Complexity, time-consuming procedures and difficulty in compliance within time frames are the elements that characterize the existing licensing system for hotels and tourist accommodation. As a result, on the one hand, the owners of the units are discouraged from submitting an application and on the other hand, extensions are granted, which at the end of the day act as an incentive to exploit and non-comply with the provisions of the legislation.
The above findings are recorded in a special report of the Audit Office, which was released yesterday, with the Deputy Ministry of Tourism as the audited body. The Audit Office's report, with the years 2023-2025 as a reference period, records the problems in the licensing procedures, as well as other misspellings in the proper functioning of the tourism industry. According to the findings of the Audit Office, out of the 728 hotels and tourist accommodation registered in the register of the Deputy Ministry of Tourism on 27.4.2026, only 168 (23%) have secured an operating license.
In relation to the part concerning the complexity of the licensing process, the Audit Office states, among other things, that after a brief recording of the requirements set in the existing legal framework for the licensing of hotels and tourist accommodation in Cyprus, the view arises that there is an increased degree of complexity, which may act as a deterrent for entrepreneurs and owners of tourist units in terms of submitting a licensing application.
Complex procedures
In particular, as it is pointed out, the licensing of hotels and tourist accommodation seems to require the involvement and coordination of many different Authorities and Services, including the Deputy Ministry of Tourism, the Provincial Self-Government Organizations, the Fire Service, the Health Services and other technical or supervisory Authorities.
In addition, the need to obtain planning and building permits, fire safety certificates, health approvals, swimming pool licenses, electromechanical certifications and other supporting documents with different time validity for each, may entail significant delays, increased administrative and financial costs and compliance difficulties, especially for smaller businesses or existing units.
In addition, the fact that in many cases, existing buildings have been erected decades ago, without having full planning or building permits or without meeting today's technical and regulatory requirements, makes the process of obtaining the required approvals and certificates particularly time-consuming and complicated.
Five dangers
Having taken into account the above, with the extensive operation of unlicensed or temporarily legalized hotels and tourist accommodation, the Audit Office lists five main risks:
1) Safety and health risks: Increased likelihood of causing fires and accidents, inadequacy of sanitary infrastructure and non-compliance with the required technical specifications.
(2) Risks to consumers/visitors: Reduced quality of services provided, misleading visitors and reduced trust.
(3) Risks to the state: Loss of public revenue from uncollected fees, undermining the international reputation and quality of the Cypriot tourism product.
(4) Unfair competition: Unequal treatment to the detriment of companies that invested and complied with the law and were licensed on time.
(5) Risks for entrepreneurs/owners: Possible exposure to legal penalties and interruption of the relevant activity, imposition of fines, exclusion from digital booking platforms and difficulties in insuring the premises.
Audit Recommendations
Therefore, the Audit Office considers it necessary for the Deputy Ministry, in cooperation with all stakeholders involved, to carry out an overall assessment of the existing process, in order to identify the main problems, practical difficulties and the reasons why businesses either do not submit an application or are unable to successfully complete the licensing process.
At the same time, the adoption of targeted measures to simplify and speed up procedures should be considered, with a view to facilitating the full licensing of hotels and tourist accommodation, while ensuring the protection of the health and safety of users and the public.
The Audit further recommends that the efforts of the Deputy Ministry be intensified, so that the licensing rate increases significantly in the coming months, within the time limits set and without the need to promote new extensions of the implementation of the legislation.
In addition, to strengthen controls and impose sanctions on businesses that do not comply with the current legislative framework as well as to promote the information of both consumers and entrepreneurs regarding their rights and obligations in order to ensure legality, health and safety in the tourism sector.
