2020 Cyprus Country Report

Tourism
Sector Profile
agents had already classed the island as a safe
destination with many countries eyeing Cyprus
as a corona-free holiday haven. Meanwhile,
Cyprus ensured only countries with similar
epidemiological data could have flights to the
island, thus balancing tourism and the overall
health and safety of citizens, hospitality workers
and visitors alike. The list of approved countries
will be updated regularly based on how the coronavirus
situation evolves.
The year started off well with an annual
increase of 2% in tourist arrivals for the first
two months, but a sharp drop was recorded
in March 2020 due to the lockdown and entry
ban. Cyprus has shown strong leadership in its
handling of the pandemic, but it will be hard to
judge what the long-term impact on tourism
will be with so many other countries – and crucially
countries like the UK that constitute key
markets for Cyprus – still struggling to manage
their infection rates.
Cyprus has had to revise its high expectations
for 2020 and has set a new target of attracting at
least 20-25% of the 2019 arrival figures, which
translates to bringing roughly 0.8-1 million
tourists. To achieve this target, the government
has taken a proactive approach by targeting
several European countries to promote Cyprus
as an ideal travel destination this year. To secure
its safe-haven status the government introduced
rigorous travel and health protocols for anyone
looking to visit the island. All these measures are
constantly assessed and updated based on global
developments.
SUPPORT MEASURES AND INCENTIVES
With the harsh realities of the global pandemic
continuing until the foreseeable future, Cyprus
has sprung into action to support its tourism industry.
In early June 2020, the country launched a
new scheme to support aviation to stimulate passenger
traffic by providing incentives for airlines
to conduct flights even with low occupancy rates.
The scheme, which will run for six months with
a budget of €6.3 million, will see the government
subsidising airlines based on their occupancy rate
index, with sums to be pumped out for flights
conducted with occupancy rates between 40%
and 70%. The goal is to promote direct connectivity
between Cyprus and other countries and
motivate airlines to operate flights to the island
until the end of the year.
In this new post-corona reality discounting
is going to be the prime factor for people determining
their choice of holiday destinations,
and tourism experts predict the lower price tags
will result in a significant increase in travel and
tourism. With the Cyprus government subsidy
assuring a large part of a flight’s capacity, airlines
would be able to offer substantial discounts to
other passengers to fill up the plane. In addition,
Cyprus reduced the value-added tax (VAT) rate
for tourism accommodation and catering sector
services from 9% to 5% for the period from July
1 to January 10, 2021, and the government is
doubling its air and sea connectivity resources to
€15.7 million by the end of the year.
Our hotel
industry
continues
to receive
a huge
blow, due
to Covid-19, at a time when it
was predicted that this strong
pillar of our economy, would
continue its good course.
Traditional markets, such as
the United Kingdom, Russia
and Israel, were lost and
the only injection is the local
tourism, which, however,
is impossible to justify the
reopening of all the hotels
in Cyprus. Reviewing our
forecasts, we believe that
the full recovery of our hotel
industry will take at least
two years. Nevertheless,
we continue with hard work
and creativity to return our
industry where it deserves.
Haris Loizides
President
Cyprus Hotel Association
340
Days of sunshine
Tourism
accounts for over
20%
of GDP, directly
and indirectly
138 Country Report CYPRUS 2020