Bulgarian tourism sector faces possible negative impact of over construction

13/08/2007

Owners of hotels on Bulgaria's Black Sea coast could face bankruptcy next year, the head of the Balkan country's tourist agency has warned.

(Dnevnik, Sofia Echo - 13/08/07; Deutsche Welle, Sofia News Agency - 12/08/07; Sofia Echo - 06/08/07; Sofia News Agency - 27/07/07; Mediapool - 26/07/07)

Tourism provides 2 billion euros each year, approximately half of Bulgaria's trade deficit. [Getty Images]

A construction spree along Bulgaria's Black Sea coast in recent years has resulted in supply far outweighing demand, with many hotel beds now empty in the peak of the season. This is only one of the problems facing the country's tourist industry, said a report posted on Germany's Deutsche Welle website Sunday (August 12th).

Millions of euros have been invested in the construction of hotels, bars and other tourism facilities, but the needed infrastructure is missing, Marin Neshkov, a Bulgarian tourism expert in the northern Black Sea city of Varna, told the German media site.

For example, Sunny Beach -- a resort 35km north of Burgas -- has seen an enormous and ongoing expansion of Bulgaria's transition to a market economy, and is now home to more than 200 hotels, including several luxury ones. But the corresponding transportation and communication networks are lacking. There's also insufficient water supply and sewage treatment, Neshkov said.

Tourism provides 2 billion euros annually, approximately half of Bulgaria's trade deficit, according to Deutsche Welle. But, according to the chairman of Bulgaria's tourism agency, the country is now seeing a decline in foreign tourists.

The revenues from international tourism from January to May of this year stood at 532m euros -- an increase of 16% compared to the same period in 2006, State Agency of Tourism (SAT) head Anelia Krushkova said on July 26th. However, after years of solid growth, the actual number of foreign tourists decreased over the same five months, she said.

The steep rise in the number of hotels on the Black Sea coast over the past decade has pushed competition to unprecedented levels, Krushkova said. Given the fewer number of foreign visitors, many owners were forced to slash room rates last month. Still, many beds, especially in hotels without an ocean view, remain empty.

According to Krushkova, the recent building spree along the coastline has had a negative impact on about 50% of hotels located outside central resort areas. The shortage of holidaymakers could result in many hotel owners going bankrupt next year due to the inability to pay off large debts, she said.

As more Bulgarians appear to be choosing resorts in neighbouring countries for their holidays, hotel owners have been advised to lower prices not only for foreigners, but local tourists as well, to attract more guests.

An insufficient number of skilled workers poses another problem for Bulgarian tourism. Hotels are built so quickly that skilled workers can not be trained fast enough. Also, many students no longer stick around in the summers to work in the tourism industry. Instead, they go abroad.

"Tourism pays the lowest average wage in Bulgaria," Neshkov told Deutsche Welle. "It is not logical, when one thinks about it, [seeing how] tourism amounts to 14% of the country's gross national product."