Bulgaria Tourism Report 2009

Countries covered: Bulgaria

Tourism Overview

Official data for the first six months of 2008, released by Bulgaria’s National Statistical Institute, showforeign tourist arrivals standing at 3,193,235 visitors. This figure includes transit passengers, whichtotalled 889,545 for the January-July period. For the year as a whole, the head of Bulgaria’s StateTourism Agency (STA) Aneliya Krushkova has been quoted in local media as believing there was a14.6% annual increase in the number of foreign tourists visiting Bulgaria over 2008, although she stressedthis 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 theimpact of the global credit crunch during Q408, we believe that the 14.6% annual increase alluded to byMs Krushkova may prove to be slightly optimistic. In the absence of hard data, we believe that a smallerincrease (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 ourforecast period to 2013. We believe that the ongoing economic slowdown will have a negative effect onin-bound tourist arrivals to Bulgaria over Q408. We also believe that 2009 will see a decline in bothtourist arrivals and tourism revenues. Beyond 2010, we are hopeful that the Bulgarian tourism industrycan 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 resultof 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 resortdestinations in southern Europe were down by 30% y-o-y in 2008, Stanev said that only those businessesthat are able to cut expenditure without impacting the quality of services offered will survive. Stanev wasalso concerned that a lack of state support for the sector meant that Bulgaria’s marketing and advertisingefforts 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 alack 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 promoteBulgaria as a tourism destination, then there are reasons to be cautiously optimistic on the longer-termoutlook for the local industry. The country boasts a wealth of differing tourism sub-sectors (from beachand 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 pegto the euro will mean Bulgaria is at somewhat of a disadvantage in comparison to countries withcurrencies 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 dataunderpinning the country’s strategy for tourism development are incorrect. In particular, STA head AneliaKrushkova believed that the tourism revenue forecasts for the years 2008 through 2013 were tooambitious.

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

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