tourism industry in serbia

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Serbia Investment andExport Promotion Agency


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Serbia at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Why Serbia? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Global Tourism Trends . . . . . . . . . . . . . . . . . . . . . . . . . .5

Why Invest in Serbian Tourism Industry? . . . . . . . . . . . .7

Tourism in Serbia . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Recent Trends and Statistics . . . . . . . . . . . . . . . . . . . .9

Investment Opportunities in the Tourism Industry in Serbia .10

Investment Potentials Along Danube River . . . . . . . . . .12

Congress Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Investment Prospects

Privatization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Possibilities for Greenfield Investment in Belgrade . . . .17

Belgrade as a Tourist Destination . . . . . . . . . . . . . . . .18

Hotel Industry In Belgrade . . . . . . . . . . . . . . . . . . . . .19

Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Infrastructure

By Road and Rail . . . . . . . . . . . . . . . . . . . . . . . . . . .22

By Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

By Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Accommodation Facilities . . . . . . . . . . . . . . . . . . . . .23

Investment Incentives . . . . . . . . . . . . . . . . . . . . . . . . .24

Financing an Investment

International Finance Corporation . . . . . . . . . . . . . . .25European Bank for Reconstruction and Development . .25

Success Stories

Hotel Park . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Hotel Hyatt Regency Belgrade . . . . . . . . . . . . . . . . . .27

Wellness Centre Merkur . . . . . . . . . . . . . . . . . . . . . .28

Sala 84 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

Hotel Le Petit Piaf . . . . . . . . . . . . . . . . . . . . . . . . . .30

Useful Links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31About SIEPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

Contents


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Official Name

Form of State

Political Structure

Population (in million)

Area

Geographic Position

Climate

Longest river

Highest peak

Official Language

Main Religion

Largest Cities

Currency

Exchange Rate

GDP (2004)

GDP per Capita (2004)

Time Zone

Internet Domain

Republic of Serbia

Republic, member State

of the State Union of Serbia and Montenegro

President, Unicameral Assembly with 250 seats7,498

88,361 km2

South East Europe, central part of Balkan Peninsula;

borders Hungary, Bulgaria, Romania, FYR Macedonia,

Albania, Bosnia and Herzegovina and Croatia

Continental climate, with warm summers up to 300C

and snowy winters down to - 50C in mountain areas

The Danube (588 km) flows north-west to

south-east through Serbia

Djeravica (2,656 m)

Serbian

Christian Orthodox

Belgrade (capital): 1.6 million;

Novi Sad: 300,000; Ni: 250,000

Dinar (CSD)

1 USD = 70.4952 CSD; 1 EUR = 84.7000 CSD

(as of 29th September 2005)

21.377 billion USD

2,813 USD

Central European time zone (GMT + 01:00)

.yu


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GDP growth rates

2005e 4.6%

2004 7.5%

2003 3.1%

2002 4.0%

2001 5.5%

Corporate profit tax rates, 2004

Serbia 10.0%

Hungary 16.0%

Bulgaria 19.5%

Croatia 20.0%

Romania 25.0%

Czech R. 28.0%

Familiarity with English language

Serbia 42%

Poland 22%

Czech R 22%

Romania 20%

Hungary 25%

Bulgaria 28%

Labor costs in October 2004, in Euro

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To Make Your Business GrowSoutheast Europe is the region with thehighest growth in Europe. For compa-nies that seek to start or expand theirbusinesses in this region, Serbia is theplace to be for a number of reasons.Local Serbian market itself is amongthe largest in the region (7.5 million

people). The Serbian economy grew by7.6% in 2004, and is expected to sus-tain high growth rates, leading to asignificant increase in purchasingpower and expansion of the domesticmarket. Serbia and Montenegro is theonly country outside of the Common-

wealth of Independent States (CIS) thatenjoys a free trade agreement with theRussian Federation, offering customsfree

access to its market of 150 million people!Furthermore, Serbia is in the middle ofthe South East Europe Free Trade Areathat provides dutyfree access to apotential market of 55 million people.

To Easily Serve Your EU CustomersBy operating in Serbia, a company canenjoy easy access to the EU market,

while benefiting from lower productioncosts. Bordering Hungary, Serbia is at thedoorstep of the EU. It is also a gatewaybetween South East Europe, Western andCentral Europe, and an intersection ofthe two most important transportationcorridors connecting Western Europe andthe Middle East (PanEuropean corridorsNo. 10 and No. 7). By investing in Serbiaa business could effectively serve its

European and MiddleEastern customers,thus enhancing its profitability.

To Benefit from Exceptional HumanCapital at Competitive CostsEvery year thousands of young graduatesleave universities and colleges in Serbia.Highly educated people who are recep-tive to new technologies, familiar withIT, and wellversed in foreign languages,represent Serbias true capital.

Furthemore, Serbia possesses a skilledand productive workforce with a wealthof experience, both in managementand manufacturing. A tradition ofcooperation with foreign companiesand decades of openness towardsWestern culture and values have lefta mark on their skillset.

This exceptional human capital isavailable at very competitive prices.Labor costs in Serbia are among thelowest in the region and are signifi-cantly lower than those in the EUmember countries.

To Boost Your Cost EffectivenessThe tax regime in Serbia is the most

favorable in the region. Some of itsfeatures include: the lowest corporate profit tax

rate in Europe, set at 10%, tax credits for investing in fixed

assets up to 80% of the investedamount,

a 10year tax holiday for invesmentsover 7.5 million,

subsidies for new employment,

tax exemptions, and a variety ofother incentives.

GrossSalary

EmployersContributions

Serbia 180 34

Romania 196 64

Czech R. 656 230

Slovakia 657 232

Croatia 785 135

Hungary 832 295

Source: Statistical Office of the Republic of Serbia

Source: IDA, Ireland

Source: Gallup International

Source: SIEPA, National IPAs

Why Serbia?


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The world tourism industry has grown at double the paceof global GDP over the last 30 years. The rapid growth oftourism is expected to continue to outpace economic growthin the future. Tourism creates employment, generates valueadded and tax revenue and attracts foreign investment.

Tourism is one of the major global industries. It accountsfor around 5% of the worlds GDP and employs over 200million people. In over 150 countries, tourism is amongthe five industries that have generated the largest exportrevenues. In over 60 countries, it is the number oneindustry in terms of exports.

Traditionally, developed countries in Western and CentralEurope have been the destination of choice for manytravelers, but the emergence of travel to developingcountries is slowly gaining market share. In 2004, Europe

was the number one tourist destination in the world,accounting for 55% of all international arrivals. Of thattotal, Eastern Europe only accounted for 18% but exhibited8% growth in revenues over the previous year.

The tourism industry is inevitably linked to the healthof the overall economy. In that respect, Europe especially

Southeastern Europe (SEE) offers a fertile ground forthe development of tourism. In 2004, the Europeaneconomy grew at the annual rate of 3.3%, while Easternand Central Europe exhibited 5.2% annual growth thelargest annual growth rate in Europe.

The SEE region is a new and unique destination forinternational tourists. Recent global FDI statistics showthat, from the investors point of view, SEE is one of themost attractive regions for investment. Most travelers arelooking for something newan untouched, authenticexperience with a cultural authenticity. Clearly, the demandfor tourist services is on an upswing, and in order to fullycapitalize on this, investments in the sector are necessary.

Serbia represents a unique, unexplored and unsaturateddestination with a rich history and vibrant culture.

As tourism in Serbia continues to grow, the tourismsector is ripe for investment.

Global Tourism Trends

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WHY INVEST IN SERBIAN TOURISM INDUSTRY?

UNEXPLORED AND UNTOUCHED NATURAL BEAUTY

UNIQUE EXPERIENCE AND CENTURIES OLD TRADITION

LARGE DEMAND FOR TOURISM SERVICES PRIMARILYBUSINESS RELATED TRAVEL EXCELLENT CLIMATE

CONDITIONS FOR YEAR ROUND TOURISM HIGHLY

EDUCATED, WELL TRAINED AND EXPERIENCED HUMAN

RESOURCES COMPARATIVELYLOW OPERATING COSTS

ATTRACTIVE OVERALL AND SECTOR-SPECIFIC INVESTMENT

INCENTIVES AVAILABILITY OF A LARGE NUMBER OF

READY-TO-BUILD-ON GREENFIELD LOCATIONS WELL

DEVELOPED INFRASTRUCTURE OFFERING CONVENIENT

AND EASY TRAVEL TO AND FROM SERBIA UNDERGOING

OWNERSHIP TRANSFORMATION IN THE SECTOR


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Today, Serbia is regaining itsrightful position, not only in thepolitical and economic sense, butalso as a tourist destination.

After the democratic changes in2000, the number of tourists hasbeen rising steadily year after year.

In May 2005, official statisticsrecorded 225,618 guests arrivalsand 660,519 overnights.

Tourism industrys share in acountrys GDP typically rangesfrom 2 to 3%. In Serbia, localtourists provide a majority of thetourism revenue and account for

80% of total arrivals and 87% oftotal number of overnights.

In the late 1980s, Serbia was oneof the leading tourist destinationsin the region with nearly 12 millionovernight stays annually out of

which approximately 1.5 millionwere foreign visitors. Serbian capital

Belgrade was host to about 1.4 millionguest arrivals and approximately 2.2million guest nights annually.

After the breakup of the formerYugoslavia and several illfated yearsof economic isolation and sanctions,Belgrade lost its position as the politicaland economic center of the region. Theseunfortunate circumstances significantly

damaged both business and leisuretourism in Belgrade and Serbia.

With an increased annual incomeand the rise of living standards inSerbia (GDP per capita in Serbiahas doubled in just 3 years timefrom USD 844 in 2000 to USD2,813 in 2004), local demand is a

very important source of incomefor companies within the Serbiantourism industry.

International tourism is playing anincreasingly important role in Serbiastourism sector. Companies investingin Serbian tourism can immediatelycapitalize on the rise of theinternational (inbound) tourism.

The number of foreign touristscoming to Serbia in 2004 was

nearly 400,000representing a 90%increase over 2000. From 2002 to2004, receipts from international

visitors tripled: from USD 70million to USD 220 million.Rapidly growing demand from

international tourists is a result ofboth increased political stabilityand a targeted effort by theGovernment and local companiesto attract visitors.

However, Serbia has only begun totap into its potential. In 2004, thenumber of international arrivalsreached only 42% of 1989 levels. It is

evident that the increase in tourismin Serbia will continue in the future.

Tourism in Serbia

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RECENT TRENDS AND STATISTICS

Over the last few years, tourism industryin Serbia has been developing mainly inthe context of businessrelated travel,

which dominates the overall structure ofthe tourism industry. The high levels ofbusinessrelated arrivals indicate the

attractiveness of Serbia as a location forconferences and conventions anextremely lucrative business opportuni-ty. Statistics show that business travelersare spending 3 to 3.5 times more thanleisure tourists. During the spring andfall seasons the number of tourists inSerbia peaks.

Independent business travelers account for

the largest share of visitors to Belgrade 70%.Of the remaining visitors, 15% come to Ser-bia for MICE (meetings, incentives, con-

ventions, conferences, exhibitions, andfairs) and 15% for leisure related purposessuch as sightseeing, touring, culturalevents, sporting events, and family. Theleisure tourist market remains untapped inSerbia. The potential for growth in the sec-

tor is only limited by investment.

The number of foreign tourists who vis-ited Serbia during the period of January May 2005 is 19% higher than in thesame period last year. The increase indemand is a direct result of more inter-national companies doing business withSerbia. In the above mentioned periodtourism revenues totaled USD 101 mil-

lion USD 30 million more than in thesame period a year ago.

Origine of foreign tourists in Serbia

Austria 11,202

Bosnia and Herzegovina 42,708

Bulgaria 11,382

Greece 13,680

Italy 23,813FYR Macedonia 22,980

Germany 22,865

Russian Federation 12,330

Slovenia 33,676

UK 17,234

Croatia 23,099

Other European countries 14,708

USA 10,885

Other nonEuropean countries 18,376

Main tourist attractions in Serbia, JanMay 2005

Main administrative centers 111,891

Other tourist places 31,133

Mountain 7,477

Spa centers 5,501

Total 160,126

Tourist arrivals and overnights in Serbia, JanMay 2005

Overnights

Total 2,471,677

Foreign 348,542

Domestic 2,123,135

Arrivals

Total 743,282

Foreign 160,126Domestic 583,156

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Serbia offers a variety of possibilities for investment. Numerous attractions from stunning nature and specific microcli-mate spas to peaceful villages and bustling cities that can generate significant tourist demand can be found all over the

country. One can experience senses of Serbia through enjoyable national cuisine, authentic wines and famous brandy.

Hunting and Fishing Tourism

Favorable climate creates excellent naturalconditions for a large number of species of gameand fish. The quality of the grounds has beenoften proven on various European and globalcompetitions. From the Panonia plain in theNorth to the mountain massifs in the South, Serbiahas 323 easily accessed hunting grounds, spread-ing across 8,828,588 ha. The famous huntinggrounds in Serbia are: Karadjordjevo, Morovi,

Apatin, Eka, Tara and ara. With more than 35fishing centers this is a very well developedbranch of tourism in Serbia. The cold waters of

the Zlatibor and Timok regions, renoun through-out Europe, offer a unique fishing experience.

Ethno Tourism

Crystal clear air, water from the nearbysprings, natural healthy food and spirits inrural households are providing to be a uniqueexperience. Guest enjoy traditionally served,homemade dishes, prepared by their hosts.They can take part in local traditions, events,gatherings and dances. Ethno tourism isdeveloped mainly in the western part of thecountry. Currently, 111 households areengaged in ethno tourism, offering 600 bedsin 30 villages. Given the increasing demandfor this kind of tourism, practically every

village can become a site for providing ruraltourism services.

City Tourism

A rich mixture of history, culture and entertain-ment in major Serbian cities offers guests bothexcitement and relaxation. All major cities inSerbia are able to attract tourists, be they travel-ing on business or experiencing something new.In 1990, this segment of tourism accounted foralmost 70% of total number of foreign touristarrivals. Innovation is necessary for a constantrejuvenation of the existing tourist productsand for endogenous growthpresenting aninteresting business opportunity. Major Ser-bian cities are: Belgrade (1.5 million inhabi-

tants), Novi Sad (300,000), Ni (250,000),Kragujevac (177,000), and Leskovac (156,000).

Investment Opportunities in


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Medieval monasteries housing beautiful frescoes and modern galleries represent Serbias real treasures. The enchantmentof Serbia lies in its diversity of landscapes, history, culture and food. Direct road and rail links, Belgrade International

Airport and the waterways of Sava and Danube rivers, Serbia is easy to access and get around.

Spa Tourism

Spa tourism has a long standing tradition andhistory. Spas and climate areas had been wellknown since Roman times. The remains ofthe Roman spas and baths exsist even today inthe majority of 140 spas in Serbia. With morethan 1000 springs of cold and warm mineral

water, as well as the wealth of natural medicalmud and gas, spas provide therapy, in additionto plenty of indoor and outdoor sport activi-ties. Spas are also well equipped for organizingcongresses, seminars and other big gatherings.Most of them are situated in the foothills of

the mountains and near forests with mild cli-mate and unpolluted environment.

Mountain Tourism

Serbia is a country of exceptional mountains.The mountain regions, with their broad offerof various facilities, are an attractive touristdestination. Their unique beauty and untouchedpureness is the foundation for many nationalparks. Kopaonik, a major tourist attraction, isone of the highest mountains in Europe with44km of ski slopes and 20 ski lifts. Zlatibor,Divibare, Zlatar, Golija, Go, Jastrebac andStara Planina are popular tourist attractions all

year round. Unrivalled by beauty, with thetotal hight of all mountain peaks listed higher

than Mount Everest, all these destinations arefew hours drive away from Belgrade.

Event Tourism

Cultural events in Serbia reflect the vibrantcreative force and spiritual wealth of ournation. Numerous events taking place each

year celebrate Serbias rich folklore. Festivi-ties, performances, fairs, cultural, sporting,and other events, organized on various occa-sions, feature diverse contents that enrichSerbias tourist offer. Local and foreigntourists are especially drawn by the festivitiesthat cherish tradition, customs, folklore, andhandicrafts. The bulk of festivities are heldduring the summer, being overly dedicated to

historic events, sowing, picking, and othersummertime events.

the Tourism Industry in Serbia


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Serbia is positioned at the heart of the river that unites

Europe the Danube River. Passing through ten European

countries (Germany, Austria, Slovakia, Hungary, Croatia,

Serbia, Bulgaria, Romania, Moldova and Ukraine), the

Danube River links the cultures and economies of Western

and Southeastern Europe. With 588 navigable kilometers

through Serbia, the beautiful landscapes along the river

are particularly interesting and offer a high potential for

tourism development. The Danube River and its numerous

tributaries and lakes offer a perfect environment for fishing

large carps, pikes and pike perches.

There are numerous tourist attractions along the Danube

River in Serbia. Historical monuments that are testimonials

from different centuries and cultures and archeological

sites of ancient European cultures dating back to 6000

Investment Potentials


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B.C., not to mention medieval fortresses like Smederevo

and Golubac. National parks and natural reserves along

the river offer numerous possibilities to experience

nature. Both Serbias capital and the second largest city

are situated on the Danube river bank.

The Danube in Serbia offers the perfect conditions for

river cruises. Recent statistics show that the number of

dockings and passenger traffic is growing consistently.

However, the surrounding infrastructure, including marinas,

docks and gas stations, is not sufficiently developed to

properly serve the rising demand. Proposals for several

projects pertaining to this specific issue already exist but

are seeking an investor, including a marina in Belgrade

with over 200 docking slots and a marina, nautical club

and hotel complex in Veliko Gradite.

Along the River Danube


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It the late 1980s, Belgrade was one ofthe key European destinations interms of congress tourism. This trendis present again with Serbia reemergingas a popular destination. People fromall over the world are expressing moreinterest in visiting Belgrade. Most otherdestinations in Europe have alreadybeen frequently used for conventionsand congresses, so Serbia, and Belgradein particular, have emerged as new andfresh alternatives.

Serbia has emerged as a new prospec-tive convention destination for manyreasons, including:

Existence of one of Europeslargest plenary spaces,

Good hotel packages for up to1,000 rooms,

Easily accessible by air, The crossroads of history where

East meets West, Caf culture in lanes, alleyways

and along the Danube, A country of great natural beauty

and many surprises, Serbia a country where hospitality

is not a business its a way of life.

In order to fully capitalize on its advan-tages, Belgrade must increase the num-ber of 4 and 5star hotels and completethe renovation of the Sava Centre con-gress hall. With investments in newfacilities and the renovation of existingaccommodations, Belgrade could seize

the opportunity to regain its positionsin the congress tourism market.

The Sava Centre in Belgrade is the largest convention centre and major PCO in Ser-bia. It offers a 4,000 square meter exhibition space and 3,760 seat plenary hall thelargest in South East Europe and larger than the majority of halls available in manyother European capitals. Although, the new investments are needed in order to fullymeet the needs of a modern congress hall, so far Sava Centar was capable to organizemajor European business events. Additional investments include: modern technol-

ogysound, lighting and audiovisual systems, WiFi, modern telecommunicationssystems, data projection, and cabling infrastructure.

Congress


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Novi Sad has the potential to attract smaller international conferences. It is a city withenormous character, and is very attractive with good restaurants, great shopping and astrong heritage. The city is capable of providing up to 500 rooms as a block for a conventionand is well positioned to bid for international conferences of between 200 500 delegates.In order to increase its capacity to host larger conventions, the Novi Sad Fair is building anew congress centre which will be open by the end of 2005. It will offer a 1,200 seat plenary

space, divisible into two separate 400 and 800 seat spaces and 6 meeting rooms, and willbe adjacent to 6,000 sq. meters of space that can be used for exhibits or banqueting.

Zlatiboris Serbias most popular alpineresort style destination. It has a strong

yearround leisure business and hashad success with national and regionalconferences as well. The city has a welldeveloped hotel industry, but no 5starproperties. The Palisad Hotel is thecitys largest with 450 rooms and isscheduled for renovation in the fourthquarter of 2005. Renovations and theaddition of a planned new 1,000 seatconference space will significantlyimprove its attractiveness for regionaland international meetings.

Vrnjaka Banja Serbias major spacentre is situated in a strikinglybeautiful part of the country surrounded

by nature walks and scenic landscapes.It is host to nearly 100,000 annual

visitors, 15,000 of which are delegatesto its 350 yearly conferences. The cityis a three hour drive from Belgradeand two hours from Ni International

Airport. The citys largest plenaryspace offers 1,200 seats and 760 sq.meters of exhibit space. Vrnjaka Banjahas 24 hotels with 3,000 rooms.

Subotica/Pali is approximately a 2hour drive from both Belgrade andBudapest. It has 340 hotel rooms,including 172 that are 3 and 4star(no 5star properties.) Its largestmeeting facility has 600 seats and itincludes 3,300 square meters of exhi-bition space. Subotica/Pali is host to

200 national and regional conferencesa year and 15,000 delegates.

Tourism


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PRIVATIZATION

The most common way of investing in the Serbiantourism industry in the past five years has been throughthe privatization process. Serbia and Belgrade inparticular has to have a welldeveloped hotel infrastructureand various types of facilities for accommodation.Currently, these facilities are in need of further investmentsin order to keep up with the demand for quality.

Since May 2002, when the privatization process started,70% of the companies set to be sold in the tourism andhospitality sector have been purchased by 69 corporatebuyers. The total privatization revenue has reached almost

39 million. Sixty seven companies were privatizedthrough the public bidding process, while 2 companies

were sold through tenders.

At the moment around 40 tourist facilities are stillwaiting to be privatized through auction procedure.Also, 27 companies with socially and state owned capitalwith shares in portfolio of Share Fund are yet to be sold.

For any additional information regarding the privatizationof hotels and tourist organizations in Serbia pleasecontact www.priv.yu.

Investment Prospects


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POSSIBILITIES FOR GREENFIELD INVESTMENT IN BELGRADE

Belgrade is the last major European city without significantinvestment in modern hotels. Very few major hoteloperators have properties in the city like Hyatt Regency,Best Western and Intercontinental Hotel.

The city is expected to experience growth in hoteldemand from approximately 0.85 million guest nights in2003 to a conservative estimate of 1.3 million and to anoptimistic estimate of 1.6 million guest nights by 2010.

This estimate is driven primarily by an increase in businessactivity and GDP. Growth in demand is expected tocome from the midtier market segment more so thanfrom accommodations catering to upscale travelers.Prospective investors may consider focusing more on

development of quality midscale, economy and budgethotels than on development of luxury and upscale hotels.

Land and Construction IssuesWith regards to the land and construction issues inSerbia the ownership of urban land is governed by theLaw on Planning and Construction with land definedinto two categories: public land and other land.

Public land is designated for important infrastructurepurposes, while other land is divided into urbanbuilding land, which is under the ownership ofthe Republic of Serbia.

The City of Belgrade is the only authority allowed toissue the Lease on the land. Urban building land inBelgrade can be acquired by the Right to Use or by theLease of land for up to 99 years. Right of Use is an option

when an existing building is present on the land, whilethe Leasing of land exists if no buildings are present on

the land. Additional information regarding the land issuecould be found on www.beoland.com.

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As Belgrade reclaims its position as

the cultural and business hub ofSouth East Europe, the city offers

opportunities to earlystage

investors in the hospitality industry.

Though possessing a wealth of

business and cultural potential that

is increasingly being realized,

Belgrade is the last major European

city without significant investment in

modern hotels. Interested investors

may seek opportunities in Greenfield

projects, renovations or management

contracts.

Besides being Serbias capital,

Belgrade is also the main destination

for foreign tourists in Serbia. It

accounts for 34% of total tourist

arrivals in Serbia and 61% of all

inbound arrivals. In terms ofovernights, Belgrade accounts for

18% of the total annual number and

59% of all inbound overnights.

Most of the tourists come to Belgrade

for business or institutional purposes

(~70%). Tourists also visit Belgrade

to explore the citys cultural heritage,

riverbanks, various cultural events,

dining, entertainment, congresses,

and fairs. With 32 major traditional

events throughout the year and

hundreds of restaurants, bars and

clubs, Belgrade is considered the

most vibrant city in the Balkans.

Set on the confluence of two rivers,

the city has much to offer. It is also

well served by air, railroads and

roadways, with reasonable drivingdistances to many cities.

Belgrade as a Tourist Destination


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HOTEL INDUSTRY IN BELGRADE

Belgrades position on the central crossroads of majoreconomic corridors connecting Europe and Asia, withgood air connections to major European cities;

Attractive locations of several existing hotels, whichcan be redeveloped for the best and highest value use,thus requiring quality reconstruction, adaptation andrepositioning;

Several promising vacant locations for new hotels; Attraction of investment into Serbia as reforms take

hold and stability continues, thus bringing additionalbusiness guests to Serbias capital;

The Belgrade urban plan up to 2021 allows foradditional development of commercial properties,including the development along the Sava river bank;

Implementation of international hotel standards forinfrastructure, management and operations;

Increased attraction of City Breaks to Belgrade; Low presence of international hotel chains allows for

new entrants to the Belgrade market; Development of the tourism industry with a strong

focus on City Breaks and MICE tourism will attractincreased numbers of tourists.

At present, a number of Greenfield projects are underway.Furthermore, premium locations are waiting for potentialinvestors. The following map shows some of thelocations available. They are all in the verycentre of Belgrade.

Additional information could be found in Belgrade HotelInvestment Survey prepared by SEDP, available atwww.siepa.sr.gov.yu

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1. Blok 13a

2. Blok 12

3. Blok 674. Dorol

5. Knez Mihajlova & Rajieva

6. Skadarlija

7. Ivanium Center

8. Kneza Miloa 32-36 (West)

9. Federal Ministry of Defense

10. Kneza Miloa & Highway (NE)

11. Kneza Miloa & Highway (NW)12. Slavija Square (NW)

13. Slavija Square (NE)

14. Slavija Square (E)

15. Vraar

16. Depo


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The tourism industry directly employs around 8% ofthe active population in Serbia. Compared to otherregional economies, Serbia offers very skilled labor atreasonable costs and a higher degree of flexibility withrespect to labor relations.

The workforce in the tourism and hospitality sectorshas a number of years of experience, as Serbia once

was one of the leading tourist destinations in the

Region during 1980s.

The number of private and public schools specializingin tourism and hospitality is growing due to the expan-sion of tourism facilities in Serbia. Today, there are 14high schools in Serbia specialized in the tourism andhospitality field. Every year these schools release around21,000 graduates.

Serbia also has 10 universities and higher level educa-tion schools offering three and four year studiesin the tourism and hospitalityrelated fields.

In tourism, the ease of communication with hotel staff isa crucial part of a guests satisfaction and vital for provid-ing quality tourism services. Good language skills strong-ly underpin the execution of management decisions inthe case of a multilingual business environment. The

knowledge of foreign languages has always been anadvantage of the Serbian workforce when compared toother SEE countries.

Statistics show that around 40% of the population canconduct at least a basic conversation in English, andabout 10% are able to do so in French and German.The average net monthly salary in the period fromJanuary 2005 April 2005 in the tourism and

hospitality industry was the local currencyequivalent to 127.

Workforce


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For any industry investor, the level of infrastructuredevelopment plays an important role when considering

whether to invest in a country. For the development ofthe tourist industry, infrastructure is one ofthe prerequisites for development and a key growthdriver. One can reach Serbia by road, rail, air or water.

BY ROAD AND RAIL

Some of the major European transportation corridorsintersect in Serbia, connecting Serbia with the rest ofEurope and the Middle East. Corridor 10 links Scandinavia,Western Europe and the Middle East. The road andrailway network is very well developed and connectsSerbia to all neighboring countries.

BY WATER

Belgrade is located on the confluence of two navigablerivers Sava and Danube, the latter of which provides

freight and transportation links to Western Europe andthe Black Sea.

The Danube River is the most important linkage for eco-nomic cooperation between the East and West. The costsof transportation on this waterway are much lower thanthose any other form of transport.

Currently, there are 15 ports on the major rivers in

Serbia providing docking, cargo loading and unloadingservices.

BY AIR

Serbia has two international airportsBelgrade and Ni.Belgrade Airport is located 20 km from the center of thecity and currently provides service to 17 airlines withscheduled flights to and from major European cities as

well as USA and the Middle East. Almost all Europeanand some of the nonEuropean air companies have repre-sentative offices in Serbia.

The national carrier JAT Airlines flies to over 36 countries.According to the statistical data of the Belgrade Airport,the number of passengers coming to Serbia in 2004 wasapproximately 1.85 million and has increased sharplysince 2000.

The development of the New International AirportPassenger Terminal at the Belgrade Airport will havean influence on Serbia's image and standing as a worldclass visitor destination.

This 22 million project was originally scheduled to openby the end of 2005. Once it opens, Terminal 1 will revertfor use as the city's domestic passenger terminal.

Also, the new cargo terminal, a USD 60 million worthproject scheduled for completion in 2009, will makeBelgrade to become a cargo hub for whole of South EasternEurope. The facility with a total of 30 60 hectares ofland to be developed, is currently planned to include

a large service and maintenance facility anda small 3 to 4star hotel.

Infrastructure


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ACCOMMODATION FACILITIES

Accommodation in Serbia has experienced significantimprovements over the past few years. Quality accom-modation such as hotels and resorts are offered through-out Serbia. Additionally, private rental units, highendapartments and rooms, can provide a unique and personalexperience.

The vast majority of hotels in Serbia are two andthreestar hotels that need additional investment tomeet the more sophisticated demand. A number ofhotels are undergoing privatization, creating a steadystream of foreign investment in the industry.

Serbia lacks both a sufficient number of highend hotelsand global hotel chains. The Hyatt Regency, Interconti-nental and Best Westernwhich recently purchased two

Serbian hotelsare the only major foreign players in thehospitality sector.

During the summer, music and sporting events attract alarge number of young people interested in inexpensiveaccommodation, such as hostels. The lack of hostels andlowend hotels present a considerable business opportu-nity for both domestic and foreign investors.

Number of hotels in Serbia, in 2005


!!!!! 3

!!!! 18

!!! 69

!! 97

! 24

Uncategorized 66

Total 277


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If you employ new workersTaxpayers who employ new workers are entitled to a taxcredit equal to their new employees gross salaries plusrelated social security contributions paid by the employer.

For your large investmentsTaxpayers who invest over CSD 600 million (around7.4 mill) in fixed assets and employ at least 100 new

workers are not liable for corporate income tax for up to

ten years, provided that those assets are used for theactivities for which the taxpayer is registered.

Other incentives Import of equipment and other assets as well as

construction materials representing a foreign entitysinvestment are exempt from customs duties.

Import of raw materials, semifinished and componentparts carried out for the purpose of realization of a

longterm production contract in cooperation with a foreignproducer are exempt from customs and other import duties.

INVESTMENT INCENTIVES

If you invest in fixed assets Taxpayers investing in fixed assets are entitled to a

tax credit of up to 20% of the value of the investmentmade in that year. The tax credit is limited to 50% ofassessed tax in the year of the investment. Theunused portion of the tax credit can be carried for-

ward for up to 10 years.

Taxpayers classified as small companies are entitledto a tax credit of up to 40% of the value of their invest-ments in fixed assets in the year of investment. In thiscase, the credit is limited to 70% of assessed tax in the

year of the investment. The unused portion of anysuch credit can be carried forward for up to 10 years.

Certain industries including production of medicalinstruments are entitled to receive a tax credit of up to80% of investments made in purchasing fixed assets

with their own financing. The unused portion of anysuch credit can be carried forward for up to 10 years.

Government Measures Toward Sustainable Development of Tourism

The new Law on Tourism was adopted in May 2005 and is in compliance with EU regulations in this field. The

Law provides for various investment incentives for tourism industry. Within the new Law, the Government has

established a tourism development fund and a program for managing and support of tourism development. TheGovernment effort for the further development of the tourism industry and attempt to encourage and strengthen

foreign investments in Serbia is seen by establishing a strategy for tourism development through year 2015.

Government Measures Toward Sustainable Development of Tourism

The new Law on Tourism was adopted in May 2005 and is in compliance with EU regulations in this field. The

Law provides for various investment incentives for tourism industry. Within the new Law, the Government has

established a tourism development fund and a program for managing and support of tourism development. TheGovernment effort for the further development of the tourism industry and attempt to encourage and strengthen

foreign investments in Serbia is seen by establishing a strategy for tourism development through year 2015.


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INTERNATIONAL FINANCE CORPORATION

The IFC is the largest multilateral source of loan and equi-ty financing for private sector projects in the developing

world. As a member of the World Bank Group, the IFCshares the primary objective of World Bank Group institu-tions: to improve the quality of the lives of people in itsdeveloping member countries. Since 1967, the IFC hasapproved over USD 1.5 bil-

lion of investments in theaccommodation and tourismsector (mostly resort hotels,tour operators, restaurantsand city hotel investments)in more than 180 projectsacross 70 countries. The IFCoften works with major hotelchains on projects across the

globe, including: ConradIstanbul, Hilton Sofia, Holi-day Inn Skopje and numer-ous hotel projects in Lithua-nia, Poland, Azerbaijan andKazakhstan.

The IFC offers a wide varietyof financial products to pri-

vate sector projects in devel-

oping countries. To ensurethe participation of investorsand lenders from the privatesector, IFC limits the totalamount of ownaccount debt and equity financing it willprovide for any single project. For new projects the max-imum is 25% of the total estimated project costs and upto 35% for small projects. For expansion projects, theIFC may provide up to 50% of the project cost, provided

its investments do not exceed 25% of the total capitaliza-tion of the project company. www.ifc.org

EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT

EBRD was formed in 1991 to foster the shift to a mar-ket economy in transition countries. The Banks share-holders are 60 countries and two multilateral organiza-tions. EBRD operates in 28 countries and is the singlebiggest investor in the region with commitments ofover 24 billion in over 1,000 projects.

Since the Bank started itsoperations in Serbia andMontenegro in 2001, it hascommitted 644 millionincluding 425 million forpublic sector projects and219 million for private sec-tor projects (excluding thetrade facilitation program).

Local and foreign privateentities may bid for tenderopportunities as part of theimplementation of publicsector projects.

EBRD develops tailor madeproducts that are designed tosatisfy the needs of the clientand the project. The product

range includes longtermloans, working capital, equity,quasiequity instruments,and guarantees. Typically,

the Bank directly finances longterm loans between5250 million priced competitively at current marketrates, as well as equity investments of 2100 million(with exit usually within 48 years). The Bank finances aportion of the project costs (usually up to 35% of the total

project costs), with the remainder to be provided by theclient, sponsor or other financiers. www.ebrd.org

Financing an Investment


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Hotel Parkis one of the biggest hotels and restaurant

complexes not only in Serbia but also in the formerYugoslavia. Situated near the centre of Novi Sad, andat the heart of the citys largest park, it has a uniquelocation which distinguishes it from other hotelsin the city.

The hotel was privatized in February 2004. Under thenew private owner, 22,000 square meters of the hotel

were completely reconstructed. In December 2004, the

beautifully renovated 5star hotel opened its doors to thefirst guests. Since reopening, the hotel has recreateditself. The new management has focused on customer

service and performance to create a brand which will be

recognized internationally.

With its wonderful facilities, Hotel Park is a city withina city. The hotel has been the destination of choicefor the business traveler. With its recent expansion,the Hotel Park will begin to attract conventionsand conferences.

The Hotel Park has over 80 single rooms, more than

100 double rooms, 40 semiapartments, 17 apartments,6 residences and additional facilities to accomodateconventions and conferences.

!!!!! Success Stories


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Hyatt Hotels & Resorts encompasses 212 hotels and

resorts (over 90,000 rooms) in 43 countries around theworld, operating under the Hyatt, Hyatt Regency,Grand Hyatt and Park Hyatt brands.

As Hyatts global philosophy is to distinguish itself fromthe competition by providing innovative products andservices worldwide, the Hyatt Corporation decided toexpand into the Balkans in the early nineties.

Several important reasons influenced the Hyatts decisionto come to Serbia. First, there were no other internationalhotel chains present in the Balkans. Second, Belgrade

was a logical choice given its extraordinary geographicalposition and the traditional hospitality of the Serbiancapital. The Hyatt Regency Belgrade very quicklybecame the leading hotel for business and leisuretravel in Serbia.

Hyatt Corporation (domestic U.S., Canadian and

Caribbean hotels) and Hyatt International Corporation(international properties) are subsidiaries of theChicagobased Global Hyatt Corporation. Global HyattCorporation is also the parent company of the HyattVacation club, Inc. and Hyatt Equities, L.L.C.


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Vrnjaka Banja, located in central Serbia near the vastKopaonik mountains, is the largest spa and health centerin Serbia.

The preserved natural environment of the mountaingives the spas microclimate a special and exceedinglypleasant subAlpine character.

The hot mineral water of Vrnjaka Banja belongs to thesame WHO classification category as waters fromCarlove Vary, Bohemia and Vichy, France. The water hasbeen proven to improve digestion.

Merkurs specialized hospital represents the mostuptodate medical health centre for the treatmentof digestive problems and diabetes. Additionally,the hotel complex surrounding the hospital consistsof four hotels with 850 beds.

The Wellness Centre Fons Romanus, which is a partof Merkur, provides a whole array of health treatmentsthat improve overall health and promote relaxation

and stress relief.

The Centre is equipped with facilities for hydroproce-dures and massages that have a healing effect on theentire body. Guests can take a dip in the thermomineral

water pool or simply relax with a classical or shiatsumassage.

Other programs offered by the centre include an

antistress and anticellulite program, sauna park,and hot bath.


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Since its opening,Sala 84

is holding the title of the HonoredMember of Diplomatic Code, and has won Great GoldMedal on 2004 Novi Sad Fair for the high quality of servic-es, Gold Tourist Heart as the most successful tourist facili-ty in Serbia, 2004 competition for title of Most Succesfulorganized by Sacen International, and the title of Bussinesspartner in 2005. Sala 84 was also chosen by USAID as oneof 10 Perfect Places along the Corridor 10 (autoroute E 75).In May 2004, the grange is opened for the visitors.

The entire homestead the main building and guesthouses, as well as auxiliary buildings like barns, stablesfor cattle, etc. is constructed in the same way as it wasbuilt 200300 years ago. The rooms are furnished withpinewood furniture and heated by 250 years old, famousHungarian Zsolnai ceramic stoves.

Delicious Vojvodinian meals are prepared on similar oldstoves and are served in traditional ceramic dishes.

These are very unique specilaties and they can be tastedonly on Sala 84 grange.

Grange has facilities for organizing important seminarsand congresses for up to 100 people, with modern audio,and video equipment at clients service. Guests can alsoenjoy recreation on well equipped carting track, grass

volleyball courts, beach volley and small football. It takes10 minutes to reach Sala 84 from Novi Sad.

Over the course of the past two years, Sala 84 hasa constantly growing number of visitors, bothdomestic and foreign. Many respectable companies

are organizing meetings, congresses, celebrations,presentations and promotions in this spaciousand beautiful garden.

Due to anticipated increase in demand, the managementof Sala 84 plans to invest in the expansion of accomo-dation facilities, by building a new complex of houses

with 13 suites (single, double, and triple bedded),congress hall and modern AV equipment, as well as

modern and well equipped fitness center and outdoorswimming pool.

29


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Hotel Le Petit Piafrepresents an example of how oneman initiative can result in the one of the best model ofthe tourism investment in Serbia.

Mr. Placide Machoud arrived in Belgrade in December2002 as a representative of a Swiss Investment Fund.Even though as a resident of Belgrade, he often visited

various places throughout Vojvodina and central Serbia,holding a function of a director of a large company for

production of frozen foods and vegetables.

Having a financial background, he was not too interestedin other fields of work until he visited Skadarlija for thefirst time, and spotted a small backyard behind a housemuseum of the famous Serbian writer andpainter ura Jaki.

Subsequently, he decided to resign from his previous job

and together with his local partner engage in the renovationproject of an existing facility, as well as its back yard, andturn it into a Hotel Le Petit Piaf. This process was2.5 months long.

The Hotel was officially open on 9 September 2004.It has 7 rooms and 5 apartments, a Restaurant,Lounge and a Garden, with a total of 450 personoccupancy.

After 10 months of working successfully, the hotelcapacity is full. For this reason hotel reservations arenecessary to be made at least one month aheadof time. Hotel guests are mostly foreigners i.e.,business people with an average stayof 3 nights.

The lack of hotels in Belgrade is one of the reasons forthis projects success, as well as, its location being in the

oldest part of Belgrade, in the center of the city, and thecontinuity of providing high quality services.


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Ministry for Trade, Tourism and Services

Nemanjina 2226, 11000 Belgrade

Tel: +381 11 361 88 52

Fax: +381 11 361 02 58

Email: [email protected]

www.minttu.sr.gov.yu

Tourist Organization of Belgrade

Deanska 1, 11000 BelgradeTel: +381 11 3248 404

Fax: +381 11 3248 770


www.tob.co.yu

Tourist Organization of Serbia

Deanska 8a, 11000 Belgrade

Tel: +381 11 3342 521Fax: +381 11 3221 068


www.serbiatourism.org

Agency for City Building Land and Development of Belgrade

Njegoeva 84, 11000 Belgrade

Tel: +381 11 344 11 59

Fax: +381 11 344 10 32Email: [email protected]

www.beoland.com

Privatization Agency

Terazije 23, 11000 Belgrade

Tel: +381 11 302 08 00

Fax: +381 11 302 08 28


www.priv.yu

Hotel Hyatt Regency Belgrade

Milentija Popovia 5, 11000 Belgrade

Tel: +381 11 301 11 82

Fax: +381 11 311 22 34


www.belgrade.regency.hyatt.com

Hotel Le Petit Piaf

Skadarska 34, 11000 BelgradeTel: +381 11 303 52 52

Fax: +381 11 303 53 53


www.petitpiaf.com

Sala 84

Vojvoanskih brigada 17/I, 21000 Novi Sad

Tel: +381 21 445 993Fax: +381 21 521 324


www.salas84.co.yu

Hotel Park, Novi Sad

Novosadskog Sajma 35, 21000 Novi Sad

Tel: +381 21 4888 888

Fax: +381 21 611 711Email: [email protected]

www.hotelparkns.com

Wellness Center Novi Merkur

Bulevar Srpskih Ratnika, Vrnjaka Banja

Tel: +381 36 611 625

Fax: +381 36 611 626


www.vrnjcispa.co.yu

Useful links


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Serbia Investment and Export Promotion Agency (SIEPA)is a government agency established in 2001 to facilitateand support foreign direct investments and promoteSerbian exports.

The list of services that SIEPA provides to foreign investors:

analyzing Serbias business environment and providingcritical information regarding the process of settingup

a company in Serbia, preparing sector analyses and studies that give a

thorough overview of the state of particular sectorsof the Serbian economy,

providing help in identification and acquisition ofattractive Greenfield and Brownfield sites,

assistance in obtaining necessary permits andlicenses, thus speeding up the completion of invest-ment projects,

helping in finding partners and suppliers amongSerbian companies.

Only by effectively networking with public and privatesector bodies, SIEPA can best respond to the needs offoreign investors. In particular, SIEPA works in closecooperation with the following institutions:

all government ministries and other governmentalbodies,

municipal authorities and local selfgovernment, Building Directorate of Serbia and Agency for Building

Land and Construction of Belgrade, tax and customs authorities, statistical bureaus, chambers of commerce, National Bank of Serbia,

and all other institutions related to the process of

establishment and successful pursuit of businessventures in Serbia.


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Design: Saa orevi Photos: Dragoljub Zamurovi,Dragan

Ministry of Trade, Tourism and Services

n

GTZ


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SIEPA Vlajkovieva 3 11000 Belgrade tel.: +381 11 3398 550 fax: +381 11 3398 814 [email protected] www.siepa.sr.gov.yu

Bosni,NemanjaJovanovPrint:Standard2

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Serbia Investment andExport Promotion Agency

Supported by United NationsDevelopment Programme

Funded by the Government of theNetherlands

tourism industry in serbia

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