Travel and Tourism - Bulgaria

Travel and tourism sees growth despite the crisis
 

Despite the ongoing economic crisis, travel and tourism in Bulgaria managed to achieve healthy value sales growth in 2010. Following a weak beginning to the year and the rainy first months of the summer season, improved performance was seen in July and August, and by the end of 2010, positive value sales growth was achieved. However, all-inclusive packages continued to account for the major share of value sales, which left little room for the growth of related industries, such as foodservice and travel retail.
 

Higher promotional budget expected to boost tourism
 

The Ministry of the Economy, Energy and Tourism launched a major campaign aimed at popularising Bulgaria as a tourist destination. The campaign consisted of four television spots, which were aired on leading European television channels, as well as featured in press publications and on the radio. Despite some criticism of the campaign, the budget allocated was much larger that of previous similar campaigns. The campaign is expected to lead to an increase in the number of inbound tourists in 2011.
 

Domestic tourism on the rise as Bulgarians reduce their travel budgets
 

As the economic crisis continued to impact Bulgarians negatively in 2010, many reconsidered their travel plans, and spent their holidays in Bulgaria, rather than travelling abroad. As a result, departures saw a significant decline in 2010. However, domestic trips compensated partially for this decline and contributed to the overall growth of the tourism industry. The uncertain social climate in neighbouring Greece, which is traditionally a preferred destination among Bulgarians, also contributed to the decline seen in departures in 2010.
 

Alternative forms of tourism enjoy healthy growth
 

Alternative forms of tourism gained strength over the review period, to the point that they began to enter the focus of mass tourists. Furthermore, there exist a number of tour agencies in Bulgaria that focus exclusively on organising alternative tourism trips, including cultural tourism, as well as sports like bicycling, rafting and trekking. Village tourism also grew in popularity, with organised groups of French and German tourists visiting small villages in the Bulgarian countryside.
 

VAT rate change may alter the competitive landscape
 

The Ministry of Finance announced its decision to change the VAT rate applicable to tourist services. Currently the VAT rate for organised trips is 7%, while individual trips are taxed at the same rate as other services, namely 20%. The introduction of a common VAT rate for both group and individual trips might empower hotels and serve to ease the burden on individual travellers, as well as change the competitive landscape for tour operators that organise group trips for foreign tourists.