A critique of tourism policy and planning in Croatia - Essay Example

?COVER PAGE ESSAY A CRITIQUE ON THE TOURISM PLANNING AND POLICY IN CROATIA Tourism January TABLE OF CONTENTS Executive Summary 2 1. Introduction 4 1.1 Key features of existing tourism patterns, significance to the economy and employment 4 1.2 Key institutions responsible for the policy framework and tourism development 4. 2. Definition of term 5 3. Statement of the problem 6 4. Tourism vision and policies 6 5. Issues facing developments of tourism in Croatia 7 6. Tourism strategies 8 7. Analysis 10 8. Conclusion 12 Annex 14 Bibliography 15 Executive Summary This study is about tourism planning and management. As tourism has been significant source of revenue and development in the Republic of Croatia, its tourism planning and policies are inspected and analyzed. A critique is forwarded to point out the deficiencies between the policies and the actual performance. The study is subdivided in several sections that discusses following issues: a) key features of the existing tourism patterns, its significance to economy and employment; b) Issues or problems facing tourism in Crotia; c) Institutions working for its development; d) official strategy of the country and, e) finally, an analysis whether the strategies spelled out are realistic and achievable. The Study used available sources of information from the Ministry of Tourism, World Economic Review, and other published information to arrive at an analytical position. Study found out insufficienes on structural development of Croatia leads to its low competitiveness that does not go with its proclaimed tourism policy. A Critique on the Tourism Planning and Policy in Croatia 1. Introduction Tourism has been a significant part of any country’s economic development. Tourism creates multiplier effects as tourists’ spending spur growth in the economy. Local employment is created, business opportunities are opened, and infrastructure development results to improved facilities for the residents. However, as tourism expands, the need for proper policy and management becomes significant. Through effective policies, research and planning, the environment, the indigenous culture and area of the country are preserved. 1.1 Key institutions responsible for the policy framework and tourism development. As tourism is a multi-faceted function, its policy, Mato, Bartuloci (2010a, p.255), a professor in Business and Economics in Croatia, said should be determined by the combined economic policy of agriculture, hotel industry, transportation, commerce and municipal services. In Croatia, tourism policy is developed by several organizations. At the top level, there is the Ministry of Tourism. The Croatian National Tourist Board (CNTB), the Croation Chamber of Economy, and at the regional level, it comprises of the tourists board, public sector representatives, travel agencies, enterprises and companies, residents, and others who are interested. The CNTCB is founded with a “view to promoting and creating the identity, and to enhance the reputation of Croatian tourism. The mission also includes the planning and implementation of a common strategy and the conception of its promotion, proposal and the performance of promotional activities of mutual interest for all subjects in tourism in the country and abroad, as well as raising the overall quality of the whole range of tourist services on offer in the Republic of Croatia.” (CNTCB n.d.) 1.2 Key features of existing tourism patterns, significance to the economy and employment The importance of tourism in Croatia is fully expressed in this country since it depends much from tourism to boost its economy. Tourism in Croatia created 135,000 jobs in 2011, (12.3% of total employment). Economic indicators of the World Travel & Tourism Council (2012) showed a positive outlook and brighter promise for tourism in Croatia . Figure 1 below shows a picture of tourists’ arrival that records to 9,334.8 (thousand) in 2009 and a international tourism receipts of (US$ millions)8,889.4 for the same year. However to remain positive, the tourism policy of this country should properly address the problems faced by the country such as inadequate infrastructure and seasonality of travel. Before we start with the discussion of tourism policy, it would be helpful to have a clear understanding of the term. 2. Definition of term. Bartuloci (2010b, p. 255) gathering different definitions from several authors arrived at a simplified term, that states” tourism policy is the sum total of the conscious effort by the state on tourism by means of the necessary intruments that are directed towards the development of and improvement of tourism, to the maintenance of its competitiveness and on the way to the realization of its economic and non-economic goals”. From various perceptions of authors cited in Bartuloci (2010c, p. 256), tourism policy seem to be a complicated one as it has two facets of development; one that suggests tourism development on one hand, and economic development on the other. 3. Statement of the problem The goal of tourism development as decribed by Bartuloci (2010d, p. 256) is relative to the supply situation wherein conditions for competitiveness in the foreign market should be met. It should be remembered that foreign tourists have needs and wants that should be satisfied. It also deals with protection of resources and should address its sustainability as well as to provide necessary conditions for profitability of businesses in Croatian tourism . Whereupon, this study will look if the vision of Croatian tourism is compatible with its tourism policy. 4. Tourism Vision and Policies Tourism policy of Croatia is impliedly explained in its tourism vision that states… “Tourism largely drives the economic growth of the Republic of Croatia for the benefit of all of its citizens, under the premise of sustainable usage, protection and development of its naural, historical, and cultural resources, while creating a favorable investment climate”. Belosovic, Blanca, 2012a p. 4 ). Tourism in Croatia has a positive outlook. On the first half of 2012, there were about 3,418,600 tourists arrival in Croatia representing an 6% percent increase from same period last year. Out of this number, 2, 962, 632 , were foreigners (up by 8%) and 496,674 local travellers which experienced a drop of 4%.(Visit Croatia, July 2012). In Visit Croatia website, topping the list of foreign visitors are Japanese (up by 38%) followed by the Britons (25% more) Belgians (265 more), Dutch (22% mor) and Swedish(21% more) visitors. But as per report of Gorana, Kranjec of Visa Card (2012a, p. 5), German visitors are the largest spenders that accounted for $ 122.8 million, a figure which is up by 52.1 percent on year to year. Accordingly, trip to Croatia became easier for British tourists because of accessibility and opening of budget airlines such as Monarch, Jet2, Ryanair, and Easyjet in 2011. Euromonitor (2006) predicts tourism growth of Croatia to be about 42% between 2005 to 2010. Consequently growth is driven by the arrival of budget airlines and the expectation of EU membership Aside from the increased number of tourists here, Gorana Kranjec ( 2010b, p.3), cited Central Bank figures of $8 billion revenue during the nine months period of 2011 from tourists spending representing a 6.0 percent increase during the same period on 2010.These figures are significant for Croatia’s economy since it depends much from tourism to boost its economy. 5. Issues facing developments of tourism in Croatia. As part of its tourism initiatives, Croatia hopes to capture the imagination of foreign tourists by saying : “ Croatia; The Medeitarreanen as it once was” (Euromonitor 2006) . It aims to cater to high-end tourists who are looking for quality tourism that is in accord with sustainable development. Croatia suffered an economic setback because of war in 1991-1995. As such, its economy collapsed where it used to be one of the wealthiest country in Yugoslavian republic. It failed to catch up the waves of investment when the Berlin Wall fell. However, its economy began to move slowly in 2007 to 2008, when tourism rebound led to a GDP increase of 4 to 8 percent. This slow progress recruited problems of unemployment, high inflation rate, a growing trade deficit, and a challenging investment climate (CIA World Facts, updated 2012a). As part of reconstruction process of the country, and to create a favorable investment climate, the Ministry of Tourism cited strategic developments it has mobilized since 1993 (Belsovic, Blanca, 2012b) Initial goals were valorization, reconstruction, and protection of tourism resources. While much of these goals have reportedly been achieved, CIA (2012b) believes a lag on structural reform still exists and its over-reliance on tourism revenue is questioned by no other than the World Bank as it feared it will lead to a higher risk for economic development. 6. Tourism strategies In 1998, Croatia’s long-term development plan emphasized the importance of building the necessary infrastructure with emphasis on building communications and transport in the islands. It has also put up a policy that stressed the importance of “building awareness about ecology” . This initiative clearly emphasized the implementation of its reconstruction process as part of tourism strategy. However the IMF No. 12/302 (2012) Report clearly indicates its lack of competitiveness with neighboring countries and would be a sign that reconstruction process needs to be further strengthened. As shown in Box 1 [Fig.7] tourists arrival in Croatia falls below Turkey and Bulgaria in terms of tourists arrivals from the years 2000 to 2010. Its export growth is also one of the lowest among its neighboring countries for the same period. Box 1 Comparison of tourists arrivals, 2000-12. Source: IMF COUNTRY ASSESSMENT. However, the prosects of tourism in Croatia is not totally dim as the World Economic Forum in its “Insight Report of Global Competitiveness 2012-2013”, ranked Croatia as 34th place out of 139 countries in 2010 which is rather high and therefore considered one of the most desired tourists destination in the world. Its ranking remains the same as of 2009. Croatia’s second development strategy is towards tourism development by 2010, as it spells out the following vision: “Tourism largely drives the economic growth of the citizens of Croatia for the benefit of all its citizens, under the premise of sustainable development of its natural, historical, and cultural resources, while creating a favorable investment climate.” BelosovicBlanca, 2012a p. 4 ). Towards accomplishment of this vision/mission, Croatia tourism imposed the following pinciples: “Space is the most valuable tourism resource; transition from mass tourism to quality tourism; and sustainable growth is the key to prosperity.” Since Croatian tourism policy to sustain growth is to strengthen structural reforms through quality tourism, my research through IMF Country Report no. 12/302 (2012a) showed limited progress in structural reforms; the need for futher efforts to returns to fiscal sustainability, and the need for careful monitoring of monetary and financial sector policies. The lingering recession brought a euro crisis, which according to the Croatia Risk Asessment Matrix is figured as a source of risk (IMFCounty Report no. 12/302, 2012b p. 40) Accordingly, the strong escalation of the euro crisis would most likely create an impact that will lower export and tourism revenues and a reversal of capital inflows that would induce more recessions, exchange rate pressures, higher fiscal deficits that would be difficult to finance. As credit crunch hit the country, there will be no progress or very little progress on structural reforms. Such development would mean that potential growth is delayed as potential investors confidence would fall thereby affecting access to financing. 7. Analysis Further to country competitiveness, The World Economic Forum (WEC) had ranked tourism performance of Croatia as 34th in the world rankings of 139 countries which is rather high. The WEC measures the success of each country in travel and tourism. This report is done on a yearly basis for guidance of policy makers and is divided into 3 categories: Policy rules and regulations, the business environment, and quality of human, cltural and natural resources. The study gives a critique on each competitiveness index which is based on Croatia’s tourism policies. WE Forum competitiveness index indicators are set against 14 pillars of values of competitiveness. See Annex 1 for further illustration. Out of the 14 pillars of indexes, the index for price competitiveness for tourism and travel showed Croatia to be the lowest (101st) among the countries evaluated. It seems economic policy does not go with Tourism policy of attracting investors because of higher tax burden, ranked 134th airport and airline charges, ranked 90th and price of fuel ranked 90th. Of course, price of fuel is dictated by global market, and there is very little that could be done on this since Croatia is not an oil producing country. The index of human capital that received a low mark is a clear manifestation that the government needs to invest more on education and training of people to be employed in tourism. Tourism is a service industry so much so that people should properly address the satisfaction of tourists. Government should amend regulations on labor practices, most especially the hiring and firing process and ease of hiring foreign workers since it received a low mark.In relation to regulatory framework, Country gathered a low ranking of 131st on the impact of FDI rules to businesses. This implies difficult setting to foreign investors and privatization policy is not compatible with its regulations. Bratic, Vjekoslav, et. al (n.d.) in their study about tax system as a competitiveness factor cited study of Deloitte and Touche wherein it showed that higher tax burden reduces hotel and tourism revenues while decreases of tax rate influences tourists on their travel destinations and accommodations. Tourists keep prices of accommodations in mind when they travel and chooses destinations in that respect. Its visa requirements are somewhat relaxed, that indicates ease of entry for tourists since Croatia’s Ministry of Tourism plans to scrap visa requirements from certain countries.(Balkan Insight, 2010) As to the index of environmental sustainability, government policy had imposed a strict sense on ecology and sustainable development, but it is noted that environmental regulation and enforcement is low (ranked 51st in country ranking) and and a poor ranking of 81st among countries in terms of T & T sustainable developments. In Addition, the government failed to protect its endangered species which is a tourist attraction. This suggests a government breakdown to fully implement environmental protection. There are also areas that must be improved to attain competitiveness since it gathered a low review; these are air transport infrastructure, international airport, and ports infrastructures. Towards this, it is noted that government spending on T & T is rather low, since it ranks 117th. Again, this expenditure does not match with the priorities of tourism policy and its competitiveness would remain low if proper measures are not done. On the the other hand, there are also positive assessments for safety and security, health and hygiene. This means peace and order is maintained, so business investments are safe and protected. It has received a satisfactory assessment for affinity of travel and tourism on account of the large number of hotel rooms per capita, the presence of rent-a-car companies, and the degree of development of the ATM network. The positive assessment of affinity for travel and tourism to a great extent is a result of its openness to tourism (13th position). Tourism openness is high while attitude of people to foreigners could be considered moderately good. However, it is noteworthy to consider why recommended extensions of stay in Croatia gathered a low ranking of 119th. As reasons for this could not be found this is most likely another area for research. As to seasonality of tourists arrivals, no effrort was seen to correct this imbalance. This could be another area for research. 8. Conclusion The tourism policy of Croatia is premised on preservation of its natural and cultural heritage. In order to do this, the government is mandated to play an active role in its preservation and development, to create a favorable business and tourism climate, to set rules, regulations and policies to make tourism attractive and sustainable. Efforts have been for reconstruction, to put up the pieces into its old self, that of a picture of the country before the war devastated its economy. However, to date, it pales in comparison with its neighboring countries, due to flaws and inconsistencies of implementation. Study shows that the country is not well prepared yet to become the topmost tourist destination in the Mediterranean. Although it boasts of its natural and cultural heritage, something that tourists look forward to experience, government has not exhausted all its means to protect it and to further its development. International organizations that devoted several assessments and study about Croatia all confirmed the need for structural reforms to motivate tourists arrivals. Research on two areas for improvement is recommended to draw strategies for correction of tourism imbalances, and to know reasons why extensions for travel are rated very low. Government expenditures on T & T which are rather short should also be intensified to make a favorable tourism scenario. ANNEX 1 BIBLIOGRAPHY Balkan Insight. 2010. Croatia ’30 million for Tourism Promotion. Available at http://business.croatia.hr/en-GB/Croatian-national-tourist-board [Accessed 04 January 2013] Belosovic, Blanca. (2012a p.4). Current Trends in Sustainable Tourism – Example of Croatia [pdf] Ministry of Tourism, Republic of Croatia. Available at. Accessed [02 January 2013]. Belosovic, Blanca. (2012b. p. 5) Bratic, Vjeskoslav, Bejakovic, Predrag, and Devie. n.d. Tax System as a Factor of Competitiveness: The Case of Croatia [pdf] Available Accessed [05 January 2013] CIA The World Facts Book 2012[a]. Croatia [on line] Available https://www.cia.gov/library/publications/the-world-factbook/ [Accessed 02 January 2013] CIA World Facts 2012 (b) Croatian National Tourists Board. n.d. General information. [Online] Available at: http://business.croatia.hr/en-GB/Croatian-national-tourist-board [Accessed 06 January 2013] Euromonitor International. 2006. Croatia: Strong potential for tourism growth . [online] Available at: http://blog.euromonitor.com/2006/08/croatia-strong-potential-for-tourism-growth.html [Accessed 04 January 2013} Gorana, Kranjec. 2012a p. 5. Visa: Tourism Outlook; Croatia [pdf] Available at http://corporate.visa.com/_media/visa-tourism-outlook-croatia-12.pdf [Accessed 04 2013] Gorana, Kranjec. 2012b p. 3. IMF Report No.12, 302, 2012a. Republic of Croatia, 2012 Article IV Consultation [pdf] Available at:. ww.imf.org/external/pubs/ft/.../cr12302.pdf  [Accessed 5 January 2013] IMF Report, 2012b, p. 40 Mato, Bartuloci, 2010a.The Determinants in new Tourism Policy in Croatian Tourism. Tourism and Hospitality Management 2010, Conference Proceedings. Pp. 254-265.[online] Available at [Acessed 03 January 2013]. Mato, Bartuloci, 2010b, p. 255 Mato, Bartuloci, 2010c, p. 256 Mato, Bartuloci, 2010d,p. 256 World Travel & Tourism Council. 2012. Travel & Tourism, Economic Impact – Croatia. 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