From boom to gloom: Cyprus tourism and the Iran war

The Iran conflict is causing a rise in tourist cancellations and a dive in new bookings in Cyprus and to a lesser extent other countries whose economies rely heavily on summer visitors.

The U.S. and Israel launched attacks on Iran on February 28, just as Cyprus's tourism industry was reopening after winter. Then on March 2, as Iran launched a series of counter-strikes, a drone struck a British naval base on the island, triggering a wave of tourist cancellations.

The drop in bookings is the latest sign of the war’s broad fallout, from disrupted oil flows to mass flight cancellations and worsening economic outlooks worldwide. 

Daily cancellation rates for short-term rentals in Cyprus shot up from around 15% before the conflict to as high as 100% in the days after, according to data from U.S.-based AirDNA, which tracks such bookings. That figure has since dropped, but remained around 45% by March 21. Greece and Turkey saw slight rises in cancellation rates, too. 

Cyprus' Hoteliers Association has seen a near 40% drop in March bookings and a similar reduction in April, the association's director-general, Christos Angelides told Reuters. 

"Since March 1 … we have had a lot of cancellations coming through," said Nicholas Aristou, commercial director at Muskita Hotels in Limassol, which runs two luxury hotels.

He hopes that the slowdown does not continue into the summer months, when tourist visits typically pick up. 

"We have to protect the high season months to make sure we can turn things around by the time May comes along, otherwise the destination will be in trouble."

GREECE MAY ALSO SEE IMPACT AS PRE-BOOKINGS SLOW

The war is hitting Cyprus' growth expectations. This week, the Central Bank of Cyprus cut its 2026 economic growth forecast to 2.7% from 3.0%, based on an assumption that the conflict would last around two months. 

Budget airlines like EasyJet and Jet2 say demand for Cyprus and Turkey has waned and that demand has shifted to western Mediterranean destinations like Spain.

Savvas Orphanos, a souvenir shop owner in the central Ayios Andreas quarter of Limassol, sat alone among an array of pottery and fridge magnets. When Reuters visited, a downpour worsened an already slow period. "Unfortunately as you can see our area is empty of tourists," he said. 

In Greece, where the economy runs on summer visitors, the impact is also being felt.

Aegean Airlines, the country's biggest carrier, has seen a double-digit drop in summer bookings from Israel and Gulf states to Greece since the start of the Iran conflict, a spokesperson said on Thursday.

George Vernicos, secretary general of Greece's tourism confederation SETE, said that there has been a slowdown in pre-bookings, although that was partly offset by a rush to book flights before oil price rises impacted the cost of plane tickets. He said that there was a drop in demand from Greece's biggest markets in northern Europe and the United States. 

"We are in a wait-and-see phase," he told Reuters. "There is a restraint but the year is still running positively, also because the momentum was quite high before the war began."