Crisis drags tourism business back down to 2007 level

The local tourism market rose some 20 percent year-on-year in the first 10 months of 2008, due to the business travel and outgoing segments. Players in the field were estimating a 25 percent increase of the outgoing segment and 10 percent growth on the incoming segment.

However, the last two months of the year led to a staggering 30 percent decline in the number of trips, with a negative impact on the turnover for the whole of 2008.

Most companies have lowered their travel budgets by as much as 30 percent due to the financial crisis. Budgets for the leisure segment have also been reduced.

This has likewise affected the hotel business. Early this year, players in the industry were expecting a 10 percent profit margin and an occupancy rate exceeding 70 percent. Due to the crisis, these now say that the best case scenario will be profit and turnover comparable to that in 2007. The situation is similar for travel agencies, which initially expected a 15 percent increase, but revised their estimates due to the crisis.

The financial crisis has also led to people changing their winter holiday plans. Romanians spent over €45 million for New Year's Eve packages sold by travel agencies, although the number of trips abroad dropped 38 percent, and the number of people spending New Year's Eve in various resorts in Romania fell by an annual 23 percent.

Business Standard