MIND, BODY & SPIRIT
1974 AND 2013
INSIDE
Overview of upcoming wellness exhibition in Limassol
Two different kinds of crises: two different kinds of solutions
TV and lifestyle supplements to see you through the week
Pages 18-20
Pages 6-7
www.cyprus-mail.com
April 7, 2013
€1.60
COFFEESHOP: CUNNING COMMIES AND THE USED-BANK SALESMAN PAGE 17 INSIDE Cyprus ‘Don’t fight the crisis, use it’ say psychologists 5
World Talks fail to end nuclear stalemate with Iran 8
Business Cyprus’ gas future burns brightly, says KRETYK boss 22
Property What to do in the garden this month 23
Sport Auroras Encore wins Grand National back
Failed economy looks to tourism Hopes being pinned on the industry to help rescue economy but are they realistic? By George Christou
K
EY PLAYERS from the tourism industry say they have good reason to feel bullish about a successful summer season, but some industry watchers say it is not the magic bullet it once was and cannot save the island like it did after 1974. Proposed upgrades have boosted confidence, with both the government and international lenders suggesting that investment in tourism has the best shot of plugging the gap left by the near demise of the financial services industry. If forecasts are to be believed, the financial sector will likely be halved, with brutal consequences for related industries such as wealth management, trusts, foreign exchange trading, fund administration and insurance. Now, after playing second fiddle to finance for two decades, hopes again rest on the holiday trade, which was once the mainstay of the economy but are these hopes really justified? On paper the prospects for growth look promising last year nearly 2.5 million people visited the island, boosting revenue from tourism up 10.2 per cent, with revenues of €1.927 million - which equates to about 10 per cent of GDP. At the end of the nineties however that figure was closer to 20 per cent. However, few deny that
since the bailout agreement a concerted effort is needed to tackle a whole raft of new headaches faced by tour operators, hoteliers and other related services. One major concern is that many foreign travel companies have already paid hotels to reserve rooms, but the haircut on those uninsured deposits sitting in the Bank of Cyprus and Laiki raises serious questions about how hotels will function with a highly reduced cash-flow. “It is a real concern,” says Zacharias Ioannides, the Chairman of the Cyprus Hoteliers Association. “It is something that we are working on and we are confident that there will be an amicable result to this.” With government assurances that steps are being taken to address the issue, Ioannides anticipates that the banks and tourism sector will work closely to overcome any obstacles. Not everyone is so confident. Unburdened from the shackles of high office, former finance minister Michalis Sarris said he understood the frustration expressed by tourism officials, but offered a blunt message that everyone must share the pain of the savings raid. “I think with the tourism sector there will be problems, but they are manageable. I think the tourism sector has done well - it will do well in the coming year,” he told CyBC radio this week. “It’s not perfect,
Some industry observers say tourism is not the magic bullet it was in 1974 when it saved the economy. Back then, Cyprus had no competition in the region but I think under the circumstances, they also are paying something of their fair share of this problem,” he added. Industry players say clarifications on the haircut on deposits need to come sooner rather than later, with Zacharias Manitaras from the Cyprus Chamber of Commerce and Industry
insisting that tourism be insulated from the worst effects of crisis. “Obviously the government should reimburse those in the tourism sector. As this is the biggest business we have - hotels and other related businesses cannot work without cash flow,” he added. The Memorandum of Understanding (MoU)
with the international lenders focuses on tourism as a cornerstone for future economic growth, now that the financial services sector has been destroyed. “Since tourism is one of Cyprus` largest sectors and an important potential driver of future
TURN TO PAGE 3