Cyprus’ hospitality and tourism sector performance in 2022

Cyprus’ hospitality and tourism sector has repeatedly proven to be one of the most resilient sectors of the island, even in unprecedented times like the pandemic, geopolitical and economic crises, and other unfavorable happenings around the world. Holidays have historically been the main purpose of travel in Cyprus and this year was no different as holidays have once again been the main purpose at 81% of total visits, following the same seasonality trends as in the pre-pandemic years. Visiting friends and relatives accounted for 13% of the total visits, followed by business purposes at 6%.

The sector’s performance in 2022 proved that the tough days of the pandemic are now a thing of the past for our island, achieving a strong recovery by reaching 80% of the record breaking 2019 tourist arrivals and 91% of the revenue achieved from tourism in 2019. Considering the geopolitical crises around the world, the outbreak of the war in Ukraine and the global increase in inflation at a period that is considered important for summer bookings, the performance of Cyprus’ hospitality and tourism sector in 2022 can be considered rather satisfactory and optimistic for the future.

Despite the unfortunate event of the war in Ukraine which resulted in the loss of the Ukrainian and the Russian markets, with the latter being the second biggest market of tourism for the island, tourist arrivals in 2022 reached 3,2 million. Compared to the previous year’s arrivals, tourist arrivals in 2022 recorded a 65% increase reaching 80% of the tourist arrivals recorded in 2019 which was a record year for the island’s tourist arrivals.

The shortfall in tourist arrivals noted in 2022 was mainly due to the war, as in 2019 the Russian and the Ukrainian markets accounted for 22% of the tourist arrivals (c.880,000 visitors), attesting that the Cyprus’ hospitality and tourism sector has successfully recovered from the pandemic.

Even though the war resulted in the distortion of Cyprus’ key source markets of tourism and the loss of its second largest source market, part of the loss was offset by increased flows of individual tourists and tourist arrivals from other markets such as Germany, which noted an increase of c.30% (c.50.000 visitors) and Poland which noted an increase of c.133% (c.110.000 visitors) compared to 2019. Notably, a decrease of c.10% (c.120.000 visitors) from Cyprus’ main source market, the United Kingdom, was noted during the year, perhaps because of the strong effects the UK is facing due to the rising inflation and the increased cost of travelling.

Remarkably, revenue from tourism for 2022 amounts to €2,4 billions, only 9% less than the revenue from tourism obtained in 2019. Compared to the previous year’s revenue from tourism, an increase of 61% was achieved in 2022, setting strong an anticipated upwards trend for the future. Regardless of the lower number of tourist arrivals recorded in 2022 compared to the pre-pandemic years, an increased expenditure per tourist was also noted in 2022, amounting to €760 per tourist. The expenditure per tourist seen in 2022 translates to a 13% increase compared to the €675 spending per tourist recorded in 2019, indicating that the island’s tourism is shifting towards a better quality of tourism with higher spending visitors.

On a final note, the successful exploitation of alternative markets and the increased expenditure per tourist achieved in 2022 point towards a higher quality and a more diverse mix of travelers, helping in lessening the sector’s dependance on the UK and Russian markets. Therefore, 2022 is undoubtedly seen as the starting point for the sector’s recovery, setting an even brighter future for Cyprus’ hospitality and tourism sector.

Marilena Constantinou, ACCA

Real Estate & Hospitality Specialist, KPMG Limited