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18 July, 2024
 
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FTI bankruptcy adds to woes of Cyprus tourism sector

Financial fallout from FTI bankruptcy hits Cypriot hotels

Newsroom

The recent bankruptcy of German tour operator FTI has sent ripples through the Cyprus tourism industry, highlighting both immediate concerns and long-term implications. While the direct impact on hotels has been limited, the broader consequences are troubling, especially given the significant efforts Cyprus has made to penetrate the German market in recent years.

FTI's collapse adds to the woes already facing Cyprus tourism, which is grappling with the effects of the ongoing war in neighbouring Israel and an economic recession in the United Kingdom—both critical markets. Though FTI's contribution to Cyprus's annual tourism numbers was relatively small, industry experts warn of broader challenges.

In preliminary assessments, tourism officials have noted that FTI's immediate impact is modest. The tour operator brought approximately 30,000 to 35,000 tourists to Cyprus, primarily filling 160 hotels in Famagusta and Paphos. The Deputy Ministry of Tourism and the Cyprus Hotel Association (PASYXE) caution that FTI's bankruptcy, combined with other negative factors, could test the sector's resilience.

Meetings held since last Monday have revealed that FTI Touristik has unresolved financial obligations to Cypriot hoteliers. The scale of these debts remains unspecified, but the general manager of PASYXE, Philokypros Roussounidis, noted that debts from last year and early this year are pending. Recovering these funds will be a lengthy and challenging process.

With the current situation, the Cyprus tourism industry faces two primary tasks: retaining the 30,000 tourists that FTI typically brought annually and mitigating the broader impact on efforts to grow the German market share. Estimates suggest the immediate damage will be limited, as many affected tourists are expected to rebook with other operators.

However, the broader concern is the future of Cyprus's penetration into the German market. FTI's bankruptcy is not an isolated incident; it follows a series of financial troubles among German tour operators in recent years.

FTI's financial troubles predate the COVID-19 pandemic. The company received substantial financial support from the German government, including €590 million in aid and €280 million in loans from Unicredit. Prospects improved when U.S. investment fund Certares showed interest in buying FTI, planning a €125 million liquidity injection. However, this potential deal fell through when the German government rejected Certares' demand for a debt reduction.

The German Competition Commission's delayed decision on the takeover further strained FTI's liquidity, leading to its collapse. FTI, a major player in the tourism market since 1983, employed 11,000 workers and is the second significant German tour operator to go bankrupt after Thomas Cook in 2019.

As the summer season progresses, the full impact of FTI's bankruptcy on Cyprus tourism will become clearer. Industry experts predict that the real repercussions will be felt towards the end of the season, particularly when assessing this year's performance of the German tourism market, which last year brought 200,000 tourists to Cyprus.

[Summary of Apostolis Tomaras' original story in Greek published in Kathimerini's Cyprus edition]

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Cyprus  |  economy

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