British teens on holiday

It is a business truth universally acknowledged that if all the current practitioners are insistent upon moving up market then there’s an opportunity for a new market entrant to appeal to that lowest level of consumers. Tesco moving away from pile it high and sell it cheap provides the opportunity for Aldi and Lidl to occupy that former space. The Monkees releasing an album where they didn’t use session musicians led to the space for more boy bands. So it is with the booze’n’sex model for teenage holidays:

Ayia Napa has warned boozy lads holidays they are not welcome at the Cypriot hotspot as it sets its sights on becoming “the most cosmopolitan tourist resort of the Mediterranean”.

The coastal town developed a reputation for drunken debauchery from the 18-30 crowd in the Nineties, with groups of young men and women, often stag and hen dos, cavorting into the small hours.

But no longer.

The mayor of Ayia Napa, like his counterparts in resorts such as Magaluf, Ibiza and Hvar….

They’re all trying to do it, they’re all moving away from that model. Which gives an opportunity for someone else to supply that very market. After all, Darren and Darleen do actually need a gutter to throw up in for a week a year and there’s money to be made from providing it.

One would need a beach, an airport and not a great deal else. Well, OK, cheap booze is going to be necessary too but there’s a trick to be played there. One way, a very useful way, to make sure that the teens stay in the place they’re put is to have a differential regime for booze taxes. That means locating our resort corral in a high tax country, but then make booze duty free within our target location. And only booze served in a bar, no take outs. The higher the booze taxes in the surrounding area the stronger our fence.

High tax country, beach, airport, Spitzbergen it is then.

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  1. Regarding Norway:

    I read this book between the death of the MP Jo Cox and the announcement of the European Union referendum results. This was not a good week. My spirit needed replenishment. George Lakey’s book provided it.

    Here, Lakey combines historical analysis, economic data and interview-based opinion to produce something that delivers much more than each of those could do in isolation. As a result, Viking Economics tells a story of economic change and the foundations on which it was built at a time when it is so obvious that such narratives are desperately needed in modern political discourse.

    His quest to explain why Scandinavia has delivered a notably high quality of life when so many things (energy sources apart) appear stacked against the countries that make up the region is focused not on outcomes, although he documents them, but on causes. This is wise: most will be familiar with much of the data on incomes, taxation, happiness, child poverty and even productivity, where in each and every case the states that he describes as Scandinavian (Norway, Sweden, Denmark and Iceland) have outcomes that are consistently outstanding. It’s the way Lakey explains that this is not by chance that I found so persuasive.

    The story is not the same in all states: it cannot be. Norway was, for example, both Danish and Swedish territory before achieving its independence. Denmark and Norway suffered Nazi occupation; Sweden did not. Sweden and Denmark are in the EU, but Iceland and Norway are not. These factors, then, suggest that Lakey’s search for some deeper explanation is appropriate.

    That explanation is, he suggests, to be found in the work of the Nobel prizewinning Swedish economist Gunnar Myrdal. Lakey’s argument is that Myrdal encouraged all these states to invest in the individual person as the primary resource for delivering economic growth. This idea, and the actions that result from it, is, he believes, the pillar of the Nordic economic model. At its core this idea, he observes, rejects the classical view of work – that it is a struggle to win the means of existence – and puts in its place a positive framework of incentives for economic participation.

    The book explores this hypothesis in numerous ways, but at its heart a number of things stand out that, at a time when the economies of so many countries are so badly failing those who live in them, must be worthy of serious study.

    The first is conceptual. As a result of these states having largely rejected the core assumptions of classical economics, profit is seen as a consequence of work and not as its goal. Banking is seen as a service and not as the focus of economic growth. Education is viewed as vital to personal growth, which just also happens to be the perfect countercyclical investment that secures long-term prosperity. And underpinning all this is an expectation that each person will work to contribute to the overall well-being of the society of which they are part: this is a perception of work as a participatory activity.

    The result appears to be a Keynesian, social democratic nirvana where education, healthcare and pensions are free, the social safety net is still strong and cooperatives supply 40 per cent of housing in Norway.

    The Keynesian argument may be true, but it has to be understood. What Lakey makes clear is that this is not a society where stimulus is created by digging holes and then filling them in again. Nor does it by default seek stimulus from investment in infrastructure. It is one in which countercyclical investment is in skills. And this is not some minor commitment: it is lifelong, and embraces not just the citizen but the immigrant as well.

    The attitude towards migration in Norway was perhaps the most surprising and hope-filled revelation I encountered in this book, in a week when Ukip unveiled a profoundly racist poster to the British public. The migrant is welcome in Norway – but not (quite significantly) unconditionally. Those not enjoying freedom of movement have a year to learn Norwegian, but are given the means to do so, as well as the necessary financing. In return, they are then expected to develop a skill that Norway needs if they do not already have it: they are prepared for work, in other words. And then they have to do that work where they are directed to repay the favour granted. This is a contract. Once it is fulfilled, they can stay, which they are likely to want to do (as you would if you’d learned Norwegian).

    I am sure that there are complexities and issues that Lakey skips over: I know Norway well enough, for example, to be aware that not all migrants have been welcomed with open arms. But the point is that the model has worked, within reason. Crucially, it offers something that is the same as the bargain available to the locally born population, which in Denmark they call “flexicurity”. There is no guarantee in this system that a worker will have their existing job for life. In its place is an undertaking of support, so that if a person has to change their employment they will get the training and support needed to get a new job.

    Importantly, as Lakey suggests has happened in Norway, this model specifically embraces polarity. After a history of very difficult industrial relations, the country came to a settlement between unions and business in the 1930s that has, broadly, and with the Quisling era a disruption, survived to date. As a result, business is seen not as being in opposition to the social model but rather as a part of it. This is evidenced by the fact that the state quite positively encourages people to set up their own businesses. Among Lakey’s more surprising statistics are those on entrepreneurship, where Scandinavian rates exceed those of the US. His explanation of this is, to me, and based on my experience as a one-time practising chartered accountant, very obviously correct: Scandinavians can afford the uncertainty of starting a business because the risk of ill health, old age, education for their children and even, to some degree, failure is accepted by society as part of the bargain made for the gains the business will deliver, which it will settle by way of tax paid and opportunity provided. No UK graduate now has the security to take risk in that way. No wonder the Scandinavians can win.

    These states were also notable winners when it came to their dealings with their banks, whether because they had their failures early (in the case of Norway and Sweden) and were prepared as a result for the crisis that developed in 2008 or because they simply refused to accept that the recklessness of bankers was something that they had to pay for, as happened in the case of Iceland.

    So can this model be replicated? Lakey is an optimist. By nature so am I. But if he is right, then the story he imparts has to be told, understood and acted upon. And in the Nordic tradition, that story is more like a saga than a soundbite. But if the UK’s higher education sector cannot build a narrative around the power of investing in people as the basis of our future prosperity, then what is it for?

  2. I feel very, very old.

    When I was posted to Cyprus in ’76 (9 Sig Regt at Ay Nik) ‘Napa was a little fishing harbour with an excellent restaurant that did a sea food meze to die for. No hotels within about 5 miles. While I’m at it Fig Tree Bay was just two restaurants which were OK.

  3. Unfortunately, Tim, your project collides with reality. If you go into any of the bars or clubs the youngsters prefer to get lathered, they not actually cheap. The dive of choice in our town doesn’t sell anything under €5. Even soft drinks. Anything much more than a half of Spanish piss-water’s more like €8 with cocktails being much more. And that’s despite being able, for the price of a mojito in the supermarket along the road, being able to buy a couple bottles of rum, half a gallon of soda, a kilo of limes, a 3 kilo bag of crushed ice, a small bag of brown sugar & be able to drink yourself into emergency room at the local medical centre.
    But few, apart from the residents, do.

  4. Sorry. Comma in the wrong place there. Supermarket only sells readymade mojitos in expensive bottles containing very little alcohol. Put the error down to this being the Saturday morning after Friday night.

  5. This sort of thing always strikes me as a reaction from the sort of people who run the council who don’t want it to be a “ghastly” place. It’s like the mayor of Amsterdam wanted to “clean” the place up and bring in a better class of tourist. But other than the Anne Frank House, there’s not much worth seeing. People go there because they can smoke weed and watch women do things with ping pong balls.

    I’m not saying there aren’t costs to having the club 18-30 lager drinking crowd, but you’re going to get new costs to keep the middle class wanker crowd going. You’re going to need to spend more money on maintenance, maybe adding facilities like an aquarium or cycle paths you can point to.

  6. Its a story as old as the hills.

    The guy who took over my father’s pub in ’77, which CAMRA had described as the haunt of quarry men or something similar, was determined that he could go up market and attract the G&T set, despite being warned there wasn’t one.

    He duly set about upgrading the pub and making the after work crowd, who turned up for a few pints and game of dominoes wearing their coveralls, unwelcome so they went off somewhere else. The weekend evening crowd of noisy, but peaceful, heavy drinkers were also made unwelcome.

    The G&T set didn’t turn up and he didn’t last long. He wasn’t the first and wont be the last to try that trick.

  7. If the mayor of Ayia Napa wants to go up-market, their choice and will then be competing with all the other middle-class Cyprus resorts so lower prices for middle-class.

    Has the mayor asked Ayia Napa hotels & businesses if they agree?

    As BiND alludes to, if you have a profitable captive market cater for it, don’t snobbishly reject it.

    • The publicans probably know that and want to cater to their clientele. It is the mayor who wants to be the mayor of a more upscale town. Too bad it couldn’t be him relocating, rather than all the town’s reliable customers.