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Ana-Maria Nica1, Bartomiej Aleksander Zdaniuk2,

Puiu Nistoreanu3
ANALYSIS OF COMPETITIVENESS IN THE TOURISM
SECTORS WITHIN CENTRAL AND EASTERN EUROPE.
CASE STUDY ROMANIA
Tourism is a rapidly emerging sector in the globalized
economy. The number of competing tourist destinations is vast
and growing. A given region can be regarded as a commercial unit
that tries to attract as many customers i.e. a wider part of the
tourism demand (national and international) through an effective
combination of input resources. Going down the same logical
path, a tourist area must be able to effectively manage inputs,
while the output, the result, consists of indicators such as
arrivals, overnight stays, added value, employment, consumer
satisfaction, etc.
A territory can thus evaluate its performance by quantifying
its tourism efficiency , allowing decision makers to identify and
check any malfunction in the aforesaid process for highlighting a
set of policies and activities.
An efficient performance at regional level can then be
determined based on competitiveness in the region. This analysis
is centered on the tourism sector of Central and Eastern European
region by highlighting the main strenghts and weaknesses of the
analyzed tourism competitiveness, and strategic positioning
possibilities of the Romanian tourism in the region.
Keywords: tourism, competitivity, emerging countries, Central and
Eastern Europe, competitivity index tourism, tourism competitivity
analysis, destination management.
JEL Classification: C13, C43, C82, F15, F59, F63, L83, O10, R11.
1. Introduction. Tourism specific activities in the area have a real
impact on the sustainable economic and social development, considering
the importance of their contribution to GDP and to the labor market
performance.
The impact on the global economy highlights the economic
importance of this domain in the following aspects: diversifying economic
structures, national income, job creation, stimulating investment, inflation.
(Ioncic, 2004)
1

Assistant., Ph.D., Faculty of Commerce, Bucharest University of Economic Studies, Romania.

Lecturer, PhD, Institute of Political Science, University of Warsaw, Poland.


Prof., Ph.D., Faculty of Commerce, Bucharest University of Economic Studies, Romania.

In order to meet current challenges, including productivity,


investment, new technologies, both researchers and policy makers state
entities, support the need for countries to become more "competitive".
Consequently, the concept of regional competitiveness is extended to
regional level, so that the areas should maintain their current economic
position or to evolve from this point of view, compared to other adjacent
regions. Moreover, given the fact that both employers and investors tend
to depart from the less to more competitive areas, a "competitive" region
is defined as one unable to attract and retain efficient companies or
maintain a high quality of life for its inhabitants (Church & Coles, 2007).
In the past, regional development policies have attempted to
reduce regional disparities through substantial income generating
activities, a large-scale infrastructure, thus attracting substantial
investment.
Extending the concept of regional competitiveness is relatively
recent, but recorded a major influence on the direction of regional
development policies. These regional policies often "focus" on those areas
which recorded the slowest growth rates, including the regions with
industrial restructuring or geographically peripheral regions (Nica &
Stnciulescu,
2011).
Regional development is a term with a broad understandable spectrum,
but it can also be seen as a general effort towards reducing regional
disparities by undertaking income generating economic activities.
The positive impact of tourism on regional development, especially
in areas with few alternative activities (Nistoreanu, Nica & Tnase, 2011),
is clearly recognized. Tourism creates income from the tourism specific
activities (lodging, F&B, entertainment), it reduces unemployment by
increasing the demand for labor, and also supports the construction and
maintenance of both collective and specific infrastructure. (Nistoreanu,
2005).
2. Economic competitiveness and its role. The current issue of
competitiveness is to be addressed not only at micro but also at
macroeconomic level because unfortunately, there is a lack of
competitiveness of Romanian products / services on domestic and foreign
markets.
The competitiveness of a nation is influenced by the level achieved
by each of the actors within its economy. The productive sectors of the
economy contribute by increasing their competitiveness in GDP growth,
added value, while other branches enhance, through the developed
activity, to the quality of life (health, education, welfare), the formation of
a skilled workforce (education) etc.. (Nica & Stnciulescu, 2011)
In 2001 the World Economic Forum has suggested the calculation
of an index of competitiveness, which been named Global Competitiveness
Index (GCI) and was originally developed by Jeffrey Sachs and John Mc
Arthur. The essential purpose of the GCI is to analyze the potential global
economies, noting areas of healthy economic growth in the medium or
long term. GCI index is centered on three basic elements: (Blanke, Chiesa,
2011)

1. competitive economic environment of each country


analyzed;
2. quality of public institutions and their policies;
3. technological efficiency at country level.
Romania stands out in an average way, considering any criterion of
the global competitiveness index. One of the basic requirements of
economic development is infrastructure, under which it occupies the 110th
inferior position.
Political and social events of the last half of the period have
focused on macroeconomic stability, occupying position 13 to position 75
in CEE and worldwide. This instability still produces more effects that will
alter the business environment and the public confidence in public
institutions (world ranked 84 out of 133).
Regarding higher education Romania occupies a middle position
(51) compared to the rest of analyzed countries. In terms of labor market
efficiency, the 79th place shows that the labor force is not trained nor
skilled enough in order to support efficient growth of the economy
compared to other countries in CEE ranked higher such as Albania, Poland
or Bulgaria.
Comparing the situation in Romania and Bulgaria, position 76
(same as previous year), gives a lower overall status. Analyzing each
component, discrepancies arise regarding the basic requirements for
growth (infrastructure 102th place, macroeconomic stability 45th,
compared with the 75th of Romania, and in terms of labor efficiency - 54th
place, 79th Romania).
Table 1. Global competitiveness index in Central and Eastern
Europe
Country

2007

2009

2011

Albania
Bosnia
Bulgaria
Croatia
Estonia
Latvia
Lithuania
Macedoni
a
Monteneg
ro
Poland
Czech R.
Romania
Serbia
Slovakia
Slovenia
Turkey
Hungary

88
102
71
77
33
70
47
79

96
109
76
72
35
68
53
84

108
107
76
61
32
54
44
89

49

62

65

39
36
67
96
60
45
61
52

46
31
64
93
47
37
61
58

53
33
68
85
46
42
63
62

Data source: Based on http://www.weforum.org/issues/competitiveness-0/gci2012-data-platform/.

Technological readiness (58) ranks Romania an inferior position to


the one occupied by Bulgaria and Hungary. Putting togheter Hungary and
Romania, one can make the following clarifications: superior technological
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readiness (40), the necessary infrastructure for tourism development (57),


and characteristics, higher education (35) give Hungary a detached four
ahead positions. But the crisis has affected the Hungary also (83) in terms
of macroeconomic stability of the country. Consumer market proves to be
more efficient in Romania (61) than Bulgaria (81) and Hungary (64).
Romania does not have a favorable view of the essential
requirements of global competitiveness, making this reference to
infrastructure and economic stability, the only feature that provides a
competitive advantage is the size of the market, but not sufficient criterion
to support the development of other sectors of the economy, including
tourism.
3.
Tourism competitiveness. One can use a production
function to determine the tourism and travel performance of a particular
area.
Figure 1. The structure of the Tourism Competitiveness Index

Source:available at http://www.weforum.org/issues/travel-and-tourism-competitiveness

When a tourism region is not able to produce the maximum


possible output, given the inputs, that particular tourism region is
inefficient
and
bound
to
attract
relatively fewer tourists compared to competing areas. The reason may be
that too many entries are used in an imbalance between inputs and
outputs, and / or less optimal combination of input factors. This situation
may be due to various deficiencies. First, policy makers may have
intended believes, mistakenly, that the touristic region in question is
growing or finds itself in the maturity stage within the product life cycle
(igu, Maria & Nica, 2010), thus resorting to measures to support tourism
investment, deepening imbalance between inputs and outputs.
Secondly, the tourist region is in the growth phase or maturity of
the tourism product life cycle, but efforts are insufficient to maintain longterm market position.
Thirdly, (Nistoreanu, Tanase, 2008), an imbalance between inputs
and outputs may be due to uncontrollable factors or unexpected events
that prevent tourist region from obtaining optimum production.
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Tourism competitiveness index


Tourism development is mainly determined by the available
resources (potential, technical and human capital) known, generally
speaking, as equippment factors whose characteristics particularize the
countries (many countries and destinations are known, devoted to a
specific tourism product or form of spending holidays).
Table 2. Global Competitveness Index in Central and Eastern
Europe

2010
2007

Overall index
Countrie
s
Bulgaria
Czech
Republic
Estonia
Cyprus
Latvia
Lithuania
Hungary
Malta
Poland
Romania
Slovenia
Slovakia
Bulgaria
Czech
Republic
Estonia
Cyprus
Latvia
Lithuania
Hungary
Malta
Poland
Romania
Slovenia
Slovakia

Regulatory
framework

SUBINDEXES OF T & T
Business
Human, cultural,
environment
natural resources

Rank
48

Score
4.39

Rank
54

Score
4.79

Rank
44

Score
4.32

Rank
51

Score
4.05

31
25
24
51
55
38
26
49
63
33
54

4.77
4.88
4.89
4.36
4.34
4.54
4.88
4.38
4.17
4.64
4.35

26
17
23
38
33
24
9
49
51
29
39

5.26
5.5
5.33
5.07
5.14
5.29
5.69
4.86
4.85
5.19
5.05

37
19
14
39
46
45
22
65
66
33
57

4.56
5.09
5.15
4.36
4.21
4.28
4.93
3.81
3.8
4.7
3.96

31
50
44
83
85
48
54
30
66
53
52

4.48
4.06
4.19
3.66
3.66
4.06
4.02
4.48
3.84
4.03
4.04

43

4.36

50

4.75

52

3.84

31

4.48

30
26
24
45
47
33
25
56
69
36
38

4.75
4.85
4.87
4.34
4.33
4.6
4.86
4.18
3.88
4.49
4.42

20
18
27
35
31
19
13
60
72
42
33

5.38
5.41
5.24
5.1
5.21
5.4
5.56
4.51
4.29
4.97
5.11

37
18
17
43
45
41
25
62
66
33
46

4.37
4.91
5.04
4.17
4
4.18
4.73
3.62
3.55
4.53
3.94

25
49
40
82
74
50
43
34
73
61
51

4.51
4.22
4.34
3.75
3.79
4.21
4.28
4.42
3.79
3.98
4.19

Data source:available at http://www.weforum.org/issues/travel-and-tourism-competitiveness

Comparative analysis of tourism resources allows positioning each


country on a tourist market - global or regional - and the differences
between those highlight the advantages and the competitiveness, but also
where action towards developing tourism are needed, given that the
technical and human capital can be improved through investing.
(Nistoreanu, Tanase, 2008)
The Travel & Tourism Competitiveness Index (TCI) Program was
developed by the World Economic Forum Partnership for aviation, tourism
and travel. The scope of the index was to measure the factors and policies
that make attractive the development of the tourism and travel sector in
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different countries. The index was developed between September 2005


and October 2006 by the World Economic Forum in close collaboration
with strategic partners such as Booz Allen Hamilton, International Air
Transport Association (IATA), UNWTO and WTTC.
TCI took as a starting point the Competitiveness Monitor developed
by WTTC between 2001-2004, which aimed to measure the extent to
which a country offers a competitive environment for tourism and travel.
The monitor includes a number of indicators, taking into account the
critical concepts of tourism industry development and price
competitiveness, infrastructure, human resources, environment and
technology. (Hornoiu, Tnase, Nistoreanu, 2009)
Figure 2. Tourism competitiveness index, structure

Data source: based on Table 2

After a slump in 2009 (Blanke, 2011), the tourist arrivals indicator


increased again in 2011 and returned to pre-crisis levels. World Travel &
Tourism Council estimates that from direct and indirect activities, the
tourism sector now provides a remarkable 9.2% of world GDP.
This sector has always been sensitive to external shocks, although
the most recent crisis has caused a stronger dip than previous downturns.
For example, in the aftermath of 9/11, travelers avoided flying for a couple
of months but quickly picked up their usual travel behavior thereafter. This
led to a drop of 1.5 percent in travel spending from 2001 to 2002, while
overall GDP growth was unaffected (+2.9 percent).
The recent economic crisis led more people to change their travel
plans more significantly because of their worsened economic situation,
reflected in a 0.6 percent drop in real GDP growth from 2008 to 2009.
(WTTC, 2010)
Consequently, the economic crisis left travelers from the western
hemisphere insecure about their future economic well-being (for a short
time in late 2008 and early 2009) and made distant travel look like what it
was just a few decades ago: a luxury affordable to only a lucky few.
However, from 2010 to 2011, spending on personal travel and tourism is
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expected to have recovered somewhat, with an increase of 1.6 percent.


This increase still, however, lags significantly behind global GDP recovery
which is 4.7 percent, according to the International Monetary Fund. (IMF,
2012)
The travel and tourism sector thus clearly remains a critical one for
the world economy, accounting for a significant share of global
employment and also providing an important opportunity for developing
countries to move up the value chain toward the production of highervalue-added services. In this context, an analysis of the travel and tourism
competitiveness of individual economies around the world remains
pertinent, especially in the areas considered as emerging. (Ringbeck,
2009)
Figure 3. The impact of the financial crisis on tourism

Data source:available at http://www.weforum.org/issues/travel-and-tourism-competitiveness

Countries such as Turkey or Bulgaria gained throughout the crisis


by attracting price-sensitive travelers from crisis-struck outbound regions
in Western Europe. Economies losing both on tourist arrivals and
international tourism receipts are considered to represent the crisis
epicenter, as shown in Figure 3.These are the major European and North
American destinations that suffered from weakened long-haul or regional
source markets. Most of themFrance and Spain being among the most
visited countries worldwidealso lost significantly on tourism receipts,
hinting at less revenue per visitor and, thus, price pressure. (Blanke,
Chiesa, Trujillo, 2011)
Bulgaria has kept its growth momentum partly because (and not
despite) of the crisis attracting budget-orientated tourists from Western
Europe seeking low-cost alternatives to traditional sun-and-beach
destinations in the Euro zone. More than 75 percent of Hungarys inbound
travelers in 2009 were same-day visitors from neighboring countries who
were drawn in by the favorable exchange rate of the Hungarian currency.
(Blanke, Chiesa, Trujillo, 2011)
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The group of twelve European countries in the above table have


been chosen as such taking into account various factors, like geographical
position, near dates of joining the European Union, close trade and tourism
connection and cooperation, common historic facts, as most of them have
experienced a period of socialist regime, the transition period in terms of
economic evolution, all of those and more qualify this group as an
European emergent area of economic development.
The data in Table 2 present the situation of the travel and tourism
competitiveness index in the central and eastern part of the European
Union, at two different moments: the year 2007 and the year 2011, chosen
as such in order to better illustrate the effects of the financial crisis in this
region.
As all of these economies have experienced changes, influenced
by the crisis in the travel and tourism domain, differenced in particular
cases can be highlighted.
While Cyprus seems to be the only country which held on its 25th
position in the overall ranking, maintaining a close to the original 4.87 4.89 value of the index in the two analyzed years, other economies
experienced major drops in the above mentioned list, such as: Latvia (from
the 45th position to the 51st, although the difference in the index value is
rather low, of 0.02), Lithuania (from the 47th position to the 55th, with a
difference of 0.01 in the index value), Hungary (from the 33rd to the 38th
place in the ranking, with a 0.06 difference).
The most dramatic drop was registered in Slovakias case, as it
passed from being the 38th on the overall index list to being on the 54th
position, with a value difference of 0.07.
On the other side, there are countries whose travel and tourism
sectors seem to be recovering faster from the global financial crisis,
overcoming difficulties and even moving uphill in the ranking. This is the
particular case of Romania, which, with a value index difference of 0.29
moved up from the 69th place to the 63rd.
Poland constitutes the other economy which is going against the
general registered trend, with a move-up of 7 places (from 56th to 49th)
and a general difference of 0.2 in the index value.
With this evolution of the above mentioned cases, one of the
trends in European travel and tourism domain trends is being proven. The
global financial crisis has brought changes also in the consumer behavior,
as tourists put these countries on their vacation-destination maps,
switching from more traditional destinations to ones considered more
accessible.
4. The relative level of tourism competitiveness of the
Romanian tourism sector evolution and strategic approach.
Competitiveness is a very current phenomenon in the economic and social
coordinates. Amid the global financial crisis, which significantly affected
the global tourism industry, the competitiveness of tourism destination
countries was an extremely important element to finding ways to resolve
or mitigate its effects.
Romania's competitiveness in the tourism sector goes over its
competitors' as follows:
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to Bulgaria - pillars: Price (chapters rates per room in hotels


in 2008 purchasing power parity index, the tourism tax),
Infrastructure (only the chapters roads and railways)
Environment (carbon dioxide emissions lower than Bulgaria,
but higher population density) Technology (only in terms of
high-tech exports);
to Croatia - pillars: Price (only in terms of tourism taxation
level), Environment (carbon dioxide emissions less than in
Croatia, but at a higher density), International Openness (in
terms of level of taxation in international trade) and Social;
to Hungary - only for pillars: Social and Prices;
to Slovakia - only for pillars: Prices, Environment, Technology
(exclusively in terms of high-tech exports), International
Openness (visa section) and Social;
to Czech Republic - only for pillars: Price (the tax on tourism)
and Social;
to Poland - in case of pillars: Price (the tax on tourism),
Economic Impact of Tourism, Technology, International
Openness (openness index in tourism) and Social;
Analyzing the situation in Romania, it shows little difference to
those of other countries in the area, in terms of tourism competitiveness.
Even if cultural resources (49) make a difference to other CEE countries,
Romania is facing an on-going problem: land and air infrastructure (83)
insufficiently developed, low price competitiveness in the tourism industry
(110), and the attitude of Romanian population towards tourism (102
globally), make Romania a destination insufficiently competitive in the CEE
region.
Figure 4. Strategic recommendations for the Romanian tourism
sector

Tourism products
Creation
products

of

Human
tourism

tourism

resources

in

Training
the
human
resources in tourism

Development of tourism
infrastructure

Social tourism

Quality of
products

tourism

Marketing actions
Operating the systems of
tourism information
Rising efficiency of the
marketing actions

Source: proposed by authors

Bulgaria has a superior situation in terms of indicators directly


characteristic to the tourism activity - tourism infrastructure, position 18 to
34 for Romania, and to the priority orientation towards tourism, position
78 to 102 of Romania. Regarding tourism perception by the local
population, Romania occupies the position 105 of the 133 at international
level.
Strategic ways of improving Romanian tourism sector s
competitiveness withing the CEE. Based on the experience of more
tourism competitive countries in the Central and Eastern Europe, some
strategic ways of improving the Romanian tourism sector are highlighted,
as summarized in Figure 4.
The creation of a competitive tourism product is one of the most
important fields of action.Development of tourism products will focus not
only on the integration of various elements and components of the supply,
eg attractions, tourist accommodation, services, communications
infrastructure, information and brand into a coherent whole but also the
development of a modern infrastructure, the quality improvement of
existing products and investment efficiency.
The selection of products to be developed must take place as a
result of preliminary testing of the market, both domestic and foreign.
Tourism products will be created and primarily developed locally in
cooperation with local authorities and then at regional level for products
involving more than one region.
The concept "from idea to product" is the basic and, together with
the principle "think global, act local" should be widely used to enhance
tourism competitiveness of products and therefore that of the destination.
Other strategic means of becoming more competitive is through
the
labor
force.
Highly qualified staff and their professional skills are the key to achieving a
high quality of the tourism services and implementation of quality tourism
products in a highly dynamic context of ongoing structural framework.
The tourism industry, especially due to skilled human resources,
can help obtain a very strong competitive position. The main goal of the
job providers (employers) should be endorsed by promoting the idea of
training staff in order to meet the growing needs of customers.
Tourism development needs full support from the social
framework. It contributes to the development of appropriate consumer
attitudes, which enhances the activity of the whole society through
tourism and recreation and developes interest in cultural, natural and
environmental values.
The social framework is of particular importance for tourism,
especially for youth tourism. This type of tourism integrates school and
extra-school education, vocational education and training.
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Las but not least, marketing actions are the key to increasing the
competitiveness of the Romanian tourism sector.Creating a functional
tourism marketing in Romania aims at strengthening promotion and
communication, at increasing the number of foreign tourist arrivals. The
implementation of this system, however, requires close cooperation
between local and regional governments and of that within the tourism
sector.
5. Conclusions. Even if the short-term outlook for the global
travel and tourism sector is considered promising, tourism destinations will
continue to face increasing volatility of traveler demand caused by shortterm shocks such as economic downturns, currency fluctuations, pandemic
outbreaks, etc.
Policymakers should aim to manage downturn periods by linking
consistent short-term crisis responses with their broader travel and
tourism development agenda to build the resilience of their tourism sector
and to find paths to future growth: build up fast crisis-response capability
based on close cooperation between the public and private sectors, reduce
access barriers and implement an open market environment, foster local
initiatives and entrepreneurship to promote domestic tourism, introduce
more flexible investment schemes to create sustainable growth.
These years of global downturn have demonstrated that, although
the crisis hurt traditional source markets, some emerging tourism
destinations have been able to grow not only because of the weakness of
competing destinations but also by leveraging the crisis to pave the way
for future growth..
Overall, the sector has passed through rough times after the
financial crisis, with almost all major destinations having seen a significant
decline in visitor numbers and receipts while overarching trends have
continued to reshape the sector as a whole. The economic downturn of
200809 has left lasting uncertainty on the long-term growth prospects of
the sector, which had become accustomed to high growth rates year over
year.
Pointing out several important aspects, it can be concluded that
Romania needs a stable legislative framework with clearly defined lines of
action. The overall position 66 for tourism competitiveness index should be
countered by a series of measures taken by the managing entities in
tourism.
Every year vocational schools and faculties of tourism provide
skilled labor force, which, however, prefers to changed domains because
of the inadequate working conditions that do not prove competitive.
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Author(s):

12

Ana-Maria Nica
Assistant PhD
Tourism and Geography Department, Faculty of Commerce
Bucharest University of Economic Studies.
6th Romana Square, Mihai Eminescu Building, Bucharest, 010374, Romania
Research interests: Business administration, Tourism - Ecotourism, Hotels
and restaurants technology, Hotel management, Education.
Phone: : 0040 21 319 19 00, int 187
e-mail: ana.nica@com.ase.ro

Bartlomiej Aleksander Zdaniuk


Lecturer PhD
Institute of Political Science, University of Warsaw, Poland
Research interests: History of democracy, Economic policies, Education.
Phone: : 0048 22 826 54 28
e-mail: bartlomiej.zdaniuk@uw.edu.pl

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Puiu Nistoreanu
Professor PhD
Tourism and Geography Department, Faculty of Commerce
Bucharest University of Economic Studies.
6th Romana Square, Mihai Eminescu Building, Bucharest, 010374, Romania
Research interests: Business administration, Management, Marketing,
Services, Tourism - Ecotourism, Hotels and restaurants technology, Hotel
management, Sustainable development, Education
Phone: 0040213191900, int. 202
e-mail: puiu.nistoreanu@com.ase.ro

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