Cyprus hotels are looking more closely at local holidaymakers this summer, as the industry tries to protect a difficult season shaped by weaker foreign bookings, higher costs and the continuing uncertainty caused by the Middle East crisis. 

The effort is not a blanket price-cutting exercise. Instead, hotels are moving carefully, with targeted offers, domestic tourism campaigns and last-minute deals aimed at filling rooms without undermining margins at a time when energy, wages and other operating costs remain high. 

The pressure has been building since spring. Tourist arrivals fell sharply in March and April, after geopolitical tensions in the region hit confidence in several eastern Mediterranean destinations. May brought some relief, with arrivals reaching 455,680, down 4.9 per cent from 479,160 in May 2025, according to the Statistical Service (Cystat). 

That was a marked improvement on the 30.7 per cent drop recorded in March and the 27.6 per cent fall in April. However, the first five months of the year were still 13.3 per cent lower than in 2025, leaving hotels heavily dependent on late bookings, domestic demand and a steadier flow from key foreign markets. 

For that reason, the local market has become more important. In the summer months of 2025, trips by Cyprus residents abroad reached 583,051, up 16.4 per cent from a year earlier, according to Statistical Service data processed by Politis. 

Greece remained the main destination, with 201,316 trips in June, July and August 2025, compared with 195,446 in the same period of 2024.  

Trips to the United Kingdom eased slightly to 46,849 from 48,016, while Italy saw a sharp rise, reaching 34,114 from 22,758. Russia, Germany, Poland, Romania, Spain, France, Bulgaria, Hungary, the Netherlands and Georgia also attracted stronger flows. 

For Cyprus hotels, even a small shift in that outbound demand could make a difference. 

The director-general of the Cyprus Hotel Association (Pasyxe), Christos Angelides told Politis that, despite the difficulties facing the sector, the current period could also create opportunities for Cypriots looking for better prices. 

“Everyone should look at the websites of hotel companies, call hotels and monitor their social networks,” he said. 

Angelides said Cypriot hotels remain competitive with similar hotels abroad, adding that there is already interest from locals. Some are booking, while others are still looking around, waiting to see whether more offers will appear closer to their travel dates. 

Still, hoteliers are cautious about how far they can go. The higher cost base means that any discounts are likely to be selective rather than general. 

“Each business follows its own commercial policy, depending on demand, occupancy and the market it is targeting,” Cyprus Tourism Enterprises Association (Stek) director Chrysaimili Psilogeni told Politis. 

“What we are seeing are targeted promotional actions for domestic tourism and not horizontal price reductions across the entire sector,” she added. 

She said hotels had faced a significant rise in operating costs in recent years, from energy and wages to raw materials and day-to-day expenses. Prices had not increased by the same extent, with businesses absorbing part of the pressure in order to keep Cyprus competitive. 

The June picture has been better, though still uneven. Cyprus hotels saw some recovery in June, particularly compared with March, April and May, but occupancy remains below what the sector would normally expect at this point in the season. 

Famagusta hotels were averaging around 60 per cent occupancy in June, while Paphos stood at about 70 per cent, compared with levels closer to 90 per cent in a normal year. Limassol has been somewhat better placed, helped by business travel and a smaller supply of beds, but it too remains below previous years. 

Pasyxe president Thanos Michaelides said traffic had improved, but the market was still moving at lower levels than usual for the season. He said there was hope that demand could strengthen following the easing of the Iran crisis, though there were not yet clear signs to confirm that this would happen. 

“2026 is a difficult year for the hotel industry,” he said. 

The same uncertainty has been felt across the wider eastern Mediterranean. According to the Financial Times, bookings to Cyprus, Turkey and parts of North Africa dropped after the escalation of the conflict earlier this year, before gradually recovering as travellers reassessed the risks and hotels offered more attractive prices. 

“Consumers are opening their maps and realising that the Suez Canal is not connected to the Strait of Hormuz,” easyJet chief executive Kenton Jarvis told the Financial Times. 

“I think it’s been a really good geography lesson,” he added. 

Jarvis also said hotels in the region “have put great deals into the system, so you can get much better quality… than you can in Spain for the same price.” 

Search data appears to support the recovery. Citing hotel data firm Lighthouse, the Financial Times reported that searches for hotels in Egypt, Turkey and Cyprus had been rising steadily since mid-April, with searches for Cyprus up 29 per cent in the second week of June compared with the first. 

Nick Aristou, chief commercial officer of Muskita Hotels, which operates three hotels in Cyprus, told the newspaper that “things have improved dramatically since May”. 

“We were down 20 per cent in March for the summer season,” he said, adding that the group was “now making up for lost ground in terms of travel bookings from the UK and Europe”. 

Airlines have also pointed to a stronger regional picture. easyJet Holidays chief Gary Wilson said Egypt had moved “from a negative position… to a very strong positive position year-on-year in just a few weeks,” while Wizz Air chief executive Josef Varady said there had been “a very strong recovery” in markets such as Turkey, Egypt and Cyprus. 

For Cyprus, improved travel advice has also helped. Deputy Tourism Minister Costas Koumis said the revision of foreign advisories had offered the sector a degree of relief, helping the island move towards a more normal period for tourism. 

At the same time, the UK Foreign Office continues to describe the regional situation as unpredictable, meaning confidence remains sensitive to events. Air connectivity is another concern, with the European Regions Airline Association warning that reduced tourism is a risk for Cyprus and that stable routes are vital for island economies, as reported. 

Psilogeni said the May figures showed a clear improvement compared with the previous two months, but also confirmed that the effects of the crisis had not yet passed. 

“The May figures show a clear improvement compared to previous months, as the decrease in arrivals was limited to 4.9 per cent, compared to the significant losses recorded in March and April,” she said. 

“Despite this positive development, the first five months of the year still show a decrease of 13.3 per cent, which confirms that the effects of the geopolitical crisis in the region have not yet been overcome,” she added. 

She also said arrivals alone do not tell the whole story, as occupancy, length of stay and spending vary by market and region. 

“The picture today is mixed, with some businesses performing better and others still facing challenges. However, we remain vigilant as we continue to navigate an environment of heightened uncertainty due to geopolitical developments in the wider region, closely monitoring both the flow of last-minute bookings and international developments that may affect tourism demand,” she said. 

The experience, she added, had shown the need for an effective tourism crisis management mechanism, so that the state and industry can coordinate more quickly when sudden shocks affect the sector.