15 September 2020
New research on the tourism and hospitality industry in Europe shows Cyprus was outperforming many of its competitors before the global health outbreak, putting the island in a strong position to attract new investors. The island’s resilience is partly due to multi-million investments in Cyprus by large hotel groups that are still going ahead, as well the government’s handling of the pandemic.
Cyprus outperformed the Algarve, the Turkish Riviera and France’s popular Aix-en-Provence, in terms of generating the highest revenue per available room (RevPAR), in 2019 up to the outbreak. This put the island on par with the Balearic Islands, Marrakech and Lisbon. The island also sustained average daily rates (ADR) for rooms sold in 2019, jumping in excess of 20% from 2008 levels. Venice, Antibes and Cannes were the highest RevPAR earners in 2019.
The analysis emerged during a webinar Global FDI Trends in Hospitality Investments: The Case for Cyprus hosted by Questex and Invest Cyprus, the national investment promotion agency. Speakers included the Permanent Secretary to the Ministry of Finance, George Pantelis and leading hotel and real estate groups including Grant Johnson, Senior VP of City of Dreams Mediterranean, Ron Aloni, MD of Fattal Mediterranean Group and Alexander Yakovlev, of Allea Group.
Alex Robinson, Senior Manager at STR, a hotel data firm, said: “No-one could account for what we’ve been going through with the pandemic, but the trend for the past six years in Cyprus, in terms of revenue from available rooms, is solid growth, where Cyprus has outperformed many destinations across Europe. When you look at holidays, RevPAR for Cyprus is not far behind places like Lisbon. It is shoulder to shoulder with some of the most popular destinations.”
In 2022, a number of global brands include Sofitel, Voco, part of IHG Hotels, and Grand Hyatt are due to open hotels in Cyprus, followed by the launch of the City of Dreams Mediterranean, Europe’s largest integrated hotel and casino resort.
Alex added: ”From an opportunity perspective, branded supply in Cyprus only represents 15% of all rooms, so there are a lot of opportunities for other brands to enter the market.”
As of the week ending 23 August 2020, China is the global leader in terms of hotel occupancy levels, at almost 60%, according to STR data. More remote holiday destinations, such as the north of Germany, South of France, and the UK’s Cornwall and Norfolk, are faring better for occupancy rates, compared to big cities like London and Madrid.
Examining the global trends in the hospitality real estate sector, speakers pointed to a rising focus on sustainability and integrating digital technologies. An online survey of investors who participated in the webinar showed that 81% believed mixed-use developments would be an industry focus, followed by medical, health and wellness tourism (36%).
George Campanellas, CEO of Invest Cyprus, said Cyprus’s growing reputation as a European business centre offered opportunities to investors. “The government’s approach, and the support of the Cypriot people, has been instrumental in flattening the curve. Although we were able to lift the restrictions and open the airports early in June, we have been able to maintain daily cases to a single digit. From our discussions with the international community, we know that investors see this very positively.”
“On top of this, the location of Cyprus, at the centre of three continents, has been pivotal in the development of Cyprus as a trade centre, for financial services and now as a tourist destination. The increase in international business activity is creating demand for projects in the hospitality industry, with hundreds of thousands of business trips being made each year.”
Cyprus has made a number of greenfield and brownfield sites available for new development, with Invest Cyprus highlighting the potential to expand medical and wellbeing tourism, sports tourism as well as agrotourism.
The Permanent Secretary to the Ministry of Finance, George Pantelis said that increasing Cyprus’s competitiveness as a business and investment destination was an overarching objective for the government.
“In this challenging environment, foreign investments are all more important for the re-vamping of economy. To this end, maintaining a macroeconomic environment characterised by stability combined with a favourable investment framework is an overarching objective for this government. “
For investors and businesses looking to set up a European headquarters in Europe, Cyprus’s competitive advantages included a transparent and modern legal system, based on common law, a highly trained workforce of lawyers accountants and corporate service providers, excellent telecommunications, transport and logistic infrastructure and a favourable tax environment.