The Cyprus Tourism Sector faces three key challenges:

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1. High Seasonality: The majority of Cyprus tourism arrivals take place from June – September of each year. Incoming tourism numbers have been largely stable over the past 15 years and have not kept up with the increase in hotel bed capacity. Over six months of the year feature very low occupancy and limited flight access.

2. Disintermediation: The rise of the internet and online travel agencies (OTAs) or airlines such as Booking.com, Ryanair or Aegean has seen key revenue streams for hotels, travel agents and tour operators fall. Travel consumers are internet-savvy: they are perfectly able to select and compare fares using direct providers or aggregators such as Skyscanner.net.

3. Declining Terms of Trade: The commoditisation of travel means that Cypriot tourism companies face declining prices and margins, as well as a shift in bargaining power from themselves towards other trade channels. Given the rising cost base in Cyprus, this means that tourism service providers must work harder each year to break even.

 

In this environment, Cypriot tourism providers must manage their inventory and pricing carefully. Whether this is a room night or a seat on a departing flight, Cypriot hotels and travel agents must engage more frequently and more regularly in tactical sales offers to attract business, particularly in the low and shoulder season.

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Tactical sales initiatives can be grouped around a number of targeted outcomes:

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1. Managing occupancy or “inventory”. Typical tactical initiatives include selling room nights during the low season; national holidays; filling mid-week hotel nights; developing successful excursions or package tours, etc.

2. Managing customer loyalty: Rewarding repeat customers by offering them special discounts in exchange for repeat business.

3. Managing different customer segments: Special offers for repeaters, regenerating lost accounts, VIP sales, golfers, long stayers, etc.

4. Selling alongside regional events: Paphos Triathlon; Paphos Opera; Limassol Carnival

 

Experience from consultancy assignments indicates that there are several problems with the way special offers are currently generated in the Cyprus travel sector:

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1. Offers are undifferentiated: The same special offer is sent to all customer segments, irrespective of place of origin, previous consumer behavior, flight availability or language.

2. Offers do not include sufficient value:  While many hotels or other providers offer a “10% early booking discount”, this discount is not of sufficient interest for many tourists to make the reservation. This is also insufficient given the vast difference between low season and high season costs.

3. Offers are not based on a proper cost analysis: Most hotels or providers see the top-line discount as strong value. They ignore the real cost analysis of such a discount, or alternative offers which may have higher value for customers. A good example of this is the half-board special offer, or the sea view room upgrade offer. The actual costs of offering this per guest are rarely calculated either in terms of variable or real costs, or in terms of opportunity costs.

4. Offers are typically defined prior to booking and departure. Very little is done to offer tactical sales initiatives within the property during the guest occupancy.

5. Roles and responsibilities are diffused. For instance, many receptionist staff have a higher benefit on special offers (such as car rental or excursion sales) than to the hotel owners.

6. The Cypriot market is often ignored. While many hotels target Cypriot customers or expat residents in Cyprus, they do not do so in terms of active promotion, but do so in the same way they target foreign tourists. This leads to very low results.

7. Offers are often incomprehensible: Most hotelliers, for instance, provide a special offer using trade terms such as “supplements”, “BBT”, etc. These are often so difficult to understand, that a customer has to telephone and ask for clarifications. This in turn reduces the impact of emails, billboards or other promotional methods.