Filenews 11 July 2021 - by Adamos Adamou
The tourism sector may have recorded record highs in tourist arrivals by 2019, but it is accepted by all that it was facing structural problems.
This is why the Ministry of Tourism has given and continues to place special emphasis on the National Tourism Strategy 2030. However, the coronavirus pandemic has overturned many of the plans, as existing tourism businesses move towards a second in a row lost summer season and now their focus is more on survival than further development.
Against this unprecedented backdrop, the need for new foreign investment in the sector is becoming imperative, with the prospects in this direction appearing not to be as depressing as the prospects for significant tourist arrivals this year.
At least this was evident from the international conference held last Tuesday by the Cyprus Investment Promotion Agency (Invest Cyprus).
Project Bank by Invest Cyprus
The conference was attended by more than 150 participants, including institutional investors, consultants in the tourism and hospitality sector, as well as world-renowned hotel chains. In front of this targeted audience, the Project Bank created by Invest Cyprus was presented for the first time, with important projects available for investment.
Stefani Panagi, Head of Strategic Projects of the organization, referred particularly to the thematic projects, while expressing the readiness of Invest Cyprus to respond to the demands of foreign strategic investors.
At the start of the conference, Finance Minister Konstantinos Petridis analysed the outlook for the economy, noting that for this year growth is estimated at 4% of GDP, with the ultimate goal of returning to pre-pandemic level in 2022. As far as the tourism sector is concerned, he made extensive reference both to the efforts of the Ministry of Tourism to attract tourists and to the efforts of Invest Cyprus to attract investment in tourism infrastructure.
Moreover, a recent study carried out by the advisory firm THR - the Spanish firm that also carried out the study on the National Tourism Strategy - on behalf of Invest Cyprus, aimed at this very purpose, at how to make Cyprus a more attractive destination for tourism investment.
Deputy Tourism Minister Savvas Perdios, for his part, analysed the five main pillars of the National Tourism Strategy, with a time horizon of 2030. The ultimate goal is for Cyprus to become a year-long tourist destination, to offer high-quality tourist services (an objective which in order to achieve investment is also necessary), to offer smart technological solutions, through the implementation of digital reforms, to become an environmentally friendly destination and finally to become an alternative tourist destination beyond the sun and the sea. Mr Perdios was particularly focused on the close cooperation between his State Department and Invest Cyprus and stressed the role of the investment agency in achieving the objectives of the National Strategy. Thus stressing the importance of investment in the sector in the same direction.
However, despite the prospects, competition in this part is particularly intense. As mentioned, there are 21 countries in the Mediterranean basin which place particular emphasis. Some depend on tourism exclusively and obviously are also currently in the battle to attract investment in the hospitality sector.
In the hunt for investment
The challenges for tourism and attracting investment in the tourism sector were also developed at the conference by the Spanish THR. Christophe de Bruyn, CEO of THR, which reportedly contributed to the development of the National Tourism Strategy and later provided advisory services to Invest Cyprus on the development of the action plan to attract foreign investment in the tourism and hospitality sector, estimated the full recovery of the sector is in place for 2023. In the long term, it estimated that if the strategy is implemented, Cyprus could reach around 5.8 million tourists in 2030.
However, as he explained, the backdrop for investment in the tourism sector remains difficult. Globally, the sector has fallen 63% in 2020; there appears to be a partial recovery in 2021, and, depending on epidemiological developments, it will be further reheated in 2022. He noted, however, that significant improvements are needed to increase the attractiveness of Cyprus as an investment destination. There are, he said, areas in which Cyprus lags behind its directly competitive destinations, such as Malta, Greece and Morocco.
The view of investors
During the conference, a round table was held, which included the CEO of Kition Ocean Holdings Ltd Panos Alexandros, the CEO and Head of Western Balkans, Greece and Cyprus of NCH Capital Inc. Andreas Sadis, vice president development of Radisson Hotel Group, Middle East, Pakistan, Greece & Cypru,s Elie Milky, Vice President, Property Chief Financial Officer of Melco Kevin Sweet and the General Manager of Invest Cyprus, Giorgos Kampanellas. Representatives of organisations that have already worked closely with Invest Cyprus but who are also making significant investments in Cyprus.
For example, Elie Milky commented that Cyprus is one of the success stories of the Radisson group, highlighting the country's huge prospects, as evidenced by the recent decision to expand their activities with five new projects amid a pandemic. He explained that the Radisson Beach Resort in Larnaca is expected to open in September, while the Radisson Apartments projects in Larnaca and the Radisson Blu Hotel in Nicosia are under way.
He made particular reference to the prospects of the province of Larnaca but also to the fact that the penetration of international branded hotel chains in Cyprus is extremely low, just 1% of beds, and therefore there is considerable room for growth.
- For his part, Panos Alexandrou expressed optimism that with goodwill and effort there can be positive changes in the tourism industry. Kition Ocean Holdings is proceeding with the implementation of the major development project in Larnaca, which concerns the creation of a marina with a capacity of 880 boats, yacht club, passenger room, shops, dining areas, hotel and residential units, as well as the upgrading of the commercial port and the creation of 3,500 car parking spaces. As Mr. Alexandrou noted, both the city of Larnaca and the whole country need investment in infrastructure in order to take advantage of the opportunities created. He particularly stood by the fact that the city of Larnaca, while having the largest international airport in the country, had the least growth in recent years, and expressed confidence that this image would change.
- Andreas Santi expressed the belief that Cyprus has important prospects and that is why the American investment company is moving forward with investments in our country. He noted that Cyprus has long experience in the tourism sector and an important bet will be to adapt to the new data that wants the emphasis to go from traditional family hotels to branded hotels and mixed-use resorts. In terms of improvements, he noted the need to speed up building permit procedures and appropriate infrastructure on the part of the state to help large deployments. "The government is willing to do so and we hope to move from words and goodwill to actions," he said.
- Kevin Sweet, of Melco, the company that develops the multi-themed casino resort in Limassol, said his group invested in the country after identifying the prospects created by its geographical location and beyond. He reiterated that their goal is for the resort casino to help attract 300,000 additional high-income tourists a year and to extend the tourist season.
Key investment law for Cypriot tourism
Attracting foreign direct investment in the tourism and hospitality sectors, in order to meet the objectives set by the state through the National Tourism and Development Strategies of the Mountain Regions, is an important part of the objectives of the Cyprus Investment Promotion Agency.
Working with THR, Tourism Innovative Advisors' consulting team, who had previously worked with the government to prepare the study on the National Tourism Strategy, Invest Cyprus proceeded to carry out a major sectoral study on the development of a Strategic Investment Attraction, in order to achieve the objectives of the National Tourism Strategy.
In particular, the shortcomings in projects in the tourism industry supply chain, the existing regulatory framework, future trends, comparative analysis with other competing destinations were studied and future needs for specific categories of investment developments and projects were identified.
Best international practices for promoting, attracting and facilitating investment in this sector were also studied, Invest Cyprus' human and financial resources needs were recorded and proposals were made to improve the investment environment through reforms and incentives.
As has emerged through the dozens of interviews with foreign investors, time-consuming licensing procedures are perhaps the most important problem in achieving the objectives set. In view of this, the investment law pending before the House has an important role to play in the whole effort. However, the finance minister, in a recent letter to the Speaker of the House, said the National Recovery Plan includes investments and reforms that should be implemented in specific time frames and in line with binding targets and milestones. It sent a list of 28 pieces of legislation to be filed by the government in the coming period, which should be adopted in 2022, including the investment law.
This law establishes a strategic investment management directorate in the Department of Urban Planning, under which the project management office and the licensing office will operate. The appointment of a project manager for each strategic investment within the mechanism, which will act as a central reference point for the investor's service with public services, is also established and an urban planning and building permit is issued at a central level within a maximum of one year, while binding timetables are set for the issuance of all permits required for the implementation of a major investment.
Invest Cyprus' message
For his part, the general manager of Invest Cyprus, Giorgos Kampanellas, explained the importance of creating Project Bank, saying that it includes large-scale development projects that can differentiate the tourist product of Cyprus. Addressing foreign investors, Mr.Kampanellas said that Cyprus is not only an island tourist destination, but has all the quality characteristics to attract large-scale investments. "The fact that the average of the 2020 recession in the other Mediterranean destinations was 67% higher than in our country clearly shows that we already have a diversified economy with smaller dependencies. We want Cyprus to become an ideal destination for quality tourism, international business and financial services and these are precisely our strategic aspirations as a state-owned investment agency. We support increasing our attractiveness as a destination, we are setting the stage for increasing air connectivity, we are optimising the experiences of foreigners who decide to live, work or visit our country," said Invest Cyprus, General Manager.
