FTI Group Bankruptcy: Implications For Cyprus’ Tourism Sector

The recent bankruptcy of FTI Group, Europe’s third-largest tour operator, is set to significantly impact Cyprus’ tourism industry. Filed in the Munich regional court, the insolvency threatens up to 30,000 hotel bookings in Cyprus, affecting approximately 160 hotels on the island. This collapse could lead to an estimated loss of €15 million, directly impacting Cyprus’ hotel sector, which accounts for around 15% of the country’s GDP.

Wider Challenges

The Cyprus Hoteliers Association expressed concerns over the broader challenges facing Cyprus’ tourism sector. These include regional instability, economic downturns in key markets such as Germany and Russia, and the aftermath of the COVID-19 pandemic. The bankruptcy of FTI adds to these woes, highlighting the sector’s vulnerability to external economic shocks.

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Government Response

In response to this crisis, the Cypriot government is exploring measures to mitigate the impact on the tourism sector. Strategies under consideration include increasing marketing efforts in alternative markets and providing financial support to affected hotels. The government aims to sustain the sector’s recovery momentum and ensure that the negative repercussions are contained.

Future Outlook

Despite the immediate challenges, industry experts remain cautiously optimistic about the long-term prospects of Cyprus’ tourism industry. Efforts to diversify the tourism market and enhance the island’s appeal as a year-round destination are ongoing. The resilience shown during the COVID-19 pandemic provides a foundation for recovery and growth, albeit with the need for adaptive strategies to navigate the current crisis.

The FTI Group’s bankruptcy is a stark reminder of the fragility of the tourism sector in the face of global economic disruptions. For Cyprus, it serves as a call to bolster the industry’s resilience through diversification and strategic planning. As the situation unfolds, the focus will be on mitigating immediate impacts while positioning the sector for sustainable recovery and growth.

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Cyprus Hits Historic Tourism Peak As Overtourism Risks Mount

by THEFUTURE.TEAM

February 13, 2026

Record-Breaking Performance In Tourism

Cyprus’ tourism sector achieved unprecedented success in 2025 with record-breaking arrivals and revenues. According to Eurobank analyst Konstantinos Vrachimis, the island’s performance was underpinned by solid real income growth and enhanced market diversification.

Robust Growth In Arrivals And Revenues

Total tourist arrivals reached 4.5 million in 2025, rising 12.2% from 4 million in 2024, with momentum sustained through the final quarter. Tourism receipts for the January–November period climbed to €3.6 billion, marking a 15.3% year-on-year increase that exceeded inflation. The improvement was not driven by volume alone. Average expenditure per visitor increased by 4.6%, while daily spending rose by 9.2%, indicating stronger purchasing power and higher-value tourism activity.

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Economic Impact And Diversification Of Source Markets

The stronger performance translated into tangible gains for the broader services economy, lifting real tourism-related income and overall sector turnover. Demand patterns are also shifting. While the United Kingdom remains Cyprus’ largest source market, its relative share has moderated as arrivals from Israel, Germany, Italy, the Czech Republic, the Netherlands, Austria, and Poland have expanded. This gradual diversification reduces dependency on a single market and strengthens resilience against external shocks.

Enhanced Air Connectivity And Seasonal Dynamics

Air connectivity has improved markedly in 2025, with flight volumes expanding substantially compared to 2019. This expansion is driven by increased airline capacity, enhanced route coverage, and more frequent flights, supporting demand during shoulder seasons and reducing overreliance on peak-month flows. Seasonal patterns remain prominent, with arrivals building through the spring and peaking in summer, thereby bolstering employment, fiscal receipts, and corporate earnings across hospitality, transport, and retail sectors.

Structural Risks And Future Considerations

Despite strong headline figures, structural challenges remain. The European Commission’s EU Tourism Dashboard highlights tourism intensity, seasonality, and market concentration as key risk indicators. Cyprus records a high ratio of overnight stays relative to its resident population, signalling potential overtourism pressures. Continued reliance on a limited group of origin markets also exposes the sector to geopolitical uncertainty and sudden demand swings. Seasonal peaks place additional strain on infrastructure, housing availability, labour supply, and natural resources, particularly water.

Strategic Investment And Market Resilience

Vrachimis concludes that sustained growth will depend on targeted investment, product upgrading, and continued market diversification. Strengthening year-round offerings, improving infrastructure capacity, and promoting higher-value experiences can help balance demand while preserving long-term competitiveness. These measures are essential not only to manage overtourism risks but also to ensure tourism remains a stable pillar of Cyprus’ economic development.

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