Current situation of tourism in Bosnia and Herzegovina (September 2011)

Bosnia and Herzegovina is experiencing a rapid development regarding tourism in recent years. At the southeast of Europe; at the crossroads of Europe, Middle East and North Africa, Bosnia and Herzegovina has all available conditions like geographical features, natural beauty, suitable climate and rich cultural and historical heritage to its tourism development. In the tourism industry of Bosnia and Herzegovina many facilities which were supported by a strong transportation infrastructure have been established till the period up to the war which had occurred in 1992.[1]

According to Clancy tourism industry in Bosnia and Herzegovina has continued to grow at an impressive pace. Bosnia and Herzegovina has an advantage in its rich cultural and historical heritage, a mix of Turkish and European civilizations, while its beautiful and untouched nature is undoubtedly the industry’s greatest strength. Clancy also stated, that Bosnia and Herzegovina also has a developed wine route and industry whose quality is comparable to that of Croatia’s best.[2] Tourism potential of Bosnia and Herzegovina depends on natural and culture tourism and also it has great tourism opportunities.[3]

There is currently no state tourism board that would regulate the tourism industry in BiH. There are, however, entity level organizations; the Tourist Association in the Federation of Bosnia and Herzegovina (FBiH) and the Tourism Organization in the Republika Srspka(RS). There are also cantonal-level of Tourism Communities in the FBiH. In the RS, tourism is under the remit of the Ministry for Trade and Tourism, while in the Federation of Bosnia and Herzegovina it is under the Ministry of Environment and Tourism. Each of these Ministries has a deputy specifically appointed to oversee tourism.[4]

The tourism promotion structures reflect the same pattern. At the entity levels there are two tourism promotion agencies: the Tourist Association in the Federation of Bosnia and Herzegovina, and in the Republika Srpska Tourism Organization.[5]

Further the Federation Tourism Community is broken into 10 Tourism Community offices at the cantonal level. The two entity agencies have also established a State-level Tourism Association in BiH, with the sole purpose of coordinating tourism promotion of BiH at international fairs.[6] However, this association no more exists, due to financial issues that entities did not resolve. A National Tourism Administration (NTA) exists for BiH, but the board does not play a strategic or facilitating role as most other NTAs do.[7]

According to Report of the Foreign Investment Promotion Agency of Bosnia and Herzegovina (FIPA), tourism market in Bosnia and Herzegovina is gradually increasing, and Bosnia and Herzegovina became an emerging tourism destination. The World Tourism Organization foresees that the Bosnia and Herzegovina tourism market will be the 3 rd annual fee increasing within the world market with rate of 10.5 % from 1995 to 2020.[8]

In 1984, Bosnia and Herzegovina has carried out successfully the host country duty of XIV. the Winter Olympic Games. Like all sectors in the country, tourism has been heavily effected by the war between the period of 1992 – 1995[9].

Tourism development was strengthened by the hosting of the Winter Olympics in Sarajevo in 1984, at which time tourism infrastructure was developed in the mountains of Jahorina and Bjelasnica. Historic monuments, dating from the Medieval period, Ottoman Empire, and the World War II, the religious pilgrimage of Medjugorje, and the Mediterranean tourism in the city of Neum have been the main attractions for tourists for many years.[10] Bosnia and Herzegovina, which was visited by 292.422 foreign tourists in the period till the end of 2009 November, hotel and restaurant sector have %2, 06 shares in GDP (as of 2008). Regarding to the World Tourism Organization’s data’s, as of 2007, tourism expenditures in the country is %5, 3 of GDP, where as it is %18, 8 of exports and %59, 9 of exports of services.[11]

The number of foreign tourist arrivals and overnight stays has continued to grow. In the Federation, the number of arrivals rose from 108,000 in 2000,[12] to 211,469 in 2009[13], with Croatia ranked as the number one tourist source (40, 091) followed by Slovenia (24,736), Germany (14,448), Serbia (14,207) and Turkey (13,303).

Likewise, the number of overnight stays doubled from 263,000 in 2000 to 453,096 in 2009, again with Croatia (71,994) and Slovenia (43,708) at the very top, Germany (34,051) Poland (32,215),and however Turkey come fifth (31,313) despite the fact that the number of Turkish tourist arrivals was only 3,491 in 2000.

RS’s statistics also reveal a similar trend. Between 2007 and 2009, the number of tourist arrivals and overnight stays rose from 90,672[14] to 93,910[15] and 205,438 to 208, 610 respectively. Serbia overwhelmingly held the majority share (40,421 for arrivals and 92,558 for stays) followed by Croatia (9,872; 20,389), Slovenia (9,057; 15,827) and Montenegro (4,612; 14,025) with Italy as the highest source of tourists among those from outside the region (4 285; 9,712).

According to data of the Group for Tourism and Hospitality of Bosnia and Herzegovina, last year is registered 56.9 percent of foreign visits and 43.1 percent of domestic tourists.[16] In 2010 in Bosnia and Herzegovina generated 16 percent more overnight stays than 2009 year, and that the average retention of tourists was 2.2 days and 2.3 domestic and foreign 2.16 days.[17]

Bosnian and Herzegovina’s current tourism infrastructure, product quality and service standards are not as high as many international visitors require. And capacity is relatively limited, especially outside Sarajevo, Mostar and Banja Luka, particularly accommodation.

Nevertheless the current travel behaviour of expatriates working in BiH, plus regional visitors, can be viewed as indicative of the motivation and future growth potential of other international visitors who will follow. There has been a certain growth in both product capacity and quality, mainly in the cities, to service these markets.[18] According to Reoprt of USAID the most travel agencies are small scale and work 4-8 permanent all-year-round employees. Also most focus on domestic outbound tourism. Some of weaknesses according same report of tourism industry in Boosnia and Herzegovina is that;[19]

• no national policy for tourism development,
• inadequate marketing effort to match its position/potentiality,
• stereotype promotion/marketing presentation for target market,
• low level market segmentation/positioning strategy,
• inadequate level of human resources,
• general poor level of infrastructure and superstructure,
• low level of cooperation between public and private sectors,

Taleb Rifai, UNWTO secretary-general, pointed out that UNWTO stands ready to assist the country in developing a tourism industry and further position of Bosnia and Herzegovina on the global tourism map. The country has immense opportunities for tourism development given its rich natural and cultural heritage; it’s the unique mix of cultures and religions, as well as its strategic location close to major European source markets.[20]

Bosnia and Herzegovina has been a member of UNWTO since 1993. The country has seen its tourism growth expand rapidly with international tourist arrivals growing 7 percent a year between 2000 and 2009. More importantly, export earnings (receipts) have doubled in less than 10 years from €250 million in 2000 to €500 million in 2009.

Bosnia and Herzegovina possesses great reserves of tourism resources as are; untouched surroundings, mountains, coasts, valleys and forests, unique and variable flora and fauna, a rich cultural heritage of art, customs and culinary specialties and fascinating and rich history since Ancient Greece and even earlier are the attributes of Bosnia and Herzegovina as a tourism destination. There are three distinct periods of the development of the tourism sector in Bosnia and Herzegovina: [21]

• 1954–1984: No significant tourist trends;
• 1984–1992: Increased growth due to the XIVth Winter Olympic Games (1984) and accommodation development;
• 1995 to present day: (War obstructs the development of tourism in the period from 1992 to 1995) Renovation and accommodation regeneration, human resources development including staff training, renewed efforts to attract tourists and promote the country as a tourism destination.

There has been a growing consensus that tourism can be a major source of job growth and foreign exchange earnings for Bosnia and Herzegovina. According to foreign experts, Bosnia and Herzegovina has a large potential in niche market tourism and tapping into the world tourism market could have huge benefits for the Bosnia and Herzegovina’s economy.[22]

According to the analysis of the Tourism Association of the Federation of Bosnia and Herzegovina, regional tour operators in Croatia, Slovenia, Macedonia, an Serbia claim that most visitors come due to the country’s rich cultural and historical heritage.[23]

According to the Travel and Tourism Competitiveness Report, Europe enjoys a lower average score for the ticket taxes and airport charges indicator. France, the United Kingdom, and Bosnia and Herzegovina are the most expensive European countries according to this indicator.[24]

Bosnia and Herzegovina shows the greatest potential to improve to its overall Travel anf Tourism Competitiveness Indicator (TTCI) ranking and attract an estimated additional 34 percent air travel passengers if it were able to implement regulatory policies that result in an improvement of about 26 percent of the subindex A score.[25]

Republika Srpska (RS), as one of two entities in Bosnia and Herzegovina, has a yearly income from tourism of around 250 million €, while the Federation has a billion euro of revenue. According to the same analysis, Serbia has around € 1.5 billion of revenues, two billion-Montenegro, and Croatia as many as nine billion Euros. Although RS has great tourism potential, the sector in gross domestic product (GDP) RS accounts for less than 1%, which is significantly below the regional and European average.

According to Brckalovic, in the last year Bosnia and Herzegovina, in comparison to neighboring countries, had increased the number of arrivals and overnight stays 17 %, which leads to the conclusion that Bosnia and Herzegovina emerges from the tourism crisis.

The report of the Federal Ministry of Environment and Tourism on the expenditure of funds “Transfer for tourism development and the environment” is established by the FBiH budget for 2010. It was found that 7.5 million of these funds meet only 8.86 percent of the requests. Increased interest in tourism and hospitality sector for the use of these funds is illustrated by the fact that in 2010 the number of requests received in relation to the previous increase of 39.75 %[26]

According to the report of the Central Bank of Bosnia and Herzegovina, it is the only branch contributing to the constant income growth. 19% increase of income from tourism in comparison to 2006 is one of the indicators of the significance.[27]

According to latest Report of World Travel and Tourism Council for Bosnia and Herzegovina the contribution of Travel & Tourism to Gross Domestic Product (GDP) is expected to rise from 10.2% (BAM 2, 454.0mn or US$ 1,854.9mn) in 2010 to 11.4% (BAM 5, 515.8mn or US$ 3,674.8mn) by 2020.[28]

Also this report shows that Bosnia Herzegovina’s T&T Direct Industry is expected to contribute 2.8% to Gross Domestic Product (GDP) in 2010 (BAM 684.7mn or US$ 517.5mn), rising in nominal terms to BAM 1, 521.1mn or US$1,013.4mn(3.2% of total) by 2020. Real GDP growth for the Travel & Tourism Economy is expected to be -2.2% in 2010 and to average 6.1% per annum over the coming 10 years.[29]

Bosnia Herzegovina’s 25,000 T&T Direct Industry jobs account for 2.3% of total employment in 2010 and are forecast to total 28,000 jobs or 2.5% of the total by 2020.The contribution of the Travel & Tourism Economy to employment is expected to rise from 8.3% of total employment, 91,000 jobs or 1 in every 12.1 jobs in 2010, to 9.3% of total employment, 103,000 jobs, or 1 in every 10.7 jobs by 2020.[30]

Export earnings from international visitors are expected to generate 15.6% of total exports (BAM 1,131.8mn or US$ 855.5mn) in 2010, growing (nominal terms) to BAM 2, 852.8mn or US$ 1,900.6mn (15.4% of total) in 2020. Travel & Tourism investment is estimated at BAM 552.0mn, US$ 417.2mn or 10.5% of total investment in 2010. By 2020, this should reach BAM1, 228.9mn, US$818.8mn or 12.7% of total investment.[31]

[1] cf. Bosnia and Herzegovina Sector Reports, Development Bank of Turkey, 2010, p.1

[2] cf. Clancy, Bosnia, Serbia & Montenegro, Peterborough, p.124.

[3] cf. Bosnia and Herzegovina Sector Reports, Development Bank of Turkey, 2010, p.1

[4] cf. UNDP BIH, 2008, p.11

[5] cf. Alvin Rosenbaum, Cultural Tourism in Bosnia and Herzegovina, 2006, p.2

[6] cf. Rosenbaum, 2006, p.2

[7]cf. Bejtovic, 2008,p.11.

[8] cf. FIPA, 2008,p.36

[9] cf. Development Bank of Turkey,,2010, p.1

[10] cf. Environmental Performance Review,2004, 113

[11] cf Development Bank of Turkey,2010, p.1

[12]cf.Federal Office of Statistics, 2008,p.217‐19.

[13]cf.Federal Office of Statistics, 2010,p.326-33.

[14]cf.Institute of Statistics, 2007, p.1‐2.

[15] Institute of Statistics,2009,p.1-2

[16]cf.http://www.e-turizam.com/Turizam-Vijesti/Vijesti-iz-Bosne-i-Hercegovine/BiH-Turizam-R.-Srpske-na-zacelju-regiona.html

[17]cf.http://www.e-turizam.com/Turizam-Vijesti/Vijesti-iz-Bosne-i-Hercegovine/BiH-BiH-turizam-izlazi-iz-krize.html

[18] cf. Emerging Markets Group, 2006,p. 10

[19] ibid, p.3

[20]cf.http://www.eturbonews.com/17298/new-phase-cooperation-between-unwto-and-bosnia-and-herzegovina

[21] cf.Bosnia and Herzegovina’s Business Environment, p.72-73

[22] cf. Stanojcic-Eminagic, 2010, p.11

[23]cf. Tourism Review, 2008, p.47

[24] cf. WTO, 2009, p.n.a.

[25] cf. Travel & Tourism Competitiveness Report, 2009

[26]cf.http://www.fmoit.gov.ba/ba/clanak/541/usvojeno-izvjescarone-transfer-za-razvoj-turizma-i-okoliscarona-u-fbih-utvrden-proraunom-fbih-za-2010

[27] cf. Tourism Review, 2008, p.47

[28] cf. WTTC, 2010, p.3

[29] ibid

[30] ibid

[31] ibid

by Jasmin Mulahasanović, MA