyprus a truly competitive destination.
“We expect similar actions from you when it comes to the training of your staff, pricing and the utilisation of the incentives on offer so that value for money can be improved, even more so in these difficult times,” the president said.
“At the same time, the hoteliers have a moral and social obligation to support the widest possible extent the local communities in which they operate, either by hiring more staff or by supporting local and regional producers. We also expect to get as many as possible Cypriot workers in your businesses, taking advantage of government programmes and projects,” he added.
He suggested more use of initiatives such as the programme of vocational education and training in the hotel industry for the unemployed. “This will also help us to maintain and preserve one of the strongest cards of tourism in Cyprus… the traditional Cypriot hospitality,” Anastasiades said
He said tourism remained the driving force of the economy and would greatly contribute to its recovery.
“The tourist sector constitutes a basic priority for the government and will remain as such,” Anastasiades said.
Anastasiades said 2013 was a good year for tourism when the island attracted a total of 2,405,390 arrivals. He also referred to the efforts to launch new airline routes to and from Cyprus from eight large international carriers. “These efforts in parallel with open skies policy will continue with the aim of increasing the tourist arrivals,” he said.
The government would also continue with targeted actions such as the licensing of an integrated casino resort, the legal framework for which would be submitted to the House the coming weeks.
While acknowledging the state’s positive contribution to the industry, PASYXE chief Haris Loizides said more needed to be done especially in the current financial climate.
“In 2013, in a very difficult environment, the dominant features of which was insecurity, the absence of trust and drying up of liquidity, we managed to restrain arrivals at -2 per cent, compared with a relatively good 2012, and to increase revenues by 8 per cent, exceeding €2 billion for the first time in several years.
We do not claim the credit for this success. The effort was collective and coordinated actions,” said Loizides.
However he said the industry still faced multiple problems, most important of which was the lack of liquidity in the market and the inability of banks to finance projects for the enrichment and upgrading of the tourist product. This also stymied much of the state’s incentives, he said, as did the red tape in some government departments.
Loizides did say that some of the large tour operators had advanced cash to hotels to carry out renovations and extensions but this was not a long-term solution.
“We estimate that through this process, the hotel industry has invested more than €200 million, adding excess of 3,000 new beds, in a period that no one dared to invest,” said Loizides.
“However, this exceptional arrangement has cost us… resulting in significant dependence on large tour operators, so it cannot be a permanent solution to the problem. We want a strong banking system which will again be able to finance development,” he added.
Another serious problem, he said, was the banks classification of many hotels as non-performing borrowers.
“Let me give a simple example that I think shows graphically the magnitude of the problem. There are members, which may have an obligation to a Cypriot bank and a foreign bank. In the first case, the payback period is 5-8 years and the interest rate 7-8 per cent. In the second the repayment period is 20 years and the interest rate of 2.5 per cent to 3 per cent,” Loizides said.
“I wonder how, with this adverse data we can become competitive,” he added. “I want to clarify that we do not want favours or preferential treatment but we want to operate within a framework that allows us to compete on an equal footing, develop our businesses and repay our debts”.
Another issue for hoteliers was the Immovable Property Tax. Loizides said by way of example that a hotel unit, which in 2011 paid property tax of €38,000 was asked last year to pay €253,000. “At the same time in Greece, a country which also has a [troika] memorandum, in order to boost the industry, tourism businesses have to pay about one-tenth of what we pay,” Loizides said.
In response to the president’s call to employ Cypriots, Loizides said some 3,000 unemployed locals had found jobs in the industry through the labour ministry.
“By the end of 2013 we managed to have around 67 per cent Cypriot workers in the hotel industry while our customer base is 92 per cent foreign. We are confident that in 2014 we will surpass the 70 per cent target we set,” the PASYXE chief said.
To move the industry forward, Loizides suggested a drastic reduction in energy costs, reduction of taxes to state and local authorities, lengthening the tourist season, attracting new airlines, the creation of a ‘hotel chamber’, the speedy completion of tourism development projects and an easing up on hoteliers by the banks. “The vision is common, the goal is common and together we can achieve it,” he concluded.