THE IMPACT OF TRAVEL & TOURISM ON JOBS AND THE ECONOMY

ROMANIA

CHAIRMAN: Vincent A Wolfington Chairman Emeritus Carey International, Inc VICE CHAIRMAN: Jonathan S Linen Adviser to the Chairman American Express Company EXECUTIVE COMMITTEE: Peter Armstrong President & CEO Rocky Mountaineer Vacations Alex Christou Managing Partner Accenture

Jonathan Tisch Chairman & CEO Loews Hotels GLOBAL MEMBERS: Giovanni Angelini CEO & Managing Director Shangri-La Hotels & Resorts Ted Balestreri Chairman & CEO Cannery Row Company Simn Barcel Vadell Chairman & CEO Barcel Hotels & Resorts Henrik Bartl Managing Director, Head of Real Estate Structured Finance Aareal Bank AG

Dara Khosrowshahi CEO Expedia Nigel Knowles Managing Partner DLA Piper Rudnick Gray Cary JT Kuhlman CEO One&Only Resorts RK Krishna Kumar Vice Chairman The Taj Group of Hotels Gerald Lawless Chief Executive Officer Jumeirah International Manfredi Lefebvre DOvidio Chairman Silversea Cruises Manuel Martin Partner CyberDodo Productions Ltd Khater Massaad CEO Al Hamra Hotels Management Est Paul McManus President & CEO The Leading Hotels of the World Armin Meier Group Chief Executive Officer Kuoni Travel Holding Ltd Alan Mulally Executive Vice President The Boeing Company Devin J Murphy President & CEO Carey International John M Noel President & CEO The Noel Group Tom Nutley Chairman Reed Travel Exhibitions Jean Gabriel Prs President & CEO Mvenpick Hotels & Resorts Dionisio Pestana Chairman Group Pestana Fernando Pinto CEO TAP Air Portugal Nancy Poor Senior Vice President, Owner Relations Cendant Hotel Group Wolfgang Prock-Schauer Chief Executive Officer Jet Airways Bob Puccini CEO & President The Puccini Group Duan Qiang Chairman Beijing Tourism Group David Radcliffe Chief Executive Hogg Robinson plc

Kurt Ritter President & CEO Rezidor SAS Hospitality Christopher Rodrigues CEO Visa International Peter Rogers President & CEO Diners Club International Carl Ruderman Chairman Universal Media Jeffrey Rutledge Senior VP, Worldwide Travel Insurance & Related Services American International Group Inc Marty Salfen General Manager, Global Travel & Transportation Industry IBM Per Setterberg CEO Global Refund Group Eric J Speck Executive Vice President & Chief Marketing Officer Sabre Holdings Corporation Jean-Cyril Spinetta Chairman & CEO Air France David Stein Chairman The Stein Group Barry Sternlicht Chairman & CEO Starwood Capital Group Ron Stringfellow CEO Tsogo Sun Group Ian Swain President Swain Tours Jaum Tpies President Relais & Chteaux Andrew C Taylor President & CEO Enterprise Rent-A-Car Kathleen Taylor President, Worldwide Business Operations Four Seasons Hotels & Resorts Jos Antonio Tazn President & CEO Amadeus Global Travel Distribution Jeffrey Toffler Chairman Coventry Partners Simon Vincent CEO Opodo Daniela Wagner Managing Director EMEA, Consumer Travel Services International Markets Cendant Travel Distribution Svcs

Willie Walsh Chief Executive British Airways plc James Wilson Chief Executive Officer Nakheel Co LLC Philip Wolf CEO PhoCusWright, Inc Peter Yesawich Chairman and CEO Yesawich, Pepperdine, Brown & Russell Mei Yun Xin President Beijing Tourism Group Sarmad Zok Chief Executive Officer Kingdom Hotel Investments

Andrew Cosslett Raymond Bickson CEO InterContinental Hotels Group PLC Managing Director The Taj Group of Hotels Sebastin Escarrer Vice Chairman Sol Meli Manuel Fernando Esprito Santo Chairman Esprito Santo Tourism Edouard Ettedgui Group Chief Executive Mandarin Oriental Hotel Group Maurice Flanagan CBE Vice Chairman & Group President The Emirates Group Michael Frenzel Chairman TUI AG Stephen P Holmes Vice Chairman Cendant Corporation Richard R Kelley Chairman Outrigger Enterprises, Inc Geoffrey J W Kent Chairman & CEO Abercrombie & Kent J W Marriott, Jr. Chairman & CEO Marriott International, Inc David Michels Chief Executive, Hilton Group Plc Hilton International Curtis Nelson President & COO Carlson Companies Mike Ness President The Travel Corporation PRS Oberoi Chairman The Oberoi Group Alan Parker Chief Executive Whitbread PLC Gilles Plisson CEO Accor Lalit Suri Chairman & Managing Director Bharat Hotels Ltd Marilyn Carlson Nelson Chairman & CEO Carlson Companies Jennie Chua President & CEO Raffles Holdings Ltd David Clifton Managing Director, Europe & Asia Interval International Jim Compton Senior Vice President, Marketing Continental Airlines Fernando Conte Chairman & CEO Iberia, Airlines of Spain Robert Darbelnet President & CEO AAA Rakesh Gangwal Chairman, President & CEO Worldspan Laurence Geller Chairman & CEO Strategic Hotel Capital Naresh Goyal Chairman Jet Airways Arthur de Haast Global Chief Executive Officer Jones Lang Lasalle Hotels Stelios Haji-Ioannou Chairman & Founder easyGroup Pansy Ho Managing Director Shun Tak Holdings Limited Brent Hoberman Co-Founder & CEO lastminute.com James Hogan President & Chief Executive Gulf Air Grant Kelley CEO, Colony Capital Asia Raffles International Larry Kellner Chairman & CEO Continental Airlines

HONORARY MEMBERS: Andr Jordan Chairman Andr Jordan Group Lord Marshall of Knightsbridge Chairman Pirelli UK plc Sir Frank Moore, AO Chairman FT Moore P/L Frank Olson Chairman of the Board The Hertz Corporation Grard Plisson Co-Chairman, Supervisory Board Accor S.A. Henry Silverman Chairman & CEO Cendant Corporation Tommaso Zanzotto President TZ Associates Ltd. CHAIRMAN EMERITUS: James D Robinson III General Partner RRE Ventures WTTC Chairman (1990-1994) IMMEDIATE PAST CHAIRMAN: Sir Ian Prosser Retired Chairman InterContinental Hotels Group WTTC Chairman (2001-2003) FORMER CHAIRMEN Harvey Golub Retired Chairman & CEO American Express Co WTTC Chairman (1996-2001) Robert H Burns Chairman Robert H Burns Holdings Limited WTTC Chairman (1994-1996) PRESIDENT: Jean-Claude Baumgarten February 2006

2006 WORLD TRAVEL & TOURISM COUNCIL 1-2 QUEEN VICTORIA TERRACE.SOVEREIGN COURT.LONDON E1W 3HA. UNITED KINGDOM TEL: +44 (0) 870 727 9882 or + 44 (0) 207 481 8007 FAX: +44 (0) 870 728 9882 or + 44 (0) 207 488 1008 enquiries@wttc.org www.wttc.org

THE WORLD TRAVEL & TOURISM COUNCIL (WTTC) IS THE BUSINESS LEADERS FORUM FOR TRAVEL & TOURISM, WORKING WITH GOVERNMENTS TO RAISE AWARENESS OF THE IMPORTANCE OF THE LARGEST GENERATOR OF WEALTH AND JOBS WORLDWIDE. With a membership consisting of the chief executives of more than 100 of the worlds leading companies, WTTC has a unique mandate on and overview of all matters related to success in Travel & Tourism.
WTTC is delighted to have collaborated with the National Tourism Authority of Romania to produce this report, which presents the first simulated Tourism Satellite Account for Romania. Researched by WTTC, together with our partners Oxford Economic Forecasting, this report quantifies all aspects of Travel & Tourism Demand, from personal consumption to business purchases, capital investment, government spending and exports. It then translates this information into economic concepts of production, such as gross domestic product (GDP) and employment, which can be compared with other industries and the economy as a whole to provide credible statistical information that will assist in policy- and business decision-making. The Romanian Government is under no illusions as to the important role Travel & Tourism can play in the countrys future economic development. Indeed, the industry is already an important contributor to GDP and employment. In 2006, the wider Travel & Tourism Economy is expected to contribute 4.8 per cent of the countrys GDP and should account for 485,000 jobs, representing 5.8 per cent of total employment. Furthermore, over the next ten years, Travel & Tourism in Romania is forecast to achieve annualized real growth of 6.7 per cent, in terms of GDP, compared with only 3.1 per cent in the EU, taking the share of Travel & Tourism GDP to 5.8 per cent in 2016. This contribution is significant, but the industrys potential for growth should not be taken for granted. As illustrated in the Tourism Trends and Policy Framework sections of this report, several important challenges continue to limit Travel & Tourisms full potential for growth in Romania. These must be addressed to ensure the long-term sustainable development of the countrys Travel & Tourism, with maximum benefits for all stakeholders. Challenges include the development of much needed infrastructure and human capital, the enhancement of product and service quality, and raising awareness and support for the industry within government and the public at large. This report also sets out WTTCs recommendations on policies that we believe will help optimize the potential benefits of Travel & Tourism in Romania, ensuring longer-term sustainable development and spreading the benefits equitably across all levels of the economy and the country. Romanias Travel & Tourism could do even better than the baseline forecasts suggest, as long as certain factors are assured. These include a favourable government policy, a climate that is conducive to business offering incentives for investment sustained and effective marketing and promotions, and policies that respect the environment and local cultures. WTTC stands ready to support the adoption and implementation of these policies.

Jean-Claude Baumgarten President, World Travel & Tourism Council

The World Travel & Tourism Council would like to express its sincere gratitude to the many individuals and organizations that contributed their knowledge, insight and data/ information to the policy review effort. A complete list of contributors can be found on the inside back cover.

CONTENTS
EXECUTIVE SUMMARY _____________________________________________________________________________
4 FUTURE PROSPECTS__________________________________________________________________________________________ 7 ECONOMIC IMPACT_________________________________________________________________________________________ 10 GROWTH ___________________________________________________________________________________________________ 11

ROMANIAS TRAVEL & TOURISM

AN OVERVIEW OF RECENT TRENDS AND DEVELOPMENTS _____________________________________________________ 13

TRAVEL & TOURISM SATELLITE ACCOUNT

TOURISM SATELLITE ACCOUNTING __________________________________________________________________________ 18 TSA CONCEPTS & STRUCTURE ________________________________________________________________________________ 20 TRAVEL & TOURISMS ECONOMIC IMPACT ____________________________________________________________________ 22 TOTAL DEMAND _____________________________________________________________________________________________ 24 EMPLOYMENT _______________________________________________________________________________________________ 25 GROSS DOMESTIC PRODUCT ________________________________________________________________________________ 26 CAPITAL INVESTMENT _______________________________________________________________________________________ 27 PERSONAL & BUSINESS _______________________________________________________________________________________ 28 EXPORTS ____________________________________________________________________________________________________ 29 GOVERNMENT ______________________________________________________________________________________________ 30

THE POLICY FRAMEWORK APPENDIX

_____________________________________________________________________ 31

SATELLITE ACCOUNT TABLES _________________________________________________________________________________ 42

EXECUTIVE SUMMARY
THE IMPORTANT ROLE TRAVEL & TOURISM HAS TO PLAY IN ROMANIAS FUTURE ECONOMIC AND SOCIAL DEVELOPMENT IS INDISPUTABLE. HOWEVER, MUCH WORK STILL NEEDS TO BE DONE TO ENSURE THAT THE INDUSTRYS POTENTIAL IS FULLY TAPPED. BOTH GOVERNMENT AND INDUSTRY WILL HAVE TO OVERCOME A NUMBER OF CHALLENGES TO GUARANTEE THAT MAXIMUM BENEFITS TO THE ECONOMY AND SOCIETY ARE ACHIEVED IN A WAY THAT IS SUSTAINABLE IN THE LONG TERM.
Despite healthy economic growth over recent years, Romanias population is still one of the poorest in Europe. Travel & Tourism can be a catalyst for improving livelihoods throughout the country and has been identified as such by Romanias leaders as a focal point of the countrys National Development Plan. This recognition of the industrys potential contribution is a step in the right direction, although there is still a widespread lack of awareness of Travel & Tourisms economic value and potential within all levels of government and the population at large. Nevertheless, with growth prospects in most areas above both the global and European average, the outlook for the countrys Travel & Tourism is encouraging. are created. However, this depends on government recognizing and supporting Travel & Tourism as a high-priority industry and employer, factoring it into all policies and decision making. An encouraging sign in this regard is the level of government investment in Travel & Tourism which in Romania accounts for 4.3 per cent of total spending and an amount which nearly matches the percentage contribution of the industry to the countrys GDP. There is also a positive outlook for Visitor Exports, which are forecast to grow at 8.5 per cent per annum over the next ten years. In this respect, Romania ranks fourth in the world. This ranking sends a strong message that there is a need for the public and private sectors to

In 2006, the wider Travel & Tourism Economy is expected to contribute 4.8 per cent of Romanias GDP and account for 485,000 jobs, representing 5.8 per cent of total employment. Over the next ten years, Travel & Tourism in the country is forecast to achieve annualized real growth of 6.7 per cent in terms of GDP and 1.6 per cent in terms of Travel & Tourism employment. This would take the share of GDP and employment to 5.8 and 6.9 per cent respectively by 2016.
These figures show that Romania is one of the worlds least tourism intensive countries, ranking 162 out of 174 countries in terms of contribution to GDP. However growth prospects are well above both the global and European averages which bodes well for the future of Travel & Tourism. Moreover, the impact could be even greater than forecast if the underlying national policy framework is conducive to growth ie if underlying conditions for investor confidence, dynamism and sustainability pay significant attention to maintaining international visitor growth at these high levels. After two decades of declining visitor numbers and under-investment in development and modernization, Romanias Travel & Tourism industry is slowly regaining profile and pace. As Romania heads towards accession to the European Union (EU) next year and is consolidating infrastructure, governance and legal systems, Travel & Tourism will have an increasing role to play particularly in creating sustainable jobs for the countrys huge rural

population. The challenge now is to fully embrace the commercial world in order to develop a competitive tourism product, using the countrys considerable advantages including its prime central European location and rich cultural and natural diversity as a base. Past efforts, including the identification of Travel & Tourism as a national priority by the president some ten years ago, have helped put the industry on Romanias political and development agenda. However, general awareness of the industrys potential is still low and in the current climate of preparation for EU accession, where focus is on issues such as the judicial system, infrastructure and the environment, Travel & Tourism is not a priority. However these policy areas have a significant impact upon tourism and, indeed, tourism could be a catalyst for change and improvement in this regard. There is an urgent need, therefore, for Travel & Tourism to be integrated into future development plans and EU accession programmes. At the same time, considerable attention should be paid to upgrading and expanding the countrys tourism infrastructure, to modernize and improve hotels and other tourist facilities, and to enhance the competitiveness

of its human capital. This will help to ensure that Romania captures a growing share of international visitor expenditure, contributing to boosting the countrys exports and improving balance of payments. In addition, if managed effectively, Travel & Tourism can be an important catalyst for the development of other economic sectors within Romania, such as manufacturing, construction and the service industries. It can also help to conserve the countrys primary assets, namely its natural and cultural environments, which have in the past been largely unrecognized and unprotected. The National Tourism Authority has already taken steps to establish a working partnership with the private sector. It now needs to ensure that this partnership works effectively that the private sector and local authorities are closely involved in the Travel & Tourism decisionmaking process so that full buy-in from all stakeholders is guaranteed for the future. Additional measures recommended in this report are intended to set the stage to help ensure the larger rewards that Travel & Tourism can bring over the short, medium and longer term.

FUTURE PROSPECTS
WHILE THE BASELINE FORECASTS FOR ROMANIAS TRAVEL & TOURISM OVER THE NEXT TEN YEARS ARE GENERALLY VERY POSITIVE, THEY NONETHELESS HIGHLIGHT A FEW WEAKNESSES THAT COULD HINDER TRAVEL & TOURISMS GROWTH.
WTTC maintains that these may prevent Romania from attaining its true Travel & Tourism potential in the medium to longer term. At the same time, greater co-operation between all leading policy-makers, as well as with the private sector, and better management of tourism growth, could help Romania do even better than current forecasts suggest, maximizing the benefits and ensuring they are spread to all parts of the country and across all levels of the population.

Travel & Tourism has the potential to become an important export sector in Romania and to provide jobs and economic growth for the countrys vast rural population.
It possesses the inherent ability to diversify Romanias economy, to stimulate entrepreneurship particularly among small and medium-sized enterprises (SMEs) catalyze investment, create large numbers of sustainable jobs, and help social development in local communities. In general both government authorities and the private sector are open to developing Travel & Tourism, but there is a need for deeper understanding of the industry, how it works, and what it needs to be successful. Travel & Tourism should be factored into mainstream policies for employment, trade, investment, education, culture and environmental protection. In order to facilitate this, an industrial image campaign should be undertaken to ensure that all public and private stakeholders are aware of the industrys contribution and, in particular, its potential with regard to rural development. The government should take advantage of opportunities to raise awareness of Romania as a tourism destination, both within the country and internationally. One upcoming opportunity is that offered by Sibius nomination as European Capital of Culture in 2007.

RAISING AWARENESS

Romanias economic and marketingrelated Travel & Tourism research and forecasting are generally inadequate, both in terms of quality and quantity.
As a result, public sector analysis and related policies tend to overlook or underestimate the impact of the industry, or deal only with its smaller components. This TSA research, developed by WTTC and OEF for Romania, provides a significant tool for planning and policy development. Updating the TSA on an annual basis will help to ensure that adequate data is available to factor Travel & Tourism into economic and employment strategies. It will also provide the National Tourism Authority with hard economic data on which to base decisions regarding marketing and promotions. This in turn will help raise awareness among public and private sector stakeholders of Travel & Tourisms full impact across the national economy not just on hotels, restaurants and retail businesses, but also on construction, real estate, agriculture and other sectors.

INDUSTRY MEASUREMENT

Long-term tourism planning at both national and regional levels is a pre-requisite for generating investor confidence and organizing the successful and sustainable development of Travel & Tourism in Romania.
Structural re-organization over the past ten years, particularly in the Ministry of Transport, Construction 7

TOURISM PLANNING & IMPLEMENTATION

and Tourism and National Tourism Authority, has meant that until now there has been no published strategic plan or policy for tourism development in Romania. WTTC commends the present administration for its commitment to drawing up such a plan as a matter of urgency and recommends an in-depth policy Master Plan, based on well-defined broad strategy objectives. Careful attention must also be paid to the implementation of such a plan over a given time frame. In order to ensure greater support and commitment from all stakeholders, the government should also initiate a more cohesive and co-operative approach to longer-term tourism planning and development, involving all levels of government, the private sector and local communities.

for delaying the development of other infrastructure in the regions. Improvements in the formerly extensive rail network would reduce pressure on road links. In order to facilitate and increase visitor arrivals, a liberalized aviation policy should be pursued. In particular, the introduction of low-cost carriers should be encouraged. Furthermore, the development of regional airports, so that visitors do not have to connect via Bucharest, should be prioritized. Romania also benefits from extensive accommodation facilities. However, the absence of any national quality standards affects the overall quality of the countrys tourism product. Modernization of existing facilities and implementation of national standards are vital to increase Romanias competitiveness.

Travel & Tourism is affected by, and affects, policy decisions made across the whole political and economic spectrum. Strong tourism institutions, with clearly defined mandates, are therefore vital for a co-ordinated and sustainable development of the industry.
Over the past years, Romanias Travel & Tourism institutions have suffered from a high turnover of officials resulting in inconsistent approaches to tourism development and planning. Continuity on the administrative, if not political, level is vital if plans are to be realized and the countrys industry is to move forward in a sustainable and well-defined way. In order to achieve this, the National Tourism Authority should work to clearly defined priorities and with sufficient budget allocation to allow effective implementation of policies.

TRAVEL & TOURISM INSTITUTIONS

While there are certain investment incentives for foreign companies, bureaucracy within government departments puts a considerable strain on overseas investment.
WTTC recommends a one-stop shop for tourism investments, where interested parties can receive information and advice on bureaucratic processes and complete legal requirements without having to visit a number of government departments. Inadequate facilities in the banking and financial sector serve as a further constraint to attracting investors. The government should prioritize reforms of this sector in line with European norms which will not only benefit Travel & Tourism but the economy as a whole. The current tax regime for Travel & Tourism in Romania is complex and taxes are, in many cases, very high. Care should therefore be taken to ensure that fiscal policies are not harmful to investment.

INVESTMENT & TAXATION

Although basic Travel & Tourism infrastructure in Romania is adequate, a significant amount of modernization and upgrading is necessary to sustain growth and allow Romania to compete in the global marketplace.
The vast majority of Romanias visitors arrive by road. Considerable EU structural funds have been allocated to the upgrading of the countrys highways. Although further investment is desperately needed, main arterial routes are adequate and should not be used as an excuse 8

INFRASTRUCTURE

In Romania, Travel & Tourism accounts for 5.8 per cent of the countrys workforce. This amounts to some 485,000 jobs.
However, Travel & Tourism in Romania is seen as a last resort when it comes to career choice, a situation which reflects clearly the low levels of compensation in the industry. This should be amended, and salaries brought in line with other industries so that a potential workforce can benefit fully from employment in the sector. This will also help to address the brain drain and encourage the most skilled employees and managers to stay in Romania

HUMAN RESOURCES

rather than move abroad. Furthermore, a dedicated Travel & Tourism training facility should be established in collaboration with the private sector. In this way, the supply of human resources will be more closely matched to the industrys needs, with graduates endowed with the necessary practical skills in order to be part of a high quality tourism product.

Meetings, incentives, conferences and exhibitions (MICE) Mountain tourism skiing in winter and hiking in summer Heritage tourism using gateway sites such as Braov, Sibiu and Sighioara Rural tourism development of routes (wine/ monasteries) and promotion of festivals Spa/wellness tourism

The successful growth of Travel & Tourism in Romania will be highly dependent on the natural, social and cultural environments that surround it. In many instances, the natural environment and cultural heritage are central features of the countrys tourism product.
Considerable steps have been taken to clean up and protect the natural environment in Romania. Now, it is vital that tourism development plans be integrated into environmental management systems and vice-versa. In the same way, preservation of cultural heritage should go hand in hand with tourism development. In both cases, careful monitoring is needed to ensure that high standards of preservation are maintained. Furthermore, if Travel & Tourism is to be successful as a tool for rural development, then the buy-in of those communities in which it is based is vital. Linkages between different sectors and local producers should be promoted and stakeholder communication and involvement prioritized. The signing of the Geotourism Charter with the National Geographic Society in 2005 is an important first step in achieving this and highlighting the governments commitment to sustainable tourism development.

SUSTAINABLE DEVELOPMENT

Romania does not enjoy a high profile in the global market, and its image as a tourism destination has been undermined by images of poverty, orphans and environmental degradation.
These perceptions are gradually changing and the creation and promotion of Brand Romania should be urgently prioritized. Within this brand, there is also a need to promote Romanias diverse and touristicallyunique regions. Adequate funding, both at national and regional levels, should underpin all promotion and marketing activities, allowing for concerted advertising campaigns, high-profile presence at international events and a strategic approach to target markets. Use of the internet for promotions and bookings, and inclusion in the European Tourism Portal will also help to increase international awareness of Romania.

PROMOTION & MARKETING

Adjustment to the Digital Economy is essential for enterprises to become and stay competitive.
The current diffusion of internet facilities and computer ownership in Romania are among the lowest in Europe. Travel & Tourism, as a technology-intensive industry, can help Romania obtain and apply information technology systems and telecommunications at a competitive pace. As the countrys technological capabilities, particularly in rural areas, grow which will happen at a lightening pace preparations should be made for the development of an online database making visitors aware of the full range of tourism services in the country and, in time, allowing for online booking of such services. A coordinated approach will help to increase exposure for smaller businesses and increase the spread of international visitors across the industry.

TECHNOLOGY

Romanias Travel & Tourism is characterized by a high level of seasonality. A focus on new types of tourism, and new products, will encourage the development of an industry diverse in opportunities as well as seasons.
There is much potential for Romania to break away from its traditional tourism base of seaside tourism on the Black Sea, and WTTC recommends that the following sectors be prioritized:

PRODUCT DIVERSIFICATION

ECONOMIC IMPACT
IN 2006, ROMANIAS TRAVEL & TOURISM IS EXPECTED TO GENERATE RON24.6 BN (US$7,071.5 MN) OF ECONOMIC ACTIVITY (TOTAL DEMAND). THE INDUSTRYS DIRECT IMPACT INCLUDES:

jobs representing 3.1% of total EMPLOYMENT.

265,167

RON

(US$1,782.6 mn) of GROSS DOMESTIC PRODUCT (GDP) equivalent to 1.9% of total GDP..

6.2

bn

HOWEVER, SINCE TRAVEL & TOURISM TOUCHES ALL SECTORS OF THE ECONOMY, ITS REAL IMPACT IS EVEN GREATER. ROMANIAS TRAVEL & TOURISM ECONOMY DIRECTLY AND INDIRECTLY ACCOUNTS FOR:

jobs representing 5.8% of total EMPLOYMENT.

485,002

RON bn (US$4,454.9 mn) of

GROSS DOMESTIC PRODUCT (GDP) equivalent to 4.8% of total GDP.

15.5

RON

(US$1,855.4 mn) of EXPORTS, SERVICES & MERCHANDISE or 5.2% of total Exports.

6.4

bn

RON

(US$1,513.2 mn) of CAPITAL INVESTMENT or 7.2% of total Investment.

5.3

bn

RON

(US$262.8 mn) of GOVERNMENT EXPENDITURES or a 4.3% share.

0.9

bn

10

GROWTH
IN 2006 TRAVEL & TOURISM IN ROMANIA IS FORECAST TO SEE REAL GROWTH OF 9.2% IN TOTAL TRAVEL & TOURISM DEMAND TO RON24.6 BN (US$7,071.5 MN) AND

in TRAVEL & TOURISM INDUSTRY GDP to RON6.2 bn (US$1,782.6 mn) for the industry directly and 8.9% to RON15.5 bn (US$4,454.9 mn) for the Travel & Tourism Economy overall (direct and indirect expenditures).

9.4%

in TRAVEL & TOURISM INDUSTRY EMPLOYMENT (direct impact only), to 265,167 jobs, and 3.5% to 485,002 jobs in the Travel & Tourism Economy overall (direct and indirect).

2.8%

OVER THE NEXT TEN YEARS, ROMANIAS TRAVEL & TOURISM IS EXPECTED TO ACHIEVE ANNUALIZED REAL GROWTH OF:

in total TRAVEL & TOURISM DEMAND, to RON86.3 bn (US$14,110.9 mn) in 2016.

7.9%

in total TRAVEL & TOURISM GDP, to RON20.7 bn (US$3,380.1 mn) in 2016 for the industry directly and to RON48.4 bn (US$7,903.7 mn) for the Travel & Tourism Economy overall.

7.4%

in TRAVEL & TOURISM EMPLOYMENT, to 314,666 jobs directly in the industry, and 1.6% to 569,530 jobs in the Travel & Tourism Economy overall in 2016.

1.7%

in VISITOR EXPORTS, rising to RON11.6 bn (US$1,898.8 mn) by 2016.

8.5% 1.7%

in terms of CAPITAL INVESTMENT, increasing to RON15.8 bn (US$2,576.6 mn) in 2016.

6.2%

in terms of GOVERNMENT EXPENDITURES to RON1.8 bn (US$290.0 mn) in 2016.

11

OVERVIEW OF RECENT TRENDS AND DEVELOPMENTS.

ROMANIAS TRAVEL & TOURISM

INTRODUCTION
As a Communist country granted most favoured nation status by the USA due to the governments anti-Soviet policies, Romania was a wellknown tourism destination in Western Europe in the 1970s. US-backed credits to the tune of US$1 billion spurred economic development and, popular with visitors from Germany, the UK, Scandinavia, France, Italy, Austria and Belgium, the countrys Black Sea coast resorts were booming. However, by the end of the 1980s as a result of under-investment and an increasingly unstable political situation visitor numbers began to dwindle. After the international media documented the fall of Ceauescu in December 1989, this trend continued as the full impacts of the communist regime were realized. The opening up of Romania opened the worlds eyes to the extreme poverty of the Romanian people, often embodied in the images of orphanages - images far from that of a tourist haven. The slow privatization process combined with lack of investment in infrastructure over the 1990s, as Romanians readjusted to life after Communism, resulted in an increasingly ailing tourism industry. However, new-found freedom and an emerging middle class saw a boost in outbound travel, encouraged by cheap deals in nearby Greece and Turkey. Now, a favourable exchange rate with the US dollar and the

improved image of Central and Eastern Europe are beginning to attract international tourists to Romania.

GENERAL OUTLOOK
According to WTTCs 2005 TSA research, Romania ranks fourth out of 174 countries in long-term growth in Demand. Membership of NATO in 2002 and projected accession to the European Union (EU) in 2007 mean that international awareness of Romania is growing. The mid-1990s saw renewed interest in tourism from central government, when the industry was identified as a national priority. The controversial Dracula Park, although never completed, is testament to this commitment. However, the current lack of understanding of Travel & Tourisms importance, a lack of willingness for independent operators to work together, and the absence of any coherent government strategy mean that this untapped potential is still waiting to be unlocked.

POTENTIAL
Covering some 237,500 square kilometres right in the heart of Europe, Romania has a rich, but largely unexplored, natural and cultural heritage. And Romanias treasures are spread the length and breadth of the country. 13

Bucharest is no Prague or Vienna but the smaller regional towns of Sibiu, Braov and Sighioara have architecture, culture and openness more than able to compete with larger neighbours. Landlocked except for its 200kilometre coast on the Black Sea, Romania borders Ukraine and Moldova to the north and east, Hungary and Serbia & Montenegro to the west and Bulgaria to the south and it is as accessible by land as it is by air.

TRAVEL & TOURISM TRENDS Arrivals

International tourist arrivals, 1995-2005

Back to nature
Romanias 41 counties can be divided into three main geographical regions. The Central Carpathian Mountains boast the highest concentration of large carnivores in Europe including half of the continents bear population, a third of its wolves and a third of its lynx population. To the west lie the plateaus where bucolic villages and towns are dotted amongst the hills and valleys. And to the east, the low lying plains which are the countrys agricultural heartland see the Danube river empty into the Black Sea by means of its ecologically unique delta. In all the country is home to some 33,792 species of animals and 3,700 species of plants and the Danube Delta is home to 60 per cent of the worlds small pygmy cormorant population. From the beaches of the Black Sea, to skiing and walking in the mountains and nature-based tourism in the Danube Delta, Romanias natural heritage offers endless opportunities for Travel & Tourism.

Sources: Ministry of Public Administration and Interior (General Inspectorate of Frontier Police), Romania

held its level in 2000, arrivals in the country have consistently declined since 1995, although the falls in 2001 and 2002 mirror the global economic downturn in the wake of 9/11. Recent years, however, have seen impressive growth more than 16 per cent in 2003 and some 18 per cent in 2004, although preliminary estimates based on data for the first ten months of last year point to a drop of 12 per cent in arrivals in 2005. Nevertheless, given the increased political stability, and a rise of international awareness in what Romania has to offer, prospects look much better for 2006.

A unique cultural heritage

Romania is home to seven World Heritage Sites including the painted monasteries in Bucovina, the historic citadel of Sighioara and the Dacian fortresses near Hunedoara. Transylvania is world famous for its association with the Dracula legend. The countrys wide-ranging examples of architectural styles and a rich musical and literary history are reflected in an ethnic mix of Romanian, Hungarian, Roma, Ukranian, German, Russian and Turkish. A population as diverse and unique as the countrys landscape combines with a rich history to offer the visitor a great insight into Europes past and present.

International tourist arrivals in Romania and competing countries, 2003-04 (000)

Country Bulgaria Croatia Serbia & Montenegro Romaniaa Hungary Slovakia Czech Republic Poland
a b

Measure TF TCE TCE TF TCE TF TCE TCE TF

2003 4,048 7,409 481 5,595 1,105 15,706

b

2004 4,630 7,912 580 6,600 1,359 12,212 1,401 6,061 14,290

% change 2004/2003 14.4 6.8 20.1 17.9 22.9

c

...offering huge growth potential...

Tourism has traditionally centred on the resorts of the Black Sea coast but in reality Romania has a great deal more to offer. For the domestic market, spa tourism has long been popular, and significant work and investment are going into developing the countrys cultural sites for tourists. The countrys ski resorts are already well established, and the same facilities offer great potential for adventure tourism and walking in the off-season. Bucharest is also not to be ignored for the business and MICE tourism that already exists and that accession to the EU will inevitably increase.

1,387 5,076 13,720

1,0 19.4 4.2

and year-round opportunities

Romania has the potential to be a year-round destination if all the opportunities offered by the varied natural and cultural heritage are understood and maximized. Travel & Tourism can also be a country-wide industry taking development, entrepreneurial potential and employment to the 55 per cent of the population who live in rural Romania. Romanias Travel & Tourism has had a rough ride over the past ten years in terms of international arrivals. Apart from a slight rise in 1999, which 14

From the National Institute of Statistics Including same-day visitors c Comparison not possible as 2004 does not include same-day arrivals TF: tourist arrivals at frontiers TCE: tourist arrivals at registered accommodation

Source: World Tourism Organization (UNWTO) World Tourism Barometer

Among its competitors, Romania showed one of the highest growth rates in arrivals from 2003-04, although the country still receives considerably fewer visitors than Poland and Hungary. The disparity between border and accommodation figures highlights the reliance of Romanias tourism industry on visitors from border countries, who either

stay with friends and/or relatives or may not overnight at all in the country. However, if one compares the growth rate of foreign visitors in accommodation units with competing countries, Romania is showing a high growth rate of 22.9 per cent, compared with 20.1 per cent for Serbia & Montenegro, 19.4 per cent for the Czech Republic, 6.8 per cent for Croatia and one per cent for Slovakia.

Arrivals in Romania from the USA, EU and neighbouring countries, 1998-2004 (000)

Romanias Travel & Tourism has had a rough ride over the past ten years in terms of international arrivals.
International markets
The vast majority of international arrivals in Romania are from Europe. Since 2000, some 95 per cent of visitors every year have been intra-regional. Of these, a growing number 75 per cent according to 2004 figures represent arrivals from the five countries with which Romania shares a border: Ukraine, Moldova, Bulgaria, Hungary, Serbia & Montenegro. Analysis of accommodation figures shows that a large number of these visitors do not stay in registered facilities and either reside with friends or relatives, or do not overnight in Romania. Thus, it is difficult to quantify their impact on the economy. Within EU15 countries, Romanias largest markets are Germany, Italy, France, Austria and the UK. Worryingly, arrivals from all of the EU 15 countries showed negative growth in 2004. This can be attributed in part to the accession of ten new countries to the EU, and related incentives for visitors to these countries such as low-cost airlines. Growth in 2004 was driven by Hungary, which showed a 69 per cent increase in arrivals in Romania and Poland, from where arrivals were up by 22 per cent on 2003 figures. Outside Europe, Romanias main international markets are the USA, which has shown steady growth since 2000, to 111,000 arrivals in 2004, as American tourists have started to be aware of the fact that Romania is more than a Dracula destination; and Israel, although the Israeli market has remained stagnant in recent years. Tourists from China are also expected to increase in the future, as Romania received approved destination status (ADS) in June 2004. Arrivals in Romania from the EU15 markets, 2004 (000)

Source: UNWTO

Length of stay
Figures regarding length of stay are difficult to ascertain, given the large number of foreign visitors who do not show up on official accommodation registers. For those that do, length of stay has remained steady at around the 2.5-day mark for the past five years. This again reflects the number of visitors from bordering countries. Romanian tourists tend to stay longer, on average four days. This mirrors the trend for weekend trips out of Bucharest, or to the beach and mountains. Average length of stay in Romania in hotels/motels, 2000-04 (days)

Source: Oxford Economic Forecasting

Tourism receipts
While Romanias Travel & Tourism is growing at an impressive rate in terms of international visitors, the countrys tourism receipts have been lagging considerably behind neighbouring countries. In 2004, Romania registered some 505 million in tourism receipts 23 per cent of those registered by Bulgaria, approximately 12 per cent of those registered by Hungary and the Czech Republic and a mere 7 per cent of Croatias receipts. This again reflects the fact that many of Romanias visitors do not stay overnight or spend anything while they are in the country, and highlights an important weakness to address for any tourism plan going forward.

Source: UNWTO

15

International tourism receipts, 2004 ( mn)

Breakdown of arrivals in Romania by destination, 2004

Source: INCDT

Source: UNWTO

Annual growth in arrivals in different destinations in Romania by market, 2004 (annual change)
% annual change Change in absolute volume (000) All destinations Domestic Foreign Spas Domestic Foreign Seaside Domestic Foreign Mountain Domestic Foreign Danube Delta Domestic Foreign County residences Domestic Foreign Other localities Domestic Foreign 5.6 56.8 -2.2 76.7 5.2 154.9 7.7 32.2 87.6 260.6 4.9 47.2 10.9 122.2 225.9 492.5 -14.3 19.6 33.0 50.8 51.6 28.3 26.2 12.0 76.7 310.7 52.8 71.1
Source: INCDT

Domestic market
Traditionally the domestic market has driven Travel & Tourism in Romania and it is still an important sector of the industry. However, increased competition from countries such as Greece and Turkey, to which cheap flights and deals are luring Romanians away from holidaying in their own country, has meant that in terms of percentage growth, domestic tourism is decreasing. Nevertheless, in terms of absolute volume, it continues to increase. Tourist arrivals in all forms of accommodation, 2000-04 (% share)

Transport
The majority of international arrivals to Romania are by road, again mirroring the large proportion of the countrys visitors from bordering countries. As the number of these visitors increases, so does road transport. However, arrivals by air have also seen a healthy rise over the past five years with increased frequency of scheduled services and some charters operating in regional airports such as Sibiu and Constana. As Romania is forced to liberalize its aviation industry on accession to the EU, air transport is set to rise dramatically in the future. Arrivals by rail Arrivals by different transport modes, 1999-2004 (000)
1999 2000 655 660 3,808 141 2001 705 476 3,621 135 2002 689 374 3,594 137 2003 752 347 4,343 152 2004 704 308 5,401 186 Air Rail Road Sea 566 586 3,930 141

Source: National Institute for Research and Development in Tourism (INCDT)

Favourite destinations
Tourism to all destinations grew over the period 2000 to 2004, with the only sector showing a decrease being domestic visitors to spas. This reflects not only the increasing trend for Romanians to holiday abroad but also the continuing dilapidation of lower-end facilities. The significant increase of foreign visitors to all destinations clearly reflects the upward trend in international arrivals.

The significant increase of foreign visitors to all destinations clearly reflects the upward trend in international arrivals.
16

Source: Ministry of Public Administration and Interior (General Inspectorate of Frontier Police), Romania

are decreasing at almost the same rate that air arrivals are increasing as air travel becomes cheaper and more accessible. The increase in naval arrivals is a result of several programmes such as Cruises on the Danube River in partnership with neighbouring countries.

Hotel bed capacity by location, 2004 (no. of beds)

Danube Delta Spas Bucharest & other Seaside Mountain Resorts Other localities 3,180 40,849 46,541 116,935 32,554 35,837

Accommodation
Romanias hospitality sector is now all but fully privatized with the majority of hotel stock at the lower one- and two-star - end of the market. Particularly in Bucharest, a lack of four- and five-star facilities means that although occupancy is high, so are prices, in particular compared with competitors such as Budapest and Prague. Given the existing potential, much enhanced by close accession to both the EU and eurozone, this sector is set to develop rapidly over coming years. The current trend is to invest in three- and four-star hotels and, by 2009, the total total capacity of Bucharest is expected to reach 9,000, compared with the 6,000 rooms existing at the moment. Ownership of accommodation facilities 2004

Source: National Tourism Authority

Future prospects
As is the case with many other countries in the region, Romania is well placed to develop a truly unique tourism product. The country has considerable past experience of Travel & Tourism and now needs to be brought into the 21st century. Modernization, promotion and investment will be vital if Romania is to become a successful international tourism destination. Furthermore, Romania is entering a crucial stage in its history as it prepares for membership of the EU. As competing countries in Central Europe emerge onto the scene, the opportunity must be seized by the countrys Travel & Tourism players to move forward with the current wave, and to capitalize on the growing interest in new destinations, especially those which are perceived to be safe in terms of terrorism. However, Romania already lags behind its smaller neighbour, Bulgaria, and a new direction and commitment to investment are needed to ensure that the countrys potential for Travel & Tourism are not held back by bad planning and a lack of supporting infrastructure. With this in mind, Romanias considerable natural, cultural and historical resources place the country in a prime position for Travel & Tourism development.

Source: National Tourism Authority

Hotel capacity by grading, 2004

Source: National Tourism Authority

Current projects: Rembrandt Hotel (Rembrandt) 15 rooms Golden Tulip Inn (Golden Tulip) 80 rooms Ibis Parliament (Continental Accor) 150 rooms Confort Colentina Hotel (Pro Confort) 180 rooms Phenicia Hotel (Triumf Construct) 340 rooms & 28 apartments Group Millennium 80 rooms Although there are plans for a Q-label in hotels, and star gradings are underwritten by law, in general there is little standardization of accommodation stock, whether in terms of hotels, motels, bed & breakfasts, campsites or resorts and concentration of facilities mirror the traditional Romanian tourism products namely the Black Sea coast for beach holidays and the Carpathian mountains for skiing.

As is the case with many other countries in the region, Romania is well placed to develop a truly unique tourism product. The country has considerable past experience of Travel & Tourism and now needs to be brought into the 21st century. Modernization, promotion and investment will be vital if Romania is to become a successful international tourism destination.

17

TOURISM SATELLITE ACCOUNTING

TRAVEL & TOURISM SATELLITE ACCOUNT

Over the last three decades, countries have estimated the economic impact of Travel & Tourism through a range of measures using a variety of definitions and methodologies. Such approaches have prevented meaningful comparisons among nations. Even for the same nation over different periods of time, they have frustrated business and government attempts to draw valid conclusions about the nature and course of Travel & Tourism demand in national economies. This regime has obscured the substantial, positive role the industry plays in national economies and has thwarted business and government attempts to optimize economic programmes and policies. The World Travel & Tourism Council (WTTC) recognized the dearth of crucial Travel & Tourism intelligence from the time of its establishment in 1990 and it published the first detailed estimates of world tourisms economic impact that same year. Since then WTTC has worked to improve its methodologies and to encourage individual countries to enhance their measurement and understanding of tourisms impact on their national economies. Furthermore, in the spirit of joining forces to enhance world comprehension of the role of Travel & Tourism in national economies, WTTC has strongly supported the programmes of the World Tourism Organization (UNWTO) to improve tourism statistics worldwide.

THIS REPORT FOLLOWS THE CONCEPT OF SATELLITE ACCOUNTING DEFINED IN THE TOURISM SATELLITE ACCOUNT: RECOMMENDED METHODOLOGICAL FRAMEWORK (TSA:RMF), AND DEVELOPED UNDER THE AUSPICES OF THE WORLD TOURISM ORGANIZATION.

WTTCS RESEARCH
WTTC and its economic/research partners Oxford Economic Forecasting, (OEF), since 1999, and Global Insight (previously known as DRIWEFA), from 1990-1999 have developed and published research on the economic contribution of Travel & Tourism to the world, regional and national economies. Starting in 1990, WTTCs research team has been working to develop practical, real-world models to illustrate Travel & Tourisms economic contribution based on the needs of private sector leaders, public sector policy-makers and industry researchers, and on the interpretation of the system of national accounts. The research is now firmly anchored in the international standard for tourism satellite accounting that was developed by UNWTO, OECD and Eurostat, and approved by the United Nations Statistical Commission in 2000. It was launched at the TSA Conference held in Vancouver in May 2001 and published as the Tourism Satellite Account: Recommended Methodological Framework (TSA: RMF) in 2001. Since 1999, WTTCs research has assumed the conceptual framework of the UN-approved standard with a number of discretionary extensions, and it combines the most sophisticated economic modelling and forecasts available with the most up-to-date, publicly available data to generate a comprehensive implementation of Travel & Tourism satellite accounting. This special simulated TSA for Romania is the product of work commissioned by the National Tourism Authority, working in co-operation with the National Institute for Research and Development in Tourism (INCDT). In carrying out the work, OEF has drawn extensively on the methodology drawn up over the years by WTTC to develop TSAs as operational tools, and has worked closely with the National Tourism Authority and its project steering committee to review the assumptions, models and results produced by this exercise.

18

WTTCS APPROACH TO TOURISM SATELLITE ACCOUNTING

WTTC has endeavoured to implement and produce the most comprehensive TSA provided for within the TSA: RMF by developing the narrow concept of the Travel & Tourism Industry in addition to the broader concept of the Travel & Tourism Economy. WTTC advocates full implementation of the TSA as defined in the TSA: RMF in order to achieve the highest level of benefits for industry and governments. These include:

the growth of businesses that help alleviate trade balance issues; Demandand supply-side information on employment that allows for human resource planning and development. WTTC has worked towards developing a comprehensive TSA not because it is eager to exaggerate the size of Travel & Tourisms impact, but because the information that can be garnered from the exercise by governments and industry is crucial for making intelligent and informed policy and business decisions. WTTC believes that history will document its pioneering implementation of the simulated TSA as one of the most important turning points for Travel & Tourisms long overdue economic recognition. In the WTTC research, no country receives special treatment or favours. WTTC uses internationally available data sources and the same scope of tourism satellite accounting for all countries, as well as the same basic assumptions through the same system of models. WTTCs TSA research utilizes a universal and internally consistent modelling framework and generates harmonized results and forecasts for 175 countries around the world. Details of the methodology used by WTTC/OEF in its TSA research are available on WTTCs website (www.wttc.org).

A wealth of customer and consumer information on tourism-related purchases (before, during and after trips whether domestic or international, imported or exported as well as services, durables and nondurables) that has never been identified until now;

Comprehensive documentation and analysis of the full tourism-product service chain and governments ability to deliver quality and timely service to visitors;

Linkages between Travel & Tourism and other sectors of the economy such as agriculture and manufacturing to illustrate the flow-through of spending;

Complete outlook for public works that benefit visitors and Travel & Tourism companies in order to leverage public sector plans and priorities for growth;

Focused opportunities for domestic production, as well as incentives from the public sector, to aid in

ROMANIA
Travel & Tourism Employment (000 Jobs)

Travel & Tourism Gross Domestic Product (2000 Constant US$ mn)

T&T ECONOMY
Direct and indirect impact of visitor activities, capital investment, exports and government services

T&T INDUSTRY

Direct impact of visitor activity (transportation, accommodation, food and beverage, recreation, entertainment and travel services)

19

TSA CONCEPTS & STRUCTURE

Demand Side Accounts
RON bn PERSONAL TRAVEL & TOURISM
More formally known as Travel & Tourism Personal Consumption, this category includes all personal spending by an economys residents on Travel & Tourism services (lodging, transportation, entertainment, meals, financial services, etc) and goods (durable and nondurable) used for Travel & Tourism activities. Spending may occur before, during or after a trip. Spending covers all Travel & Tourism, outbound and domestic.

10.4

BUSINESS TRAVEL
Formally know as Intermediate Consumption of Travel & Tourism or more simply business travel, this category of expenditures by government and industry includes spending on goods and services (transportation, accommodation, meals, entertainment, etc) for employee business travel purposes.

1.5

TRAVEL & TOURISM CONSUMPTION

Total Travel & Tourism expenditures made by and on behalf of visitors (goods and services) in the resident economy

GOVERNMENT EXPENDITURES (INDIVIDUAL)

Formally known as Non-Market Services (Individual), this category includes expenditures (transfers or subsidies) made by government agencies to provide Travel & Tourism services such as cultural (eg. art museums), recreational (eg national park) or clearance (eg immigration/ customs) etc to visitors.

0.1

VISITOR EXPORTS
Expenditures by international visitors on goods and services within the resident economy.

3.2 15.3

GOVERNMENT EXPENDITURES (COLLECTIVE)

Formally known as Non-Market Services (Collective), this category includes operating expenditures made by government agencies on services associated with Travel & Tourism, but not directly linked to any individual visitor, instead these expenditures are generally made on behalf of the community at large, such as tourism promotion, aviation administration, security services and resort area sanitation services, etc.

0.8

CAPITAL INVESTMENT
Formally known as Capital Formation, this category includes capital expenditures by direct Travel & Tourism industry service providers and government agencies to provide facilities, equipment and infrastructure to visitors.

5.3

TRAVEL & TOURISM DEMAND

The nominal aggregate of tourism activity in the resident economy

EXPORTS (NON-VISITOR)
Consumer goods (such as clothing, electronics or petrol) exported for ultimate sale to visitors, or Capital goods (such as aircraft or cruise ships) exported for use by Travel & Tourism industry providers.

3.3 24.6

20

The Travel & Tourism Satellite Account is based on a demand-side concept of economic activity, because the industry does not produce or supply a homogeneous product or service like traditional industries (agriculture, electronics, steel, etc). Instead, Travel & Tourism is an industrial activity defined by the diverse collection of products (durables and non-durables) and services (transportation, accommodation, food and beverage, entertainment, government services, etc) that are delivered to visitors. There are two basic aggregates of demand (Travel & Tourism Consumption and Total Demand) and by employing input/output modelling separately (blue/green arrows) to these two aggregates the Satellite Account is able to produce two different and complementary aggregates of Travel & Tourism Supply: the Travel & Tourism Industry and the Travel & Tourism Economy. The former captures the explicitly defined production-side industry contribution (ie direct impact only), for comparison with all other industries, while the latter captures the broader economy-wide impact, direct and indirect, of Travel & Tourism.

Supply Side Accounts

RON bn 6.2 000s of Jobs 265.2 TRAVEL & TOURISM INDUSTRY GDP (DIRECT)
Direct Gross Domestic Product (also know as Value-Added) and Employment associated with Travel & Tourism Consumption. This is the explicitly defined Supply-side industry contribution of Travel & Tourism that can be compared one-for-one with the GDP and Employment contribution of other industries in the economy. Establishments in this category include traditional Travel & Tourism providers such as airlines, hotels, car rental companies, etc.

3.6

TRAVEL & TOURISM INDUSTRY GDP (INDIRECT)

Indirect Gross Domestic Product associated with Travel & Tourism Consumption. This is the upstream resident economy contribution which comes about from suppliers to the traditional Travel & Tourism industry. Establishments in this category include fuel and catering companies, laundry services, accounting firms, etc.

TRAVEL & TOURISM INDUSTRY SUPPLY

Total Travel & Tourism Industry supply

5.5

TRAVEL & TOURISM INDUSTRY IMPORTS

The value of goods imported by direct and indirect Travel & Tourism Industry establishments.

15.3

15.5 000s of Jobs 485.0

TRAVEL & TOURISM ECONOMY GDP (DIRECT AND INDIRECT)

Direct and Indirect Gross Domestic Product (also know as Value-Added) and Employment associated with Travel & Tourism Demand. This is the broadest measure of Travel & Tourisms contribution to the resident economy. Establishments in this category include those described above as well as manufacturing, construction, government, etc that are associated with Capital Investment, Government Services and Non-Visitor Exports.

TRAVEL & TOURISM ECONOMY SUPPLY

Total Travel & Tourism Economy supply

9.1

TRAVEL & TOURISM ECONOMY IMPORTS

The value of goods imported by direct and indirect Travel & Tourism Economy establishments.

24.6

21

TRAVEL & TOURISM ENCOMPASSING TRANSPORT, ACCOMMODATION, CATERING, RECREATION AND SERVICES FOR VISITORS IS ONE OF THE WORLDS HIGHEST PRIORITY INDUSTRIES AND EMPLOYERS.
Worldwide, in 2006, it is expected to post US$6.5 trillion of economic activity (Total Demand) and this is forecast to grow to US$12.1 trillion by 2016. Travel & Tourism Demand in the European Union is expected to reach US$2.1 trillion in 2006, growing to US$3.5 trillion in 2016. In Romania, in 2006, Travel & Tourism is expected to post RON24.6 billion (US$7.1 billion) of economic activity (Total Demand), growing to RON86.3 billion (US$14.1 billion) by 2016. In 2006, the Travel & Tourism Industry should contribute 3.6 per cent to worldwide GDP, and the broader Travel & Tourism Economy is expected to account for 10.3 per cent. In the European Union, the Travel & Tourism Industry is expected to post a GDP contribution of 3.9 per cent in 2006, while the Travel & Tourism Economy contribution will be 10.9 per cent. Romanias Travel & Tourism Industry is expected to contribute 1.9 per cent to gross domestic product (GDP) in 2006 (RON6.2 billion or US$1.8 billion), rising in nominal terms to RON20.7 billion or US$3.4 billion (2.5 per cent of total GDP) by 2016. The Travel & Tourism Economy contribution, meanwhile (as a percentage of total GDP) should rise from 4.8 per cent (RON15.5 billion or US$4.5 billion) to 5.8 per cent (RON48.4 billion or US$7.9 billion) over this same period. Travel & Tourism is a high-growth activity, which is forecast to increase its total economic activity by 4.2 per cent per annum worldwide in real terms over the next ten years. In the European Union, Travel & Tourism is expected to post average annualized gains of 3.5 per cent between 2007 and 2016. For Romania, Travel & Tourism activity is forecast to grow by 7.9 per cent per annum in real terms between 2007 and 2016. Travel & Tourism is human resource intensive, creating quality jobs across the full employment spectrum. In 2006, one in 11.5 jobs will be generated by the Travel & Tourism Economy. The Travel & Tourism Economy accounts for 8.7 per cent of global employment. Today there are 76.7 million Travel & Tourism Industry jobs and 234.3 million jobs in the Travel & Tourism Economy, and these are projected to rise to 89.5 million and 279.3 million respectively by 2016. The European Union Travel & Tourism Industry is expected to generate 8.6 million jobs in 2006 (4.2 per cent of total employment), while the broader Travel & Tourism Economy will account for 23.8 million jobs (11.8 per cent). 22 Romanias Travel & Tourism Economy employment is estimated at 485,000 jobs in 2006 5.8 per cent of total employment, or one in every 17.4 jobs. By 2016, these should increase to 570,000 jobs 6.9 per cent of total employment or one in every 14.4 jobs. The current (2006) 265,000 Travel & Tourism Industry jobs account for 3.1 per cent of total employment and are forecast to total 315,000, or 3.8 per cent of the total, by 2016. Travel & Tourism is a major exporter, with inbound visitors injecting foreign exchange directly into the economy. Travel & Tourism exports in the European Union are expected to represent 13.0 per cent of total exports in 2006. In Romania, exports make up a very important share of Travel & Tourisms contribution to GDP. Of total Romanian exports, Travel & Tourism is expected to generate 5.2 per cent (RON6.4 billion or US$1.9 billion) in 2006, increasing to RON28.8 billion, or US$4.7 billion (4.6 per cent of total), by 2016. Travel & Tourism is a catalyst for construction and manufacturing. In 2006, the public and private sectors combined are expected to spend US$1.0 trillion on new Travel & Tourism Capital Investment worldwide 9.3 per cent of total investment rising to US$2.1 trillion, or 9.6 per cent of the total, in 2016. In the European Union, Travel & Tourism Capital Investment is projected to total US$241.4 billion in 2006, or 8.6 per cent of total regional capital investment. Travel & Tourism Capital Investment in Romania is estimated at RON5.3 billion US$1.5 billion or 7.2 per cent of total investment 2006. By 2016, this should reach RON15.8 billion US$2.6 billion or 7.5 per cent of total. Travel & Tourism is both a generator and receiver of government funds. Globally, in 2006, Travel & Tourism is expected to garner US$300.2 billion, or 3.8 per cent, of total government expenditures. By 2016, government spending on Travel & Tourism should increase to US$480.9 billion 4.0 per cent of total government expenditure. Government Travel & Tourism operating expenditures in Romania in 2006 are expected to total RON0.9 billion (US$263 million) or 4.3 per cent of total government spending. In 2016, this spending is forecast to increase to RON1.8 billion (US$290 million), or 4.5 per cent of total government spending.

TRAVEL & TOURISMS ECONOMIC IMPACT

ROMANIA ESTIMATES AND FORECASTS

RON bn Personal Travel & Tourism Business Travel Government Expenditures Capital Investment Visitor Exports Other Exports Travel & Tourism Demand T&T Industry GDP T&T Economy GDP T&T Industry Employment T&T Economy Employment 10.4 1.5 0.9 5.3 3.2 3.3 24.6 6.2 15.5 265.2 485.0 2006 % of Tot 3.9 --4.3 7.2 2.5 2.6 --1.9 4.8 3.1 5.8 Growth1 7.6 4.6 2.3 6.7 22.4 11.1 9.2 9.4 8.9 2.8 3.5 RON bn 35.9 4.1 1.8 15.8 11.6 17.2 86.3 20.7 48.4 314.7 569.5 2016 % of Tot 5.2 --4.5 7.5 1.8 2.7 --2.5 5.8 3.8 6.9 Growth2 7.7 4.9 1.7 6.2 8.5 12.4 7.9 7.4 6.7 1.7 1.6

2006 Real Growth Adjusted for Inflation (%); 22007-2016 Annualized Real Growth Adjusted for Inflation (%); 000 of Jobs

EUROPEAN UNION ESTIMATES AND FORECASTS

US$ bn Personal Travel & Tourism Business Travel Government Expenditures Capital Investment Visitor Exports Other Exports Travel & Tourism Demand T&T Industry GDP T&T Economy GDP T&T Industry Employment T&T Economy Employment 910.3 219.0 92.1 241.4 364.5 321.9 2,149.4 544.5 1,513.1 8,605.6 23,820.3 2006 % of Total 11.3 --3.2 8.6 6.9 6.1 --3.9 10.9 4.2 11.8 Growth1 3.0 4.8 0.8 2.2 5.8 5.0 3.8 4.2 4.5 3.3 3.3 US$ bn 1,344.9 326.8 127.1 441.9 650.9 637.2 3,529.0 811.7 2,404.0 9,511.6 27,646.0 2016 % of Total 11.8 --3.2 9.3 6.7 6.6 --4.1 12.0 4.5 13.0 Growth2 2.5 2.5 1.7 4.2 4.3 5.5 3.5 2.4 3.1 1.0 1.5

2006 Real Growth Adjusted for Inflation (%); 22007-2016 Annualized Real Growth Adjusted for Inflation (%); 000 of Jobs

WORLD ESTIMATES AND FORECASTS

US$ bn Personal Travel & Tourism Business Travel Government Expenditures Capital Investment Visitor Exports Other Exports Travel & Tourism Demand T&T Industry GDP T&T Economy GDP T&T Industry Employment T&T Economy Employment 2,845 672 300 1,011 896 750 6,477 1,754 4,964 76,728.7 234,304.5 2006 % of Total 9.5 --3.8 9.3 6.4 5.4 --3.6 10.3 2.8 8.7 Growth1 3.7 5.9 2.2 4.9 6.5 5.0 4.6 4.4 4.8 3.4 4.4 US$ bn 4,916 1,190 481 2,060 1,754 1,715 12,119 2,969 8,972 89,484.5 279,346.7 2016 % of Total 9.8 --4.0 9.6 5.5 5.4 --3.6 10.9 2.9 9.0 Growth2 3.4 3.6 2.6 4.6 4.9 6.5 4.2 3.2 3.7 1.6 1.8

2006 Real Growth Adjusted for Inflation (%); 22007-2016 Annualized Real Growth Adjusted for Inflation (%); 000 of Jobs

23

TOTAL DEMAND
TRAVEL & TOURISM IN ROMANIA IS EXPECTED TO GENERATE RON24.6 BILLION (US$7.1 BILLION) OF TOTAL DEMAND IN 2006, INCLUDING:

ROMANIA Travel & Tourism Total Demand (2006 Est. RON bn)

EUROPEAN UNION Travel & Tourism Total Demand (2006 Est. US$ bn)

RON10.4 billion (US$3.0 billion) of Personal Travel & Tourism consumption by residents of Romania (3.9 per cent of total personal consumption); RON1.5 billion (US$445 million) of Business and Government Travel by resident companies and government employees; RON913 million (US$263 million) of Government Expenditures, or 4.3 per cent of total government spending in Romania, to provide individual and collective services to the countrys Travel & Tourism Industry and its visitors; RON5.3 billion (US$1.5 billion) of Capital Investment, or 7.2 per cent of total capital investment in Romania, in personal, commercial and public Travel & Tourism facilities, equipment and infrastructure by residents, Travel & Tourism companies and government agencies; RON3.2 billion (US$915 million) of Visitor Exports generated from international visitor markets, or 2.5 per cent of Romanias total exports; and RON3.3 billion (US$941 million) of Merchandise Trade Exports, or 2.6 per cent of total exports.

ROMANIA Travel & Tourism Total Demand (2000 Constant US$ mn)

EUROPEAN UNION Travel & Tourism Total Demand (2000 Constant US$ bn)

ROMANIA Travel & Tourism Total Demand (Cumulative Real Growth, %)

EUROPEAN UNION Travel & Tourism Total Demand (Cumulative Real Growth, %)

This breakdown of demand shows that Personal and Business Travel & Tourism accounts for nearly 50 per cent of the nations Travel & Tourism Economy. Given how important Travel & Tourism is already, the sector must be accorded the highest priority by government so as to ensure sustainable growth in the future. Over the past 15 years (1990-2005), Romanias Travel & Tourism activity has experienced a series of strong and weak years followed by a steadier performance (since 1999) all during a period of economic transition. But growth in Travel & Tourism activity has nonetheless exceeded 44 per cent since 1988. This compares with 41 per cent cumulative growth over the same period for the European Union, and with 57 per cent for the world overall. Romania now looks poised for a period of healthy growth in terms of Travel & Tourism Demand, especially in the medium term. In 2006, Romanias Travel & Tourism is expected to grow by 9.2 per cent overall. In the longer term ie to 2016 Travel & Tourism Demand in Romania is forecast to average 7.9 per cent per annum. This would comfortably exceed expected worldwide growth of 4.2 per cent per annum, as well as the 3.5 per cent annual average growth forecast for the European Union. WTTC/OEF expect strong growth in Personal Travel & Tourism and visitor exports (7.7 and 8.5 per cent per annum respectively) for the foreseeable future, providing necessary support for business travel and government expenditures which are expected to post similarly consistent, albeit slightly slower growth.

24

EMPLOYMENT
THE TRAVEL & TOURISM INDUSTRY IN ROMANIA IS EXPECTED TO GENERATE DIRECTLY 265,000 JOBS IN 2006.
A total of 485,000 jobs (direct and indirect) are expected to be generated across the broader spectrum of the Travel & Tourism Economy, encompassing: travel company employment, government agency employment, and supplier company employment. The first category represents Travel & Tourism Industry jobs, while all three represent Travel & Tourism Economy jobs. Travel & Tourism Industry jobs in Romania, which are expected to total 265,000 in 2006, represent 3.1 per cent of the countrys workforce. By 2016, Travel & Tourism Industry employment is forecast to increase by 49,000 jobs to 3.8 per cent of total employment in Romania. The 485,000 Travel & Tourism Economy jobs in Romania in 2006 represent 5.8 per cent of the total workforce. By 2016, Travel & Tourism Economy employment is expected to increase by 85,000 jobs in Romania to 6.9 per cent of total employment. Over the past ten years, Travel & Tourism employment in Romania has worked very hard to recover the jobs lost in the economic transition. In 2006, due to the expected strong growth in visitor exports Travel & Tourism the employment outlook for Travel & Tourism is very positive, with employment gains expected to exceed 16,000 jobs. Assuming that growth in the economy remains positive and visitor exports strengthens over the next few years, there is strong potential over the next decade to create 8,500 new jobs a year. This would mean that the total number of jobs in Travel & Tourism would increase by just over 1.6 per cent per annum between 2007 and 2016. The charts opposite highlight a few points of interest. First, Romanias Travel & Tourism employment growth has been mostly positive for the past few years and is expected to continue this trend. Second, if Travel & Tourism employment in Romania as a percentage of total employment is compared with the respective shares of neighbouring and competing destinations, Romania comes well down the ranking at number 142. Similarly disappointing, is the fact that it still ranks unfavourably in 119th position among the list of 174 countries whose future growth performances are assessed by WTTC/OEF.

ROMANIA Travel & Tourism Employment (000 Jobs)

EUROPEAN UNION Travel & Tourism Employment (mn Jobs)

ROMANIA Travel & Tourism Economy Employment (Cumulative Real Growth, %)

EUROPEAN UNION Travel & Tourism Economy Employment (Cumulative Real Growth, %)

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Economy Employment (2006, % of Total Employment)
27 Croatia .....................................................23.1 41 Slovenia ..................................................16.9 42 Montenegro ..........................................16.8 44 Greece .....................................................15.9 55 Bulgaria ...................................................13.6 59 Czech Republic ....................................12.6 87 Bosnia and Herzegovina .................... 9.5 95 Hungary .................................................... 8.6 97 Poland ....................................................... 8.5 142 Romania ................................................... 5.8

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Economy Employment (10-Year Real Growth, Annualized, %)
7 Montenegro ............................................ 4.7 9 Croatia ....................................................... 4.7 117 Bosnia and Herzegovina .................... 1.6 119 Romania ................................................... 1.6 127 Greece ....................................................... 1.5 148 Czech Republic ...................................... 1.0 157 Slovenia .................................................... 0.5 160 Poland ....................................................... 0.5 165 Hungary .................................................... 0.3 172 Bulgaria ....................................................-0.7

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GROSS DOMESTIC PRODUCT

THE TRAVEL & TOURISM INDUSTRY IN ROMANIA IS EXPECTED TO PRODUCE DIRECTLY RON6.2 BILLION (US$1.8 BILLION), OR 1.9 PER CENT OF TOTAL GDP, IN 2006.
The broader Travel & Tourism Economy (direct and indirect) is forecast to contribute RON15.5 billion (US$4.5 billion), or 4.8 per cent, to total GDP. The long-term expectations for Travel & Tourism GDP growth are positive, exceeding 6.7 per cent annualized real growth to 2016. Over the same period, Travel & Tourism Economy GDP is forecast to gain a full percentage point to reach a 5.8 per cent share of total GDP, or RON48.4 billion (US$7.9 billion). The Travel & Tourism results and forecasts illustrate the significant and sometimes massive economic stimulus of Travel & Tourism, especially for a developing country. The first set of charts (stacked bar) for Romania illustrates how the tourism industry acts as a leading economic catalyst as its contribution permeates through Romanias Travel & Tourism Economy. For the European Union, there is also significant leverage between both parts of the value added and they tend to move in step. In general, these charts illustrate how small yet positive changes in the Travel & Tourism Industry, especially visible in the Romanian charts, result in a much greater impact on the broader Travel & Tourism Economy. In the second set of charts (Cumulative Real Growth), Romanias Travel & Tourism Economy shows a return to positive territory following negative results posted during the early years of economic transition. Also evident is the strongly positive outlook for growth over the next ten years. Overall, this level of growth is much stronger than for the European Union overall, which continues to post positive, but more modest gains. The third set of charts (left) compares WTTC/OEFs estimates for Romania and its neighbouring and competing destinations, showing respective Travel & Tourism Economy GDP as a percentage of total GDP. Ranked in 162nd place among 174 countries well at the bottom of the list Romania is currently among the lower-tier, tourism-intensive countries of the region and the world. However, the second league table extract illustrates how Romanias prospects for GDP growth are also better than for most of its neighbours and competitors within the regional and world ranking in third and 12th position respectively

ROMANIA Travel & Tourism GDP (2000 Constant US$ mn)

EUROPEAN UNION Travel & Tourism GDP (2000 Constant US$ bn)

ROMANIA Travel & Tourism Economy GDP (Cumulative Real Growth, %)

EUROPEAN UNION Travel & Tourism Economy GDP (Cumulative Real Growth, %)

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Economy GDP (2005, % of Total GDP)
30 43 44 48 52 62 69 99 101 162 Croatia .......................................................20.1 Bulgaria .....................................................16.0 Montenegro ............................................15.7 Greece .......................................................15.1 Slovenia.....................................................14.6 Czech Republic .......................................13.6 Bosnia and Herzegovina .....................11.8 Poland.......................................................... 9.1 Hungary ...................................................... 9.0 Romania ...................................................... 4.8 2 3 12 20 43 53 90 106 108 127

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Economy GDP (10-Year Real Growth, Annualized, %)
Croatia ......................................................... 8.3 Montenegro .............................................. 8.0 Romania ...................................................... 6.7 Bosnia and Herzegovina ....................... 6.2 Czech Republic ......................................... 5.2 Hungary ...................................................... 4.9 Poland.......................................................... 4.3 Slovenia....................................................... 4.1 Bulgaria ....................................................... 3.9 Greece ......................................................... 3.7

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CAPITAL INVESTMENT
IN 2006, TRAVEL & TOURISM CAPITAL INVESTMENT IN ROMANIA IS EXPECTED TO TOTAL RON5.3 BILLION (US$1.5 BILLION), OR 7.2 PER CENT OF TOTAL INVESTMENT.
The largest component of capital investment originates from the private sector in new plant and equipment, while the public sector invests in new Travel & Tourism infrastructure. This represents the continuation of significant capital investment growth in the Romanian Travel & Tourism economy since the early-1990s. Over the next ten years (2007-16), the contribution of Travel & Tourism to Romanias capital investment account is expected to increase at an average rate of 6.2 per cent per annum in real terms. Examination of Travel & Tourism Capital Investment results and forecasts lends greater insight into the market forces at work in a given economy and the expectations by the public and private sectors to meet the challenges and opportunities in the years ahead. For the most part, Travel & Tourism Capital Investment tends to be cyclical, with strong links to major public policy initiatives, the business / market cycle, major events (such as natural disasters) and significant socio-political changes. Worldwide, Travel & Tourism Capital Investment is expected to generate 9.3 per cent of total investment in 2006. The expectation for global growth from 2007-16 is 4.6 per cent per year (in constant US dollars). In the European Union, the respective figures are 8.6 per cent of total capital investment in 2006 and 4.2 per cent real growth over the coming decade. The charts to the right illustrate several interesting points. First, Romanias Travel & Tourism Capital Investment is expected to show steady significant growth as its economic transition continues. Second, when compared with neighbouring and competing countries, Romanias ranking is still modest as it is in the broader listing of 174 countries in investment percentage terms for 2006. With Travel & Tourism estimated at 7.2 per cent of total investment, Romania ranks 138th in the world listing, behind Bosnia and Herzegovina (133rd place). However, Romanias Travel & Tourism Capital Investment growth prospects for 2007-16 place it at the upper tier of the WTTC league tables in third position in the regional and 21st position in the world listings. This ranking sends a positive message to Travel & Tourism operators at home and abroad that Romania is well positioned and absolutely expects to attract significant new business ventures over the coming decade.

ROMANIA Travel & Tourism Capital Investment (2000 Constant US$ mn)

EUROPEAN UNION Travel & Tourism Capital Investment (2000 Constant US$ bn)

ROMANIA Travel & Tourism Capital Investment (Cumulative Real Growth, %)

EUROPEAN UNION Travel & Tourism Capital Investment (Cumulative Real Growth, %)

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Capital Investment (2006, % of Total)
56 62 70 81 96 99 120 130 133 138 Bulgaria .....................................................14.2 Montenegro ............................................13.4 Greece .......................................................12.6 Czech Republic .......................................11.9 Slovenia.....................................................10.4 Croatia .......................................................10.1 Poland.......................................................... 8.4 Hungary ...................................................... 7.7 Bosnia and Herzegovina ....................... 7.4 Romania ...................................................... 7.2 8 17 21 25 43 59 64 65 79 102

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Capital Investment (10-Year Real Growth, Annualized, %)
Montenegro .............................................. 7.5 Czech Republic ......................................... 6.5 Romania ...................................................... 6.2 Hungary ...................................................... 6.1 Greece ......................................................... 5.4 Bosnia and Herzegovina ....................... 4.7 Poland.......................................................... 4.6 Slovenia....................................................... 4.6 Croatia ......................................................... 4.2 Bulgaria ....................................................... 3.7

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PERSONAL & BUSINESS

IN 2006, ROMANIA IS EXPECTED TO GENERATE RON10.4 BILLION (US$3.0 BILLION) OF PERSONAL TRAVEL & TOURISM CONSUMPTION BY RESIDENTS, OR 3.9 PER CENT OF TOTAL PERSONAL CONSUMPTION.
In Romania, business travel in 2006 is expected to total RON1.5 billion, or US$445 million (88 per cent corporate, 12 per cent government). Unlike visitor exports, which depend on international markets for consumers, the business generated in these two categories depends on Romanias economy itself. As the national economy grows, Romanias consumer and business travel tends to follow suit. In the mid 1990s, Romanias Personal Travel & Tourism enjoyed a rapid period of growth following the change of government. Over the next decade (2007-16), Personal Travel & Tourism in Romania is expected to grow at an annual rate of 7.7 per cent, while Business/Government Travel is forecast to grow by 4.9 per cent a year. Although some of this Travel & Tourism occurs domestically within Romania, a part of it takes place outside the country. When the spending does take place abroad, the satellite account generates a corresponding import credit, providing for an accurate assessment of Travel & Tourism produced in Romania and Travel & Tourism produced by the rest of the world. Analysis of Romanias results highlights a few interesting points. First, Romanias residents have recently been allocating only about 3.9 per cent of their personal expenditures on Travel & Tourism. This percentage is well below the world average of 9.5 per cent and significantly lower than the European Union average of 11.3 per cent. Generally, the level of personal Travel & Tourism spending is directly linked to the development of the resident economy. As per capita income increases, so does Travel & Tourism spending. Romanias gradually improving macroeconomic situation since the mid-1990s has been reflected by the strongly positive trend of Romanian residents spending on Travel & Tourism, as illustrated by the stacked bar and cumulative growth charts on the left. Nevertheless, even discounting the mid 1990s turnaround, the cumulative growth charts for Romania and the European Union illustrate the strong future growth outlook for Romania well above that for European Union Travel & Tourism spending. If, as expected, the economy continues to show positive growth, Romanias residents spending on personal and business Travel & Tourism is also likely to accelerate. Finally, the league table extracts also suggest that, while Romania ranks in the lower tier of countries (148th position in the ranking) in terms of current Travel & Tourism spending on a relative basis, it ranks much more favourably in the worldwide listing (6th) in respect of future forecast growth of personal Travel & Tourism. This suggests there is significant opportunity for generating and producing Travel & Tourism services in Romania for Romanians in the years to come.

ROMANIA Personal & Business Travel & Tourism (2000 Constant US$ mn)

EUROPEAN UNION Personal & Business Travel & Tourism (2000 Constant US$ bn)

ROMANIA Personal Travel & Tourism (Cumulative Real Growth, %)

EUROPEAN UNION Personal Travel & Tourism (Cumulative Real Growth,%)

WTTC LEAGUE TABLE EXTRACT Personal Travel & Tourism (2006, % of Total Personal Consumption)
26 54 62 72 74 75 91 93 146 148 Croatia .......................................................12.0 Greece ......................................................... 9.2 Slovenia....................................................... 8.5 Hungary ...................................................... 7.7 Bulgaria ....................................................... 7.5 Czech Republic ......................................... 7.5 Poland.......................................................... 6.1 Montenegro .............................................. 6.0 Bosnia and Herzegovina ....................... 4.0 Romania ...................................................... 3.9 6 11 20 42 54 62 63 106 130 143

WTTC LEAGUE TABLE EXTRACT Personal Travel & Tourism (10-Year Real Growth, Annualized, %)
Romania ...................................................... 7.7 Croatia ......................................................... 7.1 Montenegro .............................................. 6.4 Czech Republic ......................................... 5.7 Hungary ...................................................... 5.5 Poland.......................................................... 5.3 Bulgaria ....................................................... 5.3 Slovenia....................................................... 4.5 Bosnia and Herzegovina ....................... 3.9 Greece ......................................................... 3.5

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EXPORTS
TRAVEL & TOURISM EXPORTS PLAY A STRONG AND VITAL ROLE IN ROMANIAS TRAVEL & TOURISM BUSINESS.
In 2006, Travel & Tourism Services and Merchandise Exports for Romania are expected to total RON6.4 billion, or US$1.9 billion 49 per cent from visitors and 51 per cent from exported consumer and capital goods representing some 26 per cent of total Travel & Tourism Demand. Without question, as this category grows, it will enhance the health and vitality of Romanias Travel & Tourism sector. Over the past 15 years, Travel & Tourism Visitor Exports in Romania has been on a roller coaster ride with significant gains in the early 90s tempered by significant loses in the late 90s and new gains in recent years. Over the next ten years, Romanias Visitor Exports are expected to grow by a strong 8.5 per cent per annum, while Travel & Tourism Merchandise Exports (non-visitor exports) are forecast to record even stronger growth of 12.4 per cent per annum. Globally, and for the European Union, Visitor Exports are projected to grow by 4.9 and 4.3 per cent per annum respectively over the next ten years (2007-2016). Clearly, based on these forecasts, Romanias Travel & Tourism Visitor Exports growth is excellent and well ahead of its regional and global peers. Although long-term expectations for Romanias Travel & Tourism export growth (2007-2017) are positive, these forecasts like any others depend on future events and can therefore not be guaranteed. Hurricane Katrina in 2005, for example, which had a major negative impact on tourism in the Gulf Coast of the USA, is a perfect illustration of the uncertainty inherent in forecasting. Examination of the WTTC league tables reveals that Romania is lower on the scale of current Visitor Exports measured as a percentage of total exports. In the second league table, Romanias Visitor Exports growth illustrates the positive outlook ahead, since it ranks in 4th position globally. This ranking sends a strong message that there is a need for the public and private sectors to pay significant attention to maintaining international visitor growth at these high levels.

ROMANIA Travel & Tourism Capital Investment (2000 Constant US$ mn)

EUROPEAN UNION Travel & Tourism Exports (2000 Constant US$ bn)

ROMANIA Travel & Tourism Exports (Cumulative Real Growth, %)

EUROPEAN UNION Travel & Tourism Exports (Cumulative Real Growth, %)

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Visitor Exports (2006, % of Total Exports)
22 25 30 57 61 91 99 109 113 150 Montenegro ............................................37.6 Greece .......................................................35.1 Croatia .......................................................32.0 Bulgaria .....................................................17.8 Bosnia and Herzegovina .....................17.3 Slovenia....................................................... 8.5 Poland.......................................................... 7.2 Czech Republic ......................................... 6.0 Hungary ...................................................... 5.7 Romania ...................................................... 2.5 2 4 6 13 64 134 148 158 163 165

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Exports (10-Year Real Growth, Annualized, %)
Montenegro ............................................12.6 Romania ...................................................... 8.5 Croatia ......................................................... 8.1 Bosnia and Herzegovina ....................... 7.6 Hungary ...................................................... 5.6 Czech Republic ......................................... 4.5 Poland.......................................................... 4.2 Bulgaria ....................................................... 3.9 Slovenia....................................................... 3.8 Greece ......................................................... 3.6

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GOVERNMENT
IN 2006, GOVERNMENT AGENCIES IN ROMANIA ARE EXPECTED TO SPEND RON913 MILLION (US$263 MILLION) OF CURRENT OPERATING FUNDS ON TRAVEL & TOURISM.
This represents 4.3 per cent of total government expenditures, which are allocated to providing individual and collective government Travel & Tourism services to visitors, travel companies and the community at large. Over the next ten years (2007-16), Travel & Tourism Government Expenditures in Romania are expected to increase by an average of 1.7 per cent per year in real terms. Globally, governments are forecast to allocate an average of 3.8 per cent of their expenditures to Travel & Tourism-related functions, and to increase this spending by 2.6 per cent per annum over the next ten years. The corresponding figures for the European Union are 3.2 per cent of total government spending and 1.7 per cent real growth for the coming decade. Based on these results, Romanias 2006 government contribution of 4.3 per cent is currently above the level of its regional competitors and global average in terms of Travel & Tourism support and services. In this WTTC report, 2006 government expenditures include individual expenditures of RON148 million (US$43 million) that can be linked to individual visitors, such as immigration services. But they also include collective expenditures of RON765 million (US$220 million) that are undertaken for the community at large such as on airport administration but which have a logical service connection to Travel & Tourism. One would naturally assume there should be a direct link between the impact of an industry / sector like Travel & Tourism on the economy (in terms of GDP) and the amount of funding allocated by governments towards that industry/sector. In Romania, the 2006 ratio of Travel & Tourism GDP (percentage of total GDP) to government expenditures is 1.1:1.0. Worldwide, and in the European Union, this ratio is 2.7:1.0 and 3.4:1.0 respectively. This would suggest that Romania is significantly better than the world average and the European Union results indicating that Romania government authorities generally are currently giving significantly more back to Travel & Tourism than governments in the rest of the world. The league tables opposite reinforces this particular point. First, Romanias government expenditures for Travel & Tourism are at the top of the regional listing, ranking the country 68th out of 174 worldwide. However, disappointing is the outlook for growth. In this measure Romania ranks 157th worldwide.

ROMANIA Travel & Tourism Govt Expenditures (2000 Constant US$ mn)

EUROPEAN UNION Travel & Tourism Govt Expenditures (2000 Constant US$ mn)

ROMANIA Travel & Tourism Govt Expenditures (Cumulative Real Growth, %)

EUROPEAN UNION Travel & Tourism Govt Expenditures (Cumulative Real Growth, %)

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Govt Expenditures (2006, % of Total Govt Expenditures)
56 68 69 79 86 91 96 114 153 165 Hungary ...................................................... 5.2 Romania ...................................................... 4.3 Slovenia....................................................... 4.2 Greece ......................................................... 3.8 Czech Republic ......................................... 3.6 Montenegro .............................................. 3.4 Bulgaria ....................................................... 3.2 Poland.......................................................... 2.7 Croatia ......................................................... 1.5 Bosnia and Herzegovina ....................... 1.1 53 62 94 98 121 142 153 157 166 174

WTTC LEAGUE TABLE EXTRACT Travel & Tourism Govt Expenditures (10-Year Real Growth, Annualized, %)
Montenegro .............................................. 4.3 Bosnia and Herzegovina ....................... 4.2 Slovenia....................................................... 3.3 Bulgaria ....................................................... 3.3 Czech Republic ......................................... 2.8 Hungary ...................................................... 2.2 Croatia ......................................................... 1.9 Romania ...................................................... 1.7 Poland.......................................................... 1.3 Greece ........................................................-0.9

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THE POLICY FRAMEWORK

POLICY RECOMMENDATIONS AFTER TWO DECADES OF DECLINING VISITOR NUMBERS AND UNDERINVESTMENT IN DEVELOPMENT AND MODERNIZATION, ROMANIAS TRAVEL & TOURISM INDUSTRY IS SLOWLY REGAINING PROFILE AND PACE. PRIVATIZATION OF STATE ACCOMMODATION SINCE THE REVOLUTION IN 1989, COUPLED WITH NATIONALS RETURNING WITH SKILLS AND MONEY, AS WELL AS INVESTMENT BY THE MINISTRY OF TRANSPORT, CONSTRUCTION AND TOURISM, AUGUR WELL FOR A NEW DIRECTION IN TRAVEL & TOURISM IN ROMANIA.
As Romania heads towards membership of the European Union and consolidates infrastructure, governance and legal systems, Travel & Tourism will have an increasing role to play particularly in creating sustainable jobs for the countrys huge rural population. And, given its prime central European location and rich cultural and natural diversity, Romania has everything to play for.
However, the challenge for this post-communist country is to fully embrace the commercial world in order to develop a competitive tourism product. Although privatization in tourism is now almost completed, the lack of infrastructure necessary for tourism, combined with a lack of awareness of regional tourism attractions, are main reasons accounting for current low levels of tourist arrivals. Despite healthy economic growth of approximately five per cent per year over the past three years, Romanias population is still one of the poorest in Europe. Travel & Tourism can be a catalyst for improving livelihoods throughout the country and has been identified as such by Romanias leaders as a focal point of the countrys National Development Plan. Nevertheless, while government accepts that Travel & Tourism has a significant role to play in achieving robust economic reforms, it appears to underestimate the full scope of the industry as a catalyst for the development of other areas of economic activity, such as agriculture, manufacturing and financial services. Neither is there a wide appreciation of Travel & Tourisms potential to reduce disparities between urban and rural areas which, in turn, could bring major improvements to Romanians quality of life and well-being. Forecasts by WTTC and its research partner, OEF, are extremely positive, pointing to an average annual growth in Travel & Tourism Demand of 7.9 per cent over the next ten years, ranking Romania fourth in the world in terms of long-term growth. If this growth is realized, the wider Travel & Tourism Economy will contribute 5.8 per cent to Romanias GDP by 2016. Moreover, the potential impact could be even greater if the underlying policy framework is conducive to growth ie if the government makes a commitment to work with other stakeholders to create the underlying conditions for market confidence, dynamism and sustainability.

Looking ahead, Romania is in a prime position to develop a sustainable and successful tourism model. The countrys planned accession to the EU in 2007 will be a major boost to its Travel & Tourism industry and the time is now right to seize this opportunity for economic growth and job creation. It is clear, however, that several challenges lie ahead, and these must be addressed to secure the long-term sustainable development of Travel & Tourism in Romania, which will ensure maximum benefits for all stakeholders and at all levels of the economy. While the private sector can, and must, play an increasingly important role to develop quality products and competitive services geared towards rapidly changing demand, the government needs to show leadership by stimulating and facilitating investment, streamlining and clarifying regulations, and developing much needed infrastructure and human capital. Against this background, WTTC recommends that the Government of Romania: Highlight and communicate the strategic importance of tourism Plan for the future Ensure that quality statistics and information feed into policy and decision-making processes Empower national Travel & Tourism institutions to drive forward development of the industry Co-ordinate infrastructure development which supports Travel & Tourism Create a competitive business environment that encourages investment Balance economics with environment, people and cultures Develop the human capital required for Travel & Tourism growth Promote product diversification that spreads demand Bring new funding and co-ordination into promotion and marketing Favour technological advancement 31

HIGHLIGHT AND COMMUNICATE THE STRATEGIC IMPORTANCE OF TOURISM

are disseminated to all regions of Romania and are communicated to local authorities and stakeholders throughout the country.

Recognize Travel & Tourisms economic importance

Travel & Tourism has the potential to become an important export sector in Romania and to provide jobs and economic growth for the countrys vast rural population. It possesses the inherent ability to diversify Romanias economy, to stimulate entrepreneurship particularly among small and medium-sized enterprises (SMEs) catalyze investment, create large numbers of sustainable jobs, and help social development in local communities. Although Travel & Tourism was identified as a national priority by the President in the mid-1990s, there is still a widespread lack of awareness of the industrys economic value and potential within all levels of government and the population at large. In the current climate of preparation for EU accession, where focus is on issues such as the judicial system, infrastructure and the environment, Travel & Tourism is not a priority. However these policy areas have a significant impact on tourism and, indeed, tourism could be a catalyst for change and improvement in this regard. It is therefore vital that Travel & Tourism is integrated into future development plans and EU accession programmes. In general both government authorities and the private sector are open to developing tourism, but there is a need for deeper understanding of the industry, how it works, and what it needs in order to be successful.

Bring Travel & Tourism players together

There are already a large number of Travel & Tourism operators in Romania, from hotel and restaurant owners to tour operators and other service providers. Yet focus group discussions organized by WTTC highlighted that there is at present a certain reluctance among the different sectors of the industry to work together to overcome traditional competitive barriers. The government should also consider convening a National Tourism Congress, which would bring domestic and foreign stakeholders together to discuss Travel & Tourism challenges and opportunities. This would be an effective way of promoting the importance of the industry to public and private stakeholders.

European Capital of Culture

The regional town of Sibiu is set to be European Capital of Culture in 2007 and major renovations and infrastructure developments are already underway in order to facilitate this. It is a huge opportunity to put Romania on the European tourism map, not only in the eyes of potential foreign visitors but also among Romanians themselves.

Factor Travel & Tourism into mainstream policies

Travel & Tourism should be factored into mainstream policies for employment, trade, investment, education, culture and environmental protection. The strategic importance of Travel & Tourism should be communicated to all levels of government, industry and local communities. All government departments affected by, or impacting on, Travel & Tourism development should be closely involved in drawing up tourism policies and in planning and co-ordinating individual programmes.

PLAN FOR THE FUTURE

No consistent strategy for tourism in the past

Long-term tourism planning at both national and regional levels is a prerequisite for generating investor confidence and organizing the successful and sustainable development of Travel & Tourism in Romania. Structural reorganization over the past ten years, particularly in the Ministry of Transport, Construction and Tourism and National Tourism Authority, has meant that, until now, there has been no published strategic plan or policy for tourism development in Romania. WTTC commends the present administration for its commitment to drawing up such a plan as a matter of urgency and recommends an in-depth policy Master Plan, based on well defined broad strategy objectives, that incorporate the following basic elements:

An industrial image campaign

The government should undertake an image campaign to ensure that all public and private stakeholders recognize Travel & Tourisms full impact across the national economy not just on eating and drinking places and retail business, but also on construction, real estate and other sectors of the economy. Even more importantly, stakeholders should be made aware of its untapped potential and of the spin-off benefits of tourism that filter down through all levels of the community.

Clearly defined goals, objectives and responsibilities Decisions based on quantitative input Indications of best practice in tourism development Measures to support existing industry, as well as for the promotion of new developments An articulated strategy for product development and

Travel & Tourism as a vehicle for rural development

Rural tourism is mentioned as one of five focal points set out in the National Development Plan. There is already considerable work being done at ground level to kickstart tourism in rural areas through international development agencies and the focus is, quite rightly, on ensuring competitiveness and standards. It is in this area that Romania has the most to gain from Travel & Tourism and the government should ensure that all communications regarding the importance of the industry

diversification A long-term strategy for tourism marketing and promotion in line with the policys long-term goals and objectives; and Clear branding that reinforces the basic vision for Romanias Travel & Tourism development

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Implementation is important
Once a coherent plan is in place it is vital that there is commitment from all stakeholders, and particularly government authorities, to implement that plan over the given time-frame. The Master Plan, or at least the broad strategy objectives, should be adopted as an Act of Parliament to ensure their long-term implementation regardless of the government in power.

A culture of statistics

ENSURE THAT QUALITY STATISTICS AND INFORMATION FEED INTO POLICY AND DECISION-MAKING PROCESSES

High quality research and data is crucial to identify the specific needs and directions of tourism development in Romania. A culture of statistics, coordinated by the National Institute of Statistics in consultation with the National Tourism Authority, should be encouraged throughout the industry and comprehensive statistics compiled for all aspects of Travel & Tourism. The National Institute for Research and Development in Tourism (INCDT) should be supported in the collection and analysis of tourism statistics. In particular, there is a need for comprehensive statistics regarding international tourism spending and tourists purpose of visit. The latter is important as at present there is a large gap between the number of arrivals and the number of tourists who stay in registered accommodation, pointing to an important VFR market which is as yet not quantified. Finally, significant improvements must be made to the Domestic Residents Tourism Survey as, although domestic tourism is an important slice of the countrys Travel & Tourism, this is not being fully captured. Once compiled, data must be linked to desired objectives. Clear targets and a statistical basis will lend legitimacy and applicability to a Master Plan and allow for careful monitoring of the implementation of such a plan.

Private sector input in planning and implementation

In order to ensure greater support and commitment from all stakeholders, the government should also initiate a more cohesive and co-operative approach to longer-term tourism planning and development, involving all levels of government, the private sector and local communities. The recent seminar, organized by the National Tourism Authority (NTA) and CHF International, which brought together public and private stakeholders from all over the country, provided a valuable discussion forum and the outputs should be reviewed carefully as a plan is constructed. This is a format which could and should be replicated as the planning process moves forward. On a longer-term basis, there is a need for the private sector to come together and organize itself into a coherent group, or council, which can provide direct private sector input into mission-critical policy and decision-making by the public sector with regard to Travel & Tourism. WTTC understands that steps are already in place to form such a group and this should be supported and encouraged by the NTA.

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Sharing information can increase competitiveness

In focus group discussions it became clear that there is a certain amount of reluctance by some tourism operators in Romania to provide transparent and quality statistics. The National Tourism Authority needs to work with such operators to build up trust and confidence and the understanding that the provision of such data is vital to the successful future of the countrys tourism businesses. In more general terms there is a need throughout the country for a new approach to using statistical research when it comes to business development, and the government should prioritize an initiative to rectify this. Romania is entering a highly competitive tourism market and a thorough understanding of the countrys tourism dynamics is absolutely invaluable to determining how to increase its competitiveness on a European and global scale.

example regionally is that of Turkey, which has seen a consistent strategy over recent years despite political changes.

Clear priorities
The National Tourism Authority should work to clearly defined priorities as agreed with the Ministry of Transport, Construction and Tourism and other ministries, as well as private sector players to ensure that development happens in a co-ordinated and coherent way and is integrated with wider government policy objectives and decisions. At this stage, priorities clearly lie in the construction of a Master Plan, defining a clear brand Romania and determining the focus for Romanias product development.

Appropriate budget allocation

The Ministry of Transportation, Construction and Tourism should work closely with the Ministry of Public Finances to ensure that the budget is allocated to the National Tourism Authority truly reflects the industrys economic importance. The current total budget allocation for the NTA (including salaries, marketing, promotion, product development, international offices) is a mere US$10 million, and Bucharest is one of the only capital cities in Europe which does not have its own visitor bureau.

Implement TSA on a yearly basis

Travel & Tourism needs to be effectively measured in order to understand its full impact throughout the economy. As a new industry, Travel & Tourism is not discretely identified in charts of national accounts its component parts are scattered throughout the accounts. Public sector analysis and related policies tend to overlook, or understate, the impact of the industry, or deal with its smaller individual components. The technique of satellite accounting is designed to measure the new service sectors, and this Tourism Satellite Account (TSA) developed by WTTC and OEF for Romania should prove to be a significant tool for planning and policy development. WTTC urges the Government of Romania, and the NTA, to update this TSA on an annual basis to ensure that adequate data is available to factor Travel & Tourism into economic and employment strategies.

Road network

CO-ORDINATE INFRASTRUCTURE DEVELOPMENT WHICH SUPPORTS TRAVEL & TOURISM

The vast majority of Romanias foreign visitors arrive by road. Road is also the main means of transport for domestic visitors. Throughout the focus group discussions, the bad state of road infrastructure was cited as a major constraint to tourism development. Nevertheless, there is a

A cabinet position for tourism

EMPOWER NATIONAL TRAVEL & TOURISM INSTITUTIONS TO DRIVE FORWARD DEVELOPMENT OF THE INDUSTRY

general understanding of what is needed, not only for tourism but for the countrys general economic development, and considerable EU structural funds have been allocated to the upgrading of Romanias highways some 1.26 billion within the period 2007 to 2013. Furthermore, as far as tourism is concerned, the main arterial routes to the Black Sea in the East and to towns such as Braov, Sighioara and Sibiu to the north of Bucharest, are adequate and, although investment is desperately needed, should not be used as an excuse for delaying the development of other tourism infrastructure in the regions.

Travel & Tourism is affected by, and affects, policy decisions made across the whole political and economic spectrum. Strong tourism institutions, with clearly defined mandates, are therefore vital for a coordinated and sustainable development of the industry. Currently tourism falls under the remit of the Ministry of Transportation, Construction and Tourism, with the President of the National Tourism Authority reporting directly to the Minister.

Liberalized approach to aviation

Tarom Romanian Air Transport is the national carrier and mainly scheduled airlines fly into Romania. Although experience from neighbouring contries shows that a more liberalized approach to aviation is beneficial to both tourism and the national economy after Sky Europe introduced services to Budapest in 2003, there was a 25 per cent increase in tourist numbers the Romanian Government has not opted for an open-skies policy. WTTC maintains that any form of protectionism is not in the longer-term tourism interests of the country, and that the government

Consistency
Over the past years, Romanias Travel & Tourism institutions have suffered from a high turnover of officials resulting in inconsistent approaches to tourism development and planning. Continuity at the administrative, if not political, level is vital if plans are to be realized and the countrys industry is to move forward in a sustainable and well-defined way. A good

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should open its air transport market. As tourism demand grows, an expansion of liberal aviation accords will attract an increased number of scheduled flights and charter activity from Romanias main markets, while low-cost carriers (LCCs) can help generate new markets from within Europe. Several international LCCs have already expressed interest in Romania and have begun licensing procedures to allow them to operate as soon as the government takes the necessary action. Accession to the EU will require Romania to conform to European aviation open-skies policies and WTTC recommends that this process be started as soon as possible to ensure that related infrastructure is in place to accommodate increased arrivals.

development. There have been recent moves in this direction, as the commitment of 76 million from the EU to upgrade a stretch of railway on the BucharestConstanta line shows. As further investments are made, the needs of the Travel & Tourism industry should be taken into account, since use of the facilities by international visitors could not only boost usage and income but also see the railways become a tourism product in themselves and spur further investment.

Rail transport
Finally, government and industry must ensure that high standards are maintained by actively supporting and promoting those employees who have worked hard to gain certification. Awareness of such programmes must be promoted within the industry, to tourists and to the general public so that their value, and that of Travel & Tourism in general, is maintained.

Airports
There are currently four international airports in Romania, with the majority of international flights using Henry Coanda Bucharest airport. Considerable investment is needed to ensure that these airports are able to cope with more visitors. Upgrading of Sibiu Airport is already underway, which will provide an important access point to Transylvania, without tourists having to travel via Bucharest, and WTTC recommends that other regional airports are upgraded in a similar way.

Accommodation
There are already some 4,000 accommodation facilities throughout Romania, from five-star hotels in Bucharest, to mid-range resorts on the Black Sea coast and ski resorts in the Carpathian mountains, to small bed & breakfasts in outlying towns and villages. However, the absence of any national quality standards affects Romanias overall provision of a quality tourism product. WTTC understands that the National Association of Rural, Ecological and Cultural Tourism (ANTREC) is already adopting EU norms for its accommodation members and encourages the NTA to enter into a dialogue with them to make this a national system. Standards should be voluntary but supported by adequate consumer protection, 35

Compensation in line with other sectors

Romanias rail infrastructure has traditionally been of a high standard although recent underinvestment has seen use of the countrys railways fall dramatically. However, a revival of the railways would alleviate the increasing pressure on road infrastructure, itself a constraint to tourism

hygiene, sanitation, safety and environmental laws. Furthermore, in certain areas, particularly Bucharest, there is a shortage of hotel rooms which results in high prices compared to other regional centres such as Budapest and Prague and in turn has a negative effect on competitiveness. Overall, there is a need to build more mid-market (two- and three-star) facilities in the capital and throughout the regions to accommodate and encourage more visitors. The NTA should collaborate with industry associations, such as the Bed & Breakfast Association, ANTREC and regional accommodation associations, to audit the number of accommodation facilities throughout the country and ascertain where, and at what level, the needs lie. This should be followed by the introduction of a national grading system to maintain quality standards and help boost Romanias standing as an international tourism destination.

recommends a one-stop shop for tourism investments, where interested parties can receive information and advice on bureaucratic processes and complete legal requirements without having to visit a number of government departments.

Drive financial sector reforms to encourage investment

Another constraint to Romanias attractiveness to investors is inadequate facilities in the banking and financial sector. Charges, especially with regard to credit cards, are extremely high and prevent smaller operators from offering the facility to their clients. Given the international nature of the Travel & Tourism industry, a banking system which is on a par with those from visitors home countries is vital to ensure that maximum income is achieved. Furthermore, systems of credit history have yet to be established which means that banks are reluctant to give loans to SMEs, a situation which is hampering small-scale investment and development in the tourism industry. WTTC urges the Government of Romania to push forward with financial sector reforms, which will boost not only Travel & Tourism but the whole of the countrys economy.

A constraint to Romanias attractiveness to investors is inadequate facilities in the banking and financial sector. Charges, especially with regard to credit cards, are extremely high and prevent smaller operators from offering the facility to their clients.

Intelligent taxation
Transaction (indirect) taxes are relatively high in Romania. There is no doubt that such taxes have a negative impact on performance, not to mention Romanias image with foreign tour operators. Care must be taken to ensure that the level of VAT is not perceived as excessive, as this could have a long-term, negative impact on demand. The current level of VAT at 9 per cent for hotels and bed & breakfast accommodation is below average for the region and WTTC supports the efforts of the current NTA administration to have incoming tourism reclassed as an export sector and to reinstate a rate of zero per cent VAT, as was the case in the mid-1990s. However, operators on the Black Sea coast pay up to 29 different taxes. While Travel & Tourism should pay its fair share of taxes, the growth and prosperity of the industry including the investment necessary to generate these future revenue flows will depend in no small part on the competitiveness of Romanias Travel & Tourism. This will also depend on whether it receives equitable treatment relative to other industries and to competing destinations. There is an increasing tendency worldwide for governments to target Travel & Tourism as a revenue generator to meet short-term budget objectives, with little thought to the longer-term consequences on demand and job creation. WTTC urges the Government of Romania to ensure fiscal regimes that encourage tourism growth, exports, investment, infrastructure, business innovation and job creation. The User Pays User Benefits principle should be given priority, with funding collected earmarked for Travel & Tourism infrastructure and promotion. Furthermore, it is vital that taxes applied are equitable and, where possible, hypothecated. It is important that the authorities in Romania recall the WTTC Principles of Intelligent Taxation which recommend equity, efficiency, simplicity, fair revenue generation and effective stimulus to growth - and refer to these principles when they consider new taxes or adjustments to existing tax structures.

CREATE A COMPETITIVE BUSINESS ENVIRONMENT THAT ENCOURAGES INVESTMENT

Romania enjoys a strategic location between Europe, the Middle East and Asia which makes it attractive to foreign investors. The countrys economy is combining steadily increasing levels of GDP and significantly higher levels of foreign direct investment (FDI) than its near neighbours. In 2004 Romania received 3.5 billion in FDI, compared to 2.5 in Hungary, 1.5 billion in Bulgaria and 0.5 billion in Slovakia. Successive governments have worked closely with international finance institutions to produce a country with more respectable macro indicators, and inflation approaching three digits the legacy of the first ten years without communism is now under control. According to figures published in February 2005 by the National Trade Register Office of the Romanian Ministry of Justice, tourism companies represent 4.8 per cent of Romanian companies with foreign direct investment, and 1.7 per cent of foreign currency invested capital goes to tourism. WTTC/OEF estimates show that capital investment in Travel & Tourism related industries is healthy and set to total more than RON5.3 billion (US$1.5 billion) in 2006, some 7.2 per cent of total investment.

Break down bureaucracy

While there are certain investment incentives for foreign companies, for example no customs fee for equipment and a land tax reduction for investments of over US$1 million, bureaucracy within government departments puts a considerable strain on overseas investment. WTTC 36

WTTC Principles of Intelligent Taxation

A study of Travel & Tourism taxation policy by the London School of Economics for WTTC recommended five principles that public policy-makers should use to guide their review of tax policy proposals and legislation. Equity All economic sectors should be treated fairly with regard to taxation. Even-handed treatment of all sectors reduces imbalances that can result in political, social and economic difficulties. Efficiency Taxes must generate revenue without a significant impact on the demand for a good or service (unless the tax is designed to modify behaviour). At a certain threshold, the benefits of a tax become less significant than the costs of reduced demand. The decrease in demand sends a debilitating wave throughout the economy as linked suppliers are affected. This negative cycle swells because of the subsequent loss of tax revenue in many sectors. Simplicity Complicated taxation schemes eat up revenues through administrative costs. These costs include both those borne by government in the process of collecting and enforcing taxes, and those borne by taxpayers. An objective of good tax policy is to achieve the highest possible ratio of revenues generated per dollar invested in collecting the tax. Special note should be made to incorporate taxpayers costs of compliance in calculating this ratio. Simplicity in taxing also dictates that it is clear what the tax rates are, and what the revenues are intended to be used for. Fair revenue generation Fair revenue generation arises from the concept of equity. In the even-handed capturing of tax revenue, it is unreasonable to assess special fees or levies on specific goods or services. These taxes are often cloaked by language and terminology to hide their real intent. Special charges and fees may appear, on face value, to be modest. They aggregate, however, to become a cumulative and often unreasonable burden to a sector. Effective stimulus to growth Tax incentives and disincentives should be imposed with the underlying goal of stimulating growth. Taxes that support infrastructure will ideally result in the attraction of investment and subsequent employment. When taxes become excessive, economic growth often grinds to a halt. Many taxes on Travel & Tourism violate some or all of these Intelligent Tax Principles. The practical reality of these principles provides that taxes can be imposed to generate revenue, increase competitiveness, or change consumptive behaviour. If taxes follow the criteria above, they will result in both increased revenues for governments and strong competitive economies.

Environmental protection is paramount

BALANCE ECONOMICS WITH ENVIRONMENT, PEOPLE AND CULTURES

The environmental legacy of the Communist era is one of pollution, degradation and lack of awareness. Raising standards of environmental cleanliness and protection is central to Romanias accession to the European Union. Pockets of intense air and water pollution, caused by industrial emissions and dumping, are widespread throughout the country. At the level of individual citizens, there is also very low awareness of environmental issues. Romanias tourism product relies very heavily on the natural environment and it is imperative that measures are taken to clean and safeguard the environment, not only for the good of Travel & Tourism, but for the sustainable future of the country. That said, as Romania moves towards EU membership, a number of measures have already been taken and Romania ratified the Kyoto Protocol in 2001. All tourism development plans need to be integrated into environmental management systems and vice-versa. A legal framework for environmental protection is already in place in Romania and all Travel & Tourism stakeholders, including government authorities, should support and encourage its enforcement. Although, in the short-term, adhering to strict environmental regulations, particularly those imposed by the EU, may affect competitiveness in the countrys tourism industry, for the long-term sustainability of the industry it is absolutely vital. In order to achieve this, government authorities and industry associations must provide support and information to those involved in Travel & Tourism so that there is a better understanding, not of only the legalities of protecting the environment, but also of the importance to their businesses of well looked after natural surroundings.

Measures already taken by Romanian authorities to improve the state of the environment
Transition periods for the emission of volatile organic components have been established Harmonization of the legislation concerning waste management, waste transport and waste disposal and restriction of the use of some dangerous substances for electric and electronic equipment Harmonization of the large part of legislation concerning water quality, including urban used-water disposal and the spilling of dangerous substances into the water environment Harmonization of the legislation concerning the protection of the nature except some requirements of the Directive Birds Harmonization of the legislation concerning the genetic altered organisms Harmonization of the legislation concerning noise except for openair equipment Partial harmonization of the legislation concerning the monitoring of the conveyance for radioactive refuses Preparations for the network NATURA 2000 have been started 52 incinerators have been shut down

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Cultural heritage
Romania has a unique and diverse cultural heritage which differentiates it from surrounding countries. Spread throughout the country, this heritage provides the opportunity for tourism to benefit even the remotest areas of Romania. Preservation of cultural heritage is therefore vital. There are already seven World Heritage Sites in Romania, including the Danube Delta, the churches of Moldavia, the Monastery of Horezu, villages with fortified churches in Transylvania, the Dacian Fortresses of the Orastie Mountains, the Historic Centre of Sighioara and the wooden churches of Maramure. However the vast majority of Romanias cultural gems, including spas, monasteries and castles, are ripe for preservation and renovation. Travel & Tourism is one of the few ways if not the only way in which heritage preservation can be carried out so as to produce financial returns. The government should prioritize the development of cultural tourism as a way of preserving the countrys rich heritage, particularly as traditions become threatened by EU regulations. The Mihai Eminescu Trust as well as many others have already made significant headway in the restoration of heritage sites and should be commended, however there is still a need for monitoring of any restoration projects to ensure that high standards are maintained.

linkages between Travel & Tourism and the rest of the economy. Such a focused approach could include:

promoting public awareness of the potential linkages between Travel & Tourism and other sectors such as agriculture and manufacturing

educating those in other sector of the needs of Travel & Tourism so that high quality products can be sourced locally by the industry encouraging the use of traditional skills and products in the development of the industry

DEVELOP THE HUMAN CAPITAL REQUIRED FOR TRAVEL & TOURISM GROWTH
In 2006, Travel & Tourism in Romania will account for some 485,000 jobs around 265,000 jobs directly within the industry and a further 220,000 jobs in sectors linked to Travel & Tourism, such as real estate, construction and retail. Travel & Tourism has the potential to create jobs at all levels of society and the economy from bar staff and chamber maids in hotels, to guides and taxi drivers, to top level management in tourism enterprises. It is a labour-intensive, quality-driven service profession which depends crucially on the skills level and professionalism of the workforce to make the sector productive and competitive. However, as is the case in many countries across the globe, Travel & Tourism in Romania is seen as a last resort when it comes to career choice. This is not surprising as levels of compensation in the sector are the lowest in the country. The average wage of a hotel or restaurant employee in 2004 was 3,626 million lei, compared to 4,450 million lei in agriculture and 8,000 lei million for public sector workers. While the average annual salary in Romania doubled between 2001 and 2004, hospitality wages increased by only 75 per cent.

Community development
If Travel & Tourism is to be successful as a tool for rural development then as the industry develops it must do so with the buy-in of those communities in which it is based. The Government of Romania must incorporate sustainable tourism into the national social and economic policy framework with a focus on:

local engagement with the industry start-up support and technical assistance for entrepreneurs and SMEs ensuring that money from Travel & Tourism benefits all those involved rather than remaining in the hands of a few major players partnership with the private sector so that developments, new and old, are fulfilling the governments targets for social and economic development. There are already projects throughout Europe which highlight a

Compensation in line with other sectors

Compensation in the Travel & Tourism sector must be brought in line with other sectors so that a potential workforce can benefit fully from employment in the sector and so that the value of top-quality employees is not undermined. The government can assist the industry in achieving this by implementing labour laws which take into account the need for greater flexibility to accommodate the seasonality, daily flows and other operating characteristics of a 24/7 industry.

community-based approach. Examples of best practice from inside and outside the country should be identified, so as to produce models on which to base the further development of such projects in Romania. The recently signed Geotourism Charter with the National Geographic Society highlights the governments commitment to these aspects of Travel & Tourism development. The NTA should work with the industry and community leaders to ensure that this commitment can be followed through effectively.

Beat the brain drain

One of the most serious concerns voiced by both private operators and the public authorities was that of the drain of the best Travel & Tourism employees to neighbouring countries, where wages are higher and opportunities are more attractive. It is felt that if Romania invests in high quality training for the industry, this investment will be lost as employees move abroad. This cycle must be broken with a combination of better working conditions and high quality training so that Romanias tourism product is able to develop to a high standard. Furthermore, it is imperative that the government and industry work together by actively supporting and promoting those employees who have worked hard to gain qualifications and certification. Awareness of such programmes must

Linkages
Many have argued that the know-how to create linkages between Travel & Tourism and the rest of the economy is well established, but that the largest weakness in the equation is the implementation and execution of the effort. WTTC recommends that a dedicated effort and resources be organized by the Ministry of Transport, Construction and Tourism or the NTA to guarantee a focused approach to establishing effective 38

be promoted within the industry, to tourists and the general public so that their value, and that of Travel & Tourism in general, is maintained.

evolving with technological advancements and new products changing the industry at a rapid pace. Courses should take this into account and ensure that students graduate with the skills necessary to deal with new situations and ways of doing business. Furthermore, Travel & Tourism employment in Romania is largely seasonal, which results in a high turnover of labour year on year, and a subsequent negative impact on quality. A more diversified tourism product, as set out later in this report, would go a certain way in resolving this problem, but it is equally important that employees are furnished with the skills necessary to carry out a diverse range of activities, in line with industry needs. There is also a requirement for training in the fields of commerce and entrepreneurship, to furnish those starting up new businesses with the relevant skills and understanding of industry mechanisms. This will result in a higher standard of facilities and service and contribute to the overall sustainability of SMEs and the tourism industry as a whole.

A dedicated Travel & Tourism training facility

The current structure of tourism training in Romania reflects the general lack of awareness of the industrys importance. There is no dedicated hospitality or tourism institute, with vocational training centered around short courses co-funded by the NTA, and managerial training spread around national universities such as the Academy of Economic Studies and University of Bucharest, where courses are mainly theoretical rather than practical. Although steps have been taken to address this need with a recent partnership between the Romanian Institute for Economic-Social Research and Polls (IRESCON) and the Ecole Htelire de Lausanne to set up the Royal Institute of Hospitality Management, WTTC urges the government of Romania to invest in a dedicated tourism training facility, where the Ministry of Education, National Tourism Authority, and Travel & Tourism industry collaborate to provide training across the broad range of Travel & Tourism activities.

Match supply and demand

Most importantly, however, the training institutions and the industry must work together and communicate with each other to ensure that courses and training are relevant to the industrys requirements. The industry can provide support to institutions and students in this regard by participating in training schemes, offering internships and communicating the importance of high standards of quality service. Training institutions must produce a wide spectrum of qualified employees which are capable of fulfilling the many different roles required by the Travel & Tourism industry so that the human resources supplied meet industrys demands for bar staff, waiters, chefs and management etc. In particular, the gap between theory and practice must be bridged and syllabi should be updated accordingly. Travel & Tourism is constantly

PROMOTE PRODUCT DIVERSIFICATION THAT SPREADS DEMAND

Romanias Travel & Tourism is characterized by a high level of seasonality. The resorts of the Black Sea coast are open only in the summer, during which time they are filled to capacity. Conversely, the countrys ski resorts are open during the winter when they are unable to satisfy demand. Nevertheless, Romanias central location, short-haul distance from European markets, and considerable natural and cultural diversity give the country potential for developing a tourism product which spreads demand not only throughout the seasons, but also across regions. There is a general awareness amongst stakeholders that diversification is necessary and possible, however a lack of focus and leadership means that concerted efforts are yet to be seen in this area.

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Culture vs sun & beach

Since the 1970s Romanias Black Sea coastline has been the focal point of the countrys tourism for both foreigners and Romanians. However, given the necessarily seasonal nature of the coast as a destination, and the intense competition from neighbouring countries such as Greece, Turkey and Bulgaria in this regard WTTC does not believe that the Black Sea coast should form the centre of Romanias development plans. While investment in the upgrading of existing facilities is necessary and must be encouraged it is widely agreed that Romanias differentiating factor with respect to its competitors is its culture and heritage and this is where the focus of development must lie.

their popularity and shows both the demand and need for more such sights to be developed. Although a contentious issue in the past, the Dracula theme is a considerable tourist draw and can be built upon. Despite the large number of festivals and events which take place each year throughout Romania, there is currently no co-ordinated calendar to allow visitors to know what is going on at any one time. WTTC understands that CHF international as part of its USAID funded Enterprise Development and Strengthening Programme is undertaking such a project. The organization is currently producing monthly event calendars for Maramure, Sibiu and Sighioara. The preparation and expansion of these calendars will be passed on to a Bucharest-based association to ensure their sustainability and continuity. The NTA should support building of the calendar and promote it widely through its marketing channels. This will also help to encourage year-round visitors.

MICE
That said, in Bucharest as well as other towns there is a growing potential for the meetings, incentives, conferences and exhibitions (MICE) business. According to the Romanian Convention Bureau (RCB), some 900 conferences and events are held each year in the capital. Currently the industry is underfunded to a startling degree the RCB is one of the only convention bureaus in the world which relies solely on members fees and receives no assistance from government. Similarly, conference facilities are yet to reach 21st century standards. The EXPO centre, build in the 1960s should be upgraded and there is potential to create a unique facility in the Peoples Palace. The demand for MICE and business tourism will certainly increase when Romania joins the EU and, with Bucharest hotels operating at near capacity, the government should act fast to ensure that the huge opportunity for high-income tourism is not missed.

There are approximately 1,300 registered sources of mineral water in Romania a third of all mineral spas in Europe, both drinkable and available for cures.

Mountains
Romanias ski resorts are already well established and at certain points during the winter it is impossible to find a hotel room in the vicinity. While investment in both the upgrading and building of accommodation facilities is necessary it is also important to remember that resorts such as Poiana Braov, Sinaia and Predeal are unable to compete with international resorts elsewhere in Europe simply because of because of the height of the mountains and length/difficulty of runs. However, it is during the non-ski season that Romanias Carpathian mountains have the most to offer to international visitors in the form of walking holidays. Maps, routes and facilities should be modernized and developed to offer a high quality mountain experience.

Spa/wellness tourism
There are approximately 1,300 registered sources of mineral water in Romania a third of all mineral spas in Europe, both drinkable and available for cures. There are already between 2,500 and 8,500 spas which cater mainly to domestic tourists but currently only two (Bile Felix and Eforie Nord) have been modernized to international standard. Development of further spas for higher-spending international and domestic visitors would not only increase income and create jobs but would also help to conserve an important aspect of the countrys heritage.

Danube Delta
The Danube Delta is increasing in popularity as a destination amongst foreign visitors and domestic tourists alike. However, it is a highly sensitive ecological area and WTTC would not recommend any significant development of the zone without thorough Environmental Impact Assessment and the integration of environmental protection into any development plans.

Culture and heritage encouraging rural tourism

Spreading the regional reach of Travel & Tourism in Romania must be a priority going forward. As already mentioned, the country is richly endowed with culture, folklore and heritage sites throughout its regions and in many areas where there are few options other than tourism for economic development. Using gateway towns such as Braov, Sibiu and Sighioara these areas should be encouraged to embrace tourism and facilities should be developed to accommodate tourists. The wine route currently under development is a good example of how tourism can link small villages together to provide a holiday tour option. Similarly, the monasteries in Maramure can provide a route for tourists. The fact that the few monasteries and churches which have already been renovated are suffering issues of carrying capacity highlights 40

Geotourism
In September 2005, Romania became only the 3rd country in the world to sign a Geotourism Charter with National Geographic. There is considerable potential for Romania to develop as a geotourism destination as geotourism embraces conservation of the natural environment and cultural heritage, as well as supporting traditional cultures and products.

The worlds view of Romania

BRING NEW FUNDING AND COORDINATION INTO PROMOTION AND MARKETING

FAVOUR TECHNOLOGICAL ADVANCEMENT

Telecommunications
Adjustment to the digital economy is essential for enterprises to become and stay competitive. The current diffusion of internet facilities and computer ownership in Romania are among the lowest in Europe. According to Eurostat, the amount of Romanian enterprises which employ more than nine employees having broadband access in 2004 was only 13 per cent, compared among an average of 52 per cent in the EU25 countries. Travel & Tourism, as a technology intensive industry, can help Romania obtain and apply information technology systems and telecommunications at a competitive pace. One example is telecommunications. An increasing share of Travel & Tourism operations and virtually all distribution and sales transactions flows through telecommunications circuits. Where telecommunications are monopoly controlled, there are often restrictions on access, high costs and unreasonable operating conditions. This in turn limits the potential of market-oriented expansion of Travel & Tourism, with negative impacts domestically and internationally in terms of cost, operational efficiency and customer service. WTTC recommends that the Romanian Government continue pursuing its policy of open telecommunications markets, which will help lower costs and enhance services for travellers and tourism companies.

Over the past decade, images of poverty, orphans and environmental degradation in the international media have outnumbered those of beautiful countryside, ancient monasteries and rich culture. While international perceptions of Romania are gradually changing in particular as the country is deemed low risk in terms of terrorism it is imperative that a strong, well-researched, positive image of the country is portrayed through a strong brand, and that this brand image is promoted through international marketing campaigns and at international shows such as WTM and ITB, while being backed up by a quality product. It is also important to secure the buy-in from individual operators in the industry for a country-wide brand to be successful. The present culture of individual promotion for industry sectors and, in some cases operators, results in an unclear and fragmented image. All product sectors and niche markets should come under the umbrella of one brand to ensure a highprofile, recognizable image of tourism in the country.

Branding and promotion of the regions

While it is extremely important to promote Romania at the national level, there is also a strong argument that promotion at regional level will reap significant results. Unlike Budapest or Prague, Bucharest is not a cultural or architectural gem Romanias gems lie in its outlying regions. It is no surprise that Sibiu, rather than Bucharest, is set to be European City of Culture in 2007. Furthermore, regions such as Transylvania evoke a much more positive image to many foreigners than Romania might. Regional authorities should be supported in developing their own brand images, under the umbrella of the national brand, to ensure that awareness of what Romania has to offer is maximized.

E-marketing and distribution

In todays increasingly competitive global marketplace, there is a real need for a strong national leadership branding which optimizes resources, focuses the myriad of interests public and private sector, national, regional and local and attracts the attention of travellers. This will require particular emphasis on a co-ordinated approach to internet marketing and distribution to optimize Romanias visibility. Clearly, the development of such a facility needs to run parallel to the general development of internet and telecommunications throughout the country. However plans should be made, in the first instance, for a high quality Brand Romania website, which outlines the countrys tourism product and provides the visitor with information and advice on Romania as a destination. As a second step, listings of accommodation facilities with contact details should be added. WTTC understands that there are plans to develop such a facility for the Bed & Breakfast sector, and this move should be supported by the relevant authorities. As the countrys technological capabilities, particularly in rural areas, grow which will happen at a lightening pace preparations should be made for the development of an online database making visitors aware of the full range of tourism services in the country and, in time, allowing for online booking of such services. A co-ordinated approach will help to increase exposure for smaller businesses and increase the spread of international visitors across the industry.

Romania in Europe
As Romania becomes more integrated into the EU, the tourism authorities should take advantage of the promotional tools which are on offer at a European level. While countries in Europe are keen to keep individual identities, there is a growing case for strong promotion of Europe, particularly to long-haul markets. The new European Tourism Portal, co-ordinated by the European Tourism Commission, is a first step in this direction and Romania would benefit from involvement. Membership of regional organizations such as the Central European Countries Tourism Association (CECTA) would allow Romania to share resources and pool ideas with neighbouring countries.

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ROMANIA
2001 Travel & Tourism - RON bn Personal Travel & Tourism Business Travel & Tourism Corporate Government Govt Expenditures - Individual Visitor Exports Travel & Tourism Consumption Govt Expenditures - Collective Capital Investment Exports (Non-Visitor) Travel & Tourism Demand 3.51 0.88 0.77 0.11 0.05 1.10 5.54 0.21 2.00 1.08 8.82

SATELLITE ACCOUNT
2002 4.52 0.88 0.76 0.11 0.07 1.43 6.90 0.32 2.14 1.30 10.66 2003 5.65 1.16 1.00 0.16 0.09 1.77 8.67 0.45 2.98 1.78 13.89 2004 7.27 1.16 1.01 0.16 0.11 2.16 10.71 0.59 3.72 2.34 17.36 2005E 8.97 1.37 1.20 0.17 0.13 2.41 12.89 0.69 4.57 2.73 20.89 2006E 10.40 1.55 1.37 0.18 0.15 3.18 15.28 0.77 5.26 3.27 24.57 2016P 35.89 4.10 3.78 0.32 0.29 11.62 51.89 1.49 15.76 17.19 86.33

Travel & Tourism Industry Aggregates (Direct Impact Only) Employment (000) 247.04 Gross Domestic Product 2.24

249.92 2.91

255.04 3.58

259.17 4.45

257.82 5.26

265.17 6.19

314.67 20.68

Travel & Tourism Economy Aggregates (Direct and Indirect Impacts) Employment (000) 459.17 459.93 Gross Domestic Product 5.75 6.94

463.10 8.97

470.60 11.12

468.76 13.19

485.00 15.48

569.53 48.36

Travel & Tourism Accounts as % of National Accounts Personal Travel & Tourism 3.83 Govt Expenditures 3.34 Capital Investment 8.30 Exports 5.58 T&T Imports 6.41 Travel & Tourism Industry Aggregates (Direct Impact Only) Employment 2.88 Gross Domestic Product 1.92

3.86 3.78 6.63 5.08 5.96

3.81 4.07 7.06 5.19 5.90

3.82 4.30 7.06 5.08 5.62

3.81 4.33 7.13 4.99 5.47

3.92 4.35 7.17 5.16 5.48

5.24 4.48 7.54 4.58 5.21

3.00 1.92

3.07 1.88

3.07 1.86

3.05 1.85

3.15 1.92

3.83 2.47

Travel & Tourism Economy Aggregates (Direct and Indirect Impacts) Employment 5.36 5.52 Gross Domestic Product 4.92 4.58 Travel & Tourism Real Growth (per annum except 2015 = 10-year annualized) Personal Travel & Tourism 10.70 4.25 Business Travel & Tourism -0.88 -19.02 Govt Expenditures -0.67 22.07 Capital Investment 39.09 -13.39 Visitor Exports -8.88 5.80 Other Exports 32.80 -2.24 Travel & Tourism Consumption 4.22 0.95 Travel & Tourism Demand 13.53 -2.14

5.58 4.71

5.58 4.66

5.55 4.63

5.75 4.81

6.92 5.78

4.68 10.80 14.75 16.86 3.92 14.94 5.31 9.15

11.17 -13.40 13.57 7.62 5.23 13.09 6.69 7.93

9.06 4.29 4.04 8.69 -1.48 3.40 6.36 6.38

7.65 4.59 2.30 6.71 22.42 11.06 10.03 9.18

7.74 4.95 1.74 6.24 8.46 12.39 7.85 7.94

42

TABLES
2001 Travel & Tourism Industry Aggregates (Direct Impact Only) Gross Domestic Product 2.92 Employment -3.72 2002 5.14 1.17 2003 3.26 2.05 2004 7.21 1.62 2005E 4.37 -0.52 2006E 9.40 2.85 2016P 7.39 1.73

Travel & Tourism Economy Aggregates (Direct and Indirect Impact) Gross Domestic Product 14.75 -2.11 Employment -2.99 0.16 Travel & Tourism - US$ mn Personal Travel & Tourism Business Travel & Tourism Corporate Government Govt Expenditures - Individual Visitor Exports Travel & Tourism Consumption Govt Expenditures - Collective Capital Investment Exports (Non-Visitor) Travel & Tourism Demand

8.17 0.69

7.11 1.62

4.85 -0.39

8.91 3.47

6.68 1.62

1,208.93 301.98 264.10 37.88 16.92 376.86 1,904.68 72.32 688.73 370.64 3,036.37

1,367.28 265.30 230.58 34.72 20.85 432.57 2,085.99 97.32 647.14 393.08 3,223.53

1,701.48 349.46 302.21 47.25 26.09 534.42 2,611.45 135.11 899.00 537.10 4,182.65

2,228.31 356.50 308.30 48.20 34.92 662.47 3,282.21 180.74 1,139.66 715.49 5,318.10

3,009.47 460.42 403.75 56.67 44.99 808.22 4,323.10 232.86 1,533.86 916.13 7,005.95

2,994.95 445.21 393.78 51.43 42.55 914.74 4,397.44 220.23 1,513.19 940.64 7,071.50

5,865.53 670.61 618.12 52.49 46.97 1,898.80 8,481.91 243.07 2,576.58 2,809.32 14,110.87

Travel & Tourism Industry Aggregates (Direct Impact Only) Employment (000) 247.04 Gross Domestic Product 771.15

249.92 879.58

255.04 1,079.74

259.17 1,363.61

257.82 1,762.44

265.17 1,782.56

314.67 3,380.12

Travel & Tourism Economy Aggregates (Direct and Indirect Impacts) Employment (000) 459.17 459.93 Gross Domestic Product 1,977.74 2,100.24 Travel & Tourism - 2000 Constant US$ mn Personal Travel & Tourism Business Travel & Tourism Govt Expenditures - Individual Visitor Exports Travel & Tourism Consumption Govt Expenditures - Collective Capital Investment Exports (Non-Visitor) Travel & Tourism Demand Gross Domestic Product Travel & Tourism Industry Travel & Tourism Economy

463.10 2,700.83

470.60 3,407.61

468.76 4,424.47

485.00 4,454.85

569.53 7,903.68

1,178.72 294.43 16.49 367.44 1,857.08 70.51 671.51 361.38 2,960.48

1,228.81 238.43 18.74 388.76 1,874.74 87.46 581.60 353.27 2,897.07

1,286.31 264.19 19.72 404.02 1,974.24 102.14 679.64 406.04 3,162.06

1,430.05 228.79 22.41 425.15 2,106.41 115.99 731.39 459.18 3,412.97

1,559.64 238.61 23.32 418.86 2,240.42 120.68 794.92 474.78 3,630.80

1,678.89 249.57 23.85 512.78 2,465.10 123.45 848.26 527.30 3,964.11

3,538.14 404.52 28.33 1,145.37 5,116.36 146.62 1,554.21 1,694.61 8,511.81

751.88 1,928.31

790.50 1,887.54

816.28 2,041.81

875.11 2,186.88

913.37 2,292.96

999.26 2,497.28

2,038.92 4,767.57

43

44

WTTC would like to express its appreciation to the following organizations that contributed their knowledge, insight and data/information to the policy review effort included in this report: Academy of Economic Studies (ASE) Academy of Economic Studies Trade Faculty Agency for Rural Development of Romania Association for Consumer Protection Association of Journalists in Tourism Central European Countries Travel Association (CECTA) CHF International Ecole Htelire de Lausanne Federation of Unions in Tourism Golden Tulip Hotels Holidays in Romania International Bank of Romania Ministry of European Integration of Romania Ministry of Foreign Affairs of Romania Ministry of Transport, Construction and Tourism of Romania National Administration of Forests National Association of Rural, Ecologic and Cultural Tourism National Association of Tourism Agencies Romania National Centre for Tourism Education (CNIT) National Forecasting Commission National Institute of Statistics National Institute for Research and Development in Tourism (INCDT) National Tourism Authority of Romania Peacock Hotels Peter Express SRL Romanian Bed & Breakfast Association Romanian Convention Bureau Romanian Ecotourism Association Romanian Institute for Social and Economic Research and for Polls Romaninan Federation of Tourism Employers Sibiu County Council Spa Association of Romania The Romanian Association for Accommodation and Ecological Tourism Tourism, Hotels & Restaurants Group (THR) Trend Hospitatlity Consulting & Management