Tourism Industry

An Expert's View about Travel, Tourism and Food Services in Bulgaria

Posted on: 16 Jan 2012

Market Demand
The tourism industry in Bulgaria plays a critical role in the country’s economy. Accession to the
EU has made a positive impact on the market, due to the improved facilities and hotels, great
affordability and accessibility, and increased exposure. Using data supplied by the National
Statistics Institute, Bulgaria had 3,533 hotels at the end of 2009, offering 268,000 beds. This data
is the basis for the revised accommodation forecasts out to 2015. The official number of hotels in
Bulgaria has fluctuated significantly in recent years, a result not only of new construction but also of existing establishments registering with government bodies and becoming part of official data.

This trend looks set to continue over the forecast period.

Bulgaria's tourism industry is heavily concentrated in the Black Sea coastal resorts, where
occupancy rates plunged dramatically in 2009. This led to several hotel closures in an area that had been characterized by high construction rates for new hotels in recent years.

This may be attributed to the rapid expansion that led to a reduction in the quality of some
Bulgarian holidays and may have contributed to recent declines in the number of visitors from
source markets such as the UK. Development in the tourism sector is influenced by the unrestrained hotel construction activity in some of the country's largest seaside and mountain
resorts, the shortage of skilled workers in the tourism sector, and the underdeveloped

The seaside summer resorts on the Black Sea coast and the winter mountain resorts are the main
attractions. However, there are many alternative market segments such as luxury and business
hotels, hotel management, spa and recreation centers as well as golf complexes and marinas that
have potential for prosperous investment. Building golf courses, marinas, and luxury spa facilities aims to shift a greater percentage of tourists away from low revenue package tours and into more upscale options.

Just days before the end of 2010 Bulgaria was listed among the top nine global tourist destinations for 2011 in a CNN article. Building upon recommendations from three travel experts, Robert Reid, US travel editor for Lonely Planet; Pauline Frommer, creator of Pauline Frommer's guidebooks; and Martin Rapp, senior vice president of leisure sales at Altour, the CNN article places Bulgaria ninth in the list. Bulgaria has been recommended by Robert Reid, pointing out it has the best Black Sea coastline for beach enthusiasts and offers great skiing in the mountains in the winter.

Developing the Meetings, Incentives, Conferences and Exhibitions (MICE) Sector
The Bulgarian hotel industry had a difficult year in 2009, the last year that official statistics were
available. A report in October 2009 in the Sega newspaper said that 20% of smaller hotels in Sofia were due to close by the end of 2009. Reports indicated that 47 accommodation establishments at the low-price end of the market have submitted notices to close, with another 12 likely to follow suit. Sofia could lose about 800 beds in total, 8% of the bed supply.

In 2011 Bulgaria was looking to develop its capabilities in the meetings, incentives, conferences
and exhibitions (MICE) tourism sector.

The most luxurious hotels in Bulgaria are part of the largest international hotel chains such as
Hilton, Sheraton, Radisson Blu and Kempinski. Best Western and Holiday Inn are also on the
Bulgarian market. Some have more than one hotel in several Bulgarian cities. Best Western
International manages eight hotels in Bulgaria.

The four-star Metropolitan Hotel, which opened in Sofia in early January 2008, is one of the
country's new business hotels, with eight conference rooms with a total capacity for 200 people.
Many other international chains are represented by hotels along the Bulgarian Black Sea coast.
Since 2006, Business Hotel Varna became part of the hotel chain Golden Tulip. It offers a full
service package of accommodation, conference and event organization in order to meet the needs
of the modern business. The Spanish hotel chain Sol Melia has also been on the Bulgarian Black
Sea coast for more than five years and it represents a big percentage of the luxury 4- and 5- star
branded hotels.

2010 was a more positive year for Bulgaria's hospitality industry and this trend should continue
over the forecast period to 2015. The positive trend was characterized by the entry of new players.

In August 2010, Rezidor announced that it had purchased the Greenville Hotel and Apartments in Sofia and would rebrand the 113-room property as the Park Inn Sofia. Rezidor already operates the Radisson Blu Grand Hotel in the capital.

In July 2010, Hilton opened the 196-room Doubletree by Hilton at Varna on the Black Sea.
Formerly called the Helios Spa & Resort, the renovated property has a 2,300 square-meter spa and medical centre. Hilton already operates one property in Bulgaria, the 245-room Hilton Sofia. The top class global hotel is represented for the first time on the Bulgarian Black Sea coast and is the first facility of such class in Bulgaria outside of the capital.

The new Hilton Garden Inn will also be the only business hotel at the Airport. With its 200 rooms it delivers will aim to deliver a refreshing blend of friendly hospitality, refined sophistication, office and business proximity.

Another new investment is the brand “Novotel” of the French chain Accor. Its location is on
“Tsarigradsko road” and the opening is scheduled for January 2013. Accor will invest $27.8
million euro in the construction of the hotel, which will be built in co-operation with local
investment company MHQ.

Turkish hotel chain Dedeman Hotels & Resorts International is reportedly looking to expand its
Bulgarian operations. Reports in June 2010 said that Dedeman is looking to add properties in
Bansko and Varna to complement its two establishments in Plovdiv and Sofia.

The country's MICE capabilities are small but the government is looking to increase Bulgaria's
share in this lucrative sub-sector of the wider hospitality industry. Other openings in Sofia included the Inter Expo and Congress Centre and 700-seat conference centre at the Sheraton.

Bulgaria needs to address many issues surrounding its energy and transport infrastructure if the
development of its tourism industry is to be assured. Unlocking the full potential of the tourism
industry by attracting more affluent travelers will depend crucially on improvements made to the
country's infrastructure, in particular, transport links.

Inadequate energy infrastructure is another problem for the hospitality industry to overcome.
Summer 2010 was marked by several blackouts in resorts areas as a result of insufficient capacity on local power lines.

In August 2010, the Sofia News Agency reported that National Electric Company was looking for holiday resorts to impose 'voluntary restrictions' on electricity consumption to avoid the imposition of supply restrictions. More worryingly, there were several media reports that the power grid around the popular Sunny Beach resort was running the risk of total collapse if energy use was not curtailed during the summer months.

Read the full market research report

Posted: 16 January 2012

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