People walk past a closed-down branch of the global travel group Thomas Cook, three days after the … [+]
The collapse of the tour operator giant Thomas Cook will have multiple negative effects on Cyprus’ tourism sector. To start, a lot of hoteliers haven’t received payment for the services offered to tourists that came to the island with Thomas Cook’s vacation packages.
As it was stated, most of them weren’t paid for the most important months of the high season: July, August and September. The total amount was calculated to about $55m (€50m) and the chances for the hoteliers to receive any money are minimal.
Furthermore, a lot of hotels planned to remain open until the end of November due to agreements with the tour operator. After the recent developments, they will probably stop operations two months earlier than scheduled. This means fewer revenues, fewer taxes and bigger seasonal unemployment during the winter season. A lot of hotel groups in Cyprus had special agreements with Thomas Cook that covered up to 80% of their occupancy. For some hotels, the dependence on Thomas Cook’s holiday packages was up to 100%. It is obvious that if they don’t come up with alternatives soon, perhaps they will never get back to business again.
The tourism sector is considered as one of the most important for the Cypriot economy with steady growth rates over the last couple of years. Both tourist arrivals and the revenues from the sector were increasing. It was estimated that the annual economic impact of Thomas Cook on Cypriot tourism is approximately $200m (€190m). Hoteliers have already started thinking of alternatives for the summer of 2020. The task to cover the gap won’t be easy. Even if there is interest from other tour operators, they will ask for significantly reduced prices. Such demands will put further pressure on hotel groups but everything will depend on their willingness to cover the lost reservations made through Thomas Cook. Other big tour operators are of course aware of the situation and will try to get the best possible prices. Cyprus’ tourism is highly dependent on a handful of tour operators. Thomas Cook was one of them.
Another one is the TUI Group. A third tour operator, Biblio Globus, brings to Cyprus over 50% of its Russian tourists, the second biggest market for Cyprus. A few months back, it was announced that Thomas Cook was planning to buy the operations of Biblio Globus. If Biblio Globus was drifted away by the Thomas Cook collapse, a new huge hole in the country’s tourism sector will be created. But announcements from, Tour Operator BG LLC, the company that manages Biblio Globus, reassured that operations will continue as usual. In the announcement, signed by the CEO of the company Julia Tugolukova, was added that Cyprus is a priority destination for the group and that it will continue to make every effort to bring more tourists to Cyprus.
Positive signs for the Russian market were recently given from the main shareholder of TUI tour operator, Alexey Mordashov. Mordashov visited Cyprus recently and during his meetings with state officials and private sector executives he analyzed TUI Russia’s plans to significantly increase the numbers of Russian tourists to Cyprus in the coming years, starting from 2020. No further details of his plans were made known but it is considered to be a good development. In 2018 tourist arrivals in Cyprus reached 4 million, a record number for the country and until August 2019 the sector was in course for a new record. After the collapse of Thomas Cook, it is obvious that no record will be broken. But the real emphasis for both the Deputy Ministry of Tourism and the private sector is to fill the gaps for 2020.
