Filenews 25 July 2022 - by Theano Thiopoulou
In 2024, tourism will return to the levels of 2019, the Central Bank predicts due to the uncertainty in relation to the outcome of the war and the sanctions on both sides, with a consequent impact on tourism flows from Russia, which until recently was the second largest market, but also the pandemic.
The challenges of the tourism sector are particularly great in 2022 noted in the June Economic Bulletin and as it is characteristically stated "however, a better performance is expected than last year, with a gradual recovery, and tourism returning to 2019 levels in 2024".
"In the effort to strengthen the sector, a significant boost is provided by the state support measures that include incentives for domestic tourism. The measures were extended until July 2022, after it turned out that they contributed positively in 2021 and mitigated, to some extent, the losses in the hotel industry," the Central Bank says.
The Economic Bulletin states "the efforts of the Deputy Ministry of Tourism to cover the losses of the Russian market from higher demand from other markets, such as Germany, Austria, Switzerland and Scandinavian countries, are noted. In addition, important developments are the renovations of hotels and the creation of new infrastructure, such as the construction of luxury hotel units, marinas and the casino-resort, which is expected to attract a large number of tourists, with its operation at the end of 2022. The general goal of the efforts that began a few years ago is to attract more tourists during the winter months and to lengthen the tourist season".
It is noted that the tourism sector is a main pillar of development of the Cypriot economy and has not had time to fully recover from the severe blow suffered by the pandemic and the war between Russia and Ukraine is expected to negatively affect the tourism industry. "Exports of services, and in particular tourism, are an important size for the purposes of analyzing the Cypriot economy, since Cyprus is a tourist and business centre and its economy is largely based on the provision of services. After the great blow that tourism received in 2020 from the spread of the pandemic, in 2021 it recovered significantly, especially in the summer and autumn months. The outbreak of war between Russia and Ukraine and the sanctions imposed on Russia are expected to hit exports of services and more tourism (mainly from Russia)."
Measures to support tourism helped
Exports of services in 2021 recorded an annual increase of 14,8% (€1,982.5 million) coming from all main categories, according to the Economic Bulletin. Specifically, the largest increase came from the category of travel revenues (€1,099.4 million), which include revenues from tourism. Also, telecommunications, IT and information services increased by €250.1 million and transfers by €130 million. The main sources of tourism for the first quarter of 2022 were arrivals from the United Kingdom (69,000 tourists), Germany (21,000) and Israel (20,000). At the same time, the revenues of the first two months of 2022 are also recorded increased compared to the corresponding period of 2021. "The increase in the category of travel (€216.9 million) was restrained by government measures to support domestic tourism, due to the pandemic, with a large number of Cypriots choosing to spend their holidays domestically", it is noted.
COMMENT
High competition between countries
Tourism accounts for 10% of the European economy, according to the Commission's data. For some countries, however, it is one of the main pillars. For example, almost 25% of Croatia's GDP comes from spending on foreign tourists - the largest percentage among EU countries. For Cyprus, the figure is 15%, Italy at 13.2%, for Greece at 20%, for Spain at 14.6% and Portugal at 19%. It is not only Cyprus that depends on the tourist season. The Mediterranean countries are claiming their own share in the "pie" of the summer, but there will be a big battle over which country will win the most tourists and at what prices the tourist packages will be closed.
