With three consecutive years of smashing all records, tourism has proven to be the faithful top performer driving the Cyprus economy. The holiday island has embarked on a brave new strategy to redefine its image as a year-round destination and aims to significantly boost both arrival numbers and revenue and attract billions in new investment over the next decade.
Cyprus tourism has been on a formidable growth path over the last three years and has been breaking records in both arrivals and revenue, proving the Mediterranean island’s strategy to diversify and upgrade its offering has started to pay off. Efforts to extend the tourist season and developing niche areas such as nautical, sports and wellness tourism have begun to bear fruit, as has work to rebrand the island as not just a traditional ‘sun and sea’ destination, but a veritable year-round European holiday spot.
2017 proved another milestone of success, as total arrivals reached over 3.6 million and marked an increase of 15% compared to 2016 – the year Cyprus broke the three-million marker – and proceeds reached €2.6 billion by November 2017, far exceeding those of the previous year. Compared to 2015, last year saw an increase of approximately 1 million more tourists, which is a significant jump for Cyprus in only two years. The 2017 winter months also saw an increase of 14.1% compared to the previous year, proving more tourists are enticed to visit the island outside the summer season – a trend Cyprus is determined to build on. And 2018 estimates are promising even higher numbers. During the period January-May 2018, tourist arrivals increased at a rate of 14.5% compared to the same period in 2017, with an increase of 18.7% in arrivals from Greece, 15.3% increase from Germany, a 9.6% increase from the UK, while a 4.4% decrease was recorded from Russia following years of growth due to the drop in Russian currency value and the re-emergence of the competing Turkish and Egyptian tourism markets.
Supporting these impressive figures has also been the country’s return to a strong economic growth of almost 4%, and a renewed investor confidence that has resulted in significant funds owing into tourism infrastructure, such as luxury marina and hotel developments, as well the island’s first and only integrated casino resort, a €550 million project which broke ground in June 2018 and represents the biggest investment project undertaken in Cyprus.
Turning Dreams into Reality
The country has set big goals through its new tourism strategy and is already on a track to achieve them as projections of international tourist arrivals reaching almost 4 million and generating expenditure of €3.5 billion by 2025 look set to be revised upwards. The implementation of the strategy is the most comprehensive restructuring of the sector since 1960 and is geared towards opening new markets and further developing more niche areas of tourism throughout the year. Cyprus is aiming to double visitor arrivals, triple tourist revenue, create 47,000 better-paying jobs and attract €20 billion in new investment to Cyprus by 2030.
Arrivals have certainly been growing and evidence of this is the increase of available airline seats to Cyprus, and the agreements achieved with foreign travel organisers. Larnaca and Paphos airports together handled 10.25 million passengers in 2017, representing an increase in traffic of more than 14% compared to 2016. For just 2018Q1, traffic from Cyprus’ airports was up 11%, reaching 2.18 million passengers. If this level of growth is maintained throughout the rest of the year, then Hermes Airports can expect to welcome around 11 million passengers through its terminals in 2018.
Cyprus also hopes to attract more tourists with greater spending powers, with an average per capita expenditure of between €250-500 a day, as opposed to the tourist of today, who spends on average less than €100 a day. With the upgrading and launch of new boutique hotels and luxury marinas, golf courses and a new casino resort, these hopes may well come true. Tourism-related real estate and infrastructure continues to be one of the most attractive investment opportunities in Cyprus, and evidence of this is the number of foreign investors closing multimillion-euro deals in the last four years. There has been an influx of new five-star hotel projects that are set to materialise in the next few years. However, to achieve its aim to attract high-spending visitors Cyprus must also focus on creating a richer holiday experience, and one that emphasises culture, indigenous heritage and natural environmental features – all underpinned by a high-quality hospitality industry. While Cyprus is certainly not turning its back on the traditional ‘sun and sea’ model, it is definitely moving to reposition itself in the holiday market to provide a more diversified and ultimately more sustainable product.
Crystal Mediterranean Waters
Despite its efforts to redefine its image, it cannot be overlooked that a key element of Cyprus’ winning package remains its ideal weather of 340 days of sunshine and its pristine beaches – one of its core natural attractions. Cyprus’ beaches have been recognised internationally and have been ranked as some of the best in Europe. In 2017, the EU’s annual bathing water report ranked Cyprus in the top three as having excellent quality water for swimming amongst all the 28 member states. For the 12th year in a row, a 2018 report has once again ranked Cyprus as first in Europe for the ratio of beaches – now 64 – that received a ‘Blue Flag’ status – an award which indicates their high environmental and quality standards.
Sailing into Success
With practically every coastal town on the island already boasting or developing its own marina, nautical tourism is rapidly expanding. Following the success of Limassol Marina, a new luxury marina project has broken ground in Ayia Napa and plans for marinas in Larnaca and Paphos are also underway. Three companies have been shortlisted to proceed to the next phase in the tender to redevelop the Larnaca port and marina, with aims to make it one of the largest in Cyprus with around 1,000 berths, including some for superyachts. The contract to build the Paphos marina was awarded to developer Pafilia in July 2018, and the €240 million project will provide a capacity of 1,000 berths and more than 42,000 square metres of residential and commercial developments.
The €220 million investment in the Ayia Napa Marina project is facilitating a transformation of the area. Backed by Egyptian business magnate Naguib Sawiris it will feature luxury high-rises, beach front villas and world-class yacht facilities for up to 600 vessels – with provisions for yachts up to 60 metres – that are sure to also boost nautical tourism.
The development of Larnaca’s marina is still in a nascent stage, with foreign investment being sought, but there will be a ready market for the facility once completed. For the past seven years, Larnaca has hosted the annual Cyprus-Israel regatta, where yachts compete in a series of races off the Cyprus coast, culminating in an exhilarating race from Larnaca to Tel Aviv, about 25 sailing hours away. The number of Israeli boats mooring at Larnaca has increased in recent years, and the town is keen to further develop its potential as a key holiday destination for sea-loving Israelis, which has become one of the fastest-growing markets for Cyprus over the last five years. Larnaca is undergoing an extensive transformation, with new hotels and leisure facilities springing up that are sure to boost the coastal city’s status as a popular holiday destination.
Rustic Retreats and Seaside City Breaks
Tourists are spoilt for choice in terms of accommodation ranging from budget-priced two and three-star hotels to a growing range of upmarket hotels with four and five-star status, as well as beachfront hotels – of which Cyprus has the third highest number among Mediterranean islands. However, a key growth segment is also rural tourism – which has flourished in Cyprus and offers a range of great options from boutique country retreats to rustic village houses, giving travellers a unique way to experience authentic island life. Another area of significant growth is short holiday lets through global brand names such as Airbnb, which has become another popular option for tourists and business visitors alike.
Increased Cruise Line Prospects
Maritime tourism is expected to receive a further boost from the new architecturally innovative passenger terminal in Limassol. Perhaps more importantly, the new facility will significantly enhance Limassol’s credibility as a destination for cruise ships in the Mediterranean. The volume of cruises in the eastern Med has been declining sharply in recent years, and the region now attracts less than 15% of all Mediterranean cruises, but according to the European Travel Commission’s (ETC) latest report on 2018 trends and prospects, Cyprus seems to once again be benefiting from spurring cruise line traffic. Some of the world’s most impressive and large boats are served today at the Limassol harbour, including the majestic Queen Mary, Seven Seas Voyager, Insignia and Viking Sky, which included Limassol on his maiden voyage. DP World, the managing company that has undertaken the passenger traffic at the port, is hoping for further growth and new collaborative ventures in the region to encourage the more effective promotion of the East Med as an attractive cruise line destination.
The Stakes Are Set
The island’s first-ever and only integrated luxury casino resort, is a part of the plan to upgrade Cyprus’ tourism product. The casino – which is being run by the consortium of Integrated Casino Resorts Cyprus (ICRC) which includes the globally renowned Melco Resorts & Entertainment Ltd – will have extensive facilities and exceed five-star status. The gaming area at the casino is set to span across 7,500 square meters with about 1,200 gaming machines and 140 tables. Over 9,600 square metres will be for convention, meeting and event spaces and 1,200 square metres of retail area replicating the feel of the old Nicosia city centre. The resort is expected to contribute €700 million annually or 4% of the country’s GDP to the economy from the second year of being fully operational, according to the President of Cyprus.
Until the resort opens its doors, a temporary casino has been set up in Limassol, named Cyprus Casino or C2, which attracted 34,000 visitors in the first three weeks of opening. In addition, satellite casinos are in the pipeline and expected to become operational in 2019. According to recent reports, one location will be at Larnaca airport, while the consortium will also operate satellite casinos in Ayia Napa, Nicosia and Paphos, with the latter two opening in October 2019. The Nicosia casino will have five tables and 50 gaming machines, while the remaining satellite casinos will have only gaming machines.
Known as the mythical island of Aphrodite and love, Cyprus wedding tourism has become a lucrative business and contributes around €110 million a year to the economy. The number of foreign marriages is estimated at 7,500 a year, of which around 40% comes from the UK market, while 30% from neighbouring Israel, 10% from Lebanon and 5% from Russia, which along with the UAE constitute growing markets for Cyprus. Efforts are underway to make inroads also into the Indian, Chinese and Japanese markets, according to the Cyprus Tourism Organisation (CTO).
Much of the growing appeal of this form of tourism is due to the availability of civil marriages in Cyprus. Across much of the Arab world – and Israel – a marriage ceremony has to be conducted within the context of a religious ceremony if it is to be legally recognised. This makes Cyprus an attractive wedding destination for mixed-faith and secular couples, and also for Israel and its 350,000 Jews from the former Soviet Union, who are not recognised as Jewish by the country’s Orthodox Chief Rabbinate.
Paphos, the legendary birthplace of the goddess of love, continues to be one of the most popular places to tie the knot. The tourism industry also received a boost in 2017 following a three-year deal between British travel group TUI UK and BookYourWeddingDay.com, a Cypriot-based innovative online platform for civil wedding bookings.
Growing Sports Tourism
Cyprus has a growing 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, which were sunk off the coasts of major tourist areas across the island in order to create more artificial diving reefs for scuba divers. Golf tourism is also expanding rapidly, Cyprus already 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.
Medical and Wellness Tourism
Medical tourism is experiencing unprecedented growth, due to Cyprus’ world-class reputation for high-quality private healthcare 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. Health and wellbeing holidays are also on the rise, 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.
Cyprus is actively targeting new markets and reassessing existing ones, but what has been evident is that tourist numbers are on the rise. Most arrivals continue to come from its traditional markets such as the UK, Greece, Germany, Russia and Scandinavia, which highlights the sector’s dependence on these specific countries. Although the island certainly cannot afford to ignore these crucial markets, tourist officials are increasingly thinking outside the box and Cyprus has begun to accelerate the process of diversification into other non-traditional markets, such as China. The country’s new strategy, if adhered to, is certain to bring profound and far-reaching results to keep the sector on its growth course for the next decades. Tourism has continuously shown to be the most resilient of Cyprus’ commercial sectors, accounting for around 13.8% of GDP in 2017. And with further development of various niche areas, such as rural, health and wellbeing, nautical, religious, conference, sports and wedding tourism, the country’s dreams are set to become a reality.
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