Bulgaria Tourism Report 2009

Tourism Overview Official data for the first six months of 2008, released by Bulgaria’s National Statistical Institute, show foreign tourist arrivals standing at 3,193,235 visitors. This figure includes transit passengers, which totalled 889,545 for the January-July period. For the year as a whole, the head of Bulgaria’s State Tourism Agency (STA) Aneliya Krushkova has been quoted in local media as believing there was a 14.6% annual increase in the number of foreign tourists visiting Bulgaria over 2008, although she stressed this estimate was based on preliminary data.

No concrete figures for 2008 as a whole were available to us at the time of going to press. Given the impact of the global credit crunch during Q408, we believe that the 14.6% annual increase alluded to by Ms Krushkova may prove to be slightly optimistic. In the absence of hard data, we believe that a smaller increase (of around 5%) is the most likely outcome for 2008.

Tourism revenues for the first seven months of 2008 totalled EUR1.5bn, some 12.1% higher year on year (y-o-y), according to the Bulgarian National Bank.

Forecast Scenario We believe that Bulgaria’s tourism sector will continue to show steady, if not spectacular growth over our forecast period to 2013. We believe that the ongoing economic slowdown will have a negative effect on in-bound tourist arrivals to Bulgaria over Q408. We also believe that 2009 will see a decline in both tourist arrivals and tourism revenues. Beyond 2010, we are hopeful that the Bulgarian tourism industry can rebound slowly, with an average growth rate of 2% for the years out to 2013.

Short-term concern surrounds tourism sector Bulgaria, like many other nations reliant on tourism as a source of foreign exchange, will suffer as a result of the ongoing global economic credit crunch. The CEO of leading Bulgarian tour operator Albena, Krasimir Stanev, told local media in November 2008 that the local industry would be ‘severly impacted’ by the global financial crisis during 2009. Citing figures showing that bookings for ski and sea resort destinations in southern Europe were down by 30% y-o-y in 2008, Stanev said that only those businesses that are able to cut expenditure without impacting the quality of services offered will survive. Stanev was also concerned that a lack of state support for the sector meant that Bulgaria’s marketing and advertising efforts were also losing ground when compared to competitor destinations such as Cyprus and Turkey.

BMI shares Stanev’s gloom on the short-term outlook for Bulgarian tourism. We have long identified a lack of a coherent national tourism strategy as a key constraint for the future development of the sector.

However, if the government can harness the private sector to work together effectively to promote Bulgaria as a tourism destination, then there are reasons to be cautiously optimistic on the longer-term outlook for the local industry. The country boasts a wealth of differing tourism sub-sectors (from beach and ski resorts, through to spa and meetings, incentives, conferencing and exhibitions (MICE) tourism) and currently offers a price advantage when compared to its West European rivals. That said, the lev peg to the euro will mean Bulgaria is at somewhat of a disadvantage in comparison to countries with currencies not pegged to the strengthening European currency.

Data Difficulties At the start of February 2008, the State Tourism Agency stated that it believes official statistical data underpinning the country’s strategy for tourism development are incorrect. In particular, STA head Anelia Krushkova believed that the tourism revenue forecasts for the years 2008 through 2013 were too ambitious.

This admission by the STA bears out BMI’s own scepticism surrounding the Bulgarian tourism industry at present. The fact that too many tourism boards exist in the country and that poor data is used to underpin official forecasts are both examples of areas where the country needs to raise its game, if Bulgaria is to take back market share from fast-growing neighbour countries such as Romania and Croatia.