EVERY few weeks we read in the papers about a new high achieved by the tourism industry this year. We have read about a record increase in arrivals, over-booked hotels, an extended tourist season, big revenue boost and so forth. This week the Statistical Service reported that revenue from tourism was up 16 per cent in June, boosted by an almost 23 per cent increase in arrivals. In the first six months of the year arrivals increased by just under 20 per cent and revenue by 13.7 per cent, compared to the first half of 2015.
These are impressive figures and the reason some are predicting the economy’s rate of growth this year would exceed all forecasts and reach 3 per cent. There was also a negative stat – spending per tourist fell 5.2 per cent compared to June last year, which was more than covered by the increase in arrivals. Business-people with restaurants, cafes and bars in the tourist resorts, however, have been complaining that they are not feeling the positive effects because too many tourists are on full-board deals at hotels and do not often venture out.
In truth, this is not a year to complain about. But we should nevertheless suppress our tendency for complacency, because we have benefited from exogenous factors. Our tourist product largely remains the same and the CTO’s marketing and advertising methods has not significantly changed (in fact budgets may have been lower). We were helped by the bad publicity Egypt received after the crash of the Russian passenger plane, terror attacks in Tunisia and Turkey, the fall-out between Russia and Turkey after the downing of the Russian fighter, and a strong pound sterling that boosted bookings from Britain.
Cyprus’ contribution was more by default than design. The island became more competitive as a result of the wage reductions that followed the 2013 haircut, while the closure of Cyprus Airways opened the way for a host of airlines to establish routes to and from the island. There are more and lower-priced airline seats serving Cyprus since its demise, even though our wise politicians always claimed that an economy, because it depended on tourism, needed its own national carrier. It quite clearly did not, but it was an excuse to keep pumping the taxpayer’s money into it.
Airlines will carry on serving Cyprus as long as the demand exists and the route remains profitable. This is why we must avoid complacency at all costs. We cannot afford some technocrat or politicians deciding that increased air traffic merited a hike in airport taxes and charges, because that would be a disaster. For now the danger to tourism comes from the unions, which, seeing this year’s numbers have already been upping their demands. Just before the start of the tourist season they demanded a return to pre-crisis pay plus extra benefits and threatened strikes at hotels. A deal was eventually reached, but this week union accusations against hoteliers violating collective agreements have resurfaced and hotels are being reported to the ministry of labour.
The unions have obviously learnt nothing from the mistakes of the past and are hell bent on making the tourism industry uncompetitive again. They forgot that the industry was in steady decline for years before the 2013 crisis, because we had become too expensive as a destination and hotels were struggling, high labour and operating costs eating away their profits. The wage cuts allowed hotels to recover as they became more competitive and, combined with relatively lower air fares and the problems faced by rival destinations, were able to attract more customers.
The unions are now threatening to stop this recovery by demanding a return to the wage regime that had contributed to the decline of the tourist industry. How could Cyprus’ hotels compete with those in Greece, for instance, when starting salaries are more than double? We are already at a disadvantage because air fares from European airports are higher as are food prices. After one good year for the industry the unions seem determined to ruin all the positives and return it to the path of decline. They are not prepared to wait a couple of years, at least, to ensure that 2016 is not just a flash in the pan and to allow hoteliers to use profits for improvements on their premises, something they could not afford in the past.
The sad thing is that nobody dares to challenge this short-sighted union mentality which is destined to cut short the revival of the tourism industry and return us to the path of steady decline. Does anybody care?