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Financial turmoil attracts travel in Cyprus

Profile Photo By: H L
April 8, 2013

Financial turmoil attracts travel in Cyprus

LONDON?Despite financial storm clouds rumbling overhead, hoteliers in debt-laden Cyprus are projected to have a strong?if not record?year, according to sources.

The Mediterranean island has frequented global headlines in recent weeks as it struggles to meet requirements for a ?10-billion ($13-billion) rescue package from the European Union, European Central Bank and the International Monetary Fund while also attempting to save its banking system. But images of lines at ATM machines, national banks being closed and angry protests have had little impact on Cyprus? tourism industry, which accounts for roughly 12% of the country?s gross domestic product.

On the contrary, the turmoil has caught the attention of value-conscious travelers searching for deeply discounted prices.

?The latest reports indicate that this should be a record year for arrivals. Maybe the recent publicity has helped increase awareness,? said Angelos Loizou, partner in charge of Hospitality & Leisure Services at PricewaterhouseCoopers.

Some tourists might see the country’s financial crisis as a chance to book a discounted stay, as happened in Greece last year when the country suffered from similar headlines, he added.

But rates for hotels in particular have not seen a substantial decrease, albeit for some seasonal Easter holiday packages, Loizou said.

?The fact that Catholic Easter was early (this year) means that there is a low volume gap from now to June, therefore it is normal to offer special packages at times,? he said.

Cyprus counted more than 2.4 million arrivals during 2012, almost twice as many people as the island’s population, according to the Cyprus Tourist Organisation. And so far, bookings this year are not down as people feared.

During the last quarter of 2012, room occupancy rates rose to 69.8%?the highest level since data was first compiled and above the previous high in 2007,?according to a report from real estate advisory Leaf Research.

Hotel operators and travel agencies are hoping those levels are repeated this year. Tas Anastasi, sales manager at?Cyplon Holidays, a travel agency specializing in Cyprus travel, said that while there was a lull in bookings for a week or so when there was so much uncertainty, ?once the bailout was approved, things got back to normal.?

Most of the 86,744 tourist beds in operation in Cyprus are found in small, family-run hotels; there are few global brands. Hilton Worldwide is one of the only major players with a large footprint in the country, operating two properties: Hilton Cyprus and Hilton Park Nicosia.

?Both remain fully operational and continue to welcome guests with near full occupancy levels,? according to a Hilton statement. ?The temporary closure of Cyprus? banks has not affected payments to team members or suppliers. We welcome the reopening of the banks and continue to monitor the situation closely.?

Obstacles remain
However, some analysts feel that while visitor numbers are still strong, there are other, longer-term problems facing Cyprus? hotel industry.

Cyprus Hotel Association President Haris Loizides told the 35th Annual General Meeting of the association in February that the eurozone crisis has had several impacts, and ?one of our biggest problems is access to capital.?

Hotel development has ground to a halt, said Panayiotis Panayides, director of developers FSB Properties.

?I am not aware of many hotels being built at this time. There are a number of projects on paper for hotels, but as yet that?s where they remain. This is mainly due not to the crisis happening today but the financial crisis the world has been experiencing over the last three or four years.?

Investment in tourism might contribute to the country’s economic recovery and future development, he said.

?We do need new money here and new operators with newer perspectives. And as tourism is going to play a very big part in the near and distant future, now is a good time to pick up a good deal.?

PwC ?s Loizou also said now is a good time to invest.

?Prices for land are very low, so there would be a good return on investment. Also, the government is very keen to help people who want to invest in large projects, and there are many incentives at the moment.?

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