Income from tourism half a billion, inflation reduced earnings

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Officials in the government talk about billions of income from tourism, and for years this money has been referred to as the state’s earnings. It is, in fact, the earnings of all economic and non-economic activities in tourism, together with taxes and contributions that go to the budget.

All grades and figures given by officials are flat. There are no real data, because there is no record of the tourist capacities that the state has at its disposal. There is no official methodology for tracking tourists and collecting the tourist tax.

As explained to Pobjeda, the dean of the Faculty of Business and Tourism from Budva, prof. Dr. Rade Ratković, for more than a decade, the assessment of the contribution of tourism to the economy of Montenegro has been confused with income from the tourism sector. He emphasizes that it is about the registered income of all tourism companies in Montenegro that belong to those companies, and that the state belongs to VAT, taxes and contributions on salaries, profits, property…

Inflation “reduced” incomes
Due to the ongoing inflation of this and previous years, the income from this year and 2019 can only be compared if it is reduced by 30 percent.

He reminds that according to the accounting methodology (accountingly objective income of the accommodation and catering sector), the tourism income was around 500 million euros, and the loss was around 50 million in 2021, after all the obligations of tourism service providers, such as energy, taxes, depreciation, were paid , communal fees…
– This year, both income and losses will probably be nominally increased, but realistically, due to high inflation, smaller. We will know that only in the middle of the third quarter of next year. Income is, therefore: the registered income of all tourist companies in Montenegro that belong to those companies, and the state belongs to VAT, taxes and contributions on wages, profit, property… Tourists also spend in other activities – local traffic, retail outside tourist facilities, culture…, but those revenues belong to the activities in which they were realized and fill their balance sheets – explains Ratković.

He confirms that a significant part of these revenues are brought by tourists and that is the contribution of tourists to the growth of income in other activities, which is why tourists are buyers of goods and services not only of the tourism industry, but also of other economic and non-economic activities, which is the broader contribution of tourism to the growth of the economy and the well-being of society.

He claims that the last season was characterized by untimely and incomplete preparation.

– It was not prepared according to the last marketing plan from 2019, nor was that plan updated according to the pandemic or post-pandemic times. It was simply ignored as a legacy of the previous government. The absence of tourism preparation for organized tourist traffic from the strongest European emission sources is particularly worrying, without which there is no long season and profitable business – emphasizes Ratković.

Tourist traffic in collective accommodation, as he emphasizes, reaches 91.85 percent of the traffic from 2019, and compared to 2021, it is higher by 58 percent.

– If we judge by the collection of the residence tax at the end of December, then the collective accommodation at the level of the year reached about 80 percent of the achievement from 2019, and the total accommodation about 88 percent – says Ratković.
Structure of guests
As for the guests, according to statistics, as he emphasized, they are mostly, i.e. 42 percent from the countries of the former Yugoslavia, which is insufficient for the sustainable operation of our tourism sector.

– About 58 percent of the turnover is from the market: Serbia 20.12 percent, Montenegro 11.94 percent, Germany 8.28 percent, BiH 6.27 percent, France 5.71 percent and Great Britain 5.47 percent. In this, the three countries of the region (Montenegro, Serbia and BiH) participate with 38.33 percent, and with the other countries of the region (former Yugoslavia) 41.81 percent. This dynamic and structure of tourist traffic does not provide a basis for sustainable operations of the tourism sector, especially in the economic (certain losses) and social (low wages and seasonal employment) dimensions – says Ratković.

Like other industries, inflation affected tourism this year, so, according to him, incomes this year and 2019 are not the same.

– The purchasing power parity of the euro changes under the influence of inflation, so that the euro in 2019 is worth significantly more than the euro in 2022, in which inflation of around 20 percent is expected in our country. This is followed by the inflation from the previous two years, so that the nominal income of today’s 100 euros can be the equivalent income of 70 euros in 2019. This should be taken into account in all economic analyzes of tourism, as well as other activities – believes Ratković.
We are lagging behind the competition
As for our tourism, he points out that we are lagging far behind the competition, especially the Mediterranean countries.

– We have by far the worst structure of accommodation facilities (the share of hotels and similar facilities is below 10 percent, while the average in Mediterranean countries is around 50 percent), an enormous share of secondary accommodation, a lack of camps and other non-hotel basic accommodation facilities, as well as the underdevelopment of tourist infrastructure and additional tourist facilities content – explains Ratković.

He notes that before 1990, we were side by side with Croatia, which is now a successful tourism story that we are lagging behind for several decades.

– We are particularly lagging behind in the structure of tourist demand, as Mediterranean tourism is based on the most important emitting sources in Europe (Germany, the United Kingdom, Scandinavian countries, France…), and in our region the region, and before covid-19 still Russia and Ukraine, and now neither one nor the other, even though we have had chronic losses in the tourism sector with them for decades – said Ratković and added that during the transition, we had a great qualitative and quantitative expansion of the restaurant sector, but we have no data on this in the official statistics.

As for promotion, he says that the Marketing Plan contains a good promotion strategy, including a digital one, but that strategy is insufficiently implemented in our country.

– We haven’t even started working on the reform of destination management according to the model of DMO and public-private partnership, without which there is no good and successful promotion. Fairs are still important, but their role and architecture have changed. Digital promotion is carried out throughout the year, and fairs are a good way to promote a tourist destination in a modern and digitized way – Dr. Ratković believes.
Ski tourism
As for the winter season, it is considered that global warming is a big threat to us.

– I have heard numerous opinions that we should no longer be dependent on snow in winter ski centers. It is the same as saying that in bathing tourism we must no longer depend on clean and warm seas and sandy beaches. We must finally understand that the phenomenon of global warming is a great threat to ski tourism and that it cannot be a priority here. Thematic tourism is much more important for us, especially agrotourism, which is in an upward trend in tourist demand, and we have the natural potential to take one of the leading positions in the Mediterranean in this type of tourism – says Ratković.

He believes that It is necessary to restore the villages, the rural economy and build the necessary tourist infrastructure, so we will have a long tourist season, a movement towards year-round tourism in the central and northern parts of our country.

– This type of tourism does not require excessive investments, it has a great power to absorb labor force, and it produces an economic and social synergy of rural agriculture and tourism and a practically year-round working season through the symbiosis of tourism and agriculture – concludes Dr. Rade Ratković.
The information system in tourism is superficial
As for our information system in tourism, which is very important, Ratković believes that it is not exact and holistic, so with a delay of one month we have information on tourist traffic in collective accommodation on Monstat.

– Data on tourist traffic in private accommodation have not been published by official statistics in the last few years due to their incompleteness and inaccuracy. Local tourism organizations estimate that traffic, so the statistics publish that data only in January or February for the previous year – explains Ratković, local media says.

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