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Cyprus is the only Mediterranean destination to have seen a fall in arrivals this summer according to the Greek Cypriot hoteliers’ association. While the rest of the region saw a 4.5 percent increase in the first eight months, the number of visitors to Cyprus fell by 2.4 percent. “Competition has risen dramatically,” says Antonis Michaelides, the tourism minister.

One reason is that Cyprus’s non-European union competitors in the region. Turkey and Egypt benefit from lower operating costs. At the same time, a boom in second home construction in Cyprus means that fewer tourists stay at the hotels. The hoteliers’ association estimates that up to 30 percent of visitors stay in private villas or apartments. The CTO says the number is smaller – about 15 percent- but accepts that the hotel industry is feeling he impact of a new kind of competition.

Greek Cypriot developers have built about 30,000 new holidays homes over the past five years. In spite of rising prices and concerns about the quality of new construction, there has been sustained strong demand among buyers from the UK and Russia, many of whom spend several months of the year in Cyprus, according to local estate agents.

Last year, Cyprus attracted 2.6m tourists, with more than 90 percent coming from other European countries. The average length of stay was 10 days, while revenues from tourism reached just over C£1bn. The UK, traditionally the island’s main tourist market, provided 56 percent of visitors.

In Spite of the fall in numbers, revenues from tourism grew by 3 percent in the first ten months. The figures suggest that the rising numbers of visitors who make use of private accommodation are starting to make a significantly larger contribution to overall revenues. The increase in revenues also suggests that previous measures to upgrade Cyprus’s tourism product are starting to deliver results.

The main investment over the past five-year has been in golf tourism. Cyprus has three 18 hole European standard golf courses and five more at an advanced planning stage – including courses designed by Nick Faldo and Jack Nicklaus. They should all be operating in 2009 according to Nicos Severis president of the Cyprus Golf Federation.

Another two courses will be added by 2012, completing the final stage of the CTO plan for developing golf tourism. The plan is aimed at capturing 5 per cent of the north European golf market - people from countries such as Sweden, Germany, and Switzerland where courses shut down between October and March.

Current figures show that the average golfer spends 35 per cent more in Cyprus than a sun-and-sea visitor. The number of games played on the three existing courses is projected to rise this year from 45,000 to 85,000 in spite of green fees that are significantly higher than in Turkey, the nearest golf destination to Cyprus “We’re making a dent in the market. In my view we could double the number of courses and they’d still be full year round,” Mr. Severis says.

Concerns over the amount of water – a scarce resource on Cyprus – that golf courses would consume appear to have been exaggerated Mr. Severis says. The new courses that are being planned will have access to treated waste water from nearby settlements, but developers will also continue to build reservoirs to store winter rainwater. “We are fortunate I that we don’t have to carve golf courses out of a desert. Visitors find they are unexpectedly green, with great natural scenery,’ he says.

The next stage of the CTO’s strategic plan calls for the development of four large marinas to meet rising demand for year round yacht berths. These would be built in main resorts – Limassol Larnaca, Ayia Napa and Paphos. Smaller facilities would be developed in strategically located bays to provide a cruising route around the south and west of the island, Mr. Phylactides says. The Limassol marina project, with 4,000 berths, which is to be built by a consortium of Greek Cypriot and foreign developer, is expected to be finalized later this month. The marina is due to open for business 2010.

Article written by Andreas Hadjipapas and Kerin Hope