Although Cyprus hotel occupancy dipped below the regional average at 56%, the price of a room went the other way climbing 42% last year during the pandemic, according to STR hospitality data analytics.
In 2020, Cyprus hotels performed like the rest of the Mediterranean region – except when it came to average daily rate (ADR).
According to STR, from April through December, Cyprus’ occupancy fell 56.1%, which was slightly worse than the average decrease (-45.0%) in other markets across the region.
Nearly every market has experienced significantly lower occupancy due to travel restrictions during the pandemic.
For Cyprus, the bottom came in December, with occupancy at just 20.7%. By comparison, the Mediterranean region bottomed out at 32.3% in December.
Where Cyprus performed better was in ADR which surged 42.3% during the nine-month period April to December.
ADR climbed to an all-time high of $278.97 in December compared to the rest of the region’s modest $116.18.
This is partly due to Cyprus having the highest percentage of independent supply compared with the rest of the region.
More than 85% of the hotels on the island are independents, leaving only 14.7% as chain-affiliated.
This concentration of independent hotels is than other countries such as 60% in Spain, 41% in the UK and approximately 78% for all other Mediterranean markets.
Furthermore, global brands account for less than 3% of total supply in Cyprus.
Another potential reason underlying the ADR increase in the COVID-era is the hotel mix in Cyprus is geared toward the upper end of the chain scale.
While most of the markets across the Mediterranean region offer ample lower-cost travel options, the Cyprus hotel market has a noticeable void – only 11.8% of hotel supply is economy or midscale, compared to 35.5% of supply in the region steering toward the lower end.
Less supply of midscale and economy options means that the ADR is skewed toward higher-end hotels.
While hotel supply has decreased, the island was still attracting record tourist arrivals before COVID-19.
From December 2010 through December 2020, Cyprus’ hotel supply decreased slightly (-3.3%), while supply for other markets across the Mediterranean increased 1.3% overall.
During the last decade, 20 hotels have shuttered in Cyprus, while only seven new hotels have opened. Fewer hotel options can lead to increased pricing power.
So, even though occupancy continues to struggle, like most other markets, ADR growth is a bright spot in an otherwise difficult time for the island. (source STR)