Government seeks to resolve 20-year hotel licensing deadlock

Cyprus has significantly increased the number of licensed hotels, with the share rising to around 45 per cent from just 5-6 per cent in 2023, Deputy Minister of Tourism Kostas Koumis told parliament on Tuesday, as authorities seek to resolve a regulatory issue pending for nearly two decades.

The Deputy Minister appeared before the House energy, commerce, industry and tourism committee during discussion of the referral of an amending law regulating the establishment and operation of hotels and tourist accommodation.

According to Koumis, the problem dates back at least 20 years, beginning with early hotel renovations and intensifying during 2014 – 2018 following urban-planning incentives introduced in 2013.

“The Christodoulides government dealt with the issue from the very first month, from March 2023,” he said, adding that licensed hotels then accounted for only 5–6 per cent, while today they reach around 45 per cent, taking into account both licensing procedures.

He explained that 23 per cent of hotels were licensed through the basic law, while a further 22 per cent were licensed through the parallel procedure under article 18.

Regarding the referral of the legislation, Koumis said it was correct because provisions of the law adopted by parliament violated “the principle of equality, the principle of legality and the freedom of contract”.

At the same time, he clarified that the government is not opposed to granting a new extension “to ensure the unhindered course of tourism and especially the hotel industry”.

However, he expressed concern that more than 50 per cent of hotels have still not submitted an application.

“We need to look at the reasons why they didn’t do it,” he said, noting some businesses may have expected another grace period while others may be hiding irregularities. He added that the state has no intention to revoke operating licences as this would disrupt the tourism sector.

“We are thinking and are in favour of a new grace period, but hoteliers must also realise that they must assume their responsibilities,” he said.

A legal service representative told the committee that the rejected amendment violated separation of powers, created equality issues for compliant businesses and increased budget expenditure, while also affecting the right to contract.

Committee chairman Kyriacos Hadjiyiannis said the executive branch must ultimately propose a solution, particularly regarding safety and health concerns.

Koumis added after the meeting that 70 per cent of hotel beds are now licensed compared with 5.8 per cent in 2023, calling the development another indicator of tourism growth.

Asked about the coming year, the Deputy Minister said early estimates for 2026 are “encouraging”, although he warned forecasts remain uncertain in a post-pandemic environment dominated by last-minute bookings.

He added that Cyprus has strengthened relations with major tour operators, many of which have held large sales conferences on the island in recent years to reassess the destination.

While he would not rule out a small rise in arrivals, Koumis said the sector should start evaluating success differently, noting that the summer season has already reached capacity levels.

Instead, the focus is shifting to winter tourism. Compared with the winter of 2022 – 2023, arrivals increased 23 per cent in the most recent winter season.

An increase in off-season tourism “is something that makes us happy”, Koumis said, adding that authorities continue to work on improving quality indicators across the sector.