Tourism in Cyprus: challenges and opportunities

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Tourism in Cyprus: challenges and opportunities

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Tourism Geographies 3(1), 2001, 64–86

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Richard Sharpley Newcastle Business School, University of Northumbria at Newcastle, UK Abstract Islands have long been popular tourist destinations, their physical and climatic characteristics combining with the less tangible elements of ‘island-ness’ to create a special allure for tourists. As a result, many islands have turned to tourism as a means of social and economic development, with tourism frequently becoming the dominant economic sector. However, such a reliance on tourism has proved to be problematic for many island destinations, frequently reecting the centre – periphery dependency model of development. As this paper demonstrates, Cyprus is no exception. Since the 1960s and despite internal political turmoil, the island has grown into a popular Mediterranean summer sun destination. At the same time, tourism has provided the foundation for rapid and successful economic growth, but the island has also become increasingly dependent upon tourism and upon a small number of major markets and tour operators. Nevertheless, as the paper argues, signicant opportunities exist for the future development of tourism in Cyprus. In particular, whilst there is an evident need for more effective planning and control at the national level, it is suggested that, contrary to conventional wisdom (and current Cyprus tourism policy), efforts should be made not to diversify but to consolidate and strengthen existing core markets. Keywords: island tourism, dependency, tourism in Cyprus

Introduction Islands, according to King (1993: 14), are a ‘most enticing form of land. Symbol of the eternal contest between land and water . . . islands suggest mystery and adventure; they inspire and exalt’. They have also long been popular tourist destinations. The physical and climatic characteristics

Tourism Geographies ISSN 1461–6688 print/ISSN 1470-1340 online © 2001 Taylor & Francis Ltd http://www.tandf.co.uk/journals DOI: 10.1080/14616680010008711

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of islands, combined with the less tangible elements of ‘island-ness’ – insularity, distance and tradition, create a particular allure to ever-increasing numbers of tourists (Conlin and Baum 1995; Lockhart 1997a). It is not surprising, therefore, that, faced with a variety of constraints to socio-economic development, many island micro-states have come to regard tourism as an integral and effective element of their development policies. Indeed, as Lockhart (1997a: 4) observes, reliance upon tourism as a means of development is almost universal in an island context, to the extent that in more than half the islands within the developing world ‘gross receipts from tourism are larger than all visible exports put together’ (King 1993: 28). However, many of those factors that constitute the touristic appeal of islands also represent challenges to the longer-term success of tourismrelated development policies (MacNaught 1982; Bastin 1984; Wilkinson 1989; Milne 1992; Lockhart et al. 1993; Conlin and Baum 1995; Briguglio et al. 1996). Typied by, amongst other factors, small geographical size, distance and isolation from metropolitan centres, a limited economic base, a lack of resources and, frequently, a lack of revenue for imports, island economies often become dependent upon a dominant tourism sector. Indeed, there is a degree of inevitability about tourism coming to dominate the social and economic environments of islands (Wilkinson 1989; Milne 1997). At the same time, the stability and growth of tourism itself in island micro-states frequently becomes dependent upon external factors with, for example, historical or colonial links, the distance from main markets and a dependency on overseas airlines, limiting the extent of local control over tourism development. As a result, both the development process in general and the characteristics of the tourism industry in particular are widely considered, in the context of island micro-states, to reect the centre – periphery dependency model of development (Høivik and Heiberg 1980; Britton 1982, 1987; Opperman 1993). Of course, not all islands experience the challenges of dependency to the same degree, nor are they restricted only to islands. Nevertheless, as Milne (1997) observes, the ‘vicious cycle’ of dependency represents an existing or potential challenge to most island tourism destinations and, as the following case study demonstrates, Cyprus is no exception. However, it does not represent an insurmountable challenge. Indeed, the purpose of this paper is to demonstrate that, even where a degree of dependency exists, there are opportunities for the future successful development of tourism. Tourism in Cyprus The development of tourism in the Republic of Cyprus has been, at rst sight, a remarkable success story. In 1960, the year the island achieved independence from British rule, just 25,000 visitor arrivals were recorded.

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Table 1

Cyprus tourist arrivals and receipts 1980–90 Arrivals (thousands)

Average annual growth (%)

Receipts ($USm)

Average annual growth (%)

1980

1990

1980–90

1980

1990

1980–90

World

285,000

429,000

4.2

102,000

249,000

9.3

Europe

196,000

275,000

3.5

62,000

136,000

8.3

Cyprus

353

1,561

16.0

203

1,258

23.0

Source: CTO (1990)

By 1973, this number had risen to over 260,000, representing an annual growth rate in excess of 20 per cent. The corresponding gure for global arrivals over the same period was 8 per cent. The Turkish invasion and subsequent occupation of the northern third of the island in 1974 had devastating and well-documented impacts on the Cypriot economy, in general, and on the tourism sector, in particular (Andronikou 1979; Gillmor 1989; Lockhart 1993). Nevertheless, the island soon re-established itself as a major Mediterranean destination, although tourism development was, and continues to be, concentrated primarily in the southern two-thirds of the island (Ioannides 1992; Lockhart 1997b; Altinay & Biçak 1998). As Table 1 demonstrates, the 1980s in particular witnessed an annual growth in tourist arrivals and receipts of 16 per cent and 22 per cent respectively, outstripping global rates (4.2% and 9.3%) and signicantly exceeding the expectations of both plannings and tour operators (Wilson 1988; CTO 1990). This is not to suggest that the northern, Turkish sector, self-proclaimed in 1983 as the Turkish Republic of Northern Cyprus (TRNC), has not experienced something of a tourism revival of its own. Following the division of the island in 1974, arrivals fell to less than 20,000 in 1975 (Akis et al. 1996). Since then, as discussed shortly, tourist arrivals have gradually increased, reaching almost 183,300 by 1998 (Warner 1999). Moreover, in 1996 earnings from tourism reached $US175.6 million, representing 23 per cent of GNP (Kibris 1998). However, not only does tourism in the TRNC remain far less developed than in the Greek sector but also represents a relatively small proportion of touristic activity on the island as a whole. For example, international (as opposed to Turkish) arrivals in the TRNC in 1998 accounted for just 2.6 per cent of total arrivals in Cyprus. Therefore, for the purposes of this paper, the discussion focuses primarily on tourism in the Republic of Cyprus. Given the rapid growth of tourism to Cyprus, it is not surprising that tourism has also become an increasingly important element of the govern-

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ment’s economic growth and development policies. In 1960, the island’s economy displayed many symptoms of underdevelopment (Witt 1991) and GDP amounted to £CY94.7m, of which tourism’s contribution was just 2.5 per cent. By 1995, GDP had reached £CY3905m, per capita GDP was £CY6,142 (approximately $US11,500), and Greek Cypriots enjoyed the third highest standard of living of all Mediterranean countries after France and Italy. (In comparison, per capita GDP in the TRNC was just $US4,222 in 1996 (Kibris 1998), indicating the huge socio-economic gulf that has emerged between the two sectors of the island.) This dramatic economic growth in the Republic largely mirrored the expansion of the tourism sector; by the mid-1990s, tourism’s contribution to GDP had risen to 20 per cent and accounted for 54 per cent of invisible exports and 40 per cent of total exports. Moreover, tourism has also been a major factor in the maintenance of low levels of unemployment – just 3.1 per cent in 1996 – with over one quarter of the working population employed directly or indirectly in tourism. Since the early 1990s, however, this apparently successful development of tourism has been tempered by a number of factors. For example, arrival gures, which fell by some 11 per cent in 1991 as a direct result of the Gulf War (CTO 1992), have been virtually stagnant since 1992. Indeed, 1996 arrivals fell back to the 1992 level, although 1998 witnessed a 6.5 per cent rise over the previous year (Department of Statistics and Research 1999). Tourist arrivals also demonstrate alarming trends in terms of main source markets, seasonality, length of stay and average spend, whilst rising costs on the island have put increasing pressure on prot levels within the tourism sector. Moreover, although it has been claimed that Cyprus has avoided some of the problems experienced by other island tourism destinations (Kammas and Salehi-Esfahani 1992), there is increasing concern about the extent to which the economy of Cyprus has, in fact, become reliant on tourism (Seekings 1997). This suggests that the island has succumbed to the allegedly inevitable problems of dependency referred to earlier. At the same time, concern has also been raised over the environment consequences of the unbridled growth in tourism, future demands on the island’s natural and human resources and, hence, the longer-term viability of tourism in Cyprus (Apostolides 1996). These problems have not gone unrecognized by the Cypriot tourism authorities. The latest tourism strategy, whilst accepting that tourism has become the primary engine driving the economy, proposes a number of policies designed to overcome many of the current challenges at the same time as providing a stable foundation for the future development of tourism. However, many of the proposed ‘solutions’ differ little from those put forward in previous policy documents and, as the following section demonstrates, many of the problems and challenges faced by Cypriot tourism remain unresolved.

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Tourism in Cyprus: the challenges Two factors have always had, and continue to have, a profound effect on the development of tourism in Cyprus. First, the island is located in the eastern Mediterranean 105 km west of Syria, 380 km north of Egypt and 75 km south of Turkey (Figure 1). This proximity to the politically turbulent Middle East region means that tourism to Cyprus is highly susceptible to exogenous political factors; for example, renewed tensions between Iraq and the United States early in 1998 caused a temporary fall in bookings (Wood 1998). Perhaps, more importantly, the island is also a peripheral summer-sun destination, relatively distant from its core northern European markets. As a result, holidays in Cyprus are, on average, roughly 15 per cent more expensive than in competitor destinations, a factor which has become increasingly signicant in recent years as the island has developed into a mainstream, summer-sun destination. Second, internal political instability, culminating in the Turkish invasion in 1974 and the continuing failure to nd a solution to the so-called ‘Cyprus Problem’, have directly inuenced the rate and characteristics of tourism development on the island as a whole. In particular, development has been both rapid and spatially concentrated in the south coast resorts between Paphos in the west and Agia Napa/Protaras in the east (Figure 1). In stark

Figure 1

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comparison, the once popular areas of Kyrenia and Famagusta in the TRNC have remained relatively undeveloped (Lockhart 1993; Mansfeld & Kliot 1996; Warner 1999). Although arrivals in the TRNC have increased over the last decade, numbers remain low in comparison to the south; furthermore, over 65 per cent of arrivals in 1998 were from the Turkish mainland and were, in effect, ‘domestic’ arrivals. Similarly, in 1998 bed capacity in the TRNC totalled 8,500, representing a 150 per cent increase since 1977. However this remains less than one tenth of the total number of licensed bedspaces in the Republic, whilst the average occupancy rate, at 37 per cent in 1998, also remains low (Warner 1999). A number of commentators have addressed the challenges of tourism development in the TRNC, arising primarily from its political isolation (Lockhart 1994; Akis and Warner 1994; Altinay and Biçak 1998; Warner 1999). Whilst the ‘Cyprus Problem’ remains unresolved, it is likely that the tourism industry in the TRNC will continue to face signicant problems. At the same time, however, tourism development in the Republic may, as a result, also be hindered. For example, many of the island’s important cultural sites are located in the north, limiting the Republic’s ability to diversify into heritage/cultural tourism, whilst the lack of suitable tourism development sites in the south is matched by the availability of such sites in the north. Moreover, holidays in the TRN are relatively cheaper than in the Republic, potentially attracting tourists who might otherwise travel to the south coast resorts. Beyond these political and locational factors, however, an analysis of the inherent characteristics of tourism development in the Republic of Cyprus reveals a number of more immediate and signicant challenges to the future health and stability of the tourism sector. Arrivals Following exceptional growth in arrivals during the 1980s, progress in the 1990s has been slow and erratic (see Table 2). The declines in 1991 Table 2 Year 1990 1991 1992 1993 1994 1995 1996 1997 1998

Tourist arrivals and receipts 1990–8 Arrivals (thousands) 1,561 1,285 1,991 1,841 2,069 2,100 1,950 2,060 2,222

Receipts (£CYm) 573 476 694 696 810 810 780 830 880

Source: CTO (1990–7); Department of Statistics and Research (1999)

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and 1996 resulted from, respectively, the Gulf conict and from adverse ‘publicity that was given to certain events that took place in Cyprus in 1996’ (CTO 1997: 8). The latter included political demonstrations and the resultant death of a Greek Cypriot on the north–south ‘border’, and violence associated with British Army personnel in the resort of Agia Napa. Despite a record level of arrivals in 1998, the growth in arrivals remains at, the relative expense and distance from major markets and the loss of product exclusivity being oft-quoted causes (Ayres 1998). This weakness is, however, exacerbated by other arrivals characteristics. The UK has long been the dominant market, accounting for 47.4 per cent of arrivals in 1970 and peaking at 54.6 per cent in 1992. In the following years, consistent with the Cyprus Tourism Organisation’s (CTO) policy of diversication into new markets, particularly Eastern Europe, the UK’s share fell back to 36.9 per cent by 1996. However, along with a decline in arrivals from Eastern Europe, the UK’s share had climbed back to almost 46 per cent by 1998, with Scandinavia and Germany each continuing to account for roughly 10 per cent of arrivals. Thus, despite efforts to the contrary, Cyprus remains highly dependent on its traditional markets and, hence, susceptible to changes in demand within those markets. Additionally, the average length of stay has declined during the 1990s, falling from 12.5 days in 1991 to 10.92 days in 1996. Though not unique to Cyprus – Malta, for example, has experienced a similar decline (Cockerell 1996) – this suggests that total annual tourist nights spent on the island decreased from around 25 million in 1992 to roughly 21 million in 1996. In short, the real volume of tourism fell by some 16 per cent. A further problem is the stubbornly seasonal ow of arrivals. In 1996, more than a quarter of all tourists arrived in the peak months of July and August, with the summer quarter from July to September accounting for 37 per cent of total annual arrivals. Conversely, just 16 per cent of total arrivals visited the island between November and February, reecting a pattern that has remained constant since the mid-1980s. Efforts have been made by the CTO to promote tourism in the off-peak season, in particular through conference tourism, yet at less than 2 per cent of total arrivals this market remains relatively insignicant. These seasonality patterns have a distinct local impact on the island. The south-east beach resorts of Protaras and Agia Napa which, together attract over one third of all tourists to the island, become ghost towns during the winter months, with many hotels closing down. This is primarily because their main markets are the summer-sun, beach tourists and therefore they are not featured in tour operators’ winter programmes. Conversely, other resorts, especially Paphos (located closer to important cultural attractions and traditionally a family resort), attract a winter clientele and remain open throughout the year.

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Mode of transport One of the most signicant factors in the rapid growth of tourism to Cyprus, particularly since the mid-1980s, has been the expansion of the ITC (inclusive tour by charter ight) sector. Until 1986, the government operated a no-charter ight policy in order to protect the national carrier, Cyprus Airways, which also enjoyed a monopoly on its routes from both Larnaca and Paphos into British regional airports (Wilson 1988). The purpose of these restrictions was not only to maximize the economic benets of tourist travel to Cyprus, but also to support the CTO’s traditional policy of marketing the island to higher-spending tourists. From 1986, however, charter ights were permitted to operate into the island and, by 1990, a total of 32 charter companies from twelve countries were ying into Cyprus (Ioannides 1992: 725). Cyprus Airways also established its own charter subsidiary, Eurocypria, in 1992 in order to compete with overseas charter companies and by 1996 this airline claimed some 9 per cent of the UK charter market to Cyprus. Nevertheless, scheduled ights into Cyprus remain highly restricted in order to protect Cyprus Airways’ routes and load factors, whilst the Cypriot authorities continue to restrict the sale of seat-only tickets on charter ights on routes which compete with the national carrier. These policies have inuenced tourism in Cyprus in three ways. First, the restrictive regime ‘helps explain the extraordinarily high proportion of visitors travelling on inclusive tours’ (Seekings 1997: 42). Almost two thirds of tourists travel on inclusive arrangements, whilst in 1997 over 80 per cent of UK arrivals and 100 per cent of Scandinavian arrivals were on IT holidays. Second and, conversely, the potentially lucrative independent market has been severely limited. Third, and most importantly, Cyprus tourism has become overly dependent on a small number of overseas tour operators. Although a large number of operators carry tourists to Cyprus, the market share of different operators is by no means equal. Not surprisingly, the largest numbers are accounted for by British operators, three of which dominate the market. Table 3 indicates the main operators’ shares of the 790,000 UK arrivals carried by British tour operators in 1997. In terms of total arrivals in Cyprus, these percentages translate into the fact that just four British tour operators carried 19 per cent of all arrivals on the island in 1997. However, even this does not reveal the true extent of the dependency of the Cypriot tourism industry on a small number of primarily British-owned tour operators. Expansion through acquisition has resulted in increasing concentration within the tour operating sector, with companies such as Airtours enjoying signicant overseas holdings. Indeed, virtually all Scandinavian arrivals in Cyprus are controlled by Airtours.

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Table 3

Tour operators’ share of UK arrivals 1997 Tour operator

Thomson First Choice Airtours Sunworld AGTA operatorsa Other operators (Independent travellers)

Share of arrivals (%) 22 13 10 5 20 10 (20)

There are 20 UK-based tour operators owned by Greek Cypriots; they have formed their own marketing group, the Association of Greek-Cypriot Travel Agents (AGTA). Source: CTO (1998) a

Inevitably, the dominant position enjoyed by tour operators means they are able to control the characteristics and ows of tourists to Cyprus. For example, the CTO has long tried, largely unsuccessfully, to promote the island as a cultural tourism destination. However, an analysis of the brochures of 40 mainstream and specialist UK operators featuring Cyprus revealed that the island is promoted primarily as a safe, welcoming summer sun–sea–sand destination, with an emphasis on fun, relaxation and, given its mythical association with Aphrodite, a hint of romance (Sharpley 1998a). This is supported by surveys which show that, on average, only 35 per cent of visitors make trips outside their resort; moreover, many of these trips are to non-cultural sites (CTO 1993b). This would suggest that Cyprus is not considered a cultural destination by a majority of visitors, whilst poor interpretation and a signicant lack of facilities at many cultural sites, such as the Tombs of the Kings at Paphos, indicates that marketing policies are not supported by investment in the sites themselves. More signicantly, tour operators have also been increasingly able to dictate accommodation prices on the island. This has resulted primarily from a largely self-inicted problem in Cyprus: the oversupply of accommodation facilities (Andronikou 1993a). However, the relaxation on restrictions on charter ights in 1986 also served to refocus tourism development from a qualitative to a quantitative basis, with a corresponding emphasis on price competitiveness. Moreover, the collapse in 1994 of the specialist operator Cypriana, which had enjoyed 25 per cent of the British market to Cyprus, left the Cypriot market at the mercy of the major operators (see Skidmore 1994). Thus, British tour operators are now able to exert downward pressure on accommodation prices in Cyprus. Equally, operators from other major markets, which have traditionally paid higher prices, particularly Germany and Scandinavia, are now also seeking lower prices (Katsouris 1998). At

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the same time, recent years have witnessed signicant cost increases within the accommodation sector, representing, as the next section considers, one of the major challenges facing the future development of tourism in Cyprus. Accommodation trends The foundation of the rapid growth of tourism to Cyprus since 1975 has been the no less rapid expansion of the accommodation sector. Prior to the Turkish invasion in 1974, the majority of accommodation development had occurred in Kyrenia and Famagusta; the invasion resulted in the loss of 65 per cent of existing accommodation and 90 per cent of that under construction (Andronikou 1986, 1987). Therefore, in 1975 there were just 3,976 bedspaces available, with just 38 per cent, or approximately 1,500 bedspaces, in coastal resorts. Ten years later there were 38,921 licensed bedspaces and, by the end of 1997, there were a total of 84,368 licensed bedspaces available, of which 55 per cent were in starrated hotels and 45 per cent in apartments, villas, holiday villages and other forms of licensed accommodation (CTO 1997). To this total must be added roughly 3,000 bedspaces under construction, as well as the unlicensed sector. The latter comprises privately owned apartments and private homes that are rented to both domestic and overseas visitors on a selfcatering basis, with estimates of the number of bedspaces on offer varying from 12,000 to 30,000 (Seekings 1997). There has, then, been dramatic growth in the supply of accommodation facilities in Cyprus, encouraged initially by a range of nancial and legislative incentives provided by a government anxious to rebuild the tourism sector. However, despite underpinning the development of tourism in Cyprus and supporting a thriving construction industry, this growth has also been problematic, stemming primarily from inadequate planning restrictions and the inability of the authorities to control the rate, character and distribution of accommodation development. This, in turn, has resulted from a lack of formal structures for the implementation of policies at the national level (reected, as discussed in the following section, in the lack of authority invested in the CTO) and a multi-layered system of democratic government that not only leads to decision making according to local, as opposed to national, interests but also that most decisions are based upon short-term political objectives (Sharpley 1998b: 47). At the same time, not only has the church, a major landowner in Cyprus, viewed tourism accommodation development as a signicant income generator, but also many private landowners have sold land for tourism development. Together, these factors have fuelled the rapid development of much of the available coastline on the island.

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The lack of control over accommodation development has had a number of repercussions on the tourism industry. First, much of the growth in the supply of accommodation has been in the apartment/self-catering sector. During the latter half of the 1980s, in particular, the supply of apartment accommodation more than doubled, not surprisingly coinciding with a rapid expansion of the self-catering market to Cyprus. More recently, and following a shift in government policy towards favouring the development of four- and ve-star hotels (and consistent with the CTO’s long-held policy of targeting middle to higher income tourists), it is the higher grade hotel sector that has experienced most growth. However, since 1985 the share of four- and ve-star hotels of total hotel bedspaces has changed little, reecting the island’s continuing popularity as a mass market beach destination. Moreover, as one commentator warned, the development of new four- and ve-star capacity ‘by the end of 1994 will increase total bed capacity by 22 per cent, meaning that tourist trafc during the next three years must continue to grow at very high rates . . . if existing occupancy rates are to be maintained’ (Andronikou 1993a: 69). This increase in tourist trafc has not, of course, occurred. This points to a second major problem, namely that the supply of accommodation has outstripped demand. More simply stated, too many hotels have been built. As evidence, at least two hotels in Limassol have recently been converted into ofce blocks, whilst the CTO is now considering different forms of incentives to encourage hotel owners to redevelop their properties for alternative uses. Nevertheless, new hotel development continues apace with, for example, the 1,500-bed Athena Hotel due to open in Paphos in the summer of 1999. Thus, in order to maintain occupancy levels, particularly in higher grade hotels, heavy discounting has taken place. Not only has this resulted in ‘the arrival of guests of a lower “quality” than is usually appropriate for such hotels’ (Seekings 1997: 47) but also it is widely accepted that, although hotel beds are being lled, few, if any, hotels are making money. Indeed, although occupancy levels rose in 1997, ‘prots vanished’ (Josephides 1997: 11). This has been compounded by a trend away from full/half-board towards bed-and-breakfast arrangements, placing further pressure on income and protability. Third, and related, the accommodation sector has experienced a dramatic increase in operating costs, particularly payroll costs, during the 1990s. Indeed, in just ve years between 1992 and 1997, the average cost of labour in hotels rose by 94 per cent (Karis 1998). Following the successful growth in tourism during the 1980s, the Cypriot economy enjoyed virtually full employment to the extent that, in 1990, overseas workers were ‘imported’ to ll vacancies in the hotel sector during the summer season. As a result, the two powerful trades union federations in Cyprus, the Pancyprian Federation of Labour (PEO) and the Cyprus Workers Federation (SEK), which together represent over 75 per cent of

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the country’s labour force (PIO 1997: 372), were able to negotiate wage settlements that represented an average 15 per cent annual wage increase. For hotel operators, this meant that payroll as a percentage of gross revenue increased from between 28 and 35 per cent in the early 1980s to well over 40 per cent and, in some cases, to almost 50 per cent in the 1990s (Andronikou 1993b; Wood 1998). Even more damaging, perhaps, the unions also secured two rounds of three-year agreements for 1993–5 and 1996–8. This restricted the ability of employers to respond to shortterm changes in the market whilst, in the longer term, the only solution has been to reduce employment levels in the sector. Thus between 1992 and 1997, average hotel employment in Cyprus fell from 91 to 64 staff per 100 rooms (Karis 1998). The corresponding reduction in quality and service has meant that Cyprus now offers a more homogeneous tourism product; it is losing its competitive edge in quality and service, yet remains expensive compared to its competitors. In one attempt to counter the strength of the unions, a new breakaway group, the Association of Cyprus Tourist Enterprises (ACTE) was established by 25 of the larger hotels on the island to better represent their interests – previously, the Cyprus Hotels Association (CHA) had represented all licensed accommodation suppliers and had accepted the unions’ demands. Nevertheless, the unions’ position remains powerful. For example, in May 19999 an island-wide hotel strike was organized in support of workers striking over the contracting-out of services in two hotels (Molyva 1999). Thus, overall, accommodation providers remain trapped in an economic vice between falling income and rising costs, threatening longer-term investment and quality in the sector. Finally, an important feature of accommodation development has been its spatial concentration in coastal areas. For example, the southeast Famagusta district, which includes the resorts of Protaras and Agia Napa, has been transformed from an isolated rural community ‘virtually unknown even to many Cypriots’ (Ionnides 1992: 722) into the island’s most popular resort area. By 1997, it accounted for 40 per cent of total bed capacity, followed by Paphos in the west with 24 per cent, the latter having experienced a 50 per cent growth in bedspaces since 1991. Even by 1992, it was observed that ‘virtually all prime sites of beach development have already been developed or are earmarked for future development’ (EIU 1992: 58). Such concentrated development has brought about a variety of welldocumented social and environmental consequences, whilst placing enormous pressure on the island’s human and natural resources (Witt 1991; Kammas 1993; Apostolides 1996). It has also limited the potential benets of tourism development in inland areas. At the same time, the lack of overall planning and control has meant that, although hotels themselves are, for the most part, of a high quality, a number of resort areas

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as a whole suffer from a lack of infrastructural development. For example, although each hotel in the popular Famagusta district pays approximately 30 cents per tourist/night in local taxes, amounting to around £CY45,000 annually for a 20-room hotel (Coursaris 1998), these funds are not channelled into local tourism infrastructural improvements. Conversely, the municipal authorities in other resorts have adopted a more proactive approach to tourism, promoting and investing in a number of tourismrelated projects. The role of the CTO Throughout this paper, reference has been made to the inability of the CTO to translate policy into practice. Ofcially, the role of the CTO is ‘to organise and promote tourism in the Republic of Cyprus, by using all possibilities and resources available’ (CTO 1997). Established in 1969, it is a statutory body run by a nine-member Board of Directors which decides upon tourism policy and related issues. Until 1992, the CTO was nanced primarily by a 3 per cent tax and other charges on tourism establishments in Cyprus. However, this has been replaced by a direct grant from the government which, in 1997, amounted to £CY13.8 million. This was supplemented by £CY1.9 million earned from licensing fees, commercial activities and other sources (CTO 1997: 6). With a staff of 250 employed both in Cyprus and overseas, the organization comprises four departments, namely, Administration, Planning, Tourist Services and Marketing. Of these, the most important function is marketing. Not only did this account for almost 64 per cent of the total 1997 budget, but it is also expected to become the organization’s sole function in future years (Metaxa 1998). Conversely, less than 5 per cent of the budget was spent on tourism organization and planning. Thus, the primary activities of the CTO suggest that, beyond an advisory and consultative role at governmental and tourism industry levels, it has little inuence over tourism development on the island. More specically, in those areas where it does play an active role, the CTO enjoys little statutory authority to implement or control development. For example, in the context of accommodation development, it has the power to license and grade new accommodation units; it is not in the position, however, to decide whether such units should be built in the rst place. Rather, it is dependent upon the instruments of central government for policy implementation. Thus, the CTO is reliant on a system that, as has been pointed out, has proved to be ineffective in controlling or guiding tourism development in Cyprus. Moreover, the CTO is also, according to some commentators, handicapped by the fact that most of its Board Members are political appointees with little or no experience of

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tourism. Certainly, the organization’s long-held policy that Cyprus should target only the up-market tourist demonstrates a lack of recognition of the changing position of the island within the international tourism market. Thus, despite its prominence and signicant level of state funding, the CTO remains a relatively powerless body and, until such time it is awarded greater authority or supported by more effective government control, it is unlikely to address many of the challenges, summarized in the next section, that tourism in Cyprus is facing. Tourism in Cyprus: a summary of challenges It is evident from the above that the future development of tourism in Cyprus faces as a number of problems and challenges. Collectively, these suggest that the island has become increasingly dependent on an economic sector over which the authorities have insufcient control. More specically: l

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tourism has become the dominant sector of the of the Cypriot economy, now contributing 20 per cent of GDP, approximately 40 per cent of all exports and 25 per cent of employment; since 1960, tourist ows have proved to be highly susceptible to both internal and external political and economic inuences; despite efforts to ameliorate the situation, Cyprus remains dependent primarily on the UK, but generally on three main markets for over 60 per cent of arrivals. Of these, over 80 per cent travel on ITs, indicating the inuencing of overseas tour operators in controlling the market; there is a continuing trend towards self-catering holidays indicating that, since the mid-1980s, Cyprus has evolved into a mass market summer-sun destination; although average per person per day expenditure is increasing, average length of stay is decreasing. However, although greater numbers of tourists are required to maintain overall receipts from tourism, statistics indicate that arrivals gure have levelled out; the power of major tour operators and, internally, of the unions means that most hotels are caught in the vicious circle of rising costs, falling income and hence lower productivity. Unable to re-invest and having to reduce staff levels, quality and service standards are falling, further eroding the island’s competitiveness; the Cypriot tourism authorities have, for the most part, been unable to impose strict planning restrictions over tourism development, resulting in signicant environmental and infrastructural consequences.

It would, of course, be logical to assume that not only is the current situation one which the authorities would have wished to avoid, but also that

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ofcial policies do exist to guide the effective and balanced development of tourism. As the following section shows, this is indeed the case. However, the paper goes on to argue that present policies do not necessarily recognize the most realistic opportunities for the future. Tourism policy in Cyprus Tourism has long been identied as an important means of achieving economic and social growth and development in Cyprus. As a result, tourism development policy, with explicit proposals with respect to the nature and scope of tourism, has been an integral element of national economic development plans, in particular since 1974. Initially, a series of Five Year Emergency Economic Plans set out to reactivate the Cypriot economy through tourism although, by the early 1980s, it was realized that the redevelopment of tourism was becoming too successful. In particular, there was growing concern about the rapid development of accommodation in coastal resorts which was outpacing infrastructural developments and demonstrating scant regard for the environment (Andronikou 1986: 127). New policies were therefore introduced to redirect nancing towards supporting accommodation and associated developments in the inland hill resorts and ve-star hotels in Paphos. At the same time, the CTO proposed a set of plans for tourism development, with ‘the highest attention being given to the protection and enhancement of the environment’ (Andronikou 1987: 49). These targeted the middle to upper income tourists and set out plans for the slow growth of primarily luxury hotels, built in areas enabling visitors to enjoy both coastal attractions and the cultural wealth of the island. This was supported by a marketing policy aimed at conference tourism for Nicosia and special interest tourism for the hill resorts, thereby relieving pressure on the coastal resorts. In practice, the opposite occurred. Not only did visitor arrivals increase by an annual average of 16 per cent during the 1980s, but the highest growth in accommodation was in the apartment sector, primarily in Famagusta district. Nevertheless, many of the policy proposals were embodied in the tourism section of the 1989–93 Economic Development Plan which, anticipating the current situation, warned that ‘if the present course of development is continued, it will in the long run have serious adverse effects on the competitiveness of our tourist product in the international market’ (CPC 1989: 156). The overall aim of the Plan was to slow the growth in tourism in combination with a variety of proposals to upgrade and diversify the tourism product, to attract higher spending tourists, to diminish the impacts of seasonality and to spread the benets of tourism around the island. Additionally, as a specic objective, the

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Plan sought ‘the basis for a more effective government intervention towards the desired directions’ (CPC 1989: 157), something that still remains to be achieved. Coinciding with the Plan, and in anticipation of a new national policy for tourism, in 1989 the government also imposed a moratorium on new hotel developments. This, however, did not slow the growth in the supply of accommodation as it did not cover the large number of applications approved prior to the imposition of the moratorium. It was therefore withdrawn in 1990 when the New Tourism Policy was introduced. The New Tourism Policy, addressing marketing policy, regulation of accommodation development, the development of tourist facilities and infrastructural development (CTO 1990) has essentially guided tourism planning throughout the 1990s. It follows the CTO’s long-held objectives of attracting a more diverse, higher spending customer base, encouraging special interest tourism in less developed rural areas, promoting low season markets and encouraging individual or non-organized tourism. Since 1990, some of these policies have, in fact, been implemented. For example, two golf courses have been opened near Paphos, three more are being established elsewhere on the island, and a number of specialist tour operators now offer golng holidays. Efforts have also been made to develop rural tourism, with some 50 rural properties having been redeveloped into traditionally styled accommodation facilities. These are promoted by the Cyprus Agrotourism Company, an organization heavily subsidized by the CTO yet, although this project was a 1999 winner of British Airways’ Tourism for Tomorrow awards, occupancy levels remain low. However, signicant differences remain between planned and actual tourism development in Cyprus. In the early 1990s tourists arrivals continued to grow rapidly, with the 1993 arrivals target exceeded in 1992 by 22 per cent. The desired level of receipts, however, was not achieved until 1994, indicating that although the New Tourism Policy sought to attract lower numbers of higher spending tourists, the opposite was achieved. As discussed earlier, the dependence on traditional markets remains, whilst the more recent stagnation in tourist arrivals has more to do with exogenous forces than with the effective marketing policies. Moreover, in terms of accommodation development, although there is evidence of a shift towards higher grade hotels as desired (though not necessarily towards higher spending tourists staying in those hotels), the supply of licensed accommodation on the island increased by around 70 per cent between 1990 and 1996, primarily in coastal areas. The most recent tourism policy, a strategic plan for tourism to 2010, accepts that tourism has now become the engine driving the Cypriot economy. It therefore sets out policies for the achievement of the longterm sustainability of tourism based upon re-positioning Cyprus on the international tourism map, strategically targeting key market segments,

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encouraging independent or specialist-operator tourism to reduce dependency on larger operators, as well as developing a more cohesive and integrated approach to planning and development of the island. However, the basic and long-held aims and objectives, such as targeting higher spending tourists, selling Cyprus as a quality destination, extending the season and controlling accommodation development, remain the same. Opportunities It is evident that, despite the existence of tourism policies in Cyprus, the actual development of tourism has followed a course largely unrestricted by such policies. As is the case with many island tourism destinations, not only has the economy become increasingly dependent upon tourism, but the Cypriot tourism industry itself has become increasingly dependent upon its traditional markets and a small number of major tour operators. More specically, the island is rmly established as a mass market, summersun destination. Not only have efforts to diversity markets proved to be relatively fruitless, but certain policies, such as encouraging low-season and special interest tourism, have also met with little success. The agrotourism project, for example, has redirected investment away from the major resorts yet, with a total of just 450 bedspaces currently available, it is unlikely to be a major source of income for rural areas and will do nothing to relieve the pressure on coastal resorts. At the same time, the wisdom of developing golf courses in a country suffering acute water shortages – in December 1998, the majority of the island’s reservoirs were 95 per cent empty – is questionable. Nevertheless, although tourism in Cyprus faces signicant challenges, there are two major opportunities for the successful future development of tourism on the island. The extent to which both of these may be exploited depends to a great extent upon the ability of the authorities to implement tourism policies on a national scale, a factor which itself is dependent upon all sectors of the Cypriot tourism industry working towards recognized goals within a spirit of agreement and co-operation. Whether this is realistic remains to be seen, although the establishment of a new tourism committee by President Clerides in early 1998 is a positive development. The prime opportunity for tourism in Cyprus is market consolidation. Despite efforts to diversify, thereby reducing dependency on both British tourists and tour operators, the UK market remains dominant. This is not surprising. In addition to the historical links between the two countries and the continuing presence of British Forces in two sovereign bases, a number of factors increase the appeal of the island to (hence the island’s

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dependency upon) the UK market. It is seen as both familiar and safe; English is widely spoken and cars drive on the left-hand side of the road. Currency – the Cyprus Pound – is the ‘same’ and despite the overall prices of holidays, costs on the island itself remain relatively low. Furthermore, many Cypriots working in the industry were born or brought up in the UK. In short, it can be argued that Cyprus is a uniquely British destination. Therefore, although it contradicts both the conventional wisdom of market diversication to reduce dependency and also current CTO policy, in the short term it may be more sensible for Cyprus to consolidate and strengthen its existing core markets, in particular the UK, as well as Scandinavia and Germany. Within these, specic segments such as walking, weddings or golf may be targeted, but the main market is likely to remain the summer IT tourist seeking the ‘traditional’ sun–sea–sand package. This suggests that the latest policy of encouraging tourism through smaller, specialist operators may be counter-productive. Indeed, working with the major operators may prove to be the most effective means of not only consolidating existing business but also increasing low-season or wintersun arrivals and developing newer niche products, such as two-centre rural–beach holidays in association with the agrotourism project. In short, the dependency on major markets and tour operators represents not a threat but an opportunity. The second important opportunity, in addition to the consolidation of core markets, will arise from the inevitable relaxation of aviation restrictions as Cyprus moves closer to EU membership. Not only will this go some way to reducing the dependence on tour operators through the encouragement of independent tourism, but it may also lead to the development of timeshare accommodation on the island. To date this has been opposed by the powerful hotel associations. However, as timeshare represents one of the fastest growing sectors of international tourism and allegedly generates higher levels of tourist spending than hotel-based tourism (WTO 1996: 63), it is likely to be viewed as an attractive proposition. Greater competition within the accommodation sector may also go some way to diminishing the inuence of the unions, whilst the growth of the independent sector would provide much needed support for the CTO’s efforts to develop specialist markets and accommodation, particularly in rural areas. More generally, the opportunity also exists for Cyprus to regain the competitive advantage that it lost when it began to focus on quantitative rather than qualitative tourism during the 1980s. The country retains its reputation for friendliness and quality service and this can be augmented by improvements in the quality of the Cypriot tourism product as a whole. Specically:

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Sha rpl ey the local taxes paid by hotels should be channelled into infrastructural improvements in resort areas in order to upgrade the overall appearance and supply of facilities and amenities; planned improvements to the highway between Larnaca and Agia Napa/Protaras should become a priority to improve communications with the rest of the island and to facilitate access to the main cultural sites in the Troodos mountains and to the west; major heritage sites require improved interpretation and visitor facilities. Sites, such as the Tombs of the Kings in Paphos, remain poorly interpreted.

Finally, there is no doubt that opportunities exist to develop niche markets. For example, although conferences still account for just 2 per cent of total arrivals the island is ideally placed as a conference venue for Europe and the Middle East. However, the main conference centre and business hotels are located in Nicosia with few, if any, on the coast, the one exception being Le Meridien in Limassol which has recently upgraded its conference facilities. Therefore, investment incentives may be necessary to encourage the development of this market. Similarly, special interest holidays, such as rural tourism, offer potential, but again substantial support and investment is required. Nevertheless, Cyprus remains and is likely to remain primarily a summer-sun (package) destination, continuing to provide the foundation of the Cypriot tourism industry. This characteristic of tourism on the island has been exacerbated by previous policies that have discouraged independent forms of tourism; indeed, many of the challenges described in this paper have been allowed to emerge as a result of poor or ineffectual planning and management of the tourism sector. In particular, the free rein given to the private sector, though giving rise to remarkable short-term growth and prosperity, has placed the island in a vulnerable situation. Thus, as is becoming more widely recognized in Cyprus, the solution would appear to lie in greater control from central government, with tourism development policies implemented by bodies with sufcient authority to regulate and monitor development. Only then will the challenges currently faced by the Cypriot tourism industry be overcome. Acknowledgement The author gratefully acknowledges the comments and help of a number of individuals in Cyprus, in particular Thomas Coursaris, Phedias Karis, Phoebe Katsouris and John Wood.

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Biographical note Richard Sharpley is Reader in Travel and Tourism at the University of Northumbria at Newcastle, UK. He has written a number of books and articles, primarily in the context of rural tourism, the sociology of tourism and, more recently, tourism and development issues. In particular, his research has focused upon the role of tourism in island development. (University of Northumbria at Newcastle, Newcastle Business School, Longhirst Campus, Longhirst Hall, Morpeth, Northumberland NE61 3LL, UK; e-mail: [email protected]) Résumé: Tourisme en Chypre: les challenges et les opportunités Les îˆ les ont toujours été des destinations touristiques en vogue, leurs charactéristiques physiques et climatiques combinées avec des éléments moins tangibles ‘insularité’ pour créer un attrait spécial pour les touristes. Par suite, plusieurs îˆ les ont choisi le tourisme comme un moyen de développement socio-économique, et le tourisme souvent devenant le secteur dominant l’économie. Néanmoins, cette dépendance du tourisme a prouvé d’eˆtre problématique pour plusieurs destinations insulaires, fréquement reètant le modèle de développement centre–périphérie. Comme cet article le démontre Chypre n’est pas une exception. Depuis les années 1960 et malgré les désarrois politiques internes, l’îˆ le est devenue une destination Méditerranéenne d’été. Cependant le tourisme a fourni la fondation pour une croissance économique rapide et prospére, mais l’îˆ le est aussi devenue plus dépendante sur le tourisme et sur d’important marchés et des tours opérateurs peux nombreux. Malgré tout, comme l’essai le discute, de grandes opportunités existent pour le développement du tourisme en Chypre dans l’avenir.

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En particulier, quoiqu’il y a un besoin pour une planication et un controˆle plus efcace au niveau national, il est suggéré que, contrairement à la croyance populaire (et l’actuelle politique du tourisme Chypriote), les efforts doivent eˆ tre investis non à la diversication mais à la consolidation et au renforcement de principaux marchés existants. Mots-clés: tourisme insulaire, dépandance, tourisme en chypre.