Romania Tourism Report Q3 2008

Tourism Overview Recently released official customs data for 2007 show that foreign visitor arrivals totalled over 7.7mn, representing a very strong increase of nearly 28% compared with a year earlier. Most of the visitor arrivals came from European countries (94.4%), while 62.3% of arrivals were from the EU. Following considerable growth in 2006, the number of Romanian departures abroad was up a significant 23.3% year-on-year (y-o-y) to almost 11mn. The most recent data for the first two months of 2008 show a surge in foreign visitor arrivals of nearly 60% y-o-y to over 1.1mn visitors.

Hospitality As anticipated, the hospitality sector had a very good year in 2007. Official data record that tourism nights in all accommodation establishments totalled around 20.6mn (foreign and domestic tourists), up 8.4% compared with the previous year. Data for foreign tourists show an even stronger 10.6% y-o-y increase to near 3.6mn overnight stays (17.4% of total overnight stays). The number of foreign visitor arrivals in collective accommodation establishments was also up a strong 12.4% y-o-y, to 1.55mn visitors (around 22% of total arrivals). Moreover, hotel occupancy rates stood at 43.2% in 2007, up from 41% a year earlier.

Forecast Scenario We forecast that the Romanian economic growth outlook will remain positive, averaging 5.1% through our five-year forecast period to 2012. That said, we caution that key risks to our forecast in the medium term include inflation, and the potential for a downturn in foreign investment due to heightened risk aversion, which would exacerbate the current account deficit and threaten economic stability. BMI expects favourable growth in foreign visitor arrivals over the forecast period to 2012 but anticipates growth to slow in 2008. This is largely due to downward revisions to growth forecasts in the eurozone - the major source of arrivals. After 2007's 2.6% real GDP growth in the eurozone, we are now anticipating 1.6% in 2008 and then 2.0% in 2009 and 2010. Despite expected short-term weakness of the Romanian currency, the leu, against the euro, BMI continues to forecast appreciation of the leu over the medium term, which is likely to constrain inward tourism.

Bucharest Henri Coanda International Airport After strong growth in recent years, Romania's largest airport, Bucharest Henri Coanda International Airport (BHCIA), recorded impressive growth in passenger numbers in 2007 of some 42% y-o-y to almost 5mn passengers. Around 83% of passenger traffic was with EU countries. Domestic traffic increased a substantial 46% compared with a year earlier, with nearly 411,000 passengers.

Tarom In the wake of EU accession, the national flag carrier, Tarom, recorded buoyant growth in scheduled passenger numbers last year of 32% y-o-y to almost 1.7mn passengers.

Wizz Air Among a considerable number of new routes in 2008, the Hungarian low-cost carrier Wizz Air launched its first domestic service in Romania in February with flights between Bucharest and Cluj-Napoca (the only domestic flight operated by a low-cost airline in Romania). The airline also started thrice weekly flights from Bucharest to Brussels Charleroi, Milan Bergamo and from Cluj-Napoca to Dortmund.