According to several experts in the Cyprus tourism sector, the loss of Russian tourists to the island may be a blessing in disguise. Some experts think that shifting away from tour companies might be a boom for Cypriot tourism. This summer, Cyprus has exceeded 2021 levels, reaching 454,657 tourist arrivals in July, up from 297,308 recorded in the corresponding time last year. This is evidence of the industry recuperating. However, there’s evidence that a recent effort to shift toward individual (prime) tourists have taken effect, as well. Still, with the conflict in Ukraine, the UK, and the EU in a recession and the broader crisis in view, are these views shortsighted? Here’sHere’s a candid look at the future of European tourism, with Cyprus as a case study.
The Cyprus Rebalancing
This report from Kathimerini Cyprus has many revelations that help us focus on the short, medium, and long term of Cyprus’ tourism sector. The article’s subheading gives us the gist. Essentially, more tourists are visiting the island as individuals rather than as part of tours. And as we all know, individual tourists spend more, which in turn aids local and national economies. This is true if the volume of “prime” tourists generates more significant revenues.
Of course, this is obvious, but it’s a fact that a more balanced tourism approach, a more sustainable one, is the overall goal European stakeholders should be aiming for. It’s ironic, and probably no coincidence, that the European Commission Lanarca is among four shortlisted destinations for the European Destination of Excellence (EDEN) 2023 recently.
Luckily for Cypriot businesses, the tourism ministry has been ahead of the trend for more than a year. The Kathimerini piece tells of Cyprus’ Deputy Tourism Minister addressing that Russian and British markets would fall off from June 2021. At the 43rd conference of the Pancyprian Hoteliers Association, Savvas Perdios (at right with LOT Airlines executive Rafał Kempski) told attendees of Cyprus’ efforts to focus on the European market to gain a more significant share of that market.
It should be clear, Perdios and the stakeholders attending that conference had no idea NATO and Russia would be close to a conflagration a few months later. However, this dark cloud has a kind of silver lining for tourism businesses.
So, Cyprus’ Europe-focused reset ended up rescuing 2022 and hundreds of the island’s businesses. However, what began as a mid-to-long-term strategy is now a part solution and a short-term fix. The reasons are apparent. Two days ago, Mr. Perdios announced that 40% of Cyprus’ tourists this season have arrived from the E.U. He also pointed out the evident success of the ministry’s diversification effort. His data also shows that the revenues to arrivals trajectory for 2022 proves the success. And he is right.
The elephant in the room is the expanding conflict between Russia and the west. Experts are not focused (yet) on the devastation due to downward pressures on businesses and incomes.
More Steps Needed
Without a minute analysis, we can look at the situation from a central viewpoint of flights (or any other metric) to predict what will happen. For example, if we look at 2022 flight data from Larnaca, we see the U.K., Greece, Germany, Sweden, and Poland accounting for most of the 7,546 trips recorded as of August 22. Here’sHere’s where the problems take hold. Despite the initiatives of Cyprus decision-makers, the prime tourism rebalance has not taken hold. This can be seen if we look at the airlines providing the most flights to the island. They are almost all budget airlines. Wizz Air and TUI Fly Germany lead with 43 routes in total.
Forgetting that the economy of Europe may soon appear as an energy Armageddon worse than the COVID lockdowns, the future of the airline business is giving investors and tourism experts pause. Look at an essential Cyprus carrier, Wizz Air. The company’s CEO is on the hot seat by shareholders over a huge £110 million bonus he’s supposed to receive for getting the company’s stock up over £120 in five years. Today, Wizz Air shares have plummeted to just under £17 as I write this. I don’t need to remind anyone that the U.K. has already plunged into the worst decades-old recession. We have this from S&P Global Ratings via CNBC:
“The U.K. is already in the throes of a “moderate four-quarter recession that started in the second quarter,” as households face inflation running at around 10% and expected to rise further over the winter, quashing consumer spending over the coming quarters.”
Wizz Air Leeds Bradford replacing the Doncaster hub the company just shut down, is also telling news for the company. And right behind the UK, Germany and much of the rest of Europe are facing similar dark trends. With all this in mind, it’s challenging to imagine Cyprus, Greece, or any other tourism-dependent economy being exuberant about 2023. And least of all, markets where the budget/tours contingent is still overbalanced. Short version? After paying triple or more energy bills this winter, will anybody be booking budget tours to Cyprus?
Bloomberg is already hinting at the economy of Europe sinking into a deep recession that could see an economic contraction of perhaps 5% or more. If Winter 2022 is harsh, experts worry over a financial disaster on par with 2008/2009. Russia’s energy conflict with Europe has escalated geometrically, and the apparent Nordstream pipeline sabotage worsens the situation.
The scope of my report has surged far past the capacity of tourism stakeholder strategies to cope. I guess the only thing that can be learned here is that we never seem to know or prepare for the worst. It’s fair to suggest that the constant downward pressure on pricing, and flawed economics, perpetuates Cyprus and the rest of Europe in harm’s way. So rather than depositing the evident negative trend all in Cyprus decision-makers laps, I’d end this report with a peek at the real problem. Our collective view of “sustainability” is all wrong.
For instance, you’ll quickly find numerous deadly flaws if you read the UNWTO’s Tourism in 2030 Agenda. Some may recall the organization’s Secretary-General Zurab Pololikashvili (at left via Twitter) was pushing #RestartTourism hard in 2020 to get the EU on track to adhere to sustainability efforts. With this in mind, it seems prudent to look inside UNWTO for clues as to how clear their strategy is. For example, look at Goal number three, or “Good Health and Well-being.”
The authors suggest that successful tourism efforts will lead to a so-called “knock-on effect,” wherein added foreign earnings and tax income should be reinvested to help societal causes. This is a beautiful ideal. Unfortunately, the state of budget tourism today leaves no margin for sustainable business, let alone reinvesting in people. My point is there’s nothing to reinvest and certainly nothing to sustain tourism or society when recession and war hit.
Let’s look briefly at goal four in the UNWTO strategy, Education. Again, the thinkers in tourism suggest investing in educating the workforce. But, I needn’t point out how hundreds of thousands of tourism workers have exited the industry worldwide. This is another function of downward spiraling prices caused by unsustainable tourism practices. It’s not just a problem of there not being funds for training. This is a systemic problem that only gets worse as price economics trend downward. It’s inevitable, and I am in awe of how obtuse the industry is over this. Cyprus and other tourism destinations have a huge problem. The wider economy of Europe has big problems ahead unless we descend into some Medieval system of peons and surfs, that is. The UNWTO is not addressing this, and neither is the European Commission. Jobs. The condition of individual finances. These are things nobody seems focused on.
Skipping down to UNWTO goal seven, affordable/clean energy is not on our horizon. That is, not unless some significant paradigm shift occurs before April 2023. I am sure it is time we all recognize that renewable energy and accelerating the transition towards it is not a reasonable goal for at least another decade. The fact is, we are not even making a significant shift at all. People freezing and being out of work in the EU’s most prosperous country this Winter should be evidence of this.
Finally, when I glance down the line to the goal of peace and justice, I cannot help but register my disbelief. I won’t delve into how hypocritical all our organizations can be here. On the verge of global war, all our strategies reflect a kind of obtuseness and hypocrisy that got us here in the first place. The world cannot talk. We cannot agree anymore. But we lurch forward with the same strategies that created our crises. More cruise ships, more flights, more hotels, more consumption, and wordplay were truly sustainable life is concerned. Tourist volumes, industry growth, margins, and the same old mediocrity of thinking cannot end in a bright future for Cyprus or anywhere else.
What has to happen is that decision-makers like Savvas Perdios need to expand on their already forward-thinking efforts. Cyprus can become a case study of how tourism should look. Perhaps this will mean a drastic rethinking of land use, hotel expansions, and ultimately tourism’s role in the overall economy. Already, Perdios seems focused on the right numbers. He recently commented that too few of the island’s 4 million yearly tourists arrive in Winter. He says Cyprus intends to increase volume by 1 million by 2030, but that off-season tourists will make up a much larger percentage. This seems far more innovative and ambitious for filling out the island’s tourism long term.
One thing seems inevitable: Cyprus and many other destinations have to envision a travel reality with little or nothing to do with budget trips. In the coming years, unless substantial hydrogen-powered Zeppelins fill the skies of the eastern Mediterranean, the “balance” must be struck.
[To be continued]