Political instability and poor infrastructure stagnate Montenegro’s tourism sector

Political instability, poor infrastructure, lack of support for organized tourism and problematic fiscal policies have led to stagnation in Montenegro’s tourism sector, a key driver of the country’s economic progress. While regional countries invest in tourism promotion, Montenegro struggles with internal issues that hurt its international reputation.

Dr. Rade Ratković, a professor at the Faculty of Business and Tourism in Budva, emphasizes that tourism cannot thrive without government stability and favorable business conditions. Political unrest and transportation issues send negative signals to potential tourists, damaging Montenegro’s image as a safe destination. He warns that political instability is especially detrimental, as it directly impacts tourism, which is highly sensitive to disturbances.

Montenegro’s tourism is also hindered by a lack of organization in transport infrastructure, which limits visitor access. Ratković stresses that organized tourism, essential for attracting high-value tourists and extending the season, cannot succeed without coordination between the government, local authorities, and businesses. Unfortunately, investment in tourism infrastructure and coordination remain insufficient.

The private accommodation sector, a major part of Montenegro’s tourism, operates largely in the informal economy, preventing legal revenue generation and job creation. Ratković points out that the lack of regulation in private housing remains a significant issue.

In Budva, the local government’s ongoing conflicts have led to poor city conditions, damaging its appeal to higher-paying tourists. If these issues persist, the tourism sector may face even greater challenges this year, with a likely decline in quality visitors and overall economic loss.

Ratković also highlights that the recent increase in VAT for hoteliers pushes many to move toward the informal sector, further harming the industry. Without changes, Montenegro is poised to face financial losses and continued stagnation in tourism.