Boosting Demand

Economic News

22 Jul 2010
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While Bulgaria's tourism sector is already suffering from the financial crisis, the government has been quick to enact necessary measures to soften long-term impact.

According to Anelia Krushkova, the head of Bulgaria's state Tourism Agency (SAT), the number of foreign tourists in Bulgaria has declined this winter season and is anticipated to shrink to an even greater extent during the summer of 2009. Yet, the government tourist agencies, as well as tourism operators, are responding in full force.

A SAT report published in January shows that throughout 2008 there was a 10.4% year-on-year increase in the number of visitors over 2007. Krushkova said that 5.7m of the visitors came for tourism, 73.4% of which were from EU countries. The country generated a total of Lv2.4bn (EUR1.23bn) in tourism revenues between January and November 2008, an increase of 11.5% over 2007, according to Krushkova.

However, figures from the end of 2008 demonstrate tourism rates have been on the downturn. Bulgaria's National Statistics Institute reported that in December 2008, just over 385,000 tourists came to Bulgaria, 190,000 of which were holiday and recreation travellers. Of the EU countries, Greece and Romania top the list of the number of visitors, with 104,000 (27%) and 84,000 (22%) respectively, while the UK came in third with 12,500 (3%) tourists. Of non-EU countries, Turkey and the Republic of Macedonia saw the most travellers to Bulgaria, with 55,600 (14%) and 26,300 (7%) visitors respectively. The Russian Federation clocked in at 8100 (2%) visitors. The 2008- 2009 winter season has already seen a decline by between 15% and 20% compared to last year's figures, according to Krushkova.

At a January press conference Krushkova predicted that summer 2009 would be a tough one for Bulgaria tourism. The Sofia News Agency reported in February that early bookings of summer holidays demonstrate a similar impact, with figures showing a drop between 25% and 50% compared the numbers registered in February 2007. The financial crisis seems to be leading an increasing number of foreign tourists to wait until late spring or even early summer to book their trips, in the hopes of finding last-minute discounts on their holiday.

Region-wide tourism is expected to decline at similar rates, and governments have sought to address the growing concern. Greece has already increased its advertising budget by 50% and introduced tax cuts for companies operating in the tourism industry. Turkey has announced its plan to actively promote itself in 80 countries. The Romanian Tourism Ministry is considering giving employees vouchers for local resorts in the hope of encouraging domestic travel.

Bulgaria too has taken various steps to increase tourism in the country. Under the Operational Programme Regional Development 2007-2013, six projects have been approved that will fund SAT's various campaigns. One campaign focuses on international tourists from Germany, Britain, and Russia, where there is much room for growth, primarily through advertisements on CNN and Eurosport channels. Another campaign, worth Lv 5.7m (EUR3m), focuses on winning back tourists who, recently, have preferred foreign destinations. And the Agency is to spend Lv6m (EUR1.23bn) to create a multi-media catalogue of the country's most attractive tourist sites to attract visitors from both home and abroad.

In an effort to further attract tourists, Elena Poptodorova, the recently appointed ambassador to the Black Sea region, has focused on uniting bordering countries to increase regional tourism.

Much focus has, in particular, been placed on Russian tourists, who have been the main source of summer visitors in the past. Last year 250,000 Russian tourists visited Bulgaria, spending roughly EUR1000 per person. Bulgaria opened a business forum in Moscow on February 5 titled "Bulgaria Today - Realty, Tourism and Wine". The business fair continued alongside official activities intended to mark the "Year of Bulgaria" in Russia. There is talk of the Bulgarian state covering visa prices for Russians, so as to reduce the costs of travel packages and therefore attract more tourists. According to Nelly Sandalska, CEO of Balkantourist, this measure will cost the state EUR8m, but without such intervention, the number of Russian tourists to Bulgaria's Black Sea resorts is expected to shrink by 50%.

In addition to government efforts, tourist resorts have been expanding the number of hotels and holiday apartments in anticipation of greater demand. Easyjet has recently added several flights from Manchester, according to an Easyjet spokesperson who commented on the city's potential. These avenues of growth explain the World Travel and Tourism Council's expectation that Bulgaria will attract around 16m visitors per year by 2017. This increase should contribute to an increase of 12% in gross domestic product (GDP), as well as create a 10.2% increase in employment. The political commitment and infrastructure growth will allow Bulgaria's tourist industry to prosper in the long-term.

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