Cruising to Growth


    The most resilient of Cyprus’ commercial sectors, tourism has seen a boost bringing in record-breaking numbers of tourists in over a decade. With efforts to diversify its tourism product, new foreign investment in the sector and plans for a world-class casino resort, the future of Cyprus’ tourism looks bright.

    Tourism has been a key pillar of the Cyprus economy for decades. The sector has remained economically robust and is the only commercial sector in Cyprus to see continuous growth throughout the global financial crisis. The number of tourists visiting the island in 2015 reached almost 2.7 million, matching a previous record set in 2001, and this year the country is expected to keep up the strong growth momentum. With a strong focus on further developing niche tourism and extending its season, the country’s efforts to diversify are beginning to bear fruit.

    A Winning Package

    Cyprus is renowned for its hospitality and excellent quality of life, evidence of this are the numerous prestigious awards bestowed on its tourism industry, spanning from the Sustainable Destinations Global Top 100, VISION on Sustainable Tourism, Totem Tourism and Green Destination titles presented to Limassol and Paphos in December 2014. Cyprus ranks at the top of the EU for clean waters for swimming and has been awarded 53 Blue Flags, achieving three records: the most Blue Flags per capita in the world, the densest concentration of Blue Flag beaches and the most Blue Flag beaches per coastline. However, Cyprus is much more than just a ‘sun and sea’ and package-tour destination, with new niche segments such as sports and cultural tourism on the rise. Although tourists are spoilt for choice in terms of accommodation ranging from budget-priced hotels to a growing range of upmarket hotels with four and five-star status, a key growth segment is agrotourism – giving travellers a unique opportunity to enjoy and experience authentic Cyprus village life.

    Poised for Growth

    Cyprus saw record-breaking arrivals in 2015 and indications are that 2016 will build on this growth. The first five months have already shown an increase of 12.4% in revenue from tourism, which is estimated at €530.2m. The month of May saw a formidable 18.7% increase in arrivals, with revenue reaching €244.7m compared to €217.1m in the corresponding month of the previous year. Cyprus also recorded an increase in per capita expenditure by UK tourists to €815 from €755 in May last year, according to the Cyprus Tourism Organisation (CTO).

    The island is attracting increasing numbers of visitors from Germany, Israel, Austria, France and the Netherlands as well as the Middle East, but most notably 2015 saw the total number of British tourists exceed the one-million mark for the first time since 2011, constituting a 20% rise. Efforts by the government and the CTO to ‘reinvest’ in traditional tourist markets such as Britain and Germany has also helped reintroduce Cyprus to a new generation of tourists. The number of visitors from Greece and Germany rose 38% and 30% respectively in 2015 compared to 2014, while tourists from Sweden rose 1.8% and Israel 43%. Russia, a traditionally strong market, has been a source of some concern with arrivals falling almost 18% to 524,853 in 2015 due to the devaluation of the rouble making international travel unaffordable for many. Per capita spending by Russian tourists dropped to €577 from €752 in May 2015.

    However, Russian tourists remain the second largest tourist market for Cyprus and the negative performance is considered to be a temporary lull by Cyprus tourism chiefs. Long-term forecasts issued by the World Travel and Tourism Council, an authority on world tourism, paint a positive picture for Cyprus. By 2025, international tourist arrivals are forecast to total 3,734,000, generating expenditure of €3.5bn – an increase of 4.2% per annum. Analysts are confident that by consolidating its core attractions, while at the same time diversifying and developing niche areas in response to changing consumer demand, Cyprus tourism will continue on a path of steady growth.

    Expanding Connections

    Cyprus is forging ahead on multiple fronts regarding the ‘Open Skies’ policy, to extend both the number of originating airports, as well as aircraft operators. Cyprus has completed several new agreements with countries such as Bahrain and Oman, and is in talks with various countries from Asia, Africa and South America. Although the demise of national carrier Cyprus Airways in 2015 has inevitably been a blow to the industry, over 70 airlines continue to operate in and out of Cyprus with many expanding existing routes. Airlines such as British Airways, Emirates and Etihad have increased capacity to the island, along with commercial carrier Germania, low-cost Austrian airline NIKI and Qatar Airways. Also new Cyprus-based airline Cobalt took to the skies in 2016.

    Diversification to Boost Investment

    Efforts continue to maximise the commercial potential of the island’s mild winter climate and to develop the sector as a year-round tourism destination, particularly for niche areas, such as agrotourism, health and wellbeing, nautical, religious, conference, sports and wedding tourism. In fact, 2015 saw increased interest in bookings for March and November, the two months which have been identified as a first stage priority in the plan to expand the season beyond summer months. The CTO also supports external investment through numerous incentive schemes and opportunities remain for investors wishing to target high-quality niche tourists seeking special interest holidays. New projects currently underway are set to strengthen and upgrade Cyprus’ tourism product and encourage more winter visitors, a strategy Cyprus is fully committed to. These projects range from the construction of new golf courses, luxury marina developments and the upgrading of the island’s medical tourism product. Tourism numbers will see yet another boost with the coastal town of Paphos, the legendary birthplace of Aphrodite and UNESCO world heritage site, having won the international competition to become the European Capital of Culture for 2017.

    Developing Niche Tourism

    Cyprus has a top position among Mediterranean and European wedding tourist destinations, with around 8,000 couples from abroad tying the knot on the island in 2015. In terms of promoting its wedding tourism product, Cyprus’ key markets are the United Kingdom, Israel, Lebanon and Russia – with British holiday makers constituting around half of the weddings in Cyprus. Destination wedding site MarryAbroad ranks Cyprus as one of the top ten wedding destinations in the world for British couples planning to get married. The island also has a reputation as a popular winter practice venue for international sports groups and athletes, a field with considerable growth potential. Diving tourism is another area where growth is confidently predicted. An estimated 50,000 divers visit the island each year, many attracted by the opportunity to explore one of the top five dive sites in the world, the Swedish cargo vessel Zenobia, which sank off the coast of Larnaca in 1980. The CTO acquired four ships in 2015 in order to create more artificial diving reefs for tourists. Golf tourism is also expanding rapidly and Cyprus boasts four 18-hole international standard courses, with plans to construct an additional seven to establish the island as a year-round destination for golfers. Other developing areas include health and wellbeing holidays, with the recent creation of several exclusive spa hotels to pamper the visitor as well as a number of large scale projects open for investment in the fields of rehabilitation and other wellness services. Medical tourism is experiencing unprecedented growth, due to Cyprus’ world-class reputation for high-quality private health care in a technologically advanced environment. Cosmetic surgery, diagnostic tests and fertility treatment top the list as the most popular procedures for medical tourists from the UK, Germany, the Netherlands, Middle East and Russia.

    Game Changers

    The licence for a luxury casino resort offers particularly exciting investment potential. Legislation has been passed to award the first and only casino licence in Cyprus, and preliminary studies by the CTO predict annual government revenues of between €35 and €50 million. The licencing round garnered bids from gambling business heavyweights worldwide, and the expectation is that the licence will be awarded to one of the successful bidders in late 2016. The three casino finalists are reportedly Filipino casino operator Bloomberry Resorts, Cambodia’s NagaCorp and a consortium of the Florida Seminoles’ Hard Rock International and Lawrence Ho’s Melco International Development. The plan is to create a casino resort exceeding five-star requirements, including various leisure services such as hotels, spas and conference centres.

    Following the success of Limassol Marina, new luxury marinas are also in the pipeline for Larnaca, Ayia Napa and Paphos in a bid to boost nautical tourism. Another potential game changer for the sector has been the deal with the Buena Vista Hospitality Group. A leading player in the world of hospitality and golf management, Buena Vista has plans to construct Europe’s largest integrated sports, health and wellness resort near Limassol. The company will also base its regional headquarters for the Eastern Mediterranean, Middle East, and Balkans on the island. The Cyprus hotel industry has also seen a boost from foreign investment. Limassol hotel Alexander the Great was sold in a multi-million-euro deal, Le Meridien received a €20 million cash injection (75% investment), while the Amathus Hotel sold for €71 million. Larnaca is also seeing its fair share of investment, with a new Radisson Blu set to be completed and welcome its first guests by the summer of 2017. These deals have shown foreign investor confidence in the potential of the sector and are helping it move further upmarket.

    Challenges and the Future

    Cyprus tourism has emerged fighting fit from the recession and is ready to play a leading role in the country’s economic renaissance. However, in order to reach its growth targets and stave off increasing competition, Cyprus must tackle challenges head on in the short and long term. Still comparatively more expensive than other Mediterranean holiday destinations, Cyprus must see through its initiatives to upgrade and develop its infrastructure and product offering to meet the demand of visitors paying more for their holidays. Nevertheless, there are great opportunities and potential to develop the sector further thanks to its robust foundations and decades of experience in catering to tourists from around the world. Maintaining and boosting the success of this formidable sector will continue to take Cyprus from strength to strength.

    August 2016

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