All the data show that this year's tourist season will be, overall, better than in 2021, despite the loss of the Russian and Ukrainian markets, but inflationary pressures in other markets, and especially in the UK, add uncertainty to its final performance. Cypriot tourism in 2022.
The Fiscal Council, in its interim report, sees a third consecutive year of difficulties for the tourism industry, without these pressures leading to massive business failures.
“The monitoring of bad debts and general data related to the liabilities of the sector, justify the assessment that the financial resilience remains able to overcome, in general, the difficulties of 2022”, the report emphasizes. It is noted that loan restructuring has already been done precautionarily in 2020 and 2021, with the result that new moves to facilitate the service of the debt of hotel units lead to an increase in NPLs. Under European banking rules, a loan restructured for the second time is permanently transferred to the MES category.
“This phenomenon is expected to be recorded, but to an extent that will not be a generalized problem for the tourism industry or the financial system,” the Budget Council estimates.
The interim report states that, based on quality analyzes, information from competent authorities and economic agents, past statistics and high percentages bookings compared to 2020, 2022 will be better than 2021.
The Fiscal Council says it is slightly more conservative than the estimates recorded. Although, quantitatively, the replacement of the loss of arrivals from Russia and Ukraine may potentially exceed 30% compared to the years before the pandemic, it is expected that the actual replacement will remain lower than the potential for a number of reasons, including pressures on markets such as the UK, where macroeconomic forecasts are currently negative. In fact, cancellations are expected as well, both the growth forecasts and the estimates for inflation in the countries & # 8211; Cypriot markets are moving negatively. Therefore, the replenishment of the Russian loss of about 30% should be considered the maximum potential arrival ceiling for 2022.
At the same time, there is a positive contribution, but in the long run, of the new flights, as they will mature. The demand from the secondary markets of Cyprus will be consolidated. , before the start of the war in Ukraine.
Finally, finding solutions to labor issues in the tourism industry and facilitating the filling of job vacancies will work positively to maximize the benefits of growth new markets that fill the Russian gap.