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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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This report ‘Cyprus Tourism Market Report – Tourism Sector Analysis' by KPMG  (& CTO) gives insight in what Cyprus Tourism Organisation, in collaboration with the Cyprus Government, Hermes Airport Ltd. and the Ministry of Energy, Commerce, Industry and Tourism, undertakes to make Cyprus more attractive for tourists. Thereby it shows how they respond to competitors. For Cyprus this is very important, as tourism revenue is the largest contribution to its economy.

The economy of Cyprus is strongly dependent on the services industry, particularly on procurement and processing of tourism activities. In the years 2011 to 2016, a growing trend in the tourism sector  in line with an increase in the economy of Cyprus has been noticed. According to information about tourist arrivals, from CYSTAT, the following can be said. Due to increasement in tourist arrivals, a constantly rising trend in total contribution of travel and tourism, and an increase in demand in international tourism is perceived. Besides, a small reduce in regular tourist spending and a decrease in the period of stay in November has been noticed.

Furthermore, in the year 2016, most tourists visiting Cyprus were European residents and July ranks the first place, when looking at most tourist arrivals. The main tourist cities in Cyprus are Paphos, Famagusta and Limassol. The average tourist arrival is in summer months over five times higher than in the other months. Which makes the months May to September extremely valuable for Cyprus' market and its economy. While the months November till April are still challenging for Cyprus' holiday destinations.

In Cyprus, the main type of accommodation are hotels and hotel apartments, followed by tourist villages and Bed & Breakfast. In addition, Cyprus, Famagusta and Paphos are cities with the highest accommodation capacity. Whilst the biggest amount of accommodation units are found in Paphos,  Famagusta is known for the largest number of hotels, hotel apartments and topmost bed capacity. In recent years the absolute local and foreign visitor nights has grown. Due to this growth, the tourism industry is forced to innovate. Growth can be seen in accommodation units that remain open during winter months when most accommodations are closed.

According to KPMG, Cyprus want to attract more tourists. That is why Cyprus Tourism Organisation (CTO) developed a tactical plan. Progress has already been made, but for the next three years to come, CTO's main goals are to attract more (special) tourists throughout the year, generate higher spending, create a healthier environment for tourism businesses and to improve the quality of experiences. To reach this goal, be front in line and keep growing economically, Cyprus need to focus on introducing new tourism products and promoting its Unique Selling Points. Due to the fact that Cyprus is mostly known by its sun, sea and sand, tourist arrivals are not spread even over the year and this makes tourism in Cyprus seasonal. While thinking about the future, Cyprus Tourism Organisation and the Cyprus Government need to put focus on unique holidays Cyprus can offer to raise and spread tourist arrivals throughout the year.

In addition, Cyprus Tourism Organisation improved its marketing strategy to ensure Cyprus will reach its targets. The core of this strategy is to show Cyprus' qualities to the world by creating new ways of advertisement and making Cyprus more accessible for tourism and tourism businesses. Moreover, The Cyprus Government is starting new initiatives to improve tourism on the island. One of these initiatives is the ‘Investment Plan'. The aim of this strategy is to invest in a healthy and accessible environment. Another initiative is ‘Open Skies', which is, in line with Hermes Airport Ltd.'s (HAL) incentive strategy, to boost Cyprus' air traffic, raise the total amount of airports and accomplish a 3,5 million more tourist arrivals in five years. These plans focus on reposition Cyprus as an important destination for tourists.

The incentive strategy of Hermes Airport Ltd consists of three pillars. First of all, Hermes Airport Ltd. hopes to generate more tourist arrivals by introducing new air routes. Moreover, a long-term engagement discount with airlines is introduced and furthermore, Hermes Airport Ltd. set up a programme to stimulate tourist arrivals in during winter months.

When comparing Cyprus with destinations that have the same characteristics, Cyprus is relatively expensive. Due to this, and a growing competition, an all-inclusive environment has emerged. To keep up with the growing competition and upgrade its value-for-money, it is very important for Cyprus to focus on tourism product innovation. By introducing new tourism and leisure offerings, similar to theme parks, Cyprus can improve its competitive position. To finance product innovation, the Ministry of Energy, Commerce, Industry and Tourism started an investment initiative. The main goals of this investment initiative is to make Cyprus a front of mind destination by developing unique tourism products, upgrading accommodation units and responding to modernisation.   

(KPMG, 2017)

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