By Andreas Charalambous and Omiros Pissarides
With the end of the pandemic, the accumulated demand, and increased savings, partly as a result of the significant government support packages, led to a sharp increase in the tourist flow worldwide. Cyprus has not been an exception. Contrary to negative expectations, based on the drastic reduction of Russian tourists, 2023 stands to be a record year. Specifically, revenue for the tourism industry during the period January to May 2023 is estimated at €729 million compared to €543 million in 2022, marking an increase of 34%.
However, this upward trend masks medium-term challenges, which should be addressed, in a timely manner, in order to preserve, and further strengthen, the Cypriot tourism product.
The first challenge concerns the need to switch from mass to quality tourism. Mass tourism contributes to a lesser extent to local economies, requires greater use of resources, places a disproportionate burden on the environment, while crowding out quality, and more profitable, tourism. Already, a number of European cities have taken specific actions to limit mass tourism. Venice has banned cruise ships from docking in the city centre since 2019, followed by Bruges, Dubrovnik, Dublin and Barcelona. Recently, Amsterdam followed suit, by closing its cruise ship terminal, citing that it is not in line with the city’s efforts to be designated as a ‘sustainable area’.
An intense challenge for Cypriot tourism will be global warming. In an island country, whose tourism industry is traditionally based on the ‘sun and sea’ model, the prolonged increase in temperature, which tends to become a permanent phenomenon, constitutes a particularly worrying development. This reality should push us towards a ‘high value, low impact’ tourism policy, as well as intensified efforts to attract tourists around the entire calendar year, aiming to create stable income for the tourism industry and the state, while limiting the economy’s dependence on tourism during warm months.
Another challenge concerns the absence of an ambitious and rational urban plan, that would highlight the local Cypriot character on a uniform basis throughout the country. Global tourism trends demonstrate an explicit shift towards respect and protection of local heritage, which are very often combined with modern developments in special interest areas, such as sports tourism, health tourism, tourism for the disabled, outdoor experiential tourism and conference tourism. An interesting example is the small kingdom of Bhutan in South Asia, which promotes its distinct cultural identity, while limiting the impact on local society and the environment.
Ultimately, beyond the immediate challenges facing Cypriot tourism (e.g. flight connectivity, labour shortage), the creation of a sustainable tourism development strategy is required. This strategy should aim to attract quality tourism with high added value, based on a long-term plan of measurable objectives that places importance on modern tourism trends and domestic tourism. The strategy must include regulations and targeted incentives for environmentally friendly development and also public investment in infrastructure, e.g. in mass transport.
Andreas Charalambous and Omiros Pissarides are economists.