Collapse of German company a blow for Cyprus
The bankruptcy of German tourism group FTI is a negative development for Cyprus tourism, Deputy Tourism Minister Costas Koumis said on Tuesday, while hoteliers described it as another blow in a tough year.
“This is definitely a negative development for tourism in our country, as it comes at a time when we were trying to strengthen the German market and additionally because every loss now counts due to the pressures on the hotel industry in general,” Koumis told the Cyprus News Agency (CNA).
However, he stressed that the number of tourists brought to Cyprus by FTI is not that large although the collapse “will certainly represent a serious loss for hotel businesses that had cooperated with the tour operator.”
Currently, there are 900 in Cyprus who have travelled with FTI, Koumis said, speaking from London where he will have a series of meetings. Out of the 900 people, 860 are adults and 40 are children.
“Our responsibility is to ensure that all these people who have purchased packages from FTI can continue their holidays unhindered and return smoothly to their country,” he said.
Koumis clarified that in Germany there is a travel insurance fund that covers payments made by people in relation to package purchases from German travel organisers, which also covers their repatriation and accommodation expenses.
“Therefore, there are no particular reasons for concern for the travellers,” he added.
FTI Group, Europe’s third-largest tour operator, filed for insolvency in the Munich regional court on Monday as bookings continued to fall even after a recent one-euro buyout proposal.
In addition to sinking orders, multiple suppliers insisted on advance payments, which FTI was no longer able to provide. The group has opened a hotline and a website for customers.
Koumis said that deputy ministry officials are currently in contact with hotel associations to assess and manage the situation precisely.
He also mentioned that the financial problems of FTI were known to the tourism community, and despite hopes raised last April for a potential investment by a well-known American consortium, the situation did not end positively for various reasons.
For Cyprus the development could affect up to 30,000 hotel bookings, general manager of the hoteliers association Filokipros Rousounides said.
Speaking to local media, Rousounides said FTI works with around 160 hotels in Cyprus.
“Although the estimated 30,000 bookings affected is a small number in the grand scheme of things, it marks yet another blow to hoteliers in Cyprus in what’s shaping out to be a tough year for tourism,” Rousounides said.
“The instability in the region due to the conflict in Gaza, as well as the economic downturn in the UK – a major tourism market for Cyprus – and the upcoming Olympic Games in Paris will all take a toll on arrivals.
“A snapshot of the slowdown in bookings shows that overnight stays [in hotels] currently appear lower than last year,” Rousounides said, estimating the overall decline at 10 per cent.
The German economy ministry called the insolvency “tragic”, adding that it could not provide any additional assistance.
The government needs to examine in detail what effect the insolvency will have on the recovery aid funding it had granted FTI during the pandemic, a finance ministry spokesperson told Reuters.
“It must be assumed that only small recoveries can be expected from the outstanding claims,” the spokesperson said, adding that the government had been awaiting approval for a sale of receivables as the most economical way to claw back the funds before the company filed for insolvency.