Cyprus is facing a serious challenge in its tourism sector. According to a special report published by the Audit Office on July 2, more than half of the country's hotels and other accommodation establishments continue to operate without an official license. The audit, which covered the period from 2023 to 2025, found that the existing regulatory system has not been sufficiently effective, despite the country's extensive preparations for the tourist season. Experts warn that the current situation poses risks both to visitors and to Cyprus' reputation as one of the Mediterranean's leading tourist destinations.
Only 23% of Establishments Fully Comply with the Requirements
As of April 27, 2026, the official register of the Deputy Ministry of Tourism included 728 hotels and accommodation establishments. Only 168 properties had obtained a full operating license, representing just 23% of the total. Another 158 establishments (22%) continue to operate under temporary permits while they work to meet all legal requirements for permanent licensing.
The most concerning figure relates to properties operating without any authorization at all. There are 402 such establishments, accounting for 55% of the entire market. According to the auditors, such a high percentage demonstrates the need to reform the licensing system and strengthen government oversight.
The Risks of Unlicensed Hotel Operations
The report emphasizes that operating without a license is not merely an administrative violation. Accommodation providers lacking the necessary permits may fail to comply with fire safety regulations, health and sanitation standards, and technical requirements. As a result, the safety of both tourists and hospitality employees may be compromised. In addition, the government loses substantial revenue from mandatory fees and taxes, while law-abiding owners of licensed hotels face unfair competition from businesses operating outside the established regulatory framework.
The Deputy Ministry of Tourism has reminded operators that the current legislation provides for a transitional period until December 31, 2026. During this period, hotels and other accommodation establishments may complete the licensing process, provided they possess the required certificates and comply with the applicable regulations.
However, the Audit Office believes that the current transitional framework is not sufficiently effective. The report notes the absence of clearly defined key performance indicators (KPIs), making it impossible to objectively assess the effectiveness of government programs or measure progress toward their intended goals.
Oversight of the Tourism Market Will Be Strengthened
Experts note that tourism remains one of the key pillars of the Cypriot economy, making greater market transparency a top government priority. In the coming years, the authorities plan to strengthen oversight of the licensing of hotels, short-term rental properties, and tourist apartments, while making greater use of digital tools to improve information sharing between government agencies. These measures are expected to enhance tourist safety, reduce the number of illegal accommodation providers, and strengthen confidence in Cyprus' tourism market.