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ROMANIATHE IMPACT OF TRAVEL & TOURISM

ON JOBS AND THE ECONOMY

CHAIRMAN: Vincent A WolfingtonChairman EmeritusCarey International, Inc

VICE CHAIRMAN:Jonathan S LinenAdviser to the ChairmanAmerican Express Company

EXECUTIVE COMMITTEE:Peter ArmstrongPresident & CEORocky Mountaineer Vacations

Alex ChristouManaging PartnerAccenture

Andrew CosslettCEOInterContinental Hotels Group PLC

Sebastián EscarrerVice ChairmanSol Meliá

Manuel Fernando Espírito SantoChairmanEspírito Santo Tourism

Edouard EttedguiGroup Chief ExecutiveMandarin Oriental Hotel Group

Maurice Flanagan CBEVice Chairman & Group PresidentThe Emirates Group

Michael FrenzelChairmanTUI AG

Stephen P HolmesVice ChairmanCendant Corporation

Richard R KelleyChairmanOutrigger Enterprises, Inc

Geoffrey J W KentChairman & CEOAbercrombie & Kent

J W Marriott, Jr.Chairman & CEOMarriott International, Inc

David MichelsChief Executive, Hilton Group PlcHilton International

Curtis NelsonPresident & COOCarlson Companies

Mike NessPresidentThe Travel Corporation

PRS OberoiChairmanThe Oberoi Group

Alan ParkerChief ExecutiveWhitbread PLC

Gilles PélissonCEOAccor

Lalit SuriChairman & Managing DirectorBharat Hotels Ltd

Jonathan TischChairman & CEOLoews Hotels

GLOBAL MEMBERS: Giovanni AngeliniCEO & Managing DirectorShangri-La Hotels & Resorts

Ted BalestreriChairman & CEOCannery Row Company

Simón Barceló VadellChairman & CEOBarceló Hotels & Resorts

Henrik BartlManaging Director, Head of Real Estate Structured FinanceAareal Bank AG

Raymond BicksonManaging DirectorThe Taj Group of Hotels

Marilyn Carlson NelsonChairman & CEOCarlson Companies

Jennie ChuaPresident & CEORaffles Holdings Ltd

David CliftonManaging Director, Europe & AsiaInterval International

Jim ComptonSenior Vice President, MarketingContinental Airlines

Fernando ConteChairman & CEOIberia, Airlines of Spain

Robert DarbelnetPresident & CEOAAA

Rakesh GangwalChairman, President & CEOWorldspan

Laurence GellerChairman & CEOStrategic Hotel Capital

Naresh GoyalChairmanJet Airways

Arthur de HaastGlobal Chief Executive OfficerJones Lang Lasalle Hotels

Stelios Haji-IoannouChairman & FoundereasyGroup

Pansy HoManaging DirectorShun Tak Holdings Limited

Brent HobermanCo-Founder & CEOlastminute.com

James HoganPresident & Chief ExecutiveGulf Air

Grant KelleyCEO, Colony Capital AsiaRaffles International

Larry KellnerChairman & CEOContinental Airlines

Dara KhosrowshahiCEOExpedia

Nigel KnowlesManaging PartnerDLA Piper Rudnick Gray Cary

JT KuhlmanCEOOne&Only Resorts

RK Krishna KumarVice ChairmanThe Taj Group of Hotels

Gerald LawlessChief Executive OfficerJumeirah International

Manfredi Lefebvre D’OvidioChairmanSilversea Cruises

Manuel MartinPartnerCyberDodo Productions Ltd

Khater MassaadCEOAl Hamra Hotels Management Est

Paul McManusPresident & CEOThe Leading Hotels of the World

Armin MeierGroup Chief Executive OfficerKuoni Travel Holding Ltd

Alan MulallyExecutive Vice PresidentThe Boeing Company

Devin J MurphyPresident & CEOCarey International

John M NoelPresident & CEOThe Noel Group

Tom NutleyChairmanReed Travel Exhibitions

Jean Gabriel PérèsPresident & CEOMövenpick Hotels & Resorts

Dionisio PestanaChairman Group Pestana

Fernando PintoCEOTAP Air Portugal

Nancy PoorSenior Vice President, Owner RelationsCendant Hotel Group

Wolfgang Prock-SchauerChief Executive OfficerJet Airways

Bob PucciniCEO & PresidentThe Puccini Group

Duan QiangChairmanBeijing Tourism Group

David RadcliffeChief ExecutiveHogg Robinson plc

Kurt RitterPresident & CEORezidor SAS Hospitality

Christopher RodriguesCEOVisa International

Peter RogersPresident & CEODiners Club International

Carl RudermanChairmanUniversal Media

Jeffrey RutledgeSenior VP, Worldwide Travel Insurance & Related ServicesAmerican International Group Inc

Marty SalfenGeneral Manager, Global Travel & Transportation IndustryIBM

Per SetterbergCEOGlobal Refund Group

Eric J SpeckExecutive Vice President & Chief Marketing OfficerSabre Holdings Corporation

Jean-Cyril SpinettaChairman & CEOAir France

David SteinChairmanThe Stein Group

Barry SternlichtChairman & CEOStarwood Capital Group

Ron StringfellowCEOTsogo Sun Group

Ian SwainPresidentSwain Tours

Jaumé TàpiesPresidentRelais & Châteaux

Andrew C TaylorPresident & CEOEnterprise Rent-A-Car

Kathleen TaylorPresident, Worldwide Business OperationsFour Seasons Hotels & Resorts

José Antonio TazónPresident & CEOAmadeus Global Travel Distribution

Jeffrey TofflerChairmanCoventry Partners

Simon VincentCEO Opodo

Daniela WagnerManaging Director EMEA, Consumer Travel Services International MarketsCendant Travel Distribution Svcs

Willie WalshChief ExecutiveBritish Airways plc

James WilsonChief Executive OfficerNakheel Co LLC

Philip WolfCEOPhoCusWright, Inc

Peter YesawichChairman and CEOYesawich, Pepperdine, Brown & Russell

Mei Yun XinPresidentBeijing Tourism Group

Sarmad ZokChief Executive OfficerKingdom Hotel Investments

HONORARY MEMBERS:André JordanChairmanAndré Jordan Group

Lord Marshall of KnightsbridgeChairmanPirelli UK plc

Sir Frank Moore, AOChairmanFT Moore P/L

Frank OlsonChairman of the BoardThe Hertz Corporation

Gérard PélissonCo-Chairman, Supervisory BoardAccor S.A.

Henry SilvermanChairman & CEOCendant Corporation

Tommaso ZanzottoPresidentTZ Associates Ltd.

CHAIRMAN EMERITUS:James D Robinson IIIGeneral PartnerRRE VenturesWTTC Chairman (1990-1994)

IMMEDIATE PAST CHAIRMAN: Sir Ian ProsserRetired ChairmanInterContinental Hotels GroupWTTC Chairman (2001-2003)

FORMER CHAIRMENHarvey Golub Retired Chairman & CEO American Express CoWTTC Chairman (1996-2001)

Robert H BurnsChairmanRobert H Burns Holdings LimitedWTTC Chairman (1994-1996)

PRESIDENT: Jean-Claude Baumgarten

February 2006

©2006 WORLD TRAVEL & TOURISM COUNCIL1-2 QUEEN VICTORIA TERRACE.SOVEREIGN COURT.LONDON E1W 3HA. UNITED KINGDOMTEL: +44 (0) 870 727 9882 or + 44 (0) 207 481 8007 • FAX: +44 (0) 870 728 9882 or + 44 (0) 207 488 1008 • [email protected] • www.wttc.org

WTTC is delighted to have collaborated with the National Tourism

Authority of Romania to produce this report, which presents the first

simulated Tourism Satellite Account for Romania.

Researched by WTTC, together with our partners Oxford Economic

Forecasting, this report quantifies all aspects of Travel & Tourism Demand,

from personal consumption to business purchases, capital investment,

government spending and exports. It then translates this information into

economic concepts of production, such as gross domestic product (GDP)

and employment, which can be compared with other industries and the

economy as a whole to provide credible statistical information that will

assist in policy- and business decision-making.

The Romanian Government is under no illusions as to the important

role Travel & Tourism can play in the country’s future economic

development. Indeed, the industry is already an important contributor to

GDP and employment. In 2006, the wider Travel & Tourism Economy

is expected to contribute 4.8 per cent of the country’s GDP and should

account for 485,000 jobs, representing 5.8 per cent of total employment.

Furthermore, over the next ten years, Travel & Tourism in Romania is

forecast to achieve annualized real growth of 6.7 per cent, in terms of

GDP, compared with only 3.1 per cent in the EU, taking the share of

Travel & Tourism GDP to 5.8 per cent in 2016.

This contribution is significant, but the industry’s potential for

growth should not be taken for granted. As illustrated in the Tourism

Trends and Policy Framework sections of this report, several important

challenges continue to limit Travel & Tourism’s full potential for growth

in Romania. These must be addressed to ensure the long-term sustainable

development of the country’s Travel & Tourism, with maximum benefits

for all stakeholders. Challenges include the development of much needed

infrastructure and human capital, the enhancement of product and

service quality, and raising awareness and support for the industry within

government and the public at large.

This report also sets out WTTC’s recommendations on policies that

we believe will help optimize the potential benefits of Travel & Tourism

in Romania, ensuring longer-term sustainable development and spreading

the benefits equitably across all levels of the economy and the country.

Romania’s Travel & Tourism could do even better than the baseline

forecasts suggest, as long as certain factors are assured. These include a

favourable government policy, a climate that is conducive to business –

offering incentives for investment – sustained and effective marketing and

promotions, and policies that respect the environment and local cultures.

WTTC stands ready to support the adoption and implementation of these

policies.

THE WORLD TRAVEL & TOURISM COUNCIL (WTTC) IS THE BUSINESS LEADERS’ FORUM FOR TRAVEL & TOURISM, WORKING WITH GOVERNMENTS TO RAISE AWARENESS OF THE IMPORTANCE OF THE LARGEST GENERATOR OF WEALTH AND JOBS WORLDWIDE.

With a membership consisting of the chief executives of more than 100 of the world’s leading companies, WTTC has a unique mandate on and overview of all matters related to success in Travel & Tourism.

The World Travel & Tourism Council would like to express its sincere gratitude to the many individuals and organizations that contributed their knowledge, insight and data/information to the policy review effort. A complete list of contributors can be found on the inside back cover.

Jean-Claude BaumgartenPresident, World Travel & Tourism Council

EXECUTIVE SUMMARY _____________________________________________________________________________ 4FUTURE PROSPECTS __________________________________________________________________________________________ 7ECONOMIC IMPACT _________________________________________________________________________________________ 10GROWTH ___________________________________________________________________________________________________ 11

ROMANIA’S TRAVEL & TOURISMAN OVERVIEW OF RECENT TRENDS AND DEVELOPMENTS _____________________________________________________ 13

TRAVEL & TOURISM SATELLITE ACCOUNTTOURISM SATELLITE ACCOUNTING __________________________________________________________________________ 18

TSA CONCEPTS & STRUCTURE ________________________________________________________________________________ 20

TRAVEL & TOURISM’S ECONOMIC IMPACT ____________________________________________________________________ 22

TOTAL DEMAND _____________________________________________________________________________________________ 24

EMPLOYMENT _______________________________________________________________________________________________ 25

GROSS DOMESTIC PRODUCT ________________________________________________________________________________ 26

CAPITAL INVESTMENT _______________________________________________________________________________________ 27

PERSONAL & BUSINESS _______________________________________________________________________________________ 28

EXPORTS ____________________________________________________________________________________________________ 29

GOVERNMENT ______________________________________________________________________________________________ 30

THE POLICY FRAMEWORK _____________________________________________________________________ 31

APPENDIX SATELLITE ACCOUNT TABLES _________________________________________________________________________________ 42

CONTENTS

4

Despite healthy economic growth over recent years,

Romania’s population is still one of the poorest

in Europe. Travel & Tourism can be a catalyst for

improving livelihoods throughout the country and has

been identified as such by Romania’s leaders as a focal

point of the country’s National Development Plan.

This recognition of the industry’s potential contribution

is a step in the right direction, although there is still

a widespread lack of awareness of Travel & Tourism’s

economic value and potential within all levels of

government and the population at large.

Nevertheless, with growth prospects in most areas

above both the global and European average, the outlook

for the country’s Travel & Tourism is encouraging.

These figures show that Romania is one of the

world’s least tourism intensive countries, ranking 162

out of 174 countries in terms of contribution to GDP.

However growth prospects are well above both the global

and European averages which bodes well for the future of

Travel & Tourism.

Moreover, the impact could be even greater than

forecast if the underlying national policy framework

is conducive to growth – ie if underlying conditions

for investor confidence, dynamism and sustainability

are created. However, this depends on government

recognizing and supporting Travel & Tourism as a

high-priority industry and employer, factoring it into all

policies and decision making.

An encouraging sign in this regard is the level of

government investment in Travel & Tourism which in

Romania accounts for 4.3 per cent of total spending

and an amount which nearly matches the percentage

contribution of the industry to the country’s GDP.

There is also a positive outlook for Visitor Exports,

which are forecast to grow at 8.5 per cent per annum

over the next ten years. In this respect, Romania ranks

fourth in the world. This ranking sends a strong message

that there is a need for the public and private sectors to

pay significant attention to maintaining international

visitor growth at these high levels.

After two decades of declining visitor numbers and

under-investment in development and modernization,

Romania’s Travel & Tourism industry is slowly regaining

profile and pace. As Romania heads towards accession to

the European Union (EU) next year and is consolidating

infrastructure, governance and legal systems, Travel &

Tourism will have an increasing role to play – particularly

in creating sustainable jobs for the country’s huge rural

THE IMPORTANT ROLE TRAVEL & TOURISM HAS TO PLAY IN ROMANIA’S FUTURE ECONOMIC AND SOCIAL DEVELOPMENT IS INDISPUTABLE. HOWEVER, MUCH WORK STILL NEEDS TO BE DONE TO ENSURE THAT THE INDUSTRY’S POTENTIAL IS FULLY TAPPED. BOTH GOVERNMENT AND INDUSTRY WILL HAVE TO OVERCOME A NUMBER OF CHALLENGES TO GUARANTEE THAT MAXIMUM BENEFITS TO THE ECONOMY AND SOCIETY ARE ACHIEVED IN A WAY THAT IS SUSTAINABLE IN THE LONG TERM.

EXECUTIVESUMMARY

In 2006, the wider Travel & Tourism Economy is expected to contribute 4.8 per cent of Romania’s GDP and account for 485,000 jobs, representing 5.8 per cent of total employment. Over the next ten years, Travel & Tourism in the country is forecast to achieve annualized real growth of 6.7 per cent in terms of GDP and 1.6 per cent in terms of Travel & Tourism employment. This would take the share of GDP and employment to 5.8 and 6.9 per cent respectively by 2016.

5

population. The challenge now is to fully embrace the

commercial world in order to develop a competitive

tourism product, using the country’s considerable

advantages – including its prime central European location

and rich cultural and natural diversity – as a base.

Past efforts, including the identification of Travel

& Tourism as a national priority by the president some

ten years ago, have helped put the industry on Romania’s

political and development agenda. However, general

awareness of the industry’s potential is still low and in

the current climate of preparation for EU accession,

where focus is on issues such as the judicial system,

infrastructure and the environment, Travel & Tourism

is not a priority. However these policy areas have a

significant impact upon tourism and, indeed, tourism

could be a catalyst for change and improvement in this

regard. There is an urgent need, therefore, for Travel &

Tourism to be integrated into future development plans

and EU accession programmes.

At the same time, considerable attention should be

paid to upgrading and expanding the country’s tourism

infrastructure, to modernize and improve hotels and

other tourist facilities, and to enhance the competitiveness

of its human capital. This will help to ensure that

Romania captures a growing share of international visitor

expenditure, contributing to boosting the country’s exports

and improving balance of payments.

In addition, if managed effectively, Travel & Tourism

can be an important catalyst for the development

of other economic sectors within Romania, such as

manufacturing, construction and the service industries.

It can also help to conserve the country’s primary

assets, namely its natural and cultural environments,

which have in the past been largely unrecognized and

unprotected.

The National Tourism Authority has already taken

steps to establish a working partnership with the private

sector. It now needs to ensure that this partnership works

effectively – that the private sector and local authorities

are closely involved in the Travel & Tourism decision-

making process – so that full buy-in from all stakeholders

is guaranteed for the future.

Additional measures recommended in this report

are intended to set the stage to help ensure the larger

rewards that Travel & Tourism can bring over the short,

medium and longer term.

7

RAISING AWARENESSTravel & Tourism has the potential to become an important export sector in Romania and to provide jobs and economic growth for the country’s vast rural population. It possesses the inherent ability to diversify Romania’s

economy, to stimulate entrepreneurship – particularly

among small and medium-sized enterprises (SMEs) –

catalyze investment, create large numbers of sustainable

jobs, and help social development in local communities.

In general both government authorities and

the private sector are open to developing Travel &

Tourism, but there is a need for deeper understanding

of the industry, how it works, and what it needs to be

successful.

Travel & Tourism should be factored into

mainstream policies for employment, trade, investment,

education, culture and environmental protection. In

order to facilitate this, an industrial image campaign

should be undertaken to ensure that all public and private

stakeholders are aware of the industry’s contribution

and, in particular, its potential with regard to rural

development.

The government should take advantage of

opportunities to raise awareness of Romania as a tourism

destination, both within the country and internationally.

One upcoming opportunity is that offered by Sibiu’s

nomination as European Capital of Culture in 2007.

INDUSTRY MEASUREMENTRomania’s economic and marketing-related Travel & Tourism research and forecasting are generally inadequate, both in terms of quality and quantity. As a result, public sector analysis and related policies

tend to overlook or underestimate the impact of the

industry, or deal only with its smaller components.

This TSA research, developed by WTTC and OEF

for Romania, provides a significant tool for planning

and policy development. Updating the TSA on an

annual basis will help to ensure that adequate data is

available to factor Travel & Tourism into economic and

employment strategies. It will also provide the National

Tourism Authority with hard economic data on which

to base decisions regarding marketing and promotions.

This in turn will help raise awareness among public

and private sector stakeholders of Travel & Tourism’s

full impact across the national economy – not just on

hotels, restaurants and retail businesses, but also on

construction, real estate, agriculture and other sectors.

TOURISM PLANNING & IMPLEMENTATION

Long-term tourism planning at both national and regional levels is a pre-requisite for generating investor confidence and organizing the successful and sustainable development of Travel & Tourism in Romania. Structural re-organization over the past ten years,

particularly in the Ministry of Transport, Construction

FUTURE PROSPECTSWHILE THE BASELINE FORECASTS FOR ROMANIA’S TRAVEL & TOURISM OVER THE NEXT TEN YEARS ARE GENERALLY VERY POSITIVE, THEY NONETHELESS HIGHLIGHT A FEW WEAKNESSES THAT COULD HINDER TRAVEL & TOURISM’S GROWTH.WTTC maintains that these may prevent Romania from attaining its true Travel & Tourism potential in the medium to longer term. At the same time, greater co-operation between all leading policy-makers, as well as with the private sector, and better management of tourism growth, could help Romania do even better than current forecasts suggest, maximizing the benefits and ensuring they are spread to all parts of the country and across all levels of the population.

8

and Tourism and National Tourism Authority, has meant

that until now there has been no published strategic plan

or policy for tourism development in Romania. WTTC

commends the present administration for its commitment

to drawing up such a plan as a matter of urgency and

recommends an in-depth policy Master Plan, based on

well-defined broad strategy objectives. Careful attention

must also be paid to the implementation of such a plan

over a given time frame.

In order to ensure greater support and commitment

from all stakeholders, the government should also

initiate a more cohesive and co-operative approach

to longer-term tourism planning and development,

involving all levels of government, the private sector and

local communities.

TRAVEL & TOURISM INSTITUTIONS

Travel & Tourism is affected by, and affects, policy decisions made across the whole political and economic spectrum. Strong tourism institutions, with clearly defined mandates, are therefore vital for a co-ordinated and sustainable development of the industry. Over the past years, Romania’s Travel & Tourism

institutions have suffered from a high turnover of

officials resulting in inconsistent approaches to

tourism development and planning. Continuity on the

administrative, if not political, level is vital if plans are to

be realized and the country’s industry is to move forward

in a sustainable and well-defined way.

In order to achieve this, the National Tourism

Authority should work to clearly defined priorities

and with sufficient budget allocation to allow effective

implementation of policies.

INFRASTRUCTUREAlthough basic Travel & Tourism infrastructure in Romania is adequate, a significant amount of modernization and upgrading is necessary to sustain growth and allow Romania to compete in the global marketplace. The vast majority of Romania’s visitors arrive by road.

Considerable EU structural funds have been allocated

to the upgrading of the country’s highways. Although

further investment is desperately needed, main arterial

routes are adequate and should not be used as an ‘excuse’

for delaying the development of other infrastructure in

the regions. Improvements in the formerly extensive rail

network would reduce pressure on road links.

In order to facilitate and increase visitor arrivals,

a liberalized aviation policy should be pursued. In

particular, the introduction of low-cost carriers should be

encouraged. Furthermore, the development of regional

airports, so that visitors do not have to connect via

Bucharest, should be prioritized.

Romania also benefits from extensive

accommodation facilities. However, the absence of any

national quality standards affects the overall quality of

the country’s tourism product. Modernization of existing

facilities and implementation of national standards are

vital to increase Romania’s competitiveness.

INVESTMENT & TAXATION While there are certain investment incentives for foreign companies, bureaucracy within government departments puts a considerable strain on overseas investment. WTTC recommends a ‘one-stop shop’ for tourism

investments, where interested parties can receive

information and advice on bureaucratic processes and

complete legal requirements without having to visit a

number of government departments.

Inadequate facilities in the banking and financial

sector serve as a further constraint to attracting investors.

The government should prioritize reforms of this sector

in line with European norms which will not only benefit

Travel & Tourism but the economy as a whole.

The current tax regime for Travel & Tourism in

Romania is complex and taxes are, in many cases, very

high. Care should therefore be taken to ensure that

fiscal policies are not harmful to investment.

HUMAN RESOURCES In Romania, Travel & Tourism accounts for 5.8 per cent of the country’s workforce. This amounts to some 485,000 jobs. However, Travel & Tourism in Romania is seen as a ‘last

resort’ when it comes to career choice, a situation which

reflects clearly the low levels of compensation in the

industry. This should be amended, and salaries brought

in line with other industries so that a potential workforce

can benefit fully from employment in the sector. This will

also help to address the ‘brain drain’ and encourage the

most skilled employees and managers to stay in Romania

9

rather than move abroad. Furthermore, a dedicated

Travel & Tourism training facility should be established

in collaboration with the private sector. In this way, the

supply of human resources will be more closely matched

to the industry’s needs, with graduates endowed with

the necessary practical skills in order to be part of a high

quality tourism product.

SUSTAINABLE DEVELOPMENT

The successful growth of Travel & Tourism in Romania will be highly dependent on the natural, social and cultural environments that surround it. In many instances, the natural environment and cultural heritage are central features of the country’s tourism product.Considerable steps have been taken to clean up and

protect the natural environment in Romania. Now, it is

vital that tourism development plans be integrated into

environmental management systems and vice-versa. In

the same way, preservation of cultural heritage should

go hand in hand with tourism development. In both

cases, careful monitoring is needed to ensure that high

standards of preservation are maintained.

Furthermore, if Travel & Tourism is to be successful

as a tool for rural development, then the buy-in of those

communities in which it is based is vital. Linkages

between different sectors and local producers should

be promoted and stakeholder communication and

involvement prioritized. The signing of the ‘Geotourism

Charter’ with the National Geographic Society in

2005 is an important first step in achieving this

and highlighting the government’s commitment to

sustainable tourism development.

PRODUCT DIVERSIFICATION

Romania’s Travel & Tourism is characterized by a high level of seasonality. A focus on new types of tourism, and new products, will encourage the development of an industry diverse in opportunities as well as seasons.

There is much potential for Romania to break

away from its traditional tourism base of seaside tourism

on the Black Sea, and WTTC recommends that the

following sectors be prioritized:

• Meetings, incentives, conferences and exhibitions

(MICE)

• Mountain tourism – skiing in winter and hiking in

summer

• Heritage tourism – using gateway sites such as

Braşov, Sibiu and Sighişoara

• Rural tourism – development of routes (wine/

monasteries) and promotion of festivals

• Spa/wellness tourism

PROMOTION & MARKETING

Romania does not enjoy a high profile in the global market, and its image as a tourism destination has been undermined by images of poverty, orphans and environmental degradation. These perceptions are gradually changing and the

creation and promotion of ‘Brand Romania’ should be

urgently prioritized. Within this brand, there is also a

need to promote Romania’s diverse and touristically-

unique regions. Adequate funding, both at national

and regional levels, should underpin all promotion and

marketing activities, allowing for concerted advertising

campaigns, high-profile presence at international events

and a strategic approach to target markets. Use of the

internet for promotions and bookings, and inclusion in

the European Tourism Portal will also help to increase

international awareness of Romania.

TECHNOLOGY Adjustment to the Digital Economy is essential for enterprises to become and stay competitive. The current diffusion of internet facilities and computer

ownership in Romania are among the lowest in Europe.

Travel & Tourism, as a technology-intensive industry, can

help Romania obtain and apply information technology

systems and telecommunications at a competitive pace. As

the country’s technological capabilities, particularly in

rural areas, grow – which will happen at a lightening

pace – preparations should be made for the development

of an online database making visitors aware of the full

range of tourism services in the country and, in time,

allowing for online booking of such services. A co-

ordinated approach will help to increase exposure for

smaller businesses and increase the spread of international

visitors across the industry.

10

ECONOMIC IMPACTIN 2006, ROMANIA’S TRAVEL & TOURISM IS EXPECTED TO GENERATE RON24.6 BN (US$7,071.5 MN) OF ECONOMIC ACTIVITY (TOTAL DEMAND). THE INDUSTRY’S DIRECT IMPACT INCLUDES:

HOWEVER, SINCE TRAVEL & TOURISM TOUCHES ALL SECTORS OF THE ECONOMY, ITS REAL IMPACT IS EVEN GREATER. ROMANIA’S TRAVEL & TOURISM ECONOMY DIRECTLY AND INDIRECTLY ACCOUNTS FOR:

265,167jobs representing 3.1% of total

EMPLOYMENT.

RON 6.2 bn (US$1,782.6 mn) of

GROSS DOMESTIC PRODUCT (GDP) equivalent to 1.9% of total GDP..

485,002jobs representing 5.8% of total

EMPLOYMENT.

RON15.5 bn (US$4,454.9 mn) of

GROSS DOMESTIC PRODUCT (GDP) equivalent to 4.8% of total GDP.

RON 6.4 bn (US$1,855.4 mn) of

EXPORTS, SERVICES & MERCHANDISE or 5.2% of total Exports.

RON 5.3 bn (US$1,513.2 mn) of

CAPITAL INVESTMENT or 7.2% of total Investment.

RON 0.9bn (US$262.8 mn) of

GOVERNMENT EXPENDITURES or a 4.3% share.

11

GROWTHIN 2006 TRAVEL & TOURISM IN ROMANIA IS FORECAST TO SEE REAL GROWTH OF 9.2% IN TOTAL TRAVEL & TOURISM DEMAND TO RON24.6 BN (US$7,071.5 MN) AND

OVER THE NEXT TEN YEARS, ROMANIA’S TRAVEL & TOURISM IS EXPECTED TO ACHIEVE ANNUALIZED REAL GROWTH OF:

7.4% in total TRAVEL & TOURISM GDP,

to RON20.7 bn (US$3,380.1 mn) in 2016 for the industry directly and to RON48.4 bn (US$7,903.7 mn) for the

Travel & Tourism Economy overall.

2.8% in TRAVEL & TOURISM

INDUSTRY EMPLOYMENT (direct impact only), to 265,167 jobs, and 3.5% to 485,002 jobs in the

Travel & Tourism Economy overall (direct and indirect).

1.7% in TRAVEL & TOURISM EMPLOYMENT,

to 314,666 jobs directly in the industry, and 1.6% to 569,530 jobs in the

Travel & Tourism Economy overall in 2016.

7.9% in total

TRAVEL & TOURISM DEMAND, to RON86.3 bn (US$14,110.9 mn) in 2016.

9.4% in TRAVEL & TOURISM INDUSTRY GDP

to RON6.2 bn (US$1,782.6 mn) for the industry directly and 8.9% to RON15.5 bn (US$4,454.9 mn)

for the Travel & Tourism Economy overall (direct and indirect expenditures).

8.5% in VISITOR EXPORTS, rising to RON11.6 bn

(US$1,898.8 mn) by 2016.

6.2% in terms of CAPITAL INVESTMENT,

increasing to RON15.8 bn (US$2,576.6 mn) in 2016.

1.7% in terms of

GOVERNMENT EXPENDITURES to RON1.8 bn (US$290.0 mn) in 2016.

13

INTRODUCTIONAs a Communist country granted ‘most favoured nation’ status by the

USA due to the government’s anti-Soviet policies, Romania was a well-

known tourism destination in Western Europe in the 1970s. US-backed

credits to the tune of US$1 billion spurred economic development and,

popular with visitors from Germany, the UK, Scandinavia, France, Italy,

Austria and Belgium, the country’s Black Sea coast resorts were booming.

However, by the end of the 1980s – as a result of under-investment and

an increasingly unstable political situation – visitor numbers began to

dwindle. After the international media documented the fall of Ceauşescu

in December 1989, this trend continued as the full impacts of the

communist regime were realized. The opening up of Romania opened

the world’s eyes to the extreme poverty of the Romanian people, often

embodied in the images of orphanages - images far from that of a tourist

haven.

The slow privatization process combined with lack of investment

in infrastructure over the 1990s, as Romanians readjusted to life after

Communism, resulted in an increasingly ailing tourism industry.

However, new-found freedom and an emerging middle class saw a boost

in outbound travel, encouraged by cheap deals in nearby Greece and

Turkey. Now, a favourable exchange rate with the US dollar and the

ROMANIA’S TRAVEL & TOURISMOVERVIEW OF RECENT TRENDS AND DEVELOPMENTS.

improved image of Central and Eastern Europe are beginning to attract

international tourists to Romania.

GENERAL OUTLOOKAccording to WTTC’s 2005 TSA research, Romania ranks fourth out of

174 countries in long-term growth in Demand. Membership of NATO in

2002 and projected accession to the European Union (EU) in 2007 mean

that international awareness of Romania is growing. The mid-1990s saw

renewed interest in tourism from central government, when the industry

was identified as a national priority. The controversial Dracula Park,

although never completed, is testament to this commitment. However,

the current lack of understanding of Travel & Tourism’s importance, a

lack of willingness for independent operators to work together, and the

absence of any coherent government strategy mean that this untapped

potential is still waiting to be unlocked.

POTENTIALCovering some 237,500 square kilometres right in the heart of Europe,

Romania has a rich, but largely unexplored, natural and cultural heritage.

And Romania’s treasures are spread the length and breadth of the country.

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14

held its level in 2000, arrivals in the country have consistently declined

since 1995, although the falls in 2001 and 2002 mirror the global

economic downturn in the wake of 9/11. Recent years, however, have

seen impressive growth – more than 16 per cent in 2003 and some 18

per cent in 2004, although preliminary estimates based on data for the

first ten months of last year point to a drop of 12 per cent in arrivals in

2005. Nevertheless, given the increased political stability, and a rise of

international awareness in what Romania has to offer, prospects look

much better for 2006.

Among its competitors, Romania showed one of the highest

growth rates in arrivals from 2003-04, although the country still receives

considerably fewer visitors than Poland and Hungary. The disparity

between border and accommodation figures highlights the reliance of

Romania’s tourism industry on visitors from border countries, who either

Bucharest is no Prague or Vienna but the smaller regional towns of Sibiu,

Braşov and Sighişoara have architecture, culture and openness more than

able to compete with larger neighbours. Landlocked except for its 200-

kilometre coast on the Black Sea, Romania borders Ukraine and Moldova

to the north and east, Hungary and Serbia & Montenegro to the west and

Bulgaria to the south and it is as accessible by land as it is by air.

Back to natureRomania’s 41 counties can be divided into three main geographical regions.

The Central Carpathian Mountains boast the highest concentration

of large carnivores in Europe – including half of the continent’s bear

population, a third of its wolves and a third of its lynx population. To

the west lie the plateaus where bucolic villages and towns are dotted

amongst the hills and valleys. And to the east, the low lying plains which

are the country’s agricultural heartland see the Danube river empty into

the Black Sea by means of its ecologically unique delta. In all the country

is home to some 33,792 species of animals and 3,700 species of plants

and the Danube Delta is home to 60 per cent of the world’s small pygmy

cormorant population. From the beaches of the Black Sea, to skiing

and walking in the mountains and nature-based tourism in the Danube

Delta, Romania’s natural heritage offers endless opportunities for Travel

& Tourism.

A unique cultural heritage …Romania is home to seven World Heritage Sites including the painted

monasteries in Bucovina, the historic citadel of Sighişoara and the

Dacian fortresses near Hunedoara. Transylvania is world famous for

its association with the Dracula legend. The country’s wide-ranging

examples of architectural styles and a rich musical and literary history are

reflected in an ethnic mix of Romanian, Hungarian, Roma, Ukranian,

German, Russian and Turkish. A population as diverse and unique as

the country’s landscape combines with a rich history to offer the visitor a

great insight into Europe’s past and present.

...offering huge growth potential...Tourism has traditionally centred on the resorts of the Black Sea coast

but in reality Romania has a great deal more to offer. For the domestic

market, spa tourism has long been popular, and significant work and

investment are going into developing the country’s cultural sites for

tourists. The country’s ski resorts are already well established, and the

same facilities offer great potential for adventure tourism and walking

in the off-season. Bucharest is also not to be ignored for the business

and MICE tourism that already exists and that accession to the EU will

inevitably increase.

… and year-round opportunitiesRomania has the potential to be a year-round destination if all the

opportunities offered by the varied natural and cultural heritage are

understood and maximized. Travel & Tourism can also be a country-wide

industry taking development, entrepreneurial potential and employment

to the 55 per cent of the population who live in rural Romania.

Romania’s Travel & Tourism has had a rough ride over the past ten years

in terms of international arrivals. Apart from a slight rise in 1999, which

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International tourist arrivals, 1995-2005

International tourist arrivals in Romania and competing countries, 2003-04 (‘000)

Country Measure 2003 2004 % change 2004/2003

Bulgaria TF 4,048 4,630 14.4

Croatia TCE 7,409 7,912 6.8

Serbia & Montenegro TCE 481 580 20.1

Romaniaa TF 5,595 6,600 17.9 TCE 1,105 1,359 22.9

Hungary TF 15,706b 12,212 c

Slovakia TCE 1,387 1,401 1,0

Czech Republic TCE 5,076 6,061 19.4

Poland TF 13,720 14,290 4.2

a From the National Institute of Statisticsb Including same-day visitorsc Comparison not possible as 2004 does not include same-day arrivalsTF: tourist arrivals at frontiersTCE: tourist arrivals at registered accommodation

Source: World Tourism Organization (UNWTO) World Tourism Barometer

Sources: Ministry of Public Administration and Interior (General Inspectorate of Frontier Police), Romania

TRAVEL & TOURISM TRENDSArrivals

15

stay with friends and/or relatives or may not overnight at all in the

country. However, if one compares the growth rate of foreign visitors in

accommodation units with competing countries, Romania is showing a

high growth rate of 22.9 per cent, compared with 20.1 per cent for Serbia

& Montenegro, 19.4 per cent for the Czech Republic, 6.8 per cent for

Croatia and one per cent for Slovakia.

International marketsThe vast majority of international arrivals in Romania are from Europe.

Since 2000, some 95 per cent of visitors every year have been intra-regional.

Of these, a growing number – 75 per cent according to 2004 figures

– represent arrivals from the five countries with which Romania shares

a border: Ukraine, Moldova, Bulgaria, Hungary, Serbia & Montenegro.

Analysis of accommodation figures shows that a large number of these

visitors do not stay in registered facilities and either reside with friends or

relatives, or do not overnight in Romania. Thus, it is difficult to quantify

their impact on the economy.

Within EU15 countries, Romania’s largest markets are Germany,

Italy, France, Austria and the UK. Worryingly, arrivals from all of the

EU 15 countries showed negative growth in 2004. This can be attributed

in part to the accession of ten new countries to the EU, and related

incentives for visitors to these countries such as low-cost airlines.

Growth in 2004 was driven by Hungary, which showed a 69 per

cent increase in arrivals in Romania and Poland, from where arrivals were

up by 22 per cent on 2003 figures.

Outside Europe, Romania’s main international markets are the

USA, which has shown steady growth since 2000, to 111,000 arrivals

in 2004, as American tourists have started to be aware of the fact that

Romania is more than a ‘Dracula’ destination; and Israel, although the

Israeli market has remained stagnant in recent years. Tourists from China

are also expected to increase in the future, as Romania received approved

destination status (ADS) in June 2004.

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Arrivals in Romania from the EU15 markets, 2004 (‘000)

Romania’s Travel & Tourism has had a rough ride over the past ten years in terms of international arrivals.

Length of stay Figures regarding length of stay are difficult to ascertain, given the large

number of foreign visitors who do not show up on official accommodation

registers. For those that do, length of stay has remained steady at around

the 2.5-day mark for the past five years. This again reflects the number of

visitors from bordering countries. Romanian tourists tend to ‘stay’ longer,

on average four days. This mirrors the trend for weekend trips out of

Bucharest, or to the beach and mountains.

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Arrivals in Romania from the USA, EU and neighbouring countries, 1998-2004 (‘000)

Source: UNWTO

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Average length of stay in Romania in hotels/motels, 2000-04 (days)

Source: Oxford Economic Forecasting

Source: UNWTO

Tourism receipts While Romania’s Travel & Tourism is growing at an impressive rate in

terms of international visitors, the country’s tourism receipts have been

lagging considerably behind neighbouring countries. In 2004, Romania

registered some €505 million in tourism receipts – 23 per cent of those

registered by Bulgaria, approximately 12 per cent of those registered by

Hungary and the Czech Republic and a mere 7 per cent of Croatia’s

receipts.

This again reflects the fact that many of Romania’s visitors do not stay

overnight or spend anything while they are in the country, and highlights

an important weakness to address for any tourism plan going forward.

16

TransportThe majority of international arrivals to Romania are by road, again

mirroring the large proportion of the country’s visitors from bordering

countries. As the number of these visitors increases, so does road

transport. However, arrivals by air have also seen a healthy rise over the

past five years with increased frequency of scheduled services and some

charters operating in regional airports such as Sibiu and Constanţa. As

Romania is forced to liberalize its aviation industry on accession to the

EU, air transport is set to rise dramatically in the future. Arrivals by rail

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Breakdown of arrivals in Romania by destination, 2004

Source: INCDT

Domestic marketTraditionally the domestic market has driven Travel & Tourism in

Romania and it is still an important sector of the industry. However,

increased competition from countries such as Greece and Turkey, to

which cheap flights and deals are luring Romanians away from holidaying

in their own country, has meant that in terms of percentage growth,

domestic tourism is decreasing. Nevertheless, in terms of absolute

volume, it continues to increase.

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Tourist arrivals in all forms of accommodation, 2000-04 (% share)

Source: National Institute for Research and Development in Tourism (INCDT)

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International tourism receipts, 2004 (€ mn)

Source: UNWTO

Arrivals by different transport modes, 1999-2004 (‘000)

1999 2000 2001 2002 2003 2004

Air 566 655 705 689 752 704

Rail 586 660 476 374 347 308

Road 3,930 3,808 3,621 3,594 4,343 5,401

Sea 141 141 135 137 152 186

Source: Ministry of Public Administration and Interior (General Inspectorate of Frontier Police), Romania

The significant increase of foreign visitors to all destinations clearly reflects the upward trend in international arrivals.

Annual growth in arrivals in different destinations in Romania by market, 2004(annual change)

% annual change Change in absolute volume (‘000)

All destinations

Domestic 5.6 225.9

Foreign 56.8 492.5

Spas

Domestic -2.2 -14.3

Foreign 76.7 19.6

Seaside

Domestic 5.2 33.0

Foreign 154.9 50.8

Mountain

Domestic 7.7 51.6

Foreign 32.2 28.3

Danube Delta

Domestic 87.6 26.2

Foreign 260.6 12.0

County residences

Domestic 4.9 76.7

Foreign 47.2 310.7

Other localities

Domestic 10.9 52.8

Foreign 122.2 71.1

Source: INCDT

Favourite destinationsTourism to all destinations grew over the period 2000 to 2004, with

the only sector showing a decrease being domestic visitors to spas.

This reflects not only the increasing trend for Romanians to holiday

abroad but also the continuing dilapidation of lower-end facilities. The

significant increase of foreign visitors to all destinations clearly reflects the

upward trend in international arrivals.

17

are decreasing at almost the same rate that air arrivals are increasing as

air travel becomes cheaper and more accessible. The increase in ‘naval’

arrivals is a result of several programmes such as ‘Cruises on the Danube

River’ in partnership with neighbouring countries.

AccommodationRomania’s hospitality sector is now all but fully privatized with the

majority of hotel stock at the lower – one- and two-star - end of the

market. Particularly in Bucharest, a lack of four- and five-star facilities

means that although occupancy is high, so are prices, in particular

compared with competitors such as Budapest and Prague. Given the

existing potential, much enhanced by close accession to both the EU

and eurozone, this sector is set to develop rapidly over coming years. The

current trend is to invest in three- and four-star hotels and, by 2009, the

total total capacity of Bucharest is expected to reach 9,000, compared

with the 6,000 rooms existing at the moment.

As is the case with many other countries in the region, Romania is well placed to develop a truly unique tourism product. The country has considerable past experience of Travel & Tourism and now needs to be brought into the 21st century. Modernization, promotion and investment will be vital if Romania is to become a successful international tourism destination.

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Ownership of accommodation facilities 2004

Source: National Tourism Authority

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Hotel capacity by grading, 2004


Future prospectsAs is the case with many other countries in the region, Romania is

well placed to develop a truly unique tourism product. The country has

considerable past experience of Travel & Tourism and now needs to be

brought into the 21st century. Modernization, promotion and investment

will be vital if Romania is to become a successful international tourism

destination. Furthermore, Romania is entering a crucial stage in its

history as it prepares for membership of the EU.

As competing countries in Central Europe emerge onto the scene,

the opportunity must be seized by the country’s Travel & Tourism players

to move forward with the current wave, and to capitalize on the growing

interest in new destinations, especially those which are perceived to be

safe in terms of terrorism. However, Romania already lags behind its

smaller neighbour, Bulgaria, and a new direction and commitment to

investment are needed to ensure that the country’s potential for Travel

& Tourism are not held back by bad planning and a lack of supporting

infrastructure. With this in mind, Romania’s considerable natural,

cultural and historical resources place the country in a prime position for

Travel & Tourism development.

Hotel bed capacity by location, 2004 (no. of beds)

Danube Delta 3,180

Spas 40,849

Bucharest & other 46,541

Seaside 116,935

Mountain Resorts 32,554

Other localities 35,837


Current projects:• Rembrandt Hotel (Rembrandt) – 15 rooms• Golden Tulip Inn (Golden Tulip) – 80 rooms• Ibis Parliament (Continental Accor) – 150 rooms• Confort Colentina Hotel (Pro Confort) – 180 rooms• Phenicia Hotel (Triumf Construct) – 340 rooms & 28 apartments

• Group Millennium – 80 rooms

Although there are plans for a Q-label in hotels, and star gradings

are underwritten by law, in general there is little standardization of

accommodation stock, whether in terms of hotels, motels, bed &

breakfasts, campsites or resorts and concentration of facilities mirror the

traditional Romanian tourism products – namely the Black Sea coast for

beach holidays and the Carpathian mountains for skiing.

18

Over the last three decades, countries have estimated the economic impact of Travel & Tourism through a range of

measures using a variety of definitions and methodologies. Such approaches have prevented meaningful comparisons

among nations. Even for the same nation over different periods of time, they have frustrated business and government

attempts to draw valid conclusions about the nature and course of Travel & Tourism demand in national economies.

This regime has obscured the substantial, positive role the industry plays in national economies and has thwarted

business and government attempts to optimize economic programmes and policies.

The World Travel & Tourism Council (WTTC) recognized the dearth of crucial Travel & Tourism intelligence

from the time of its establishment in 1990 and it published the first detailed estimates of world tourism’s economic

impact that same year.

Since then WTTC has worked to improve its methodologies and to encourage individual countries to enhance

their measurement and understanding of tourism’s impact on their national economies. Furthermore, in the spirit of

joining forces to enhance world comprehension of the role of Travel & Tourism in national economies, WTTC has

strongly supported the programmes of the World Tourism Organization (UNWTO) to improve tourism statistics

worldwide.

WTTC’S RESEARCHWTTC and its economic/research partners – Oxford Economic Forecasting, (OEF), since 1999, and Global Insight

(previously known as DRI•WEFA), from 1990-1999 – have developed and published research on the economic

contribution of Travel & Tourism to the world, regional and national economies.

Starting in 1990, WTTC’s research team has been working to develop practical, real-world models to illustrate

Travel & Tourism’s economic contribution based on the needs of private sector leaders, public sector policy-makers and

industry researchers, and on the interpretation of the system of national accounts. The research is now firmly anchored

in the international standard for tourism satellite accounting that was developed by UNWTO, OECD and Eurostat,

and approved by the United Nations Statistical Commission in 2000. It was launched at the TSA Conference held in

Vancouver in May 2001 and published as the Tourism Satellite Account: Recommended Methodological Framework (TSA:

RMF) in 2001.

Since 1999, WTTC’s research has assumed the conceptual framework of the UN-approved standard with a number

of discretionary extensions, and it combines the most sophisticated economic modelling and forecasts available with

the most up-to-date, publicly available data to generate a comprehensive implementation of Travel & Tourism satellite

accounting.

This special simulated TSA for Romania is the product of work commissioned by the National Tourism Authority,

working in co-operation with the National Institute for Research and Development in Tourism (INCDT). In carrying

out the work, OEF has drawn extensively on the methodology drawn up over the years by WTTC to develop TSAs

as operational tools, and has worked closely with the National Tourism Authority and its project steering committee

to review the assumptions, models and results produced by this exercise.

TRAVEL & TOURISM SATELLITE ACCOUNTTOURISM SATELLITE ACCOUNTING

THIS REPORT FOLLOWS THE CONCEPT OF SATELLITE ACCOUNTING DEFINED IN THE TOURISM SATELLITE ACCOUNT: RECOMMENDED METHODOLOGICAL FRAMEWORK (TSA:RMF), AND DEVELOPED UNDER THE AUSPICES OF THE WORLD TOURISM ORGANIZATION.

19

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Travel & Tourism Employment(‘000 Jobs)

Travel & Tourism Gross Domestic Product(2000 Constant US$ mn)

T&T ECONOMYDirect and indirect impact of visitor activities, capital

investment, exports and government services

T&T INDUSTRYDirect impact of visitor activity (transportation, accommodation, food and beverage, recreation,

entertainment and travel services)

WTTC has endeavoured to implement and produce the

most comprehensive TSA provided for within the TSA:

RMF – by developing the narrow concept of the ‘Travel

& Tourism Industry’ in addition to the broader concept

of the ‘Travel & Tourism Economy’. WTTC advocates

full implementation of the TSA as defined in the TSA:

RMF in order to achieve the highest level of benefits for

industry and governments. These include:

■ A wealth of customer and consumer information on

tourism-related purchases (before, during and after

trips – whether domestic or international, imported

or exported – as well as services, durables and non-

durables) that has never been identified until now;

■ Comprehensive documentation and analysis of the

full tourism-product service chain and government’s

ability to deliver quality and timely service to

visitors;

■ Linkages between Travel & Tourism and other

sectors of the economy such as agriculture and

manufacturing to illustrate the flow-through of

spending;

■ Complete outlook for public works that benefit

visitors and Travel & Tourism companies in order

to leverage public sector plans and priorities for

growth;

■ Focused opportunities for domestic production, as

well as incentives from the public sector, to aid in

the growth of businesses that help alleviate trade

balance issues;

■ Demand- and supply-side information on

employment that allows for human resource

planning and development.

WTTC has worked towards developing

a comprehensive TSA – not because it is eager to

exaggerate the size of Travel & Tourism’s impact, but

because the information that can be garnered from

the exercise by governments and industry is crucial for

making intelligent and informed policy and business

decisions. WTTC believes that history will document

its pioneering implementation of the simulated TSA as

one of the most important turning points for Travel &

Tourism’s long overdue economic recognition.

In the WTTC research, no country receives special

treatment or favours. WTTC uses internationally

available data sources and the same scope of tourism

satellite accounting for all countries, as well as the

same basic assumptions through the same system of

models. WTTC’s TSA research utilizes a universal and

internally consistent modelling framework and generates

harmonized results and forecasts for 175 countries

around the world. Details of the methodology used

by WTTC/OEF in its TSA research are available on

WTTC’s website (www.wttc.org).

ROMANIA

WTTC’S APPROACH TO TOURISM SATELLITE ACCOUNTING

2020

TSA CONCEPTS & STRUCTURE

More formally known as Travel & Tourism Personal Consumption, this category includes all personal spending by an economy’s residents on Travel & Tourism services (lodging, transportation, entertainment, meals, financial services, etc) and goods (durable and nondurable) used for Travel & Tourism activities. Spending may occur before, during or after a trip. Spending covers all Travel & Tourism, outbound and domestic.

PERSONAL TRAVEL & TOURISM

Formally know as Intermediate Consumption of Travel & Tourism or more simply business travel, this category of expenditures by government and industry includes spending on goods and services (transportation, accommodation, meals, entertainment, etc) for employee business travel purposes.

BUSINESS TRAVEL

Formally known as Non-Market Services (Individual), this category includes expenditures (transfers or subsidies) made by government agencies to provide Travel & Tourism services such as cultural (eg. art museums), recreational (eg national park) or clearance (eg immigration/ customs) etc to visitors.

GOVERNMENT EXPENDITURES (INDIVIDUAL)

Formally known as Non-Market Services (Collective), this category includes operating expenditures made by government agencies on services associated with Travel & Tourism, but not directly linked to any individual visitor, instead these expenditures are generally made on behalf of the ‘community at large’, such as tourism promotion, aviation administration, security services and resort area sanitation services, etc.

GOVERNMENT EXPENDITURES (COLLECTIVE)

Formally known as Capital Formation, this category includes capital expenditures by direct Travel & Tourism industry service providers and government agencies to provide facilities, equipment and infrastructure to visitors.

CAPITAL INVESTMENT

Consumer goods (such as clothing, electronics or petrol) exported for ultimate sale to visitors, or Capital goods (such as aircraft or cruise ships) exported for use by Travel & Tourism industry providers.

EXPORTS (NON-VISITOR)

Expenditures by international visitors on goods and services within the resident economy.

VISITOR EXPORTS

TRAVEL & TOURISM CONSUMPTION

Total Travel & Tourism expenditures

made by and on behalf of visitors (goods

and services) in the resident economy

TRAVEL & TOURISM DEMAND

The nominal aggregate of tourism

activity in the resident economy

10.4

RON bn

0.8

5.3

3.3

Demand Side Accounts

1.5

0.1

3.2

15.3

24.6

2121

TRAVEL & TOURISM INDUSTRY SUPPLY

Total Travel & Tourism Industry supply

TRAVEL & TOURISM ECONOMY SUPPLY

Total Travel & Tourism Economy supply

RON bn

6.2

‘000s of Jobs 265.2

‘000s of Jobs 485.0

15.5

9.1

3.6

5.5

15.3

24.6

The Travel & Tourism Satellite Account is based on a ‘demand-side’ concept of economic activity, because the industry does not produce or supply a homogeneous product or service like traditional industries (agriculture, electronics, steel, etc). Instead, Travel & Tourism is an industrial activity defined by the diverse collection of products (durables and non-durables) and services (transportation, accommodation, food and beverage, entertainment, government services, etc) that are delivered to visitors. There are two basic aggregates of demand (Travel & Tourism Consumption and Total Demand) and by employing input/output modelling separately (blue/green arrows) to these two aggregates the Satellite Account is able to produce two different and complementary aggregates of Travel & Tourism Supply: the Travel & Tourism Industry and the Travel & Tourism Economy. The former captures the explicitly defined production-side ‘industry’ contribution (ie direct impact only), for comparison with all other industries, while the latter captures the broader ‘economy-wide’ impact, direct and indirect, of Travel & Tourism.

Supply Side Accounts

Direct Gross Domestic Product (also know as Value-Added) and Employment associated with Travel & Tourism Consumption. This is the explicitly defined Supply-side industry contribution of Travel & Tourism that can be compared one-for-one with the GDP and Employment contribution of other industries in the economy. Establishments in this category include traditional Travel & Tourism providers such as airlines, hotels, car rental companies, etc.

TRAVEL & TOURISM INDUSTRY GDP (DIRECT)

Indirect Gross Domestic Product associated with Travel & Tourism Consumption. This is the upstream resident economy contribution which comes about from suppliers to the traditional Travel & Tourism industry. Establishments in this category include fuel and catering companies, laundry services, accounting firms, etc.

TRAVEL & TOURISM INDUSTRY GDP (INDIRECT)

The value of goods imported by direct and indirect Travel & Tourism Industry establishments.

TRAVEL & TOURISM INDUSTRY IMPORTS

Direct and Indirect Gross Domestic Product (also know as Value-Added) and Employment associated with Travel & Tourism Demand. This is the broadest measure of Travel & Tourism’s contribution to the resident economy. Establishments in this category include those described above as well as manufacturing, construction, government, etc that are associated with Capital Investment, Government Services and Non-Visitor Exports.

TRAVEL & TOURISM ECONOMY GDP (DIRECT AND INDIRECT)

The value of goods imported by direct and indirect Travel & Tourism Economy establishments.

TRAVEL & TOURISM ECONOMY IMPORTS

22

Worldwide, in 2006, it is expected to post US$6.5 trillion of economic activity (Total Demand) and this is forecast to grow to US$12.1 trillion by 2016.

Travel & Tourism Demand in the European Union is expected to reach US$2.1 trillion in 2006, growing to US$3.5 trillion in 2016.

In Romania, in 2006, Travel & Tourism is expected to post RON24.6 billion (US$7.1 billion) of economic activity (Total Demand), growing to RON86.3 billion (US$14.1 billion) by 2016.

In 2006, the Travel & Tourism Industry should contribute 3.6 per cent to worldwide GDP, and the broader Travel & Tourism Economy is expected to account for 10.3 per cent.

In the European Union, the Travel & Tourism Industry is expected to post a GDP contribution of 3.9 per cent in 2006, while the Travel & Tourism Economy contribution will be 10.9 per cent.

Romania’s Travel & Tourism Industry is expected to contribute 1.9 per cent to gross domestic product (GDP) in 2006 (RON6.2 billion or US$1.8 billion), rising in nominal terms to RON20.7 billion or US$3.4 billion (2.5 per cent of total GDP) by 2016. The Travel & Tourism Economy contribution, meanwhile (as a percentage of total GDP) should rise from 4.8 per cent (RON15.5 billion or US$4.5 billion) to 5.8 per cent (RON48.4 billion or US$7.9 billion) over this same period.

Travel & Tourism is a high-growth activity, which is forecast to increase its total economic activity by 4.2 per cent per annum worldwide in real terms over the next ten years.

In the European Union, Travel & Tourism is expected to post average annualized gains of 3.5 per cent between 2007 and 2016.

For Romania, Travel & Tourism activity is forecast to grow by 7.9 per cent per annum in real terms between 2007 and 2016.

Travel & Tourism is human resource intensive, creating quality jobs across the full employment spectrum. In 2006, one in 11.5 jobs will be generated by the Travel & Tourism Economy. The Travel & Tourism Economy accounts for 8.7 per cent of global employment. Today there are 76.7 million Travel & Tourism Industry jobs and 234.3 million jobs in the Travel & Tourism Economy, and these are projected to rise to 89.5 million and 279.3 million respectively by 2016.

The European Union Travel & Tourism Industry is expected to generate 8.6 million jobs in 2006 (4.2 per cent of total employment), while the broader Travel & Tourism Economy will account for 23.8 million jobs (11.8 per cent).

Romania’s Travel & Tourism Economy employment is estimated at

485,000 jobs in 2006 – 5.8 per cent of total employment, or one in

every 17.4 jobs. By 2016, these should increase to 570,000 jobs – 6.9 per

cent of total employment or one in every 14.4 jobs. The current (2006)

265,000 Travel & Tourism Industry jobs account for 3.1 per cent of total

employment and are forecast to total 315,000, or 3.8 per cent of the total,

by 2016.

Travel & Tourism is a major exporter, with inbound visitors injecting

foreign exchange directly into the economy. Travel & Tourism exports

in the European Union are expected to represent 13.0 per cent of total

exports in 2006.

In Romania, exports make up a very important share of Travel &

Tourism’s contribution to GDP. Of total Romanian exports, Travel &

Tourism is expected to generate 5.2 per cent (RON6.4 billion or US$1.9

billion) in 2006, increasing to RON28.8 billion, or US$4.7 billion (4.6

per cent of total), by 2016.

Travel & Tourism is a catalyst for construction and manufacturing. In

2006, the public and private sectors combined are expected to spend

US$1.0 trillion on new Travel & Tourism Capital Investment worldwide

– 9.3 per cent of total investment – rising to US$2.1 trillion, or 9.6 per

cent of the total, in 2016.

In the European Union, Travel & Tourism Capital Investment is projected

to total US$241.4 billion in 2006, or 8.6 per cent of total regional capital

investment.

Travel & Tourism Capital Investment in Romania is estimated at RON5.3

billion – US$1.5 billion or 7.2 per cent of total investment – 2006. By

2016, this should reach RON15.8 billion – US$2.6 billion or 7.5 per

cent of total.

Travel & Tourism is both a generator and receiver of government funds.

Globally, in 2006, Travel & Tourism is expected to garner US$300.2

billion, or 3.8 per cent, of total government expenditures. By 2016,

government spending on Travel & Tourism should increase to US$480.9

billion – 4.0 per cent of total government expenditure.

Government Travel & Tourism operating expenditures in Romania in

2006 are expected to total RON0.9 billion – (US$263 million) – or 4.3

per cent of total government spending. In 2016, this spending is forecast

to increase to RON1.8 billion (US$290 million), or 4.5 per cent of total

government spending.

TRAVEL & TOURISM’S ECONOMIC IMPACTTRAVEL & TOURISM – ENCOMPASSING TRANSPORT, ACCOMMODATION, CATERING, RECREATION AND SERVICES FOR VISITORS – IS ONE OF THE WORLD’S HIGHEST PRIORITY INDUSTRIES AND EMPLOYERS.

23

ROMANIA ESTIMATES AND FORECASTS 2006 2016

RON bn % of Tot Growth1 RON bn % of Tot Growth2

Personal Travel & Tourism 10.4 3.9 7.6 35.9 5.2 7.7

Business Travel 1.5 --- 4.6 4.1 --- 4.9

Government Expenditures 0.9 4.3 2.3 1.8 4.5 1.7

Capital Investment 5.3 7.2 6.7 15.8 7.5 6.2

Visitor Exports 3.2 2.5 22.4 11.6 1.8 8.5

Other Exports 3.3 2.6 11.1 17.2 2.7 12.4

Travel & Tourism Demand 24.6 --- 9.2 86.3 --- 7.9

T&T Industry GDP 6.2 1.9 9.4 20.7 2.5 7.4

T&T Economy GDP 15.5 4.8 8.9 48.4 5.8 6.7

T&T Industry Employment 265.2 3.1 2.8 314.7 3.8 1.7

T&T Economy Employment 485.0 5.8 3.5 569.5 6.9 1.6

12006 Real Growth Adjusted for Inflation (%); 22007-2016 Annualized Real Growth Adjusted for Inflation (%); ‘000 of Jobs

EUROPEAN UNION ESTIMATES AND FORECASTS 2006 2016

US$ bn % of Total Growth1 US$ bn % of Total Growth2

Personal Travel & Tourism 910.3 11.3 3.0 1,344.9 11.8 2.5

Business Travel 219.0 --- 4.8 326.8 --- 2.5

Government Expenditures 92.1 3.2 0.8 127.1 3.2 1.7

Capital Investment 241.4 8.6 2.2 441.9 9.3 4.2

Visitor Exports 364.5 6.9 5.8 650.9 6.7 4.3

Other Exports 321.9 6.1 5.0 637.2 6.6 5.5

Travel & Tourism Demand 2,149.4 --- 3.8 3,529.0 --- 3.5

T&T Industry GDP 544.5 3.9 4.2 811.7 4.1 2.4

T&T Economy GDP 1,513.1 10.9 4.5 2,404.0 12.0 3.1

T&T Industry Employment 8,605.6 4.2 3.3 9,511.6 4.5 1.0

T&T Economy Employment 23,820.3 11.8 3.3 27,646.0 13.0 1.5


WORLD ESTIMATES AND FORECASTS 2006 2016

US$ bn % of Total Growth1 US$ bn % of Total Growth2

Personal Travel & Tourism 2,845 9.5 3.7 4,916 9.8 3.4

Business Travel 672 --- 5.9 1,190 --- 3.6

Government Expenditures 300 3.8 2.2 481 4.0 2.6

Capital Investment 1,011 9.3 4.9 2,060 9.6 4.6

Visitor Exports 896 6.4 6.5 1,754 5.5 4.9

Other Exports 750 5.4 5.0 1,715 5.4 6.5

Travel & Tourism Demand 6,477 --- 4.6 12,119 --- 4.2

T&T Industry GDP 1,754 3.6 4.4 2,969 3.6 3.2

T&T Economy GDP 4,964 10.3 4.8 8,972 10.9 3.7

T&T Industry Employment 76,728.7 2.8 3.4 89,484.5 2.9 1.6

T&T Economy Employment 234,304.5 8.7 4.4 279,346.7 9.0 1.8


24

TOTAL DEMAND

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ROMANIATravel & Tourism Total Demand

(Cumulative Real Growth, %)

EUROPEAN UNIONTravel & Tourism Total Demand


TRAVEL & TOURISM IN ROMANIA IS EXPECTED TO GENERATE RON24.6 BILLION (US$7.1 BILLION) OF TOTAL DEMAND IN 2006, INCLUDING:

■ RON10.4 billion (US$3.0 billion) of Personal Travel & Tourism consumption by residents of Romania (3.9 per cent of total personal consumption);

■ RON1.5 billion (US$445 million) of Business and Government Travel by resident companies and government employees;

■ RON913 million (US$263 million) of Government Expenditures, or 4.3 per cent of total government spending in Romania, to provide individual and collective services to the country’s Travel & Tourism Industry and its visitors;

■ RON5.3 billion (US$1.5 billion) of Capital Investment, or 7.2 per cent of total capital investment in Romania, in personal, commercial and public Travel & Tourism facilities, equipment and infrastructure by residents, Travel & Tourism companies and government agencies;

■ RON3.2 billion (US$915 million) of Visitor Exports generated from international visitor markets, or 2.5 per cent of Romania’s total exports; and

■ RON3.3 billion (US$941 million) of Merchandise Trade Exports, or 2.6 per cent of total exports.

This breakdown of demand shows that Personal and Business Travel & Tourism accounts for nearly 50 per cent of the nation’s Travel & Tourism Economy. Given how important Travel & Tourism is already, the sector must be accorded the highest priority by government so as to ensure sustainable growth in the future.

Over the past 15 years (1990-2005), Romania’s Travel & Tourism activity has experienced a series of strong and weak years followed by a steadier performance (since 1999) all during a period of economic transition. But growth in Travel & Tourism activity has nonetheless exceeded 44 per cent since 1988. This compares with 41 per cent cumulative growth over the same period for the European Union, and with 57 per cent for the world overall. Romania now looks poised for a period of healthy growth in terms of Travel & Tourism Demand, especially in the medium term.

In 2006, Romania’s Travel & Tourism is expected to grow by 9.2 per cent overall. In the longer term – ie to 2016 – Travel & Tourism Demand in Romania is forecast to average 7.9 per cent per annum. This would comfortably exceed expected worldwide growth of 4.2 per cent per annum, as well as the 3.5 per cent annual average growth forecast for the European Union.

WTTC/OEF expect strong growth in Personal Travel & Tourism and visitor exports (7.7 and 8.5 per cent per annum respectively) for the foreseeable future, providing necessary support for business travel and government expenditures – which are expected to post similarly consistent, albeit slightly slower growth.

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(2006 Est. RON bn)

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(2006 Est. US$ bn)


(2000 Constant US$ bn)

25

EMPLOYMENT

A total of 485,000 jobs (direct and indirect) are expected to be generated across the broader spectrum of the Travel & Tourism Economy, encompassing:■ travel company employment,■ government agency employment, and■ supplier company employment.The first category represents Travel & Tourism Industry jobs, while all three represent Travel & Tourism Economy jobs.

Travel & Tourism Industry jobs in Romania, which are expected to total 265,000 in 2006, represent 3.1 per cent of the country’s workforce. By 2016, Travel & Tourism Industry employment is forecast to increase by 49,000 jobs to 3.8 per cent of total employment in Romania.

The 485,000 Travel & Tourism Economy jobs in Romania in 2006 represent 5.8 per cent of the total workforce. By 2016, Travel & Tourism Economy employment is expected to increase by 85,000 jobs in Romania to 6.9 per cent of total employment.

Over the past ten years, Travel & Tourism employment in Romania has worked very hard to recover the jobs lost in the economic transition. In 2006, due to the expected strong growth in visitor exports Travel & Tourism the employment outlook for Travel & Tourism is very positive, with employment gains expected to exceed 16,000 jobs.

Assuming that growth in the economy remains positive and visitor exports strengthens over the next few years, there is strong potential over the next decade to create 8,500 new jobs a year. This would mean that the total number of jobs in Travel & Tourism would increase by just over 1.6 per cent per annum between 2007 and 2016.

The charts opposite highlight a few points of interest. First, Romania’s Travel & Tourism employment growth has been mostly positive for the past few years and is expected to continue this trend.

Second, if Travel & Tourism employment in Romania as a percentage of total employment is compared with the respective shares of neighbouring and competing destinations, Romania comes well down the ranking at number 142. Similarly disappointing, is the fact that it still ranks unfavourably – in 119th position – among the list of 174 countries whose future growth performances are assessed by WTTC/OEF.

THE TRAVEL & TOURISM INDUSTRY IN ROMANIA IS EXPECTED TO GENERATE DIRECTLY 265,000 JOBS IN 2006.

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ROMANIATravel & Tourism Employment

(‘000 Jobs)

EUROPEAN UNIONTravel & Tourism Employment

(mn Jobs)

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ROMANIATravel & Tourism Economy Employment


EUROPEAN UNIONTravel & Tourism Economy Employment


WTTC LEAGUE TABLE EXTRACTTravel & Tourism Economy Employment

(2006, % of Total Employment)

27 Croatia .....................................................23.1

41 Slovenia ..................................................16.9

42 Montenegro ..........................................16.8

44 Greece .....................................................15.9

55 Bulgaria ...................................................13.6

59 Czech Republic ....................................12.6

87 Bosnia and Herzegovina .................... 9.5

95 Hungary .................................................... 8.6

97 Poland ....................................................... 8.5

142 Romania ................................................... 5.8

WTTC LEAGUE TABLE EXTRACTTravel & Tourism Economy Employment

(10-Year Real Growth, Annualized, %)

7 Montenegro ............................................ 4.7

9 Croatia ....................................................... 4.7

117 Bosnia and Herzegovina .................... 1.6

119 Romania ................................................... 1.6

127 Greece ....................................................... 1.5

148 Czech Republic ...................................... 1.0

157 Slovenia .................................................... 0.5

160 Poland ....................................................... 0.5

165 Hungary .................................................... 0.3

172 Bulgaria ....................................................-0.7

26

GROSS DOMESTIC PRODUCTTHE TRAVEL & TOURISM INDUSTRY IN ROMANIA IS EXPECTED TO PRODUCE DIRECTLY RON6.2 BILLION (US$1.8 BILLION), OR 1.9 PER CENT OF TOTAL GDP, IN 2006.

The broader Travel & Tourism Economy (direct and indirect) is forecast to contribute RON15.5 billion (US$4.5 billion), or 4.8 per cent, to total GDP. The long-term expectations for Travel & Tourism GDP growth are positive, exceeding 6.7 per cent annualized real growth to 2016. Over the same period, Travel & Tourism Economy GDP is forecast to gain a full percentage point to reach a 5.8 per cent share of total GDP, or RON48.4 billion (US$7.9 billion).

The Travel & Tourism results and forecasts illustrate the significant and sometimes massive economic stimulus of Travel & Tourism, especially for a developing country. The first set of charts (stacked bar) for Romania illustrates how the tourism industry acts as a leading economic catalyst as its contribution permeates through Romania’s Travel & Tourism Economy.

For the European Union, there is also significant leverage between both parts of the value added and they tend to move in step. In general, these charts illustrate how small yet positive changes in the Travel & Tourism Industry, especially visible in the Romanian charts, result in a much greater impact on the broader Travel & Tourism Economy.

In the second set of charts (Cumulative Real Growth), Romania’s Travel & Tourism Economy shows a return to positive territory following negative results posted during the early years of economic transition. Also evident is the strongly positive outlook for growth over the next ten years. Overall, this level of growth is much stronger than for the European Union overall, which continues to post positive, but more modest gains.

The third set of charts (left) compares WTTC/OEF’s estimates for Romania and its neighbouring and competing destinations, showing respective Travel & Tourism Economy GDP as a percentage of total GDP. Ranked in 162nd place among 174 countries – well at the bottom of the list – Romania is currently among the lower-tier, tourism-intensive countries of the region and the world. However, the second league table extract illustrates how Romania’s prospects for GDP growth are also better than for most of its neighbours and competitors within the regional and world ranking – in third and 12th position respectively

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ROMANIATravel & Tourism GDP


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ROMANIATravel & Tourism Economy GDP


EUROPEAN UNIONTravel & Tourism GDP


EUROPEAN UNIONTravel & Tourism Economy GDP


WTTC LEAGUE TABLE EXTRACTTravel & Tourism Economy GDP


WTTC LEAGUE TABLE EXTRACTTravel & Tourism Economy GDP

(2005, % of Total GDP)

30 Croatia .......................................................20.1

43 Bulgaria .....................................................16.0

44 Montenegro ............................................15.7

48 Greece .......................................................15.1

52 Slovenia .....................................................14.6

62 Czech Republic .......................................13.6

69 Bosnia and Herzegovina .....................11.8

99 Poland .......................................................... 9.1

101 Hungary ...................................................... 9.0

162 Romania ...................................................... 4.8

2 Croatia ......................................................... 8.3

3 Montenegro .............................................. 8.0

12 Romania ...................................................... 6.7

20 Bosnia and Herzegovina ....................... 6.2

43 Czech Republic ......................................... 5.2

53 Hungary ...................................................... 4.9

90 Poland .......................................................... 4.3

106 Slovenia ....................................................... 4.1

108 Bulgaria ....................................................... 3.9

127 Greece ......................................................... 3.7

2727

The largest component of capital investment originates from the private sector in new plant and equipment, while the public sector invests in new Travel & Tourism infrastructure.

This represents the continuation of significant capital investment growth in the Romanian Travel & Tourism economy since the early-1990s. Over the next ten years (2007-16), the contribution of Travel & Tourism to Romania’s capital investment account is expected to increase at an average rate of 6.2 per cent per annum in real terms.

Examination of Travel & Tourism Capital Investment results and forecasts lends greater insight into the market forces at work in a given economy and the expectations by the public and private sectors to meet the challenges and opportunities in the years ahead. For the most part, Travel & Tourism Capital Investment tends to be cyclical, with strong links to major public policy initiatives, the business / market cycle, major events (such as natural disasters) and significant socio-political changes.

Worldwide, Travel & Tourism Capital Investment is expected to generate 9.3 per cent of total investment in 2006. The expectation for global growth from 2007-16 is 4.6 per cent per year (in constant US dollars). In the European Union, the respective figures are 8.6 per cent of total capital investment in 2006 and 4.2 per cent real growth over the coming decade.

The charts to the right illustrate several interesting points. First, Romania’s Travel & Tourism Capital Investment is expected to show steady significant growth as its economic transition continues. Second, when compared with neighbouring and competing countries, Romania’s ranking is still modest – as it is in the broader listing of 174 countries in investment percentage terms for 2006. With Travel & Tourism estimated at 7.2 per cent of total investment, Romania ranks 138th in the world listing, behind Bosnia and Herzegovina (133rd place).

However, Romania’s Travel & Tourism Capital Investment growth prospects for 2007-16 place it at the upper tier of the WTTC league tables – in third position in the regional and 21st position in the world listings. This ranking sends a positive message to Travel & Tourism operators at home and abroad that Romania is well positioned and absolutely expects to attract significant new business ventures over the coming decade.

CAPITAL INVESTMENTIN 2006, TRAVEL & TOURISM CAPITAL INVESTMENT IN ROMANIA IS EXPECTED TO TOTAL RON5.3 BILLION (US$1.5 BILLION), OR 7.2 PER CENT OF TOTAL INVESTMENT.

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ROMANIATravel & Tourism Capital Investment


EUROPEAN UNIONTravel & Tourism Capital Investment


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EUROPEAN UNIONTravel & Tourism Capital Investment


WTTC LEAGUE TABLE EXTRACTTravel & Tourism Capital Investment

(2006, % of Total)

56 Bulgaria .....................................................14.2

62 Montenegro ............................................13.4

70 Greece .......................................................12.6

81 Czech Republic .......................................11.9

96 Slovenia .....................................................10.4

99 Croatia .......................................................10.1

120 Poland .......................................................... 8.4

130 Hungary ...................................................... 7.7


138 Romania ...................................................... 7.2

WTTC LEAGUE TABLE EXTRACTTravel & Tourism Capital Investment


8 Montenegro .............................................. 7.5

17 Czech Republic ......................................... 6.5

21 Romania ...................................................... 6.2

25 Hungary ...................................................... 6.1

43 Greece ......................................................... 5.4


64 Poland .......................................................... 4.6

65 Slovenia ....................................................... 4.6

79 Croatia ......................................................... 4.2

102 Bulgaria ....................................................... 3.7

28

PERSONAL & BUSINESSIN 2006, ROMANIA IS EXPECTED TO GENERATE RON10.4 BILLION (US$3.0 BILLION) OF PERSONAL TRAVEL & TOURISM CONSUMPTION BY RESIDENTS, OR 3.9 PER CENT OF TOTAL PERSONAL CONSUMPTION.

In Romania, business travel in 2006 is expected to total RON1.5 billion, or US$445 million (88 per cent corporate, 12 per cent government).

Unlike visitor exports, which depend on international markets for consumers, the business generated in these two categories depends on Romania’s economy itself. As the national economy grows, Romania’s consumer and business travel tends to follow suit. In the mid 1990s, Romania’s Personal Travel & Tourism enjoyed a rapid period of growth following the change of government. Over the next decade (2007-16), Personal Travel & Tourism in Romania is expected to grow at an annual rate of 7.7 per cent, while Business/Government Travel is forecast to grow by 4.9 per cent a year.

Although some of this Travel & Tourism occurs domestically within Romania, a part of it takes place outside the country. When the spending does take place abroad, the satellite account generates a corresponding ‘import credit’, providing for an accurate assessment of Travel & Tourism ‘produced’ in Romania and Travel & Tourism ‘produced’ by the rest of the world.

Analysis of Romania’s results highlights a few interesting points. First, Romania’s residents have recently been allocating only about 3.9 per cent of their personal expenditures on Travel & Tourism. This percentage is well below the world average of 9.5 per cent and significantly lower than the European Union average of 11.3 per cent. Generally, the level of personal Travel & Tourism spending is directly linked to the development of the resident economy. As per capita income increases, so does Travel & Tourism spending.

Romania’s gradually improving macroeconomic situation since the mid-1990s has been reflected by the strongly positive trend of Romanian residents’ spending on Travel & Tourism, as illustrated by the stacked bar and cumulative growth charts on the left.

Nevertheless, even discounting the mid 1990s’ turnaround, the cumulative growth charts for Romania and the European Union illustrate the strong future growth outlook for Romania – well above that for European Union Travel & Tourism spending. If, as expected, the economy continues to show positive growth, Romania’s residents’ spending on personal and business Travel & Tourism is also likely to accelerate.

Finally, the league table extracts also suggest that, while Romania ranks in the lower tier of countries (148th position in the ranking) in terms of current Travel & Tourism spending on a relative basis, it ranks much more favourably in the worldwide listing (6th) in respect of future forecast growth of personal Travel & Tourism. This suggests there is significant opportunity for generating and producing Travel & Tourism services in Romania for Romanians in the years to come.

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ROMANIAPersonal & Business Travel & Tourism


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ROMANIAPersonal Travel & Tourism


EUROPEAN UNIONPersonal & Business Travel & Tourism


EUROPEAN UNIONPersonal Travel & Tourism

(Cumulative Real Growth,%)

WTTC LEAGUE TABLE EXTRACTPersonal Travel & Tourism


WTTC LEAGUE TABLE EXTRACTPersonal Travel & Tourism

(2006, % of Total Personal Consumption)

26 Croatia .......................................................12.0

54 Greece ......................................................... 9.2

62 Slovenia ....................................................... 8.5

72 Hungary ...................................................... 7.7

74 Bulgaria ....................................................... 7.5

75 Czech Republic ......................................... 7.5

91 Poland .......................................................... 6.1

93 Montenegro .............................................. 6.0


148 Romania ...................................................... 3.9

6 Romania ...................................................... 7.7

11 Croatia ......................................................... 7.1

20 Montenegro .............................................. 6.4

42 Czech Republic ......................................... 5.7

54 Hungary ...................................................... 5.5

62 Poland .......................................................... 5.3

63 Bulgaria ....................................................... 5.3

106 Slovenia ....................................................... 4.5


143 Greece ......................................................... 3.5

29

EXPORTS

In 2006, Travel & Tourism Services and Merchandise Exports for Romania are expected to total RON6.4 billion, or US$1.9 billion – 49 per cent from visitors and 51 per cent from exported consumer and capital goods – representing some 26 per cent of total Travel & Tourism Demand. Without question, as this category grows, it will enhance the health and vitality of Romania’s Travel & Tourism sector.

Over the past 15 years, Travel & Tourism Visitor Exports in Romania has been on a roller coaster ride with significant gains in the early 90’s tempered by significant loses in the late 90’s and new gains in recent years. Over the next ten years, Romania’s Visitor Exports are expected to grow by a strong 8.5 per cent per annum, while Travel & Tourism Merchandise Exports (non-visitor exports) are forecast to record even stronger growth of 12.4 per cent per annum.

Globally, and for the European Union, Visitor Exports are projected to grow by 4.9 and 4.3 per cent per annum respectively over the next ten years (2007-2016).

Clearly, based on these forecasts, Romania’s Travel & Tourism Visitor Exports’ growth is excellent and well ahead of its regional and global peers.

Although long-term expectations for Romania’s Travel & Tourism export growth (2007-2017) are positive, these forecasts – like any others – depend on future events and can therefore not be guaranteed. Hurricane Katrina in 2005, for example, which had a major negative impact on tourism in the Gulf Coast of the USA, is a perfect illustration of the uncertainty inherent in forecasting.

Examination of the WTTC league tables reveals that Romania is lower on the scale of current Visitor Exports measured as a percentage of total exports. In the second league table, Romania’s Visitor Exports’ growth illustrates the positive outlook ahead, since it ranks in 4th position globally. This ranking sends a strong message that there is a need for the public and private sectors to pay significant attention to maintaining international visitor growth at these high levels.

TRAVEL & TOURISM EXPORTS PLAY A STRONG AND VITAL ROLE IN ROMANIA’S TRAVEL & TOURISM BUSINESS.

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EUROPEAN UNIONTravel & Tourism Exports(2000 Constant US$ bn)

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ROMANIATravel & Tourism Exports


EUROPEAN UNIONTravel & Tourism Exports


WTTC LEAGUE TABLE EXTRACTTravel & Tourism Visitor Exports

(2006, % of Total Exports)

22 Montenegro ............................................37.6

25 Greece .......................................................35.1

30 Croatia .......................................................32.0

57 Bulgaria .....................................................17.8

61 Bosnia and Herzegovina .....................17.3

91 Slovenia ....................................................... 8.5

99 Poland .......................................................... 7.2

109 Czech Republic ......................................... 6.0

113 Hungary ...................................................... 5.7

150 Romania ...................................................... 2.5

WTTC LEAGUE TABLE EXTRACTTravel & Tourism Exports


2 Montenegro ............................................12.6

4 Romania ...................................................... 8.5

6 Croatia ......................................................... 8.1


64 Hungary ...................................................... 5.6

134 Czech Republic ......................................... 4.5

148 Poland .......................................................... 4.2

158 Bulgaria ....................................................... 3.9

163 Slovenia ....................................................... 3.8

165 Greece ......................................................... 3.6

30

GOVERNMENT IN 2006, GOVERNMENT AGENCIES IN ROMANIA ARE EXPECTED TO SPEND RON913 MILLION (US$263 MILLION) OF CURRENT OPERATING FUNDS ON TRAVEL & TOURISM.

This represents 4.3 per cent of total government expenditures, which are allocated to providing individual and collective government Travel & Tourism services to visitors, travel companies and the community at large. Over the next ten years (2007-16), Travel & Tourism Government Expenditures in Romania are expected to increase by an average of 1.7 per cent per year in real terms.

Globally, governments are forecast to allocate an average of 3.8 per cent of their expenditures to Travel & Tourism-related functions, and to increase this spending by 2.6 per cent per annum over the next ten years. The corresponding figures for the European Union are 3.2 per cent of total government spending and 1.7 per cent real growth for the coming decade. Based on these results, Romania’s 2006 government contribution of 4.3 per cent is currently above the level of its regional competitors and global average in terms of Travel & Tourism support and services.

In this WTTC report, 2006 government expenditures include individual expenditures of RON148 million (US$43 million) that can be linked to individual visitors, such as immigration services. But they also include collective expenditures of RON765 million (US$220 million) that are undertaken for the community at large – such as on airport administration – but which have a logical service connection to Travel & Tourism.

One would naturally assume there should be a direct link between the impact of an industry / sector like Travel & Tourism on the economy (in terms of GDP) and the amount of funding allocated by governments towards that industry/sector. In Romania, the 2006 ratio of Travel & Tourism GDP (percentage of total GDP) to government expenditures is 1.1:1.0. Worldwide, and in the European Union, this ratio is 2.7:1.0 and 3.4:1.0 respectively. This would suggest that Romania is significantly better than the world average and the European Union results indicating that Romania government authorities generally are currently giving significantly more back to Travel & Tourism than governments in the rest of the world.

The league tables opposite reinforces this particular point. First, Romania’s government expenditures for Travel & Tourism are at the top of the regional listing, ranking the country 68th out of 174 worldwide. However, disappointing is the outlook for growth. In this measure Romania ranks 157th worldwide.

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ROMANIATravel & Tourism Gov’t Expenditures


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ROMANIATravel & Tourism Gov’t Expenditures


EUROPEAN UNIONTravel & Tourism Gov’t Expenditures


EUROPEAN UNIONTravel & Tourism Gov’t Expenditures


WTTC LEAGUE TABLE EXTRACTTravel & Tourism Gov’t Expenditures(10-Year Real Growth, Annualized, %)

WTTC LEAGUE TABLE EXTRACTTravel & Tourism Gov’t Expenditures(2006, % of Total Gov’t Expenditures)

56 Hungary ...................................................... 5.2

68 Romania ...................................................... 4.3

69 Slovenia ....................................................... 4.2

79 Greece ......................................................... 3.8

86 Czech Republic ......................................... 3.6

91 Montenegro .............................................. 3.4

96 Bulgaria ....................................................... 3.2

114 Poland .......................................................... 2.7

153 Croatia ......................................................... 1.5


53 Montenegro .............................................. 4.3


94 Slovenia ....................................................... 3.3

98 Bulgaria ....................................................... 3.3

121 Czech Republic ......................................... 2.8

142 Hungary ...................................................... 2.2

153 Croatia ......................................................... 1.9

157 Romania ...................................................... 1.7

166 Poland .......................................................... 1.3

174 Greece ........................................................-0.9

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However, the challenge for this post-communist country is to fully embrace the commercial world in order to develop a competitive tourism product. Although privatization in tourism is now almost completed, the lack of infrastructure necessary for tourism, combined with a lack of awareness of regional tourism attractions, are main reasons accounting for current low levels of tourist arrivals.

Despite healthy economic growth of approximately five per cent per year over the past three years, Romania’s population is still one of the poorest in Europe. Travel & Tourism can be a catalyst for improving livelihoods throughout the country and has been identified as such by Romania’s leaders as a focal point of the country’s National Development Plan.

Nevertheless, while government accepts that Travel & Tourism has a significant role to play in achieving robust economic reforms, it appears to underestimate the full scope of the industry as a catalyst for the development of other areas of economic activity, such as agriculture, manufacturing and financial services. Neither is there a wide appreciation of Travel & Tourism’s potential to reduce disparities between urban and rural areas – which, in turn, could bring major improvements to Romanians’ quality of life and well-being.

Forecasts by WTTC and its research partner, OEF, are extremely positive, pointing to an average annual growth in Travel & Tourism Demand of 7.9 per cent over the next ten years, ranking Romania fourth in the world in terms of long-term growth. If this growth is realized, the wider Travel & Tourism Economy will contribute 5.8 per cent to Romania’s GDP by 2016. Moreover, the potential impact could be even greater if the underlying policy framework is conducive to growth – ie if the government makes a commitment to work with other stakeholders to create the underlying conditions for market confidence, dynamism and sustainability.

Looking ahead, Romania is in a prime position to develop a sustainable and successful tourism model. The country’s planned accession to the EU in 2007 will be a major boost to its Travel & Tourism industry and the time is now right to seize this opportunity for economic growth and job creation.

It is clear, however, that several challenges lie ahead, and these must be addressed to secure the long-term sustainable development of Travel & Tourism in Romania, which will ensure maximum benefits for all stakeholders and at all levels of the economy. While the private sector can, and must, play an increasingly important role to develop quality products and competitive services geared towards rapidly changing demand, the government needs to show leadership by stimulating and facilitating investment, streamlining and clarifying regulations, and developing much needed infrastructure and human capital.

Against this background, WTTC recommends that the Government of Romania:■ Highlight and communicate the strategic importance of tourism■ Plan for the future ■ Ensure that quality statistics and information feed into policy and

decision-making processes■ Empower national Travel & Tourism institutions to drive forward

development of the industry■ Co-ordinate infrastructure development which supports Travel &

Tourism■ Create a competitive business environment that encourages investment■ Balance economics with environment, people and cultures■ Develop the human capital required for Travel & Tourism growth■ Promote product diversification that spreads demand■ Bring new funding and co-ordination into promotion and marketing■ Favour technological advancement

THE POLICY FRAMEWORK POLICY RECOMMENDATIONS

AFTER TWO DECADES OF DECLINING VISITOR NUMBERS AND UNDER-INVESTMENT IN DEVELOPMENT AND MODERNIZATION, ROMANIA’S TRAVEL & TOURISM INDUSTRY IS SLOWLY REGAINING PROFILE AND PACE. PRIVATIZATION OF STATE ACCOMMODATION SINCE THE REVOLUTION IN 1989, COUPLED WITH NATIONALS RETURNING WITH SKILLS AND MONEY, AS WELL AS INVESTMENT BY THE MINISTRY OF TRANSPORT, CONSTRUCTION AND TOURISM, AUGUR WELL FOR A NEW DIRECTION IN TRAVEL & TOURISM IN ROMANIA. As Romania heads towards membership of the European Union and consolidates infrastructure, governance and legal systems, Travel & Tourism will have an increasing role to play – particularly in creating sustainable jobs for the country’s huge rural population. And, given its prime central European location and rich cultural and natural diversity, Romania has everything to play for.

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are disseminated to all regions of Romania and are communicated to

local authorities and stakeholders throughout the country.

Bring Travel & Tourism players togetherThere are already a large number of Travel & Tourism operators in

Romania, from hotel and restaurant owners to tour operators and

other service providers. Yet focus group discussions organized by

WTTC highlighted that there is at present a certain reluctance among

the different sectors of the industry to work together to overcome

traditional competitive barriers. The government should also consider

convening a National Tourism Congress, which would bring domestic

and foreign stakeholders together to discuss Travel & Tourism challenges

and opportunities. This would be an effective way of promoting the

importance of the industry to public and private stakeholders.

European Capital of CultureThe regional town of Sibiu is set to be European Capital of Culture in

2007 and major renovations and infrastructure developments are already

underway in order to facilitate this. It is a huge opportunity to put

Romania on the European tourism map, not only in the eyes of potential

foreign visitors but also among Romanians themselves.

PLAN FOR THE FUTURE No consistent strategy for tourism in the pastLong-term tourism planning at both national and regional levels is

a prerequisite for generating investor confidence and organizing the

successful and sustainable development of Travel & Tourism in Romania.

Structural reorganization over the past ten years, particularly in the

Ministry of Transport, Construction and Tourism and National Tourism

Authority, has meant that, until now, there has been no published

strategic plan or policy for tourism development in Romania. WTTC

commends the present administration for its commitment to drawing

up such a plan as a matter of urgency and recommends an in-depth

policy Master Plan, based on well defined broad strategy objectives, that

incorporate the following basic elements:

■ Clearly defined goals, objectives and responsibilities

■ Decisions based on quantitative input

■ Indications of best practice in tourism development

■ Measures to support existing industry, as well as for the promotion

of new developments

■ An articulated strategy for product development and

diversification

■ A long-term strategy for tourism marketing and promotion in line

with the policy’s long-term goals and objectives; and

■ Clear branding that reinforces the basic vision for Romania’s Travel

& Tourism development

HIGHLIGHT AND COMMUNICATE THE STRATEGIC IMPORTANCE OF TOURISM Recognize Travel & Tourism’s economic importanceTravel & Tourism has the potential to become an important export sector

in Romania and to provide jobs and economic growth for the country’s

vast rural population. It possesses the inherent ability to diversify

Romania’s economy, to stimulate entrepreneurship – particularly among

small and medium-sized enterprises (SMEs) – catalyze investment, create

large numbers of sustainable jobs, and help social development in local

communities.

Although Travel & Tourism was identified as a national priority

by the President in the mid-1990s, there is still a widespread lack of

awareness of the industry’s economic value and potential within all levels

of government and the population at large. In the current climate of

preparation for EU accession, where focus is on issues such as the judicial

system, infrastructure and the environment, Travel & Tourism is not a

priority. However these policy areas have a significant impact on tourism

and, indeed, tourism could be a catalyst for change and improvement in

this regard. It is therefore vital that Travel & Tourism is integrated into

future development plans and EU accession programmes.

In general both government authorities and the private sector are

open to developing tourism, but there is a need for deeper understanding

of the industry, how it works, and what it needs in order to be successful.

Factor Travel & Tourism into mainstream policies Travel & Tourism should be factored into mainstream policies for

employment, trade, investment, education, culture and environmental

protection. The strategic importance of Travel & Tourism should

be communicated to all levels of government, industry and local

communities. All government departments affected by, or impacting on,

Travel & Tourism development should be closely involved in drawing

up tourism policies and in planning and co-ordinating individual

programmes.

An industrial image campaign The government should undertake an image campaign to ensure that all

public and private stakeholders recognize Travel & Tourism’s full impact

across the national economy – not just on eating and drinking places and

retail business, but also on construction, real estate and other sectors of

the economy. Even more importantly, stakeholders should be made aware

of its untapped potential and of the spin-off benefits of tourism that filter

down through all levels of the community.

Travel & Tourism as a vehicle for rural developmentRural tourism is mentioned as one of five focal points set out in

the National Development Plan. There is already considerable work

being done at ground level to kickstart tourism in rural areas through

international development agencies and the focus is, quite rightly, on

ensuring competitiveness and standards. It is in this area that Romania

has the most to gain from Travel & Tourism and the government should

ensure that all communications regarding the importance of the industry

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Implementation is importantOnce a coherent plan is in place it is vital that there is commitment from

all stakeholders, and particularly government authorities, to implement

that plan over the given time-frame. The Master Plan, or at least the

broad strategy objectives, should be adopted as an Act of Parliament to

ensure their long-term implementation – regardless of the government

in power.

Private sector input in planning and implementationIn order to ensure greater support and commitment from all stakeholders,

the government should also initiate a more cohesive and co-operative

approach to longer-term tourism planning and development, involving

all levels of government, the private sector and local communities. The

recent seminar, organized by the National Tourism Authority (NTA)

and CHF International, which brought together public and private

stakeholders from all over the country, provided a valuable discussion

forum and the outputs should be reviewed carefully as a plan is

constructed. This is a format which could and should be replicated as

the planning process moves forward. On a longer-term basis, there is

a need for the private sector to come together and organize itself into a

coherent group, or council, which can provide direct private sector input

into mission-critical policy and decision-making by the public sector with

regard to Travel & Tourism. WTTC understands that steps are already in

place to form such a group and this should be supported and encouraged

by the NTA.

ENSURE THAT QUALITY STATISTICS AND INFORMATION FEED INTO POLICY AND DECISION-MAKING PROCESSESA culture of statisticsHigh quality research and data is crucial to identify the specific needs and

directions of tourism development in Romania. A culture of statistics,

coordinated by the National Institute of Statistics in consultation with

the National Tourism Authority, should be encouraged throughout the

industry and comprehensive statistics compiled for all aspects of Travel

& Tourism. The National Institute for Research and Development in

Tourism (INCDT) should be supported in the collection and analysis

of tourism statistics. In particular, there is a need for comprehensive

statistics regarding international tourism spending and tourists’ purpose

of visit. The latter is important as at present there is a large gap between

the number of arrivals and the number of tourists who stay in registered

accommodation, pointing to an important VFR market which is as yet

not quantified. Finally, significant improvements must be made to the

Domestic Residents Tourism Survey as, although domestic tourism is an

important slice of the country’s Travel & Tourism, this is not being fully

captured.

Once compiled, data must be linked to desired objectives. Clear

targets and a statistical basis will lend legitimacy and applicability to a

Master Plan and allow for careful monitoring of the implementation of

such a plan.

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Sharing information can increase competitivenessIn focus group discussions it became clear that there is a certain

amount of reluctance by some tourism operators in Romania to provide

transparent and quality statistics. The National Tourism Authority needs

to work with such operators to build up trust and confidence and the

understanding that the provision of such data is vital to the successful

future of the country’s tourism businesses. In more general terms there

is a need throughout the country for a new approach to using statistical

research when it comes to business development, and the government

should prioritize an initiative to rectify this.

Romania is entering a highly competitive tourism market and a

thorough understanding of the country’s tourism dynamics is absolutely

invaluable to determining how to increase its competitiveness on a

European and global scale.

Implement TSA on a yearly basisTravel & Tourism needs to be effectively measured in order to understand

its full impact throughout the economy. As a new industry, Travel &

Tourism is not discretely identified in charts of national accounts – its

component parts are scattered throughout the accounts. Public sector

analysis and related policies tend to overlook, or understate, the impact of

the industry, or deal with its smaller individual components.

The technique of satellite accounting is designed to measure the

new service sectors, and this Tourism Satellite Account (TSA) developed

by WTTC and OEF for Romania should prove to be a significant tool

for planning and policy development. WTTC urges the Government of

Romania, and the NTA, to update this TSA on an annual basis to ensure

that adequate data is available to factor Travel & Tourism into economic

and employment strategies.

EMPOWER NATIONAL TRAVEL & TOURISM INSTITUTIONS TO DRIVE FORWARD DEVELOPMENT OF THE INDUSTRYA cabinet position for tourismTravel & Tourism is affected by, and affects, policy decisions made across

the whole political and economic spectrum. Strong tourism institutions,

with clearly defined mandates, are therefore vital for a coordinated and

sustainable development of the industry. Currently tourism falls under

the remit of the Ministry of Transportation, Construction and Tourism,

with the President of the National Tourism Authority reporting directly

to the Minister.

ConsistencyOver the past years, Romania’s Travel & Tourism institutions have suffered

from a high turnover of officials resulting in inconsistent approaches to

tourism development and planning. Continuity at the administrative,

if not political, level is vital if plans are to be realized and the country’s

industry is to move forward in a sustainable and well-defined way. A good

example regionally is that of Turkey, which has seen a consistent strategy

over recent years despite political changes.

Clear prioritiesThe National Tourism Authority should work to clearly defined priorities

– as agreed with the Ministry of Transport, Construction and Tourism

and other ministries, as well as private sector players – to ensure that

development happens in a co-ordinated and coherent way and is

integrated with wider government policy objectives and decisions. At this

stage, priorities clearly lie in the construction of a Master Plan, defining a

clear brand ‘Romania’ and determining the focus for Romania’s product

development.

Appropriate budget allocationThe Ministry of Transportation, Construction and Tourism should

work closely with the Ministry of Public Finances to ensure that the

budget is allocated to the National Tourism Authority truly reflects the

industry’s economic importance. The current total budget allocation for

the NTA (including salaries, marketing, promotion, product development,

international offices) is a mere US$10 million, and Bucharest is one of the

only capital cities in Europe which does not have its own visitor bureau.

CO-ORDINATE INFRASTRUCTURE DEVELOPMENT WHICH SUPPORTS TRAVEL & TOURISMRoad networkThe vast majority of Romania’s foreign visitors arrive by road. Road is

also the main means of transport for domestic visitors. Throughout the

focus group discussions, the bad state of road infrastructure was cited

as a major constraint to tourism development. Nevertheless, there is a

general understanding of what is needed, not only for tourism but for the

country’s general economic development, and considerable EU structural

funds have been allocated to the upgrading of Romania’s highways – some

€1.26 billion within the period 2007 to 2013. Furthermore, as far as

tourism is concerned, the main arterial routes to the Black Sea in the

East and to towns such as Braşov, Sighişoara and Sibiu to the north of

Bucharest, are adequate and, although investment is desperately needed,

should not be used as an ‘excuse’ for delaying the development of other

tourism infrastructure in the regions.

Liberalized approach to aviation Tarom Romanian Air Transport is the national carrier and mainly

scheduled airlines fly into Romania. Although experience from

neighbouring contries shows that a more liberalized approach to aviation

is beneficial to both tourism and the national economy – after Sky Europe

introduced services to Budapest in 2003, there was a 25 per cent increase

in tourist numbers – the Romanian Government has not opted for an

open-skies policy.

WTTC maintains that any form of protectionism is not in the

longer-term tourism interests of the country, and that the government

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should open its air transport market. As tourism demand grows, an

expansion of liberal aviation accords will attract an increased number of

scheduled flights and charter activity from Romania’s main markets, while

low-cost carriers (LCCs) can help generate new markets from within

Europe. Several international LCCs have already expressed interest in

Romania and have begun licensing procedures to allow them to operate

as soon as the government takes the necessary action.

Accession to the EU will require Romania to conform to European

aviation open-skies policies and WTTC recommends that this process be

started as soon as possible to ensure that related infrastructure is in place

to accommodate increased arrivals.

AirportsThere are currently four international airports in Romania, with the

majority of international flights using Henry Coanda Bucharest airport.

Considerable investment is needed to ensure that these airports are able to

cope with more visitors. Upgrading of Sibiu Airport is already underway,

which will provide an important access point to Transylvania, without

tourists having to travel via Bucharest, and WTTC recommends that

other regional airports are upgraded in a similar way.

Compensation in line with other sectorsRomania’s rail infrastructure has traditionally been of a high standard

although recent underinvestment has seen use of the country’s railways

fall dramatically. However, a revival of the railways would alleviate the

increasing pressure on road infrastructure, itself a constraint to tourism

development. There have been recent moves in this direction, as the

commitment of €76 million from the EU to upgrade a stretch of railway

on the Bucharest–Constanta line shows. As further investments are made,

the needs of the Travel & Tourism industry should be taken into account,

since use of the facilities by international visitors could not only boost

usage and income but also see the railways become a tourism product in

themselves and spur further investment.

Rail transport Finally, government and industry must ensure that high standards are

maintained by actively supporting and promoting those employees who

have worked hard to gain certification. Awareness of such programmes must

be promoted within the industry, to tourists and to the general public so that

their value, and that of Travel & Tourism in general, is maintained.

AccommodationThere are already some 4,000 accommodation facilities throughout

Romania, from five-star hotels in Bucharest, to mid-range resorts on the

Black Sea coast and ski resorts in the Carpathian mountains, to small bed

& breakfasts in outlying towns and villages. However, the absence of any

national quality standards affects Romania’s overall provision of a quality

tourism product. WTTC understands that the National Association of

Rural, Ecological and Cultural Tourism (ANTREC) is already adopting

EU norms for its accommodation members and encourages the NTA to

enter into a dialogue with them to make this a national system. Standards

should be voluntary but supported by adequate consumer protection,

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hygiene, sanitation, safety and environmental laws. Furthermore, in certain

areas, particularly Bucharest, there is a shortage of hotel rooms which

results in high prices compared to other regional centres such as Budapest

and Prague and in turn has a negative effect on competitiveness. Overall,

there is a need to build more mid-market (two- and three-star) facilities

in the capital and throughout the regions to accommodate and encourage

more visitors. The NTA should collaborate with industry associations,

such as the Bed & Breakfast Association, ANTREC and regional

accommodation associations, to audit the number of accommodation

facilities throughout the country and ascertain where, and at what level,

the needs lie. This should be followed by the introduction of a national

grading system to maintain quality standards and help boost Romania’s

standing as an international tourism destination.

CREATE A COMPETITIVE BUSINESS ENVIRONMENT THAT ENCOURAGES INVESTMENTRomania enjoys a strategic location between Europe, the Middle East

and Asia which makes it attractive to foreign investors. The country’s

economy is combining steadily increasing levels of GDP and significantly

higher levels of foreign direct investment (FDI) than its near neighbours.

In 2004 Romania received €3.5 billion in FDI, compared to €2.5 in

Hungary, €1.5 billion in Bulgaria and €0.5 billion in Slovakia. Successive

governments have worked closely with international finance institutions

to produce a country with more respectable macro indicators, and

inflation approaching three digits – the legacy of the first ten years

without communism – is now under control.

According to figures published in February 2005 by the National

Trade Register Office of the Romanian Ministry of Justice, tourism

companies represent 4.8 per cent of Romanian companies with foreign

direct investment, and 1.7 per cent of foreign currency invested capital

goes to tourism. WTTC/OEF estimates show that capital investment in

Travel & Tourism related industries is healthy and set to total more than

RON5.3 billion (US$1.5 billion) in 2006, some 7.2 per cent of total

investment.

Break down bureaucracyWhile there are certain investment incentives for foreign companies,

for example no customs fee for equipment and a land tax reduction

for investments of over US$1 million, bureaucracy within government

departments puts a considerable strain on overseas investment. WTTC

recommends a ‘one-stop shop’ for tourism investments, where interested

parties can receive information and advice on bureaucratic processes

and complete legal requirements without having to visit a number of

government departments.

Drive financial sector reforms to encourage investmentAnother constraint to Romania’s attractiveness to investors is inadequate

facilities in the banking and financial sector. Charges, especially with

regard to credit cards, are extremely high and prevent smaller operators

from offering the facility to their clients. Given the international nature

of the Travel & Tourism industry, a banking system which is on a par

with those from visitors’ home countries is vital to ensure that maximum

income is achieved. Furthermore, systems of credit history have yet to be

established which means that banks are reluctant to give loans to SMEs, a

situation which is hampering small-scale investment and development in

the tourism industry. WTTC urges the Government of Romania to push

forward with financial sector reforms, which will boost not only Travel &

Tourism but the whole of the country’s economy.

Intelligent taxationTransaction (indirect) taxes are relatively high in Romania. There is no

doubt that such taxes have a negative impact on performance, not to

mention Romania’s image with foreign tour operators.

Care must be taken to ensure that the level of VAT is not perceived

as excessive, as this could have a long-term, negative impact on demand.

The current level of VAT at 9 per cent for hotels and bed & breakfast

accommodation is below average for the region and WTTC supports

the efforts of the current NTA administration to have incoming tourism

reclassed as an export sector and to reinstate a rate of zero per cent VAT,

as was the case in the mid-1990s. However, operators on the Black Sea

coast pay up to 29 different taxes. While Travel & Tourism should pay its

fair share of taxes, the growth and prosperity of the industry – including

the investment necessary to generate these future revenue flows – will

depend in no small part on the competitiveness of Romania’s Travel &

Tourism. This will also depend on whether it receives equitable treatment

relative to other industries and to competing destinations.

There is an increasing tendency worldwide for governments to

target Travel & Tourism as a revenue generator to meet short-term

budget objectives, with little thought to the longer-term consequences

on demand and job creation. WTTC urges the Government of Romania

to ensure fiscal regimes that encourage tourism growth, exports,

investment, infrastructure, business innovation and job creation. The

‘User Pays – User Benefits’ principle should be given priority, with

funding collected earmarked for Travel & Tourism infrastructure and

promotion.

Furthermore, it is vital that taxes applied are equitable and, where

possible, hypothecated. It is important that the authorities in Romania

recall the WTTC Principles of Intelligent Taxation – which recommend

equity, efficiency, simplicity, fair revenue generation and effective

stimulus to growth - and refer to these principles when they consider new

taxes or adjustments to existing tax structures.

A constraint to Romania’s attractiveness to investors is inadequate facilities in the banking and financial sector. Charges, especially with regard to credit cards, are extremely high and prevent smaller operators from offering the facility to their clients.

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BALANCE ECONOMICS WITH ENVIRONMENT, PEOPLE AND CULTURES Environmental protection is paramountThe environmental legacy of the Communist era is one of pollution,

degradation and lack of awareness. Raising standards of environmental

cleanliness and protection is central to Romania’s accession to the

European Union. Pockets of intense air and water pollution, caused by

industrial emissions and dumping, are widespread throughout the country.

At the level of individual citizens, there is also very low awareness of

environmental issues.

Romania’s tourism product relies very heavily on the natural

environment and it is imperative that measures are taken to clean and

safeguard the environment, not only for the good of Travel & Tourism,

but for the sustainable future of the country. That said, as Romania moves

towards EU membership, a number of measures have already been taken

and Romania ratified the Kyoto Protocol in 2001.

All tourism development plans need to be integrated into environmental

management systems and vice-versa. A legal framework for environmental

protection is already in place in Romania and all Travel & Tourism

stakeholders, including government authorities, should support and

encourage its enforcement. Although, in the short-term, adhering to strict

environmental regulations, particularly those imposed by the EU, may

affect competitiveness in the country’s tourism industry, for the long-term

sustainability of the industry it is absolutely vital.

In order to achieve this, government authorities and industry

associations must provide support and information to those involved in

Travel & Tourism so that there is a better understanding, not of only the

legalities of protecting the environment, but also of the importance to their

businesses of well looked after natural surroundings.

Measures already taken by Romanian authorities to improve the state of the environment• Transition periods for the emission of volatile organic components

have been established• Harmonization of the legislation concerning waste management,

waste transport and waste disposal and restriction of the use of some dangerous substances for electric and electronic equipment

• Harmonization of the large part of legislation concerning water quality, including urban used-water disposal and the spilling of dangerous substances into the water environment

• Harmonization of the legislation concerning the protection of the nature except some requirements of the Directive ‘Birds’

• Harmonization of the legislation concerning the genetic altered organisms

• Harmonization of the legislation concerning noise except for open-air equipment

• Partial harmonization of the legislation concerning the monitoring of the conveyance for radioactive refuses

• Preparations for the network NATURA 2000 have been started• 52 incinerators have been shut down

WTTC Principles of Intelligent Taxation

A study of Travel & Tourism taxation policy by the London School of Economics for WTTC recommended five principles that public policy-makers should use to guide their review of tax policy proposals and legislation.

EquityAll economic sectors should be treated fairly with regard to taxation. Even-handed treatment of all sectors reduces imbalances that can result in political, social and economic difficulties.

EfficiencyTaxes must generate revenue without a significant impact on the demand for a good or service (unless the tax is designed to modify behaviour). At a certain threshold, the benefits of a tax become less significant than the costs of reduced demand. The decrease in demand sends a debilitating wave throughout the economy as linked suppliers are affected. This negative cycle swells because of the subsequent loss of tax revenue in many sectors.

SimplicityComplicated taxation schemes eat up revenues through administrative costs. These costs include both those borne by government in the process of collecting and enforcing taxes, and those borne by taxpayers. An objective of good tax policy is to achieve the highest possible ratio of revenues generated per dollar invested in collecting the tax. Special note should be made to incorporate taxpayers’ costs of compliance in calculating this ratio. Simplicity in taxing also dictates that it is clear what the tax rates are, and what the revenues are intended to be used for.

Fair revenue generationFair revenue generation arises from the concept of equity. In the even-handed capturing of tax revenue, it is unreasonable to assess special fees or levies on specific goods or services. These taxes are often cloaked by language and terminology to hide their real intent. Special charges and fees may appear, on face value, to be modest. They aggregate, however, to become a cumulative and often unreasonable burden to a sector.

Effective stimulus to growthTax incentives and disincentives should be imposed with the underlying goal of stimulating growth. Taxes that support infrastructure will ideally result in the attraction of investment and subsequent employment. When taxes become excessive, economic growth often grinds to a halt.

Many taxes on Travel & Tourism violate some or all of these Intelligent Tax Principles. The practical reality of these principles provides that taxes can be imposed to generate revenue, increase competitiveness, or change consumptive behaviour. If taxes follow the criteria above, they will result in both increased revenues for governments and strong competitive economies.

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Cultural heritageRomania has a unique and diverse cultural heritage which differentiates

it from surrounding countries. Spread throughout the country, this

heritage provides the opportunity for tourism to benefit even the

remotest areas of Romania. Preservation of cultural heritage is therefore

vital. There are already seven World Heritage Sites in Romania,

including the Danube Delta, the churches of Moldavia, the Monastery

of Horezu, villages with fortified churches in Transylvania, the Dacian

Fortresses of the Orastie Mountains, the Historic Centre of Sighişoara

and the wooden churches of Maramureş.

However the vast majority of Romania’s cultural gems, including

spas, monasteries and castles, are ripe for preservation and renovation.

Travel & Tourism is one of the few ways – if not the only way – in

which heritage preservation can be carried out so as to produce financial

returns. The government should prioritize the development of cultural

tourism as a way of preserving the country’s rich heritage, particularly as

traditions become threatened by EU regulations. The Mihai Eminescu

Trust as well as many others have already made significant headway in

the restoration of heritage sites and should be commended, however

there is still a need for monitoring of any restoration projects to ensure

that high standards are maintained.

Community developmentIf Travel & Tourism is to be successful as a tool for rural development

then as the industry develops it must do so with the buy-in of those

communities in which it is based. The Government of Romania must

incorporate sustainable tourism into the national social and economic

policy framework with a focus on:

■ local engagement with the industry

■ start-up support and technical assistance for entrepreneurs and

SMEs

■ ensuring that money from Travel & Tourism benefits all those

involved rather than remaining in the hands of a few major players

■ partnership with the private sector so that developments, new and

old, are fulfilling the governments targets for social and economic

development.

There are already projects throughout Europe which highlight a

community-based approach. Examples of best practice from inside and

outside the country should be identified, so as to produce models on

which to base the further development of such projects in Romania.

The recently signed ‘Geotourism Charter’ with the National

Geographic Society highlights the government’s commitment to these

aspects of Travel & Tourism development. The NTA should work with

the industry and community leaders to ensure that this commitment can

be followed through effectively.

LinkagesMany have argued that the know-how to create linkages between Travel

& Tourism and the rest of the economy is well established, but that the

largest weakness in the equation is the implementation and execution

of the effort. WTTC recommends that a dedicated effort and resources

be organized by the Ministry of Transport, Construction and Tourism

or the NTA to guarantee a focused approach to establishing effective

linkages between Travel & Tourism and the rest of the economy. Such a

focused approach could include:-

■ promoting public awareness of the potential linkages between

Travel & Tourism and other sectors such as agriculture and

manufacturing

■ educating those in other sector of the needs of Travel & Tourism so

that high quality products can be sourced locally by the industry

■ encouraging the use of traditional skills and products in the

development of the industry

DEVELOP THE HUMAN CAPITAL REQUIRED FOR TRAVEL & TOURISM GROWTHIn 2006, Travel & Tourism in Romania will account for some 485,000

jobs – around 265,000 jobs directly within the industry and a further

220,000 jobs in sectors linked to Travel & Tourism, such as real estate,

construction and retail. Travel & Tourism has the potential to create jobs

at all levels of society and the economy – from bar staff and chamber maids

in hotels, to guides and taxi drivers, to top level management in tourism

enterprises. It is a labour-intensive, quality-driven service profession which

depends crucially on the skills level and professionalism of the workforce

to make the sector productive and competitive.

However, as is the case in many countries across the globe, Travel

& Tourism in Romania is seen as a ‘last resort’ when it comes to career

choice. This is not surprising as levels of compensation in the sector

are the lowest in the country. The average wage of a hotel or restaurant

employee in 2004 was 3,626 million lei, compared to 4,450 million lei

in agriculture and 8,000 lei million for public sector workers. While

the average annual salary in Romania doubled between 2001 and 2004,

hospitality wages increased by only 75 per cent.

Compensation in line with other sectorsCompensation in the Travel & Tourism sector must be brought in line

with other sectors so that a potential workforce can benefit fully from

employment in the sector and so that the value of top-quality employees

is not undermined. The government can assist the industry in achieving

this by implementing labour laws which take into account the need for

greater flexibility – to accommodate the seasonality, daily flows and other

operating characteristics of a 24/7 industry.

Beat the ‘brain drain’One of the most serious concerns voiced by both private operators

and the public authorities was that of the ‘drain’ of the best Travel &

Tourism employees to neighbouring countries, where wages are higher

and opportunities are more attractive. It is felt that if Romania invests

in high quality training for the industry, this investment will be lost as

employees move abroad. This cycle must be broken with a combination

of better working conditions and high quality training so that Romania’s

tourism product is able to develop to a high standard. Furthermore, it is

imperative that the government and industry work together by actively

supporting and promoting those employees who have worked hard to

gain qualifications and certification. Awareness of such programmes must

39

be promoted within the industry, to tourists and the general public so that

their value, and that of Travel & Tourism in general, is maintained.

A dedicated Travel & Tourism training facilityThe current structure of tourism training in Romania reflects the general

lack of awareness of the industry’s importance. There is no dedicated

hospitality or tourism institute, with vocational training centered around

short courses co-funded by the NTA, and managerial training spread

around national universities such as the Academy of Economic Studies

and University of Bucharest, where courses are mainly theoretical rather

than practical. Although steps have been taken to address this need with

a recent partnership between the Romanian Institute for Economic-Social

Research and Polls (IRESCON) and the Ecole Hôtelière de Lausanne to

set up the Royal Institute of Hospitality Management, WTTC urges the

government of Romania to invest in a dedicated tourism training facility,

where the Ministry of Education, National Tourism Authority, and Travel

& Tourism industry collaborate to provide training across the broad range

of Travel & Tourism activities.

Match supply and demandMost importantly, however, the training institutions and the industry

must work together and communicate with each other to ensure that

courses and training are relevant to the industry’s requirements. The

industry can provide support to institutions and students in this regard by

participating in training schemes, offering internships and communicating

the importance of high standards of quality service.

Training institutions must produce a wide spectrum of qualified

employees which are capable of fulfilling the many different roles required

by the Travel & Tourism industry so that the human resources supplied

meet industry’s demands for bar staff, waiters, chefs and management

etc.

In particular, the gap between theory and practice must be bridged

and syllabi should be updated accordingly. Travel & Tourism is constantly

evolving with technological advancements and new products changing

the industry at a rapid pace. Courses should take this into account and

ensure that students graduate with the skills necessary to deal with new

situations and ways of doing business.

Furthermore, Travel & Tourism employment in Romania is largely

seasonal, which results in a high turnover of labour year on year, and

a subsequent negative impact on quality. A more diversified tourism

product, as set out later in this report, would go a certain way in resolving

this problem, but it is equally important that employees are furnished

with the skills necessary to carry out a diverse range of activities, in line

with industry needs.

There is also a requirement for training in the fields of commerce

and entrepreneurship, to furnish those starting up new businesses with

the relevant skills and understanding of industry mechanisms. This will

result in a higher standard of facilities and service and contribute to the

overall sustainability of SMEs and the tourism industry as a whole.

PROMOTE PRODUCT DIVERSIFICATION THAT SPREADS DEMAND Romania’s Travel & Tourism is characterized by a high level of seasonality.

The resorts of the Black Sea coast are open only in the summer, during

which time they are filled to capacity. Conversely, the country’s ski resorts

are open during the winter when they are unable to satisfy demand.

Nevertheless, Romania’s central location, short-haul distance from

European markets, and considerable natural and cultural diversity give

the country potential for developing a tourism product which spreads

demand not only throughout the seasons, but also across regions. There is

a general awareness amongst stakeholders that diversification is necessary

and possible, however a lack of focus and leadership means that concerted

efforts are yet to be seen in this area.

40

Culture vs sun & beachSince the 1970’s Romania’s Black Sea coastline has been the focal point

of the country’s tourism for both foreigners and Romanians. However,

given the necessarily seasonal nature of the coast as a destination, and the

intense competition from neighbouring countries such as Greece, Turkey

and Bulgaria in this regard WTTC does not believe that the Black Sea

coast should form the centre of Romania’s development plans. While

investment in the upgrading of existing facilities is necessary and must be

encouraged it is widely agreed that Romania’s differentiating factor with

respect to its competitors is its culture and heritage and this is where the

focus of development must lie.

MICEThat said, in Bucharest as well as other towns there is a growing potential

for the meetings, incentives, conferences and exhibitions (MICE)

business. According to the Romanian Convention Bureau (RCB), some

900 conferences and events are held each year in the capital. Currently the

industry is underfunded to a startling degree – the RCB is one of the only

convention bureaus in the world which relies solely on members fees and

receives no assistance from government. Similarly, conference facilities

are yet to reach 21st century standards. The EXPO centre, build in the

1960s should be upgraded and there is potential to create a unique facility

in the People’s Palace. The demand for MICE and business tourism will

certainly increase when Romania joins the EU and, with Bucharest hotels

operating at near capacity, the government should act fast to ensure that

the huge opportunity for high-income tourism is not missed.

MountainsRomania’s ski resorts are already well established and at certain points

during the winter it is impossible to find a hotel room in the vicinity.

While investment in both the upgrading and building of accommodation

facilities is necessary it is also important to remember that resorts

such as Poiana Braşov, Sinaia and Predeal are unable to compete with

international resorts elsewhere in Europe simply because of because of

the height of the mountains and length/difficulty of runs. However, it

is during the non-ski season that Romania’s Carpathian mountains have

the most to offer to international visitors in the form of walking holidays.

Maps, routes and facilities should be modernized and developed to offer

a high quality mountain experience.

Culture and heritage – encouraging rural tourismSpreading the regional reach of Travel & Tourism in Romania must be

a priority going forward. As already mentioned, the country is richly

endowed with culture, folklore and heritage sites throughout its regions

and in many areas where there are few options other than tourism for

economic development. Using gateway towns such as Braşov, Sibiu and

Sighişoara these areas should be encouraged to embrace tourism and

facilities should be developed to accommodate tourists.

The wine route currently under development is a good example of

how tourism can link small villages together to provide a ‘holiday tour

option’. Similarly, the monasteries in Maramureş can provide a ‘route’

for tourists. The fact that the few monasteries and churches which have

already been renovated are suffering issues of carrying capacity highlights

their popularity and shows both the demand and need for more such

sights to be developed. Although a contentious issue in the past, the

Dracula theme is a considerable tourist draw and can be built upon.

Despite the large number of festivals and events which take place

each year throughout Romania, there is currently no co-ordinated

calendar to allow visitors to know what is going on at any one time.

WTTC understands that CHF international as part of its USAID funded

Enterprise Development and Strengthening Programme is undertaking

such a project. The organization is currently producing monthly event

calendars for Maramureş, Sibiu and Sighişoara. The preparation and

expansion of these calendars will be passed on to a Bucharest-based

association to ensure their sustainability and continuity. The NTA

should support building of the calendar and promote it widely through

its marketing channels. This will also help to encourage year-round

visitors.

Spa/wellness tourismThere are approximately 1,300 registered sources of mineral water

in Romania – a third of all mineral spas in Europe, both drinkable

and available for cures. There are already between 2,500 and 8,500

spas which cater mainly to domestic tourists but currently only two

(Băile Felix and Eforie Nord) have been modernized to international

standard. Development of further spas for higher-spending international

and domestic visitors would not only increase income and create jobs

but would also help to conserve an important aspect of the country’s

heritage.

Danube DeltaThe Danube Delta is increasing in popularity as a destination amongst

foreign visitors and domestic tourists alike. However, it is a highly

sensitive ecological area and WTTC would not recommend any

significant development of the zone without thorough Environmental

Impact Assessment and the integration of environmental protection into

any development plans.

GeotourismIn September 2005, Romania became only the 3rd country in the

world to sign a Geotourism Charter with National Geographic. There is

considerable potential for Romania to develop as a geotourism destination

as geotourism embraces conservation of the natural environment and

cultural heritage, as well as supporting traditional cultures and products.

There are approximately 1,300 registered sources of mineral water in Romania – a third of all mineral spas in Europe, both drinkable and available for cures.

41

BRING NEW FUNDING AND CO-ORDINATION INTO PROMOTION AND MARKETINGThe world’s view of RomaniaOver the past decade, images of poverty, orphans and environmental

degradation in the international media have outnumbered those of

beautiful countryside, ancient monasteries and rich culture. While

international perceptions of Romania are gradually changing – in

particular as the country is deemed low risk in terms of terrorism – it is

imperative that a strong, well-researched, positive image of the country is

portrayed through a strong brand, and that this brand image is promoted

through international marketing campaigns and at international shows

such as WTM and ITB, while being backed up by a quality product. It

is also important to secure the buy-in from individual operators in the

industry for a country-wide brand to be successful. The present culture

of individual promotion for industry sectors and, in some cases operators,

results in an unclear and fragmented image. All product sectors and niche

markets should come under the umbrella of one brand to ensure a high-

profile, recognizable image of tourism in the country.

Branding and promotion of the regionsWhile it is extremely important to promote Romania at the national level,

there is also a strong argument that promotion at regional level will reap

significant results. Unlike Budapest or Prague, Bucharest is not a cultural

or architectural ‘gem’ – Romania’s ‘gems’ lie in its outlying regions. It

is no surprise that Sibiu, rather than Bucharest, is set to be European

City of Culture in 2007. Furthermore, regions such as ‘Transylvania’

evoke a much more positive image to many foreigners than ‘Romania’

might. Regional authorities should be supported in developing their own

brand images, under the umbrella of the national brand, to ensure that

awareness of what Romania has to offer is maximized.

Romania in EuropeAs Romania becomes more integrated into the EU, the tourism authorities

should take advantage of the promotional tools which are on offer at a

European level. While countries in Europe are keen to keep individual

identities, there is a growing case for strong promotion of Europe,

particularly to long-haul markets. The new European Tourism Portal,

co-ordinated by the European Tourism Commission, is a first step in this

direction and Romania would benefit from involvement. Membership of

regional organizations such as the Central European Countries’ Tourism

Association (CECTA) would allow Romania to share resources and pool

ideas with neighbouring countries.

FAVOUR TECHNOLOGICAL ADVANCEMENT TelecommunicationsAdjustment to the ‘digital economy’ is essential for enterprises to become

and stay competitive. The current diffusion of internet facilities and

computer ownership in Romania are among the lowest in Europe.

According to Eurostat, the amount of Romanian enterprises which

employ more than nine employees having broadband access in 2004

was only 13 per cent, compared among an average of 52 per cent in the

EU25 countries.

Travel & Tourism, as a technology intensive industry, can help Romania

obtain and apply information technology systems and telecommunications

at a competitive pace. One example is telecommunications. An increasing

share of Travel & Tourism operations – and virtually all distribution and

sales transactions – flows through telecommunications circuits. Where

telecommunications are monopoly controlled, there are often restrictions

on access, high costs and unreasonable operating conditions. This in turn

limits the potential of market-oriented expansion of Travel & Tourism,

with negative impacts domestically and internationally in terms of cost,

operational efficiency and customer service.

WTTC recommends that the Romanian Government continue

pursuing its policy of open telecommunications markets, which will help

lower costs and enhance services for travellers and tourism companies.

E-marketing and distributionIn today’s increasingly competitive global marketplace, there is a real

need for a strong national leadership branding which optimizes resources,

focuses the myriad of interests – public and private sector, national,

regional and local – and attracts the attention of travellers. This will

require particular emphasis on a co-ordinated approach to internet

marketing and distribution to optimize Romania’s visibility.

Clearly, the development of such a facility needs to run parallel to

the general development of internet and telecommunications throughout

the country. However plans should be made, in the first instance, for

a high quality ‘Brand Romania’ website, which outlines the country’s

tourism product and provides the visitor with information and advice on

Romania as a destination. As a second step, listings of accommodation

facilities with contact details should be added.

WTTC understands that there are plans to develop such a facility

for the Bed & Breakfast sector, and this move should be supported

by the relevant authorities. As the country’s technological capabilities,

particularly in rural areas, grow – which will happen at a lightening pace

– preparations should be made for the development of an online database

making visitors aware of the full range of tourism services in the country

and, in time, allowing for online booking of such services. A co-ordinated

approach will help to increase exposure for smaller businesses and increase

the spread of international visitors across the industry.

4242

2001 2002 2003 2004 2005E 2006E 2016P

Travel & Tourism - RON bn

Personal Travel & Tourism 3.51 4.52 5.65 7.27 8.97 10.40 35.89

Business Travel & Tourism 0.88 0.88 1.16 1.16 1.37 1.55 4.10

Corporate 0.77 0.76 1.00 1.01 1.20 1.37 3.78

Government 0.11 0.11 0.16 0.16 0.17 0.18 0.32

Gov’t Expenditures - Individual 0.05 0.07 0.09 0.11 0.13 0.15 0.29

Visitor Exports 1.10 1.43 1.77 2.16 2.41 3.18 11.62

Travel & Tourism Consumption 5.54 6.90 8.67 10.71 12.89 15.28 51.89

Gov’t Expenditures - Collective 0.21 0.32 0.45 0.59 0.69 0.77 1.49

Capital Investment 2.00 2.14 2.98 3.72 4.57 5.26 15.76

Exports (Non-Visitor) 1.08 1.30 1.78 2.34 2.73 3.27 17.19

Travel & Tourism Demand 8.82 10.66 13.89 17.36 20.89 24.57 86.33

Travel & Tourism Industry Aggregates (Direct Impact Only)

Employment (‘000) 247.04 249.92 255.04 259.17 257.82 265.17 314.67

Gross Domestic Product 2.24 2.91 3.58 4.45 5.26 6.19 20.68

Travel & Tourism Economy Aggregates (Direct and Indirect Impacts)

Employment (‘000) 459.17 459.93 463.10 470.60 468.76 485.00 569.53


Travel & Tourism Accounts as % of National Accounts


Gov’t Expenditures 3.34 3.78 4.07 4.30 4.33 4.35 4.48

Capital Investment 8.30 6.63 7.06 7.06 7.13 7.17 7.54

Exports 5.58 5.08 5.19 5.08 4.99 5.16 4.58

T&T Imports 6.41 5.96 5.90 5.62 5.47 5.48 5.21


Employment 2.88 3.00 3.07 3.07 3.05 3.15 3.83



Employment 5.36 5.52 5.58 5.58 5.55 5.75 6.92


Travel & Tourism Real Growth (per annum except 2015 = 10-year annualized)


Business Travel & Tourism -0.88 -19.02 10.80 -13.40 4.29 4.59 4.95

Gov’t Expenditures -0.67 22.07 14.75 13.57 4.04 2.30 1.74

Capital Investment 39.09 -13.39 16.86 7.62 8.69 6.71 6.24

Visitor Exports -8.88 5.80 3.92 5.23 -1.48 22.42 8.46

Other Exports 32.80 -2.24 14.94 13.09 3.40 11.06 12.39

Travel & Tourism Consumption 4.22 0.95 5.31 6.69 6.36 10.03 7.85

Travel & Tourism Demand 13.53 -2.14 9.15 7.93 6.38 9.18 7.94

SATELLITE ACCOUNT TABLESROMANIA

4343

2001 2002 2003 2004 2005E 2006E 2016P



Employment -3.72 1.17 2.05 1.62 -0.52 2.85 1.73

Travel & Tourism Economy Aggregates (Direct and Indirect Impact)

Gross Domestic Product 14.75 -2.11 8.17 7.11 4.85 8.91 6.68

Employment -2.99 0.16 0.69 1.62 -0.39 3.47 1.62

Travel & Tourism - US$ mn

Personal Travel & Tourism 1,208.93 1,367.28 1,701.48 2,228.31 3,009.47 2,994.95 5,865.53


Corporate 264.10 230.58 302.21 308.30 403.75 393.78 618.12

Government 37.88 34.72 47.25 48.20 56.67 51.43 52.49


Visitor Exports 376.86 432.57 534.42 662.47 808.22 914.74 1,898.80

Travel & Tourism Consumption 1,904.68 2,085.99 2,611.45 3,282.21 4,323.10 4,397.44 8,481.91


Capital Investment 688.73 647.14 899.00 1,139.66 1,533.86 1,513.19 2,576.58

Exports (Non-Visitor) 370.64 393.08 537.10 715.49 916.13 940.64 2,809.32

Travel & Tourism Demand 3,036.37 3,223.53 4,182.65 5,318.10 7,005.95 7,071.50 14,110.87


Employment (‘000) 247.04 249.92 255.04 259.17 257.82 265.17 314.67

Gross Domestic Product 771.15 879.58 1,079.74 1,363.61 1,762.44 1,782.56 3,380.12


Employment (‘000) 459.17 459.93 463.10 470.60 468.76 485.00 569.53

Gross Domestic Product 1,977.74 2,100.24 2,700.83 3,407.61 4,424.47 4,454.85 7,903.68

Travel & Tourism - 2000 Constant US$ mn

Personal Travel & Tourism 1,178.72 1,228.81 1,286.31 1,430.05 1,559.64 1,678.89 3,538.14



Visitor Exports 367.44 388.76 404.02 425.15 418.86 512.78 1,145.37

Travel & Tourism Consumption 1,857.08 1,874.74 1,974.24 2,106.41 2,240.42 2,465.10 5,116.36


Capital Investment 671.51 581.60 679.64 731.39 794.92 848.26 1,554.21

Exports (Non-Visitor) 361.38 353.27 406.04 459.18 474.78 527.30 1,694.61

Travel & Tourism Demand 2,960.48 2,897.07 3,162.06 3,412.97 3,630.80 3,964.11 8,511.81

Gross Domestic Product

Travel & Tourism Industry 751.88 790.50 816.28 875.11 913.37 999.26 2,038.92

Travel & Tourism Economy 1,928.31 1,887.54 2,041.81 2,186.88 2,292.96 2,497.28 4,767.57

SATELLITE ACCOUNT TABLESROMANIA

WTTC would like to express its appreciation to the following organizations that contributed their knowledge, insight and data/information to the

policy review effort included in this report:

Academy of Economic Studies (ASE)

Academy of Economic Studies – Trade Faculty

Agency for Rural Development of Romania

Association for Consumer Protection

Association of Journalists in Tourism

Central European Countries Travel Association (CECTA)

CHF International

Ecole Hôtelière de Lausanne

Federation of Unions in Tourism

Golden Tulip Hotels

Holidays in Romania

International Bank of Romania

Ministry of European Integration of Romania

Ministry of Foreign Affairs of Romania

Ministry of Transport, Construction and Tourism of Romania

National Administration of Forests

National Association of Rural, Ecologic and Cultural Tourism

National Association of Tourism Agencies Romania

National Centre for Tourism Education (CNIT)

National Forecasting Commission

National Institute of Statistics

National Institute for Research and Development in Tourism (INCDT)

National Tourism Authority of Romania

Peacock Hotels

Peter Express SRL

Romanian Bed & Breakfast Association

Romanian Convention Bureau

Romanian Ecotourism Association

Romanian Institute for Social and Economic Research and for Polls

Romaninan Federation of Tourism Employers

Sibiu County Council

Spa Association of Romania

The Romanian Association for Accommodation and Ecological Tourism

Tourism, Hotels & Restaurants Group (THR)

Trend Hospitatlity Consulting & Management

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