One in four hoteliers expect to resume operations in July, but more than half are considering the option of not opening at all or only operating a small number of their units,a new survey shows.
According to an EY survey on the potential impact of the Covid-19 pandemic on the Cyprus tourism sector, only 40% of the participants are optimistic that the industry will recover by 2021, returning back to 2019 levels.
Another 25% forecast that recovery will be achieved in year 2022, while the remaining expect a slower recovery rate.
EY carried out the survey in early April 2020. Executives and owners of major Cypriot hotels and hotel chains were invited to share their sentiment on the impact of Covid-19 on the tourism sector.
The survey spans financial, operational and strategic considerations. EY stressed that responses reflect the views of the participants at the specific point in time.
Given the constantly changing situation, making predictions is inherently difficult, it stressed.
Tourism, a power engine of the economy, recorded a particularly successful year in 2019 with some 4 million arrivals.
With the economy in virtual lockdown, the sector has had to press the pause button with hotels and restaurants all closed and passenger flights prohibited until the end of April.
There is uncertainty over when the airports will re-open, what conditions will prevail and whether visitors will actually be travelling.
Hoteliers anticipate greater reliance on domestic visitors and are considering rate reductions of up to 30% to win local business.
Here are some of the main conclusions of EY’s survey:
View on financial performance
- The vast majority of participants expect an overall reduction of at least 50% in revenue for 2020 compared to 2019. They also project a decrease of more than 50% on the average occupancy for the year compared to the previous year.
- Unanimous response that all reservations until the end of May 2020 were either cancelled or deferred. Similarly, bookings for June 2020 are currently at low levels and likely to be also cancelled.
- The majority of the participants expect 2020 to be lossmaking, with a material risk of missing out on the rest of the season
- Concerns by most participants that people will opt to spend summer holidays in home countries, even after relaxation of measures.
- Only 25% of participants were optimistic for resuming operations by July 2020, which still accounts for more than 3 months lost business for the year. More than half of the participants noted that they are considering in their options a scenario of either not opening at all or only opening a small number of their units in 2020. In the latter scenario they consider operating at around half of their capacity.
View on Government measures to-date
• Participants were neutral regarding Government support measures, anticipating further measures and clarifications.
View on industry behaviour and recovery
- Participants expect a change in tourists’ behaviour in the short term towards domestic tourism, less crowded facilities and destinations closer to home. Half of participants intend to increase their focus on
the domestic market.