The future of Cyprus’ tourism industry depends on sustainable development, according to Association of Cyprus Tourist Enterprises (Stek) president Akis Vavlitis.

The Stek president on Thursday explained that “while the sector has demonstrated resilience, ongoing challenges must be addressed to ensure long-term stability”.

These, he said, include a reliance on a handful of markets, the threat of short-term rentals, seasonal imbalance, and inadequate infrastructure.

Vavlitis stressed that tourism continues to be a vital pillar of the economy. Visitor numbers surpassed four million in 2024, generating an estimated €3.2 billion, contributing around 13 per cent to Cyprus’ GDP.

“The current year is expected to follow a similar trajectory, but ongoing geopolitical instability and economic challenges in key markets, such as Germany and France, could impact arrivals,” he said.

However, he said that despite strong performance, the “tourism industry faces deep-rooted structural issues that require urgent attention”.

One of the most pressing concerns is that a significant proportion of tourists are not staying in licensed accommodation.

Vavlitis said that “about 35 per cent of visitors in 2024, or 1.4 million people, opted for unlicensed rentals, short-term accommodation, or stayed with friends and family”.

He argued that this trend affects the hotel industry and the economy, as these stays “do not contribute to the traditional hospitality sector”.

Another long-standing challenge, he mentioned, is Cyprus’ reliance on a small number of source markets.

“Before 2022, the United Kingdom and Russia accounted for around 60 per cent of all tourist arrivals,” he pointed out.

The UK remained the largest market in 2024, with a share of 35 per cent, while Israel, the second-largest source, made up only 10 per cent.

Vavlitis pointed out that “most Mediterranean destinations do not rely on a single market for more than 20 to 22 per cent of their arrivals”.

To address this, he recommended targeting new markets such as India and Saudi Arabia to reduce dependence on a few countries.

Vavlitis also said that the issue of seasonality continues to hinder the tourism sector.

“Winter tourism remains underdeveloped, with only 16 per cent of visitors and 12 per cent of revenue generated in the five off-season months,” he explained.

This, he said, leads to “widespread hotel closures and job losses”.

“Billions in investments remain inactive during the winter months,” Vavlitis stated.

He suggested conducting a study to determine the type of winter tourism Cyprus should develop and how to attract visitors outside the peak season.

Energy infrastructure also poses a significant challenge to the sector’s growth, with Vavlitis pointing out that Cyprus’ electricity network struggles to accommodate the increasing supply of renewable energy.

“There is insufficient grid infrastructure to handle the changing energy landscape,” he said, noting that “this results in wasted green energy and inefficiencies”.

In this context, he called for immediate measures, including the creation of energy communities for businesses and the expansion of emissions reduction initiatives.

Vavlitis also mentioned that “the rapid growth of short-term rentals has further disrupted the hospitality industry”.

“In just a decade, short-term rental properties have reached the same capacity as licensed hotels, which took 50 years to develop,” he said.

“Unlike hotels, he argued, “short-term rentals operate with fewer regulations and lower costs, creating unfair competition”.

He urged authorities to introduce stricter regulations to protect the traditional hospitality sector and ensure safety standards.

The Stek president also said that sustainability is another critical factor for the future of tourism.

More travellers are prioritising eco-friendly accommodation, with over 50 per cent of TUI’s customers in 2024 choosing hotels certified by the Global Sustainable Tourism Council.

“Hotels that fail to implement sustainability practices will struggle to attract modern travellers,” Vavlitis warned.

He stressed the need for a tourism strategy that balances economic growth with environmental and social responsibility.

“The industry has played a crucial role in the internationalisation of Cyprus’ economy, supporting developments such as marinas, golf courses, and the casino resort,” the explained.

However, Vavlitis called for a more balanced tourism strategy that ensures sustainable expansion across the island.

“A comprehensive urban planning approach is necessary to create a resilient and environmentally friendly tourism sector,” he said.

“Given the increasing competition from other destinations, Cyprus must continuously monitor market trends and adapt swiftly,” the Stek president added.

“A holistic approach to tourism management is required to establish Cyprus as a year-round, high-quality destination that benefits local communities, workers, and businesses,” Vavlitis concluded.