Tourism Overview
Figures from the Slovenian Tourist Board (STB) released in December 2010 showed that a total of 1,869,106 foreign tourists visited Slovenia over the course of 2010, representing a 2.5% increase year-onyear (y-o-y). This final outcome was a little below our forecasts for the year and reflected a still-sluggish economic backdrop in the key European economies of Italy, Austria and Germany, which impacted on tourism demand.
Foreign tourists made up 62% of total arrivals according to the STB, with domestic guests accounting for the other 38%. This made for total tourist arrivals (1,869,106 foreign + 1,1,37,166 domestic tourists) of 3,006,272 for 2010, up by 0.7% y-o-y. BMI chooses to concentrate on looking solely at foreign tourist arrivals in our Slovenia Tourism Report. Looking at the number of people who stayed overnight in Slovenia, this showed a slight decline of 1% y-o-y, according to the STB.
Health spas remained the mainstay of Slovenian tourism, seeing some 654,050 tourist arrivals over 2010 (2,753,000 overnights), according to data from the Slovenian Spas Association. This equates to around one-third of all Slovenian tourist overnights, according to the STB.
Looking at key source markets, Italian arrivals to Slovenia dropped by 1.4% to 412,137 arrivals. Austria also saw a decrease in arrivals, down by 2.7% y-o-y at 201,756 arrivals, with German arrivals also down by 0.4%, at 194,386. However, this fall in demand from Western European markets is being offset by an increase in demand from the CEE region, with arrivals from Serbia up by 48.2% y-o-y at 76,156 and arrivals from Montenegro up by 73.8% y-o-y, at 7,277.
There are indications that 2011 may well prove a year of recovery for Slovenian tourism, with foreign tourist arrivals data for the first quarter of the year showing an increase of 7.1% y-o-y at 289,974.
Moreover, the country is celebrating 20 years of independence in 2011 which could also boost visitor numbers, both of foreigners and Slovenian expatriates returning home for the celebrations, most of which are taking place in June/July.
BMI is currently targeting an increase in foreign tourist arrivals of 4% y-o-y for 2011, before the pace of growth slows to the 2-3% per annum range over the remainder of our forecast period to 2015. Tourism arrivals should also be supported by Maribor being named as a European Capital of Culture in 2012. We anticipate that Slovenia will be welcoming some 2.14mn foreign tourists by 2015.
Adria Airways On The Brink Of Bankruptcy
There were severe concerns over the future viability of national carrier Adria Airways as BMI was compiling this report. The airline remains heavily indebted (estimated at around EUR100mn), with disappointing results for 2010 seeing the resignation of CEO Tadej Tufek in January 2011.
As of June 2011, the government was considering whether or not to grant the airline EUR50mn in emergency funding to keep it flying. The airline has submitted a financial and operational restructuring plan to its creditor banks, but it remains to be seen if this can be agreed between management and the airline’s unions.
One possible solution for the airline could be to seek a foreign buyer. In this context, Air India recently signed an agreement with Aerodrom Ljubljana to use the airport as a south east European stopover point for flights between India and the US, starting October 2011. However, with Air India struggling under a substantial debt burden of its own, it seems unlikely that it can act as a ‘white knight’ for the debt-ridden Adria.
Slovenian Tourism Increasingly Competitive
Slovenia has risen by two places in the World Economic Forum’s Travel & Tourism Competitiveness Report for 2011 to 33rd (out of 139 countries). The country scores highly in terms of its business environment and good infrastructure, with the WEF noting improvements in tourism policy rules and regulations over recent years. The country also scores well in the field of sustainable tourism development.
The small size of Slovenia’s tourism market has historically deterred major industry players (notably international hotel chains) from establishing a presence in country. That said, we believe that tourism will remain a key sector for the Slovenian economy and the government will continue to prioritise investment in it. Arrivals and tourism receipts should remain strong over the course of our forecast period, but the rewards for foreign operators seeking to enter the Slovenia market remain highly limited at present.
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