This annual survey by ATA has unveiled a negligible and unenthusiastic growth in the tourism industry, with operators in the key and traditional coastal destinations of Durres, Vlora and Saranda estimating this year’s performance as below their annual average or at the lowest levels
TIRANA, Dec. 19 – Poor infrastructure and environment quality, high tax rates and an ongoing unregulated market remain the key concerns for Albania’s tourism industry, whose operators report a slowdown in this year’s activity despite government’s euphoria about this sector’s progress announcing high double-digit increases in the number of tourists. The findings are revealed in the latest survey conducted by Albania’s Tourism Association (ATA) measuring the country’s tourism climate for 2011. This year’s ATA’s annual survey, the second of this kind, unveiled a negligible and unenthusiastic growth in the tourism industry, with operators in the key and traditional coastal destinations of Durres, Vlora and Saranda estimating this year’s performance as below their annual average or at the lowest levels. Other emerging destinations such as northern Shkodra with the Velipoje beach and its neighboring Shengjin beach reported an increase both in activity and number of visitors. Operators in the southeastern lake town of Pogradec and in the southern UNESCO World heritage site of Gjirokastra also reported a slight improvement compared to last year’s performance.
Ethnic Albanian tourists from neighbouring countries, accounting for around 50 percent of total foreign tourists entering Albania, and Albanian immigrants put Shkodra, Shengjin and Gjirokastra on top of their travel itinerary, followed by Pogradec, Tirana and Saranda. Operators in the Durres beach, the country’s biggest, reported a negligible increase in the number of the so-called ‘patriotic’ tourists and Albanian migrants arriving to spend their summer holidays home.
“Compared to 2010, an increase is perceived in the number of foreign visitors but this is not enthusiastic. Some 25 percent of surveyed operators thought the government had not taken the necessary road infrastructure measures,” according to survey findings.
Tourism businesses in the key coastal areas of Durres, Vlora, Saranda, Shengjin and capital Tirana perceived the business climate for 2011 as more negative, citing uncleanliness and environment pollution as their top concerns. Meanwhile, businesses in the less frequented Pogradec, Korca and Shkodra areas perceive the situation to have improved.
Tourism businesses, 40 percent of which say this year’s expectations proved unchanged or deteriorated, expect the Tourism Association to work more on advocacy and lobby government to lower taxes and conduct publicity campaigns.
The tourism climate survey supported by Germany’s GIZ covered more than 80 association members, mostly hotel owners, from the country’s main regions and key destinations. They were interviewed in Sept-Oct. 2011 just as the 2011 coastal tourism season was closing.
Estimated as one of the key sectors to the Albanian economy, the developing tourism sector contributes an annual 1.4 billion Euros to the country’s economy, producing 14.7 percent of the GDP, according to ATA’s data.
The ATA survey findings are in line to the latest figures published by Albania’s central bank in its latest quarterly current account report, proving that the increase in the number of visitors reported by government failed to bring more revenues to tourism sector. Official central bank data show tourism revenues suffered another blow in the third quarter of this year, the peak of the tourist season when they dropped by 9 percent to 469 million Euros, compared to 534 million during the same period in 2010. In total, tourism revenues during the three quarters of this year stand at 884 million Euros, 76 million Euros less or 9 percent down compared to the same period in 2010. The Bank of Albania statistics come at a time when government has announced a considerable increase in the number of foreign tourists visiting Albania in early 2011, but has not published official statistics for the third quarter of this year yet. Latest official data published by the Tourism Ministry show the number of foreign tourists entering Albania during the first five months of this year grew by 40 percent to 567,835compared to 404,442 a year ago.
While infrastructure is improving in most of Albania, including rural coastal areas, chaotic and informal buildings during the past 20 years made without a regulatory plan have caused irreparable damage to some of the country’s biggest tourist destinations such as Durres, Saranda and Vlora. However, hopes remain high as 90 percent of Albania’s coastline remains underdeveloped or virgin. Mountain tourism has also been put high on government agenda, with potential investors pledged up to seven years of tax-free policies.
High tax rate, a barrier for Albania’s competitiveness
The decrease in the value added tax (VAT), currently at 20 percent and one of the highest in the region and hotel accommodation taxes at 5 percent, have been a consistent complaint by tourism businesses, which claim that high tax rates are making Albanian tourism less competitive compared to most regional countries.
“We are not competitive with regional countries considering that the current VAT rate in Albania is 20 percent at a time when 20 out of 27 regional countries have a VAT rate lower than 10 percent,” ATA representatives say. Considering lower taxes as an emergency need, ATA brings the example of neighboring Macedonia which drastically lowered VAT on hotels from 18 percent to 5 percent a couple of months ago to keep its tourism industry competitive in these times of global crisis.
Last October, Tourism Minister Aldo Bumci told tour operators a comprehensive study needs to be carried out in the tourism sector to assess if the fiscal burden on these businesses is higher than in regional countries before deciding whether the VAT should be reduced or not.
Registration of the tourism businesses with the National Registration Center, a rating system for hotels, higher state funds on tourism better promotional campaigns and waste management are some other requests ATA has submitted to the Tourism Ministry.
ATA’s efforts to lower the hotel accommodation taxes, have currently proved successful only in Saranda and Pogradec whose local municipal councils have lowered or plan to lower them to 3.5 percent and 2.5 percent respectively.
