In response to the Cyprus Hotel Association's aim to test how Cyprus' year 2010 ofﬁcial strategy may affect tourist arrivals, hotel bed capacity and proﬁtability, this study looks at Cyprus' hotel value chain within the island's tourism customer–supplier value chain. A system dynamics simulation model helps compute multiple strategic scenarios of what might happen to Cyprus' tourism over the next 40 years. The faithful reproduction of historical tourism and bed capacity data through a 40-year time horizon shows the model's usefulness. The computed scenarios assess Cyprus' hotel value-chain sensitivity to policy parameters, tourism growth and tourism seasonality, along with their potential effects on the hotel value chain and proﬁtability. Copyright © 2003 John Wiley & Sons, Ltd.