Some 73 per cent of hotels and 36 per cent of leisure centres operated without a licence in 2016, the audit office said in a special report on the Cyprus Tourism Organisation (CTO) published on Wednesday.
The situation posed risks to safety and health for both clients and employees in these businesses, the report said.
It also said that six five-star hotels and twelve four-star hotels had a licence for the year 2016.
At the end of 2016 there were 233 hotels and 3,570 recreational centres operating, and due to the failure to meet the requirements of the relevant legislation, licences were renewed for only 63 hotels and 2,282 leisure centres, the report said.
“The arbitrary extensions and modifications made by several hotels and leisure centres without the relevant approvals such as town planning permission, building permits etc are a reason for not renewing their operating licences. As a result, these businesses operated without the necessary authorisation from the CTO,” the report said.
By way of example, the audit office said that of the 26 hotels that currently have a five-star rating, and 57 of those with a four-star rating, only six of the five-star and 12 of the four-star were issued a licence for the year 2016. Nineteen five-star-hotels and 43 of the four-star units have been operating since 2009 without authorisation, the report said.
The report also said that in October 2014 the CTO chief had informed the audit office that “the option of launching criminal prosecution against the owners of the hotels would mean issuing suspension orders for dozens of large businesses and the dismissal of thousands of employees”.
The report said that in an effort to modify the institutional framework governing both the regulation of the establishments and the control of the operation of the offending hotels and leisure centres, the CTO had requested through the tourism ministry, the advice of the state legal service to figure out how it could find a way to free the organisation from the obligation to demand the building permit before the operating permit is issued, a request rejected by the legal service.
In another letter dated February 15, 2017 to the minister of the interior, the CTO tried again, stating that the issue was very serious since in addition to the legitimacy of the buildings, there were safety and health issues related to both visitors and employees, and again asking that the issue be brought before the relevant ministries.
The report concludes that due to the situation, the CTO board had decided in 2013 to approve the temporary suspension of the prosecution of those hotels carrying out modifications without CTO approval where certain basic safety and health codes had been met.