Cyprus tourism arrivals down 2.7% in Jan-November

An incentive to keep improving quality

 

Tourism arrivals data for November underlined that this has been a difficult year for tourism in Cyprus. Despite a particularly warm November that might have attracted late bookings, tourism arrivals fell by 8.7% year on year in November, according to the Statistical Service.

This brought the cumulative fall in January-November 2006 to 2.7% compared with Jan-Nov 2005.

In keeping with the pattern that has been seen all this year, there was strong growth in arrivals from Russia (up 6.8% in November; up 16.9% in Jan-Nov). However, arrivals from the United Arab Emirates, which has shown strong growth this year, fell. They were down 17.9% year on year in November, having risen by 22.1% in the first 11 months as a whole.

However, the November fall may be related to the timing of Ramadan, since in 2005, part of Ramadan fell in early November, whereas in 2006 it fell in September and October.

Arrivals from the UK, which supply more than half of Cyprus’ tourists, fell by 14.6% in November and were down by 1.8% for the first 11 months of 2006.

 

Why us?

 

Other Mediterranean destinations have reportedly seen an increase in arrivals this year, which begs the question why Cyprus is still not up to the mark.

There are several possible reasons: some short term, some longer term.

First and foremost: cost. If you can fly from the UK to Spain for GBP 50, why bother with Cyprus? Prices for Cyprus have gone even higher thanks to new taxes either imposed by the government or agreed by the government at EU level. A 5% increase on a GBP 200 ticket is a lot more than a 10% increase on GBP 50.

Second: quality. Business rivalries and government mess-ups meant that the upgrade of the airports was left so late that Larnaca now resembles eastern European airports I was visiting in the early 1990s but which have now gone through an upgrade. Thank goodness the Ermes group expects to finish the upgrades of Larnaca and Paphos ahead of schedule.

Third (possibly, since I only have the experience of friends and family to go by): dodgy quality car hire year after year after year. Another low mark for Cyprus’ quality.

Fourth, the exchange rate. Britons, who account for over 50% of tourists, paid an average 1.191 GBP per Cyprus pound in the first three quarters of 2006 compared with 1.186 GBP per Cyprus pound in 2005. Cyprus’ adoption of the euro will not make any difference there.

Special reasons this year include the bad publicity relating to the Helios air crash in Athens in 2005, followed by the withdrawal of capacity with the demise of ajet. 

 

Don’t slack on quality improvements

 

We know that if we can’t compete on price (since we will always be further away geographically from mainland Europe than Spain), then we have to compete on quality.

The government and private sector are working together to ensure that the long-term ingredients are there—golf, casinos, marinas, sports, mountains and so on. EU money has transformed the look of the mountain village from which I am writing this, for example.

And income from tourism has risen modestly, even while arrivals have fallen.

But all of these infrastructural improvements will take time to reach their full potential.

This is why, perversely, this year’s fall in tourist arrivals is not such a bad thing. It is only when things reach crisis point that the motives to change really start to kick in.

This year’s poor performance has given us plenty of incentives to keep on trying.

 

Fiona Mullen, Sapienta Economics Ltd.