Collapse of the tourist economy in Cyprus and the need to divest

Cyprus stands on the brink of catastrophic collapse of its tourist economy unless urgent action is taken.

Keith Parkins
Oct 6, 2014 · 15 min read

We need more tourists. That is the official line peddled by the Cyprus government, you know, the same government that presided over the banking crisis and collapse of the Cyprus economy and needed a bail out.

Why do we need more tourists?

What we should be focussed on, is what is tourism for? Surely it should be for the benefit of all, not to line the pockets of the few with a few crumbs handed down to cheap immigrant labour.

Norway and Saudi Arabia are two oil rich countries. It will surprise many to learn that Norway is the wealthier of the two. In Saudi Arabia, the oil wealth goes to the corrupt House of Saud, a little to Westerners who keep the economy functioning and all the hard graft carried out by cheap Third World migrants. Norway, by contrast, the oil wealth is invested to benefit all of society.

On a sliding scale, Cyprus is closer to Saudi Arabia than Norway. It should be the other way around, closer to Norway.

Three years ago, in Puerto de la Cruz, an old 16th century colonial town on the north coast of Tenerife, the tourist industry started to collapse, empty bars and restaurants, boarded-up shops. The following year, ie two years ago, the restaurants that were empty, were now busy, but it was an illusion, it was Carnival, once Carnival was over, a ghost town, late at night, footsteps would echo off the buildings, the streets deserted.

This year far far worse, even Carnival not busy, a shadow of its former self, bars, shops, restaurants, businesses of thirty years or more closed. Bars that were open, where once busy, where they employed four people or more, where they stayed open until the early hours of the morning, are now empty, employ only one person, are closing at ten o'clock. Whole streets, not boarded-up, bricked up. And yet, due to situation in Tunisia and Egypt, tourist figures up.

What therefore is happening in Puerto de la Cruz?

During the good years, hotels that were overbooked, took their clients for granted, standards were poor, then on stream came 100,000 beds in Tunisia, Egypt, Turkey, quality hotels at half the price, plus people were prepared to travel further afield, to the Far East, Thailand. Standards have still barely improved.

Economic crisis and austerity, if people go away (and holidays is fairly inelastic, most people will cut elsewhere before they cut holidays), they are not spending money.

Tenerife is a destination for Northern Europe in the winter, in the summer for Spain because it is cooler. Last summer, the Spanish tourists stayed home.

All inclusive hotels. If a hotel is all inclusive, people do not go out of their hotel. If drinks are free, why walk to a bar to spend money? It is not only the bars that suffer. If you do not walk to a bar, you do not pass shops, and other places to spend money.

Of all the factors, it is all inclusive hotels that is killing Puerto de la Cruz, money is not circulating in the local economy.

Every time someone loses their job in a bar or restaurant, that is less money being spent in the local economy,

Puerto de la Cruz is staring into the abyss. If is turns into a ghost town, why would anyone go there?

Puerto de la Cruz should serve as a warning to Cyprus, as it is facing exactly the same problems, if no action, it will see catastrophic collapse of its tourist industry.

May last year, as economic crisis hit Cyprus, banks failed, the far end of the beach at Protaras, that would usually be packed, was empty. This year even fewer people on the beach.

Boat trips from Protaras Pier, two trips a day, at 11 o'clock in the morning and two o'clock in the afternoon. Not May this year, only one trip in the morning, as insufficient passengers to justify two trips, it would cost more in fuel than brought in by ticket sales. Napa King had to cancel a sunset trip, only eight passengers booked. Boats on the beach sitting idle, usually they would be busy.

Walk along the main street, with one or two exceptions, restaurants and bars that would be busy, are nearly empty, their proprietors with long faces.

Shops are faring little better.

September 2014, hotels usually overbooked in September, whilst they may be full, the numbers are not on the streets. Where it would be difficult to walk down the street, jostled into the road, more like a typical May than September, only May no longer typical either.

Many businesses are closing, but not immediately obvious, as new businesses open, but last less than a season. How many will survive to re-open in the new season?

Sunset Grill, sadly the name says it all. Was a Greek-Cypriot restaurant, closed, re-opened late May 2014 as a barbecue pit, closed a couple of weeks later.
A coffee bar closed, re-opened at end of May as new coffee bar, end of August had already closed.
Ethical fashion to open at the beginning of the season, never opened, unit unfinished, abandoned.
Guru sign of the times or maybe reality setting in. A bar nearly always near empty, slashing prices in desperate attempt to bring in the punters before the season ends. It did not work, Guru was still empty.

Why? Because many of the hotels are all inclusive. If you want to kill local tourism, wipe out the local economy, then allow all inclusive hotels.

What point is there in attracting tourists, if they stay at all inclusive hotels and spend no money in the local economy? And there is no trickle down through staff employed when the staff employed are not local people.

All inclusive means an inferior experience for the tourist. There is no such thing as a free lunch, let alone a free dinner. If you get eats and drinks free all day, then quality suffers. It attracts the bad tourists, those who wish to drink all day. A downward spiral, low standards, bad tourists, drive away the quality tourists.

A quality stay, is good location, clean hotel, quiet, good food, good staff.

Cheap immigrant labour, temporary staff, poor English, no local knowledge, no knowledge of Greek or Cypriot culture, does not give a good impression.

Cheap immigrant labour does not cycle money within the local economy.

Short termism, the fast buck, no attempt to establish a good reputation, no future.

Cyprus Tourist Organisation licences hotels. A condition of licence should be no all inclusive.

Why employ cheap foreign labour when there is high unemployment in Cyprus, when most families have at least one unemployed person in the family? And bribing bad employers to employ locals is not the answer (and probably a breach of EU and WTO rules).

A minimum wage, that is rigorously enforced, would mean no advantage to employing cheap immigrant labour as there would be no cost benefit to do so. It would also mean more money being spent and recycled within the local economy.

Minimum standards of English.

Maximum numbers of students. And proper training programmes in place, not a back door to employment of cheap labour.

This is not to argue against immigrant labour per se, as many provide needed skills, but to argue against cheap immigrant labour simply to drive down wages.

Cyprus used to be the quality destination. Not any more. Efforts must be made to reposition Cyprus as the quality destination, with the focus on quality tourists.

Alex bar in Megaluf where an 18-year girl was filmed having sex with 24 men for a free drink

In a bar in Magaluf in Mallorca a girl performed sex with 24 men for a free drink. She was conned into thinking she was getting a free holiday, the name of the drink. It was an example of mamading, a game where bars encourage young women to perform sex acts in return for free drinks. Is this the type of tourists Cyprus wishes to attract (as that is the direction into which it is heading)?

Megaluf : hordes of drunken yobs spilling into the street, prevent locals driving through

Bastardise your own culture to attract bottom end of the tourist market, and what do you have left?

The rough bars that attract the bottom end of the tourist market need to be closed down. Strict enforcement of night-time noise curfews a must. Any bar that is in breach, warned. Second time, equipment seized and bar owner and manager prosecuted. Third time, bar shut down. It is reasonable expectation to be able to sleep at night. It is not only those who wish to sleep who suffer. Neighbouring businesses are forced to close early because of the noise, consequential loss of revenue.

Coffee Island classic example of how not to. Deafened by a widescreen TV, unable to hold conversation without shouting. People go in coffee shops to relax, chat with their friends, not to be stressed and leave with a headache.

Criticism of Russian tourists: They are not spending money in the bars.

Maybe this should be turned around, the fault lies with the bars, not with the Russians. Maybe the bars should close, reinvent themselves as tavernas and coffee bars. Instead, the opposite, restaurants and coffee bars installing wide screen TVs. How to deter quality tourists without even trying.

Strategic alliances need to be formed. Arrive at any one destination, and pointed to others in that alliance.

Let us assume, Napa King boat trip along the coast, as passing Sirena Bay, point out to passengers, on leaving the boat, enjoyed your trip, why not try traditional Greek-Cypriot food at Nicolas Tavern, need a car or somewhere to change your money, try Windmills Car Hire?

The boat trips that were only going out once a day, why all go in the morning, why not Yellow Submarine sail in the afternoon, pick up afternoon traffic? Do they really all have to set off at the same time in a convoy?

A big mistake when the financial crisis hit, was to accept terms dictated by the EU. Several years of pain for no gain. Cyprus should have followed the example of Iceland, defaulted, left the euro. A few years pain, but at least like Iceland, would pull out without being under the German jackboot.

In the absence of default and pulling out of the euro, local communities should localise their economies by adopting a local currency. It works in Totnes, why not Paphos, Larnaca, Protaras?

To help cycle money within the local economy, support local businesses, boycott KFC, McDonald’s, Costa, Starbucks, all of which not only drain money out of the local economy, but out of the country. They also deter the quality tourist.

Nothing is more likely to deter the quality tourist, other than drunken tattooed English yobs, than arriving at what was thought to be a quality destination only to find the streets lined with KFC, McDonald’s, Costa and Starbucks.

Global corporations and Big Business suck the lifeblood out of local economies and local communities, destroy local businesses and local culture, dodge tax, have a corrosive and corrupting influence on politics.

The quality tourist is looking for authenticity, tradition, a Greek-Cypriot taverna such as Nicolas Tavern serving kleftico, slowly, slowly cooked in the traditional wood-fired clay oven, patisserie amalie serving freddo cappuccino.

freddo cappuccino at patisserie amelie

Hotels look for easy business, tourists from England, now Russia. Economic crisis in any one country on which depend, and matching downturn in tourists. Dependency on a few large tour companies, that then allows them to dictate terms, often with gun to the head, threat to divert tourists elsewhere.

The quick fix, offer large tour companies exclusive rights, but as all quick fixes, addictive and in reality an excuse for not putting in the work. Terms include cannot offer cheaper (likely breach of EU competition rules). Tour operator has the hotel over a barrel, can at any time force down prices by omitting from brochure, diverting tourists elsewhere, common tricks played by tour companies. Also bad for clients as they lack choice to book.

With everyone on the net, with hotels with a website, far more effort should be made to get direct bookings. Offer regulars a good deal if they book direct.

A bus runs between Ayia Napa, Protaras and Paralimni. It has proved to be highly popular. There now needs to be an airport bus, running direct from Larnaca Airport to both Ayia Napa and Protaras.

Much needs to be done to improve standards at hotels. Good hotels are letting standards slip, bad hotels need to improve (or lose their licence): 3* masquerading as 5*, bad food, petty rules, charging for wifi.

Free wifi on the beach maybe taking it a little too far.

When free wifi is available for the cost of a drink in bars and coffee bars, why are hotels charging to use what is too often an inferior wifi and internet connection?

Availability of wifi is a key competent of deciding a holiday destination.

CTO has suggested the ‘mystery guest’. Would this really work on an island where everyone knows everyone, the Cypriot guest would stick out like a sore thumb? Check out tripadvisor and see what guests are saying (but beware of fake reviews). Send in hit squads to the failing hotels, and as last resort, close them down.

In Tenerife, every bar, restaurant, hotel, has to have available a complaints book, libro de reclamaciones, with a notice advising to that effect. If a client wishes to file a complaint, they ask for libro de reclamaciones and fill out their complaint. The client keeps one copy, one goes to the relevant government agency or department and one is kept by the establishment. Often the mere act of asking for libro de reclamaciones may suffice.

It may be expedient for a hotel to lower standards, but it is not in the long term sustainable. When an economy is dependent on tourism, too dependent, it is vital standards are maintained. Bad news travels fast, and it is the entire sector that is blighted.

There may be good hotels in Ayia Napa, but they are blighted by the reputation Ayia Napa has acquired.

When enforcement of petty rules at a hotel and convenience becomes more important for a hotel than guest satisfaction, we have the signs of a failing hotel.

Being told to use a kiosk to book a table reservation and being required to do so at least the day before, may be acceptable in a budget bottom-end-of-the-market hotel, it is not acceptable in a 4 or 5 star hotel where service is expected.

When a hotel intimidates a guest because they do not like a review, this is a very serious matter, a classic case of shoot the messenger because you do not like the message. Even worse when it is a guest of many years, a long-standing loyal guest. TripAdvisor takes intimidation (or bribery) very very seriously, and can lead to being struck off. CTO should also treat very seriously and take action. The appropriate response of the hotel, or indeed any other establishment, is to thank the reviewer and address the issues raised. Sticking heads in the sand is not going to make the issues raised go away.

A hotel in New York fining guests for bad reviews, is a classic case study of how not to, and led to the hotel being hammered on social media.

An Italian restaurant was so disgusted with fake reviews on Yelp, that to make the point, they offered all their customers a discount to write a bad review.

Like other legal cases involving Yelp, this saga gets at the heart of a fundamental question: does Yelp’s right to run its reviews site in the way it sees fit — never removing Yelp entries — trump the rights of someone who feels bullied by such a site and would prefer to have nothing to do with Yelp at all?

Yelp lacks any credibility when it uses extortion to influence ranking. All the more surprising that a court found such practices not to be illegal.

In these days of social media, you will not get away with either poor service or trying to influence reviews. In the past tourists told their friends. Now they tell the world, often with pictures and videos.

Loyal guests should receive extra special care, be listened to. These are the bread and butter, these are the clients who recommend to others. Too often they are ignored in the quest for a fast buck, easy picking of wedding parties, that do not go down well with regular guests. No one wishes to feel they are staying in a wedding factory. If a hotel really must dredge the bottom of the barrel for wedding parties, smacks of desperation, then attract at end of season, April or November.

Hotels in Tenerife ignored their loyal clients, took them for granted, after all, the hotels were always full. Those same hotels are now half empty, dozens have gone bankrupt, their regular guests long gone elsewhere.

A re-branding exercise is not the solution. It is not an image problem, the problem is the underlying reality.

Grasping at straws is a favourite Cypriot occupation.

Offshore oil and gas deposits, even if not exaggerated, could they ever be exploited? What of the Carbon Bubble? If we are to limit global temperature rises to less then 2.0 C, then these carbon deposits have to be left in the ground. And whose gas is it? Several countries are staking a claim to the same gas deposits.

And anyone who thinks Climate Chaos and Global Warming will benefit Cyprus because it will extend the tourist season, is living in cloud cuckoo land. The mid-season temperature would be unbearable, rising sea levels would wipe out many of the hotels, and the era of low cost flights would long be a thing of the past.

If England with is superior beaches has a Mediterranean climate, why fly to Cyprus?

Every part of the industry needs to … think about what more can be done to adapt to climate change, as well as how to continue the process of reducing the impact of their operations on the environment

Monarch, one of the main carriers to Cyprus, is now cutting jobs, cutting routes, cutting the number of planes it operates.

A study by Southampton University has shown that growth in aviation will outpace any attempts to limit CO2 emissions, unless there are hikes in airfares to cut demand.

Airfares will need to increase by a third over the next 30 years if airlines are to cut their passenger numbers, in order to hit their ‘carbon neutral’ targets.

The study says air ticket prices need to increase by at least 1.4% per year, even if the airlines invest in more efficient aircraft and manage to introduce lower-carbon fuels. Air fares have become 1.3 % cheaper every year, on average, since 1979. The researchers say the average fare paid by passengers would need to rise (at 2013 prices) from £170 in 2013, to £195 in 2023, to £225 in 2033, and to £258 by 2043. The growth in demand for flights will outpace fuel efficiency improvements if the annual increase in air passengers worldwide is around 4 – 5% per year. Though IATA hopes to improve aircraft fuel efficiency by 1.5% per year up to 2020, it realises the higher growth in passenger numbers is causing a net increase in aviation carbon emissions.

The aviation industry worldwide has committed to a 1.5% target of fuel efficiency (ie cuts in CO2 emissions per pax km?) through until 2020. ICAO says ‘2% annual fuel efficiency goal to 2020 likely to be achieved’ but industry as a whole says only 1.5%. Both figures are an exaggeration, historical industry trend of aircraft efficiency improvement is showing a declining rate and is currently around 0.6% per year. But whatever claimed improvements in aircraft fuel efficiency (even if 2% per year) are far outweighed by the growth of the industry at 4-5% per year. Also has to be taken into account the length of time aircraft remain in service.

Aviation is a major polluter and contributor to Climate Chaos. This will have to be reflected in a massive hike in airfares. Where then the bottom end of the tourist market, reliant upon cheap deals, cheap airfares?

Check-in at Larnaca Airport appears to be on a permanent go slow. Then to add insult to injury, a premium fast lane at ten euros. The fast lane should be the norm, not offer a bad service, then charge for a service that should have been provided in the first place.

It has to be seen as an exercise in crass stupidity, heaters to heat the outside air when it is too cold to sit outside.

Two long term strategies, focus on quality tourism and move away from mass tourism, bottom end of the market, and divest away from tourism.

But within these strategies, how to retain and recycle money within the Cypriot economy.

Doing nothing is not an option. Business as usual is not an option, as there will be no business to be usual about.

Special thanks to all those who spared the time to take part in discussions: ‘last few years more and more bad tourists’, ‘we are losing the good tourists’, ‘austerity’, ‘economic crisis’, ‘no one has any money’, ‘no one is spending money’, ‘Cyprus no longer a quality destination’ . But way out in front ‘bad tourists’, ‘lowering of standards’, ‘all inclusive hotels’, ‘cheap foreign labour’.

Keith Parkins Masters in System Science from City University in London, well travelled, top 1% of reviewers on TripAdvisor, over 26,000 readers on TripAdvisor, curator and editor of travel writers collection on Medium with over 1,300 followers, over 1,900 followers on twitter, over 500 followers on wordpress.

Travel Writers

A place for travel writers to hang out and tell their…

Travel Writers

A place for travel writers to hang out and tell their tales, whether it is the great adventure, exploring the Acropolis, sailing between Greek Islands, freezing in Red Square, climbing Steep Hill to Lincoln Cathedral, or tea in a tea shop in the old part of Istanbul.

Keith Parkins

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Writer, thinker, deep ecologist, social commentator, activist, enjoys music, literature and good food.

Travel Writers

A place for travel writers to hang out and tell their tales, whether it is the great adventure, exploring the Acropolis, sailing between Greek Islands, freezing in Red Square, climbing Steep Hill to Lincoln Cathedral, or tea in a tea shop in the old part of Istanbul.