The economies of Croatia, Montenegro and Albania rely heavily on tourism, but COVID-19 means summer 2020 looks like being a washout.
By Samir Kajosevic, Anja Vladisavljevic and Gjergj Erebara
Dragan Ivancevic’s Hotel Adria in the Montenegrin coastal town of Budva stands empty, its doors shut by a government-imposed lockdown to fight the spread of COVID-19.
For years, the money spent by tourists flocking to Montenegro’s Adriatic coastline has been a mainstay of the former Yugoslav republic’s economy, accounting for 21 per cent of national output last year.
Ivancevic says the fallout from the novel coronavirus sweeping the world could be devastating for the former Yugoslav republic of some 630,000 people.
“At this time of year, all the money from last year has been spent, so we usually take loans,” he told BIRN. “With this epidemic, it’s hard to take a loan when you don’t know how to repay it.”
Those living off tourism in the Balkans are braced for a sustained downturn; crowded beaches, traffics jams and long queues for ice cream are looking increasingly unlikely this summer.
“Certainly, no matter what happens, the season will not be normal,” said Damir Kresic, director of the Institute for Tourism, a research and consultancy body based in the Croatian capital, Zagreb. “Even if the epidemic stops tomorrow, it would not be normal.”
Croatian support measures “no longer enough”
Like Montenegro, Croatia to the north and Albania to the south depend heavily on the flow of visitors to their respective stretches of the Adriatic coast.
In Croatia, tourism is responsible for almost 20 per cent of gross domestic product, GDP, with the number of visitors growing every year to a staggering 20.7 million in 2019, according to data from the state eVisitor system.
But for weeks, Croatia, like the rest of the Balkans, has been in lockdown, with public transportation, bars, restaurants and cafes closed. Borders are closed across the region.
Governments are promising help for businesses, including the tourism sector if the summer season is a washout. But any aid will struggle to fully offset the likely damage.
“In the more optimistic scenario, if the epidemic would end or at least be brought under control by June then part of the season could be saved,” said Kresic. “But if this kind of health crisis continues in June and July then we can forget this year.”
In early March, within days of its first confirmed case of COVID-19, the government insisted that, regardless of the restrictions gradually imposed on businesses and individuals to tackle the spread, the country remained a safe destination for tourists.
The situation changed rapidly, however, as the restrictions tightened. On March 18, Tourism Minister Gari Cappelli told the HRT public broadcaster, “I hope there will be a chance to get through the second quarter and, if we catch [more visitors in] September and October, we can swim out alive.”
The same day, the government announced a package of 63 measures to boost the economy, including salary subsidies for struggling businesses and plans for deferred payment of taxes and fees for companies and small businesses in the tourism sector.
Kresic said the measures were a good start but, given the rapidly changing circumstances, were “no longer enough.”
Emergency credit line in Montenegro
More than 2.6 million tourists visited Montenegro last year, generating earnings of one billion euros. But since mid-March this year, Montenegro’s borders, bars, hotels and restaurants have been closed, while a night-time and weekend curfew was imposed at the end of the month.
The only queues at the coast are those in front of supermarkets and pharmacies.
Trying to soften the blow to businesses, the government announced on March 18 the postponement of loan repayments and taxes for 90 days, while Prime Minister Dusko Markovic promised a new credit line of up to three million euros with an interest rate of just 1.5 per cent.
“These funds are intended for companies operating in the field of procurement of medicine, tourism and catering, traffic and food,” Markovic told a press conference.
Nina Vukcevic, public relations manager at Montenegro’s National Tourism Organisation, said the funds would cover wages in the tourism sector for the next three months.
“As tourism seems to be most affected by the current health crisis, these measures will help preserve existing jobs and allow the economy to recover faster after this turbulent period,” Vukcevic told BIRN.
In Albania, pleas fall on deaf ears
With hopes fading that the summer season can be salvaged, tourism operators in Albania have called on the government to grant them a tax holiday and access to cheap loans. But they have so far received neither.
Tourism has become the backbone of the Albanian economy in recent years, with the number of foreign visitors reaching roughly 6.4 million in 2019. The sector is estimated to account for roughly 12 per cent of GDP.
Not so this year, given the government’s own efforts to halt the spread of COVID-19 – shutting borders, restaurants and cafes.
The Association of Tour Operators and Tour Agencies appealed to the government to suspend or postpone some taxes for a period of three to six months, but the government has promised only a limited programme of support for some small enterprises.
Businesses are eligible if they were prevented from operating by the government-imposed restrictions. Tour operators are not among them since they are allowed to work, despite the fact the borders are closed.
Kliton Gerxhani, the association’s deputy head, said the failure to support tour operators ignored the sector’s broad contribution to the economy and the population at large.
“Money that tourists spend at hotels and restaurants is passed on to employees, fishermen, farmers and other service providers,” Gerxhani told BIRN.
“The trouble is that tourism is the first sector to be hit by the COVID-19 pandemic and probably the last that will recover because travel and leisure will for sure come below the population’s need for food and security at a time of crisis.”