Cyprus’ hotel industry must shift its attention from headline arrival figures to the profitability that sustains investment and keeps units modern, hoteliers association (Pasyxe) president Thanos Michaelides said, as the sector closes a steady but unspectacular season.

Speaking to Cyprus News Agency (CNA), he said profitability is “the driving force for the necessary investments and the continuous modernisation of hotel units”, adding that Cyprus must keep investing in its tourism product and, above all, in the authentic Cypriot experience, which he considers the country’s strongest comparative advantage.

He also pointed to the importance of air connectivity, noting that new markets such as Poland and Israel continue to offer positive examples.

On the regulatory front, Michaelides said there is little need for major revisions to the hotel classification code, which was recently updated “with significant success”.

However, he argued that real attention should turn to operating licences.

The process, he said, remains complicated because it involves numerous public departments and local authorities, while multiple licences and tight deadlines make compliance difficult.

As he put it, the association has already submitted proposals for a more functional and productive licensing procedure that would serve both the state and the private sector.

Looking back at the season, he said occupancy levels and customer requirements stayed roughly at last year’s levels. He expects next year to follow a similar pattern, “or slightly higher”.

Although arrivals continued to rise, he cautioned that this does not automatically feed into occupancy, insisting that the focus must remain on profitability.

“If there is healthy profitability, the investor will continue to invest in the industry. If profitability suffers, investment will decrease and this at the end of the day will also reduce the quality of the tourism industry as we know it today,” he said.

Addressing labour shortages, he noted that the challenge extends well beyond Cyprus and affects the whole of Europe and the developed world.

In Cyprus, the faster issuing of permits for third-country workers has helped, he said, although more progress is needed. Better training, he added, depends on improved working conditions and allowing seasonal staff to return for more consecutive years so they can build experience and productivity.

While there has been movement in the right direction, Michaelides said further improvements are still required to the rules governing the employment of third-country nationals, particularly to reflect the sector’s seasonality.