Chairman of Agros Development Company Antonis Pissarides has highlighted the urgent need for support and compensation for mountain hotels, saying that they are at risk of permanent closure.
Pissarides warned that this could have a “serious impact on the Cypriot countryside and local economy” and called for immediate action to prevent this from happening.
In an interview featured in the August issue of Xenodochos magazine, Pissarides emphasised that for hotels in mountainous regions, “the future is not promising without compensatory measures that both reduce operating costs and increase occupancy and revenue”.
He said that he had already prepared a detailed study with specific recommendations for compensatory measures aimed at promoting sustainable tourism development in these areas, which he has since submitted to the relevant authorities.
He also underlined the vital role that these hotels play in “keeping the countryside alive”.
Pissarides explained that “most hotels in the mountain and semi-mountain resorts of Cyprus located at an altitude of over 600 metres, operate throughout the year and attract both local and international visitors, particularly those with niche interests”.
“In doing so”, he continued, “they play a crucial role in maintaining the vibrancy of rural areas while also enabling the parallel development of agriculture, catering, leisure centres, and family-run businesses that produce and sell traditional sweets, delicacies, drinks, and other local products”.
He further stated that “these hotels provide much-needed employment, particularly for young people, which in turn positively contributes to the formation of new households”.
“Many of these households decide to settle in rural areas due to the job opportunities in hotels, agriculture, or crafts, helping to slow down the tide of urbanisation,” he added.
However, as Pissarides pointed out, “hotels in mountain and semi-mountain areas operate under very particular conditions that make them especially vulnerable”.
He explained that one of the biggest challenges facing these hotels is low demand, which often forces them to operate with low occupancy rates and reduced prices for most of the year, apart from the peak months of July and August.
This peak, he mentioned, is largely thanks to the social insurance scheme. Pissarides also touched on the positive impact of the allowance scheme for low-income pensioners, which has been running successfully for several years, providing an important boost in occupancy and revenue.
Additionally, he said the subsided holiday scheme aiming to boost local tourism introduced by the Deputy Ministry of Tourism during the pandemic helped ease some of the financial strain during this difficult period.
Pissarides mentioned that despite these schemes, the situation worsened in 2020 when a decree was issued on minimum wages and benefits for hotel staff.
Combined with the challenges posed by the pandemic and subsequent global crises, operating costs for mountain hotels have risen dramatically.
“The operating conditions of the mountain hotels became very difficult,” Pissarides said.
Moreover, he warned that “without the introduction of special incentives, funds and state support, mountain hotels risk losing their competitive edge, which could lead to their permanent closure”.
This, he stressed, “would have profound consequences for both the Cypriot countryside and the economy as a whole”.
In order to prevent such a scenario, Pissarides proposed two sets of compensatory measures that could act as special incentives for hotels in mountain and semi-mountain resorts.
He noted that similar support measures have already been introduced in countries like Greece and other European nations.
The first set of measures, he explained, would focus on reducing operating costs. He suggested that taxes paid to the state should be reduced, particularly VAT, which he proposed lowering from 9 per cent to 5 per cent, while other tax reductions should also be explored.
Additionally, he argued that overnight fees paid to community councils should be reduced or even abolished entirely.
In terms of energy costs, he recommended subsidies to help cover expenses for electricity, gas, and oil.
To address employment challenges, Pissarides proposed a special employment allowance for staff during the winter period to avoid layoffs.
He said that this “should be a work allowance, not an unemployment allowance”.
Furthermore, he suggested the introduction of special incentives and grants for renovation projects, digital upgrades, and energy efficiency improvements, along with hotel extensions, in order to enhance the tourist offering in mountain resorts.
He also called for incentives to encourage the creation of “green” hotels.
The second set of measures he proposed focuses on increasing hotel occupancy and revenue. He recommended extending the social insurance scheme by increasing the amount of funds and ensuring it covers the months of July, August, and September.
He also suggested expanding the allowance scheme for low-income pensioners to include disabled individuals and other vulnerable groups, with an increase in the amount granted and an extension of the scheme’s duration.
Moreover, he called for the reintroduction and permanent establishment of the subsided holiday scheme aiming to boost local tourism, specifically for mountain hotels.
Pissarides also highlighted the importance of targeted promotional campaigns to raise awareness about both the natural and developed environment of mountainous Cyprus, as well as its historical, religious, cultural, and environmental sites.
“These campaigns should be launched by the Deputy Ministry of Tourism, both in Cyprus and abroad, and should focus on special interest groups and the new tourism model”, he concluded.
