A recent report from Cyprus’s Audit Office has laid bare the scale of unlicensed tourist accommodation on the island, revealing that just 23% of hotel and tourist units currently hold a full operating licence. The findings, published in the Audit Office’s review of the Deputy Ministry of Tourism, show that 55% of accommodation operates without full legal compliance, while a further 22% hold only a temporary licence.
The situation is particularly acute in the government-controlled Famagusta region, where only 24 of 241 tourist accommodation establishments are licensed. This region, a popular destination for beach tourism, highlights the systemic challenges facing the sector.
Deputy Ministry Response and Historical Context
In its formal response, the Deputy Ministry of Tourism acknowledged that substantial progress has been made in licensing tourist businesses, but conceded that the problem remains largely unresolved. The ministry pointed out that more than half of all tourism units have never submitted an application to obtain a licence, a basic precondition for completing the process.
The issue of licensing has plagued Cyprus’s tourism sector for nearly three decades, according to the ministry. It worsened significantly between 2014 and 2018, when extensive renovations and extensions to hotel units, spurred by town-planning incentives introduced after the 2013 financial crisis, created a backlog of outstanding cases.
Legislation passed in 2019 included a five-year transitional period for compliance, but during that time only 43 operating licences were issued. By April 2023, just 6% of hotels held a regular licence. To accelerate progress, a new bill was submitted in 2023, extending the compliance deadline to 31 December 2025 while introducing stricter provisions and intermediate control stages, with particular emphasis on safety and health protection.
By the end of 2024, the number of fully licensed accommodation establishments had risen to 94, representing 12.69% of the total. An additional 146 units, roughly 19.7%, obtained an operating certificate under the current legislation. Today, 23% of hotel units operate with a full licence, and another 22% are active with a temporary operating licence.
The Deputy Ministry clarified that, under the new legislative arrangement, tourist businesses can continue to operate legally until 31 December 2026, provided they hold a building permit for a hotel or other tourist accommodation. Despite these measures, the definitive settlement of the issue continues to be hampered by the fact that over 50% of units have never submitted a licensing application.
Over the past two years, consultations have been under way with competent state bodies, aiming to resolve the problem definitively and ensure conditions of legality, safety, and equal treatment for all businesses. Regular reminders are sent to sector professionals to comply with their obligations.
In the self-catering accommodation segment, the Deputy Ministry noted that measures implemented since 2023 have produced significant results. The number of registered units increased from 4,765 in April 2023 to 8,478 by 29 June 2026, a rise of 78%.
The licensing crisis in Cyprus mirrors broader challenges across Southern Europe, where tourism-driven rent hikes squeeze locals and regulatory frameworks struggle to keep pace with rapid growth. As the continent grapples with extreme weather, conflicts, and responsible tourism reshaping travel in 2026, Cyprus’s efforts to bring its accommodation sector into full legality will be closely watched.
