Bulgaria would like to be one of the next big tourist destinations in Europe. Not only has the government rolled out massive advertising campaigns touting its attractions for visitors, it is also pouring money into upgrading its infrastructure.

Of course, what it gives with one hand, it takes away with the other: a flat 9% value-added tax (VAT) will be implemented on the tourism sector at the beginning of April next year, in response to demands from the EU that Bulgaria should harmonise tourism VAT, which currently stands at 7% for organised groups and 20% for individual tourism. The tourism industry of the country is opposing the tax rise vociferously, concerned that it will dampen the momentum the sector has gathered in recent years.


Tourism cash-cow

The tourism industry is a crucial cash-cow for perennially cash-starved Bulgaria, contributing nearly 10% of the country's GDP and acting as a significant source of foreign-exchange funds and jobs. This casts the coastal regions of Varna and Burgas, with their Black Sea resorts and picturesque villages, as key economic engines for the country.

The governors of both states were on hand at the Black Sea Economic Forum in Yalta in November, surely conscious that competition as much as co-operation will continue to characterise economic relations with the other countries sharing Black Sea coastlines, especially tourist magnets such as Turkey.

“The great investment opportunity in our area is tourism – that’s the main branch of our economy, and for our region,” says Konstantin Grebenavov, governor of Bulgaria's Burgas region.

“In our region we have some of the oldest towns in our country, and due to the 40 churches found there it is under the protection of Unesco. On an island near Sozopol, the oldest town in Bulgaria, in an excavation of an old monastery we found some artifacts of Saint Juan, the man who said that Jesus Christ was coming, so there is a great interest in Sozopol from not only Bulgarians but from other countries around the world.”

Work to be done

Yet despite some improvements being made, Bulgaria's tourism industry remains held back from its true potential by still-inadequate connections. Mr Grebenavov jokes that a delegate who travelled to the economic forum from the Philippines told him it took her 18 hours to get to Ukraine, and when he counted up his door-to-door travel time it was roughly the same.

“Besides the sea and sea resorts, we have wonderful places further inland, with grand mountains, and the real Bulgarian life is there. But it’s very difficult to reach these places, even in the summer, because the roads are not good. So the main step is to develop our infrastructure and we are doing this step by step,” says Mr Grebenavov, adding that a road connecting the mountainous area to the border of Turkey is under construction.

Even the coastal hot-spots are not as accessible as they could be. Mr Grebenavov says: “To get to Burgas from London is three hours, but to reach the beach – the biggest resort in the Black Sea – you need more than two [additional] hours. So that’s the next main purpose, we have to get this infrastructure sorted. One third of it is ready, maybe by the end of next year the road will be finished.”

Beyond tourism

Tourism is a top priority, but other industries are also of interest. The tourism appeal, in any case, feeds into other efforts to build up other sectors.

“Thanks to the tourism industry we draw in other FDI as people come and see the attractiveness of the region for investment. There is trust, confidence and tranquility,” says Dancho Simeonov, governor of Varna.

Of the region’s more general FDI picture, he says: “We are in an attractive position for investors and scientific institutions. The climate and infrastructure are good. There is a big airport and seven sea ports in Varna. We have big chemical, shipyard and shipbuilding industries… Thanks to foreign investors we’ve also built the world’s biggest factory producing sodium carbonate/soda salt.”

Investment into Varna suffered along with the global economy the past few years but 2010 has brought about a turn of fortune with more than Lv1.13bn ($768m) being invested in the region.

“I think it is a good sign and a reliable indicator that Varna’s economy has emerged from crisis. I believe that by the beginning of next year we will not have any exposure to the crisis,” he says. “We have very good investors interested in Varna projects.”

Those executives not ready to invest may at the least want to ponder a Black Sea beach holiday in the meantime. They will just need to spare some extra time for getting there.