Cyprus’s tourism sector catches a critical lifeline as major Western allies downgrade travel risks. But with the shadow of regional conflicts, crippling operational costs, and an over-reliance on a single market looming large, industry leaders are aggressively eyeing a pivot to India to secure the future. Here is the fast-forward breakdown.

President of the Association of Cyprus Tourist Enterprises (ACTE), Akis Vavlitis, expressed on Wednesday cautious optimism that conditions in Cyprus’s tourism sector will improve following decisions by the US and the UK to reinstate Cyprus to the lowest travel advisory level (Level 1), noting that the impact of this development will become clear in the next two to three weeks.

In statements to CNA, ACTE President said that this development has pleased the tourism industry and added that “it will become clear in two to three weeks to which extent this change in travel guidelines has affected us in a positive way.”

He noted that, apart from the fact that the United Kingdom is the largest market for Cyprus, this development is clearly a psychological factor for both European and Middle East countries.

“There is cautious optimism that things will improve due to the decisions taken by the US and the UK, but we will see over the next two to three weeks to which extent this will impact the situation in a positive way,” he said.

If booking numbers increase, it means that this has been a factor affecting bookings, he added.

Regarding the UK, Vavlitis said that “we have been saying for years now that it’s wrong to rely solely on one market,” and that ways must be found to diversify the situation.

He noted that Cyprus’s top tourism market, the UK, is vastly different from the second-largest, which is Israel. He said that in the past, before the war in Ukraine, we had the counterbalance of the Russian market and added that “in recent years, normality has become the exception; that is, crises occur more frequently and are unpredictable and more severe.”

Vavlitis added that in a presentation he made to the relevant authorities and the President of the Republic, based on a study by a major international firm, he noted that the next major tourism market will be India.

“It is not an easy undertaking, as we have to identify the product that Indian tourists want and reach agreements,” he noted, adding that “we must find a way not to rely solely on a single market.”

Regarding the start of the year in terms of tourist arrivals, Vavlitis said that the year began with positive developments in January and February, and that bookings for the entire tourist season were up compared to last year’s tourist season. He added, however, that the events related to the war in Iran had upended all bookings and forecasts.

“Today, the situation as regards bookings has improved, that is, we have more bookings than we had a month ago,” he added.

However, the President of ACTE said that “given the current situation, no one knows how this year will end and how much revenue we will lose, both hotels and for economy in general.”

He noted that significant discounts have been granted to tour operators, and this is affecting business profitability.

Furthermore, Vavlitis told CNA that hotel businesses are facing increased costs due to price hikes in energy and the supply chain, in general, as well as wage increases for the workforce that were provided for in collective bargaining agreements in April.

He said that the entire hotel industry has implemented the raises without "even considering asking the unions or the government to postpone them” due to current developments.

He also said that ACTE has been in contact at the highest level with commercial banks and with the President of the Association of Commercial Banks “and we have their full support.”

“For all businesses that have been consistent with the banks to date, we will have the support of the major banks for whatever the industry needs,” he added.

He noted that this gives the industry cause for optimism that “there is at least support from the banks, just as there was support from the government, even if only in April, and we are waiting to see what will happen for May and June.”

Vavlitis said that despite the fact that costs have risen, there have been reductions in accommodation prices, and added that his position, which he also conveyed to the President of the Republic and the relevant Ministers, is that fear (that may be the reason of reduced bookings) “doesn’t go away just because you lower prices.”

He noted that these developments have also begun to affect the economies of key source markets, such as Germany and the UK, while inflation has risen and interest rate hikes are expected. Furthermore, he noted that travel in general is no longer a luxury in recent years but a way of life, and this helps the tourism industry recover relatively quickly from crises.

Vavlitis also said that several hotels have not brought in additional staff from abroad, despite having received approval from the Ministry of Labour, adding that there is interest among workers abroad in working in Cyprus.

Source: CNA(ΚΥΠΕ)