Dorita Yiannakou
The fact that the Cypriot economy is showing growth does not mean the government should be handing out money freely to everyone. Compensating livestock farmers who lost their farms because of foot-and-mouth disease is one thing. Subsidizing hotel owners because their profits dropped due to the fallout from the war in Iran is another. Cyprus’ GDP growth during the first quarter of 2026 reached 3% compared to the same period in 2025, while overall growth for 2026 is estimated at around 2.7%.
There is no doubt that Cyprus’ hotel industry suffered losses after the drone incident at the British military base in Akrotiri on March 2. It was natural for travelers to become nervous and start considering alternative destinations this year. However, the situation later stabilized, flights returned to normal, and hotel bookings slowly began recovering. And, to be fair, it was not only hoteliers who were affected by the negative climate. Other tourism-related sectors, particularly restaurants and hospitality businesses, were also hit.
Yet so far, the only businesses set to receive state support are hotel owners, who reported booking declines of up to 60% and losses exceeding 40% in April compared to April 2025. After repeated meetings, often held in dramatic tones, between industry representatives and the government, the Finance Ministry agreed to release €6 million in support measures for the sector. Eligible hotels will receive a 30% wage subsidy for employees through the special employment support scheme for the hotel industry. Initially, however, the industry had requested a 50% wage subsidy.
Businesses eligible for support are those that recorded, or are expected to record, a drop in turnover of more than 40% in April 2026 compared to April 2025 or hotel occupancy below 60%. Subsidies may cover up to 80% of employees. Even so, hotel owners say they are still dissatisfied and are pushing for the scheme to be extended into May, while the government has made it fairly clear there are no additional funds available.
For context, around 95% of hotels in Cyprus are not facing liquidity problems, something banks have also confirmed. In fact, after several record-breaking tourism years, many businesses built financial reserves that, if they chose to, could help absorb what are likely temporary losses caused by the regional conflict. Another issue raised is the refusal to reduce prices, as hoteliers argue this would affect service quality and damage Cyprus’ image. Nobody is suggesting prices should suddenly collapse, but there could at least be temporary incentives aimed at boosting domestic tourism. After all, everyone should view the current situation as temporary and try to adapt while minimizing pressure on public finances.
The argument that tourism contributes around 14% of Cyprus’ GDP and therefore deserves state support during difficult times is not entirely convincing. A sector’s importance to the economy, however significant, does not automatically mean the state is obliged to financially support it every time it faces difficulties. Other sectors also contribute heavily to growth, jobs and public revenue, and many of them are affected by crises without receiving similar aid. There is also the broader issue of fiscal balance, as state support should be based on clear criteria related to sustainability, strategic importance and genuine emergency need.
