The economic losses for Cyprus businesses in the tourism industry from the collapse of British travel giant Thomas Cook are huge and will certainly have a domino effect for the whole economy.
Thomas Cook, founded in 1841, announced its bankruptcy yesterday, with the most optimistic scenario estimating the unpaid bills that are due to Cyprus hoteliers as high as €50 million.
Hoteliers are only covered for two weeks of unpaid bills through safeguards provided by the British government. However, payments due for July, August and September are all up in the air, and this is only the initial damage that can be recorded.
At a district level, it is estimated that hotels in Famagusta and Paphos will suffer the most since a large number depended exclusively on Thomas Cook. Specifically, 70% to 80% of bookings at Protaras and Ayia Napa were through Thomas Cook and mainly focused on the Scandinavian market. Paphos attracted mainly British tourists.
Losses to hotels vary according to the number of customers associated with the collapsed company, and the recovery will be very hard, because it will affect occupancy and turnover. There are many questions raised as to the extent of the anticipated losses more generally.
In other words, how will the liquidity issue be resolved? What about the suppliers of hotel units? What about employees’ salaries? What will hoteliers do with left-over packages
Also of concern are future holiday packages. Trip organisers book rooms one year in advance. Therefore, many units that have been booked with Thomas Cook for 2020 are now left hanging.
There are unanswered questions also as regards hospitality units in Cyprus operating under the Thomas Cook brand. This is cause for further concern since no information on their future is currently available.