Friday, November 11, 2011

FT: Tourism in Romania: investors wanted

November 10, 2011 11:13 am by Kester Eddy

Fancy an investment punt in the tourism sector? Your own B&B on the coast?

Make that the Black Sea rather than Blackpool or Palm Beach – because Romania should welcome you with open arms. It’s that short of foreign investment.

Foreign investment into the Romanian tourism sector – meaning hotels and restaurants – barely makes the radar screen on a per capita basis; in absolute terms, it totalled just €186m from 2005-2009.

Meanwhile, just to the south, arch-rival (and much smaller) Bulgaria raked in more than €450m to spruce up its holiday infrastructure, according to a report just issued by BCR, Romania’s Austrian-owned commercial bank.

The results speak for themselves; Bulgaria made €7bn net from tourism between 2006 – 2010, including €1.8bn last year alone. Romania managed a slightly negative tourist balance – meaning Romanian tourists spent more abroad than tourists spent in Romania.

Foreign tourists stay a mere 2.2 days on average in Romania – less than half the average sojourn in Bulgaria – and spend around €360 per visit, less than anywhere in the region bar Slovakia (and, presumably, Moldova, which the report omits).

While the Black Sea may not be everyone’s choice from the sun-and-sand crowd, Romania, as anyone who has traversed the Transylvanian Alps can attest, boasts a stunning choice of natural vistas and an abundance of wildlife – including wolf and bear – that few countries in Europe can equal. Yet as the report laments in its opening lines; “with one of the highest potentials for tourism in the region, Romania is pretty slow in attracting foreign visitors.”

There are signs of an upturn; what the report deems ongoing “well-focused marketing campaigns” appear to be having an effect; in the first seven months of this year, foreign tourist arrivals were up 11 per cent, boosting revenues by 16 per cent.

Only, most never get anywhere near a Transylvanian bear; more than two-thirds of tourist nights are spent in the capital, Bucharest.

There is a good reason for that – as the report rather endearingly notes, the roads are “clapped out” and motorways are “rare” in Romania.

And even where the country scores well in terms of infrastructure – for example airport numbers – in many cases the “quality of services falls short of the mark.”

Given that tourism in Romania employs a mere 1.8 per cent of the workforce – in nearby Hungary and Slovakia the figure is above 4.0 per cent – the potential to create jobs in the sector seems clear.

The report concludes that the sector could produce “additional inflow of up to €1 – 1.5bn by 2016,” given a combination of domestic and foreign investment – except, rather strangely for a bank, it puts no figures on what that investment total should be.

Still, Lucian Anghel, chief economist at BCR, insists the bank is putting money where its mouth is.

Asked how much BCR is lending to the tourism sector, he told beyondbrics:

“It’s really quite substantial, but it’ll take a bit of time to centralise all the figures, as we’re talking about a whole range of business lines, from micro to large corporates. But the bank has donated – not loaned – €80,000 to renovate the balneotherapy centre at Baile Herculane [in the far south-east]. This used to be the pride of Romania, but had been in decay for the past 20 years.”

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