THE CYPRUS TOURISM INDUSTRY

The Cyprus economy is heavily reliant on the services sector and more specifically on the tourism industry. According to the report issued by the “World Travel & Tourism Council” (‘WTTC’) on the economic impact of travel and tourism in 2015, the direct contribution of travel and tourism to GDP in 2014 was €1,111.0 million (7,0% of GDP). The direct contribution of travel and tourism to GDP is defined as “the internal spending on travel and tourism, by netting out the purchases made by the different sectors (total spending within a particular country on travel and tourism by residents and non-residents for business and leisure purposes)”.

Meanwhile, the total contribution of travel and tourism to GDP was € 3.404,9 million in 2014 (21,3% of GDP) and is expected to grow by 5,5% to € 3.593,6 million (22,4% of GDP) in 2015, as per the same WTTC report. The total contribution of travel and tourism includes its “wider impacts” (i.e. the indirect and induced impacts) on the economy. In addition, it is forecasted to rise by 4,2% p.a. to € 5.419,8 million by 2025 (25,5% of GDP). This rising trend is in line with the growing demand in international tourism.

Tourist arrivals by country of origin

The number of tourist arrivals has experienced substantial growth over the last four years. In 2014, tourist arrivals reached 2.441.231. Most of the tourist arrivals in 2014 originated from EU countries (approx. 92,23%).

1. United Kingdom: 871.517 tourists.
2. Russia: 634.000 tourists (26% of total)
3. Sweden: 106.661 tourists
4. Greece: 100.949 tourists
5. Germany: 86.394 tourists
6. Israel: 68.817 tourists

Arrivals from Asia have also been increasing and the Asian tourism market is an attractive one for Cyprus. Such arrivals reached 148.430 in 2014, representing an increase of 42,18%. This is mainly attributable to higher tourist arrivals from Israel and Lebanon (Western Asia).

Promotion of Cyprus

The CTO developed a tourism strategy of 2011-2015 which provides a coherent and comprehensive presentation of the development of the tourism sector and the positioning of Cyprus on the international tourism scene.

The strategy’s objectives are to:

• Increase total direct and indirect tourism receipts
• Increase tourism arrivals
• Deal with the phenomenon of seasonality and subsequently the alleviation of the negative results it creates
• Improve the viability of tourism enterprises
• Upgrade the overall tourism experience offered by Cyprus by providing an enhanced tourist product with significant value added, thus improving the competitiveness of the tourist industry in Cyprus in comparison to other destinations.

The strategy incorporates proposals to expand and improve the operating period and occupancy rates of licensed hotels and accommodation establishments, to improve the competitiveness of the tourism industry in Cyprus, upgrade the appearance of the built environment in the tourist areas and promote professionalism among tourist service providers through continuous upgrading of knowledge, skills and abilities of the people working in the industry.

The tourism strategy includes an analytical marketing plan.

The plan incorporates substantiated targeting of specific segments of the market (through comparative analysis and evaluation), the development of viable marketing targets and the use of implementable strategies. Advertising and promotion will focus on pillars of creative design, purchase of space/time in the advertising media and the evaluation of advertising actions. Special focus will be placed on the identification and enhancement of awareness of Cyprus as a tourist destination, as well as on improving the accessibility to the island via the development of new air links. In addition, the use of the internet will assist in promoting Cyprus in an electronic environment and in establishing a comprehensive e-Business context.

The government aims at assisting in growing the tourist appeal of Cyprus, through a number of measures, including the extension of the tourist season to cover the months of December to March inclusive, as well as the implementation of an “Open Skies” policy in an effort to extend both the number of originating airports as well as aircraft operators.

The government’s goal is to increase arrivals of tourists from the current 2,4 million to 3,5 million over the next five years.

Quality of tourist product and challenges

The tourist product in Cyprus is comparatively more expensive than other Mediterranean destinations. This, accompanied by increased competition, has resulted in the rise of all-inclusive packages, especially for arrivals from Russia and Sweden. However, the devaluation of the Russian rouble against the Euro, as well as the political situation has caused lower expected bookings from Russia for 2015.

The quality of the tourist product in Cyprus and the real estate component of the industry need further improvement in order to enhance the value-for-money options for tourists. This means both upgrading and upscaling of hotels and existing infrastructure (including archaeological and other cultural sites), as well as the addition of new projects such as casinos, marinas, golf courses, theme parks and other facilities.