NICOSIA, Oct 13 (AFP) - Cyprus may be enjoying an Indian summer, with higher than seasonal temperatures, but the holiday island is struggling to attract the level of sun-seekers it did three years ago.
The state-funded Cyprus Tourism Organisation (CTO) concedes it's been a difficult year, but hopes that a six-year strategic plan will bring positive growth by 2006.
"We expect this year will not be worse than last year, but that's not great as we hit rock-bottom in 2003," CTO acting director general Lefkos Phylactides told AFP.
"It's not as satisfactory as we hoped but we still outperform traditional competitors in Spain, Portugal and Greece," he added.
The eastern Mediterranean island is trying to survive in an intensely competitive market by upgrading its product in the face of cheaper destinations in the Balkans and North Africa.
"We are focusing our effort to concentrate on quality to establish value for money as we can't compete with Croatia, Tunisia and Egypt in terms of price," said Phylactides.
The strategy is also to shift further away from the traditional sun, sea and sand package and expand sports tourism, build more golf courses, open new marinas, introduce casinos, create a network of biking trails and attract conference business.
The island's two international airports at Larnaca and Paphos are also being upgraded to handle increased passenger flow.
But while the island has managed to stem falling tourism arrivals, much-needed revenue from foreign exchange is worryingly in the negative column.
In 2001, Cyprus reached a peak of 2.7 million tourists, who brought with them 1.3 billion pounds (2.6 billion dollars). It has been on the slide ever since.
Like most holiday destinations, Cyprus was not spared the fallout from the terrorist attacks of September 11, the Iraq war, the SARS outbreak and the global economic slowdown.
Although arrivals were up a marginal 2.4 percent for the first eight months of 2004, income fell 4.9 percent from the same period last year.
August alone saw revenue slump 10.4 percent while arrivals witnessed a 6 percent decline.
Official targets at the beginning of 2004 earmarked a five percent increase in arrivals over the 12 months, but the industry is now hoping it won't dip below 3 percent.
"This year we feel we've stopped the erosion of tourist arrivals but we need to do more about revenue," said the CTO official.
A decline in spending is blamed on a variety of factors -- all-inclusive hotel stays so people are less likely to go out shopping, shorter holiday breaks and the failure of many European economies to break out of recession.
Moreover, hotels have been forced to offer lower discounts from tour operators to try to stay competitive.
Cyprus' "bread and butter" tourists are from Britain, making up over half of all visitors, while the remainder come from fellow EU countries.
Encouragingly more French tourists are beginning to discover Cyprus but they are still outnumbered by compatriots visiting the Greek island of Crete every year.
And the lucrative Russian market has been hit by the introduction of visas, necessitated by Cyprus joining the EU on May 1.
But there are signs of a belated recovery, well into the holiday season, with hoteliers reporting an unexpected surge in bookings.
"According to our feedback for September and October there is a marked improvement in arrivals and occupancy rates," Cyprus hotel association director general Zacharias Ioannides told AFP.
"We are experiencing a remarkable recovery where people are finding it difficult to book a room," he added.
This will come as a relief to the sector, as a survey earlier in the year put hotel occupancy rates at 30 percent for the first half of 2004.
Evidence on the ground suggests it's now close to full capacity and those coming later in the year are usually the higher spenders.
But maybe Cyprus' trump card is the number of repeat visitors it attracts every year -- estimated at around 20 percent of total arrivals.
"Once people come here they fall in love with the place and I don't blame them," said Ioannides.