Storm Clouds Approaching

Economic News

22 Jul 2010
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Beautiful sandy beaches along the Black Sea and snow-capped peaks towering above mountain villas are two of Bulgaria's most popular tourism draws. But according to industry experts, the burgeoning industry is in danger of decline if more efforts are not made by the government to promote Bulgaria's attractiveness to foreign holiday-makers.

The alarm call has been prompted by a recent drastic budget cut to tourism promotion by the ruling three-party government coalition, which has been met with strong resistance by both private business interests in the sector and state tourism officials.

State Agency for Tourism head Mario al-Jebouri indicated last week that he would fight a funding cut that reduced the agency's 2006 budget to Lv6m ($3.65m). The figure is less than half of the Lv13m ($7.92m) allocated for tourism by the government last year.

On Monday, at a working breakfast with some of Bulgaria's business elite to discuss his goals for promoting tourism, al-Jebouri told the press that Lv6m for this year was insufficient and that the budget needed to be reworked.

In arguing that the government could do more to promote tourism abroad, al-Jebouri cited the example of Turkey, which spends far more as a percentage of its national income on promotion. He also mentioned that he planned to discuss the matter further with Minister of Finance Plamen Oresharski.

During the meeting, the agency head indicated that his priorities for the industry included a higher service standards, a better international presentation of Bulgaria, support for key infrastructure projects, and the boosting of ties between government and the private sector.

Indeed, a lack of government involvement in the tourism sector has long been a matter of concern for many who are concerned with the industry's long-term viability. Margita Todorova, director of marketing and sales for Albena, a leader in the tourism industry and a major stock on the local bourse, explained that there were many issues that needed to be addressed. The infrastructure in many ways is poor and discourages tourists from travelling to some locations, while there is not enough development of niche markets, and a general lack of state strategy to promote Bulgaria, she said.

"Croatia has a huge promotional budget compared to Bulgaria and has succeeded with a very strong campaign," Todorova told OBG. "We should focus on our core markets and promote a new image of Bulgaria. Until now, our image has not been well organised."

Not only are a limited amount of resources allocated for this purpose, but the funds that are used are applied to a very narrow spectrum within the sector, namely the Black Sea segment and to a lesser extent ski resorts. Without fostering growth in alternative forms of tourism - cultural, adventure, conference and eco-tourism - the market will live and die with only these profitable but narrow sectors.

During the winter months, only 20-25% of the hotel beds on the Black Sea are occupied, leaving 100,000 seasonal employees without a job, according to Rumen Draganov, former two-term chair of the Sofia tourist council. The lack of foresight by most operators has led to under-diversification of the industry. For example, of the 200-odd resorts in Sunny Beach, only one has a conference centre. As a result, this makes it much harder to attract off-season business clientele to the region.

There are of course exceptions to the rule, such as Albena. Todorova told OBG that the company is making a concerted effort to extend its operating season by offering new services that will be attractive even during off-peak months. By offering spa services, nearby golf courses, and family-friendly activities, the company hopes to extend its traditional May to October season by two months and operate from April until November.

In addition to the minimal effort put forth in building and promoting Bulgaria's image as a holiday destination, complaints of government indifference or ineptitude in regulating the unchecked growth of resorts are also common. The rapid growth of mountain resorts has led to a host of environmental problems as developers build in avalanche and landslide-prone areas and de-vegetate slopes in the process, thus further aggravating the issue. A lack of adherence to building codes has also had detrimental aesthetic impacts on the once picturesque mountain villages, as a hodgepodge of architectural styles has led to a design mishmash.

According to Dragonov, 2006 will very likely be the first year that tourism figures decline from the previous year. In addition to the lack of marketing for Bulgarian tourism abroad, one reason for this is the end of "pre-paid" tourism services by foreign tour operators. During the early years of the industry's massive redevelopment, especially along the Black Sea coast, foreign companies kicked in investment funds to build up resorts, and in return they received an allotment of services to be provided once the projects were completed. In 2004, this amount was valued at 14m euros, in 2005 it was 6m euros, and in 2006 there will be nothing. Instead of investing in Bulgarian projects, foreign investors are now developing their own resorts elsewhere.

If tourism does indeed decline in 2006, it will not be for any one reason, but because of a myriad of causes. For the country to fully realise its potential as a holiday destination, both the government and private sector will need to come up with a comprehensive, long-term strategy for the industry and dedicate the effort and resources necessary to translate the good intentions into real returns. If not, the rising star of Bulgarian tourism may reach its apogee well before it has achieved its true potential.

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