I read that tourism is declining fast and that hotels have dire occupancy rates and several may close (and yet new hotels seem to be springing up). Is this because of poor advertising, out of control litter dumped everywhere, poor exchange rates, lack of government initiative? Views?

All of the above.

Mainly, I see two reasons:

1. Villas rentals become a huge attraction with the increasing number of villas available for rent at cheaper rates compared to hotels.

2. Government has been reluctant to handle advertising on its own for "North Cyprus" and instead prefered giving incentives to the tour companies to do that.

I think the main reason is that the fall of GBP against Turkish Lira

The problem here in the UK is that North Cyprus isn’t very well plugged. It tends to be word of mouth as its not somewhere your average travel agent recommends.

No i dont think so tourists will never become an extinct species.