Romania Tourism Report Q3 2009

Tourism Overview Complete data for 2008 shows foreign visitor arrivals totalled nearly 8.9mn, a very healthy increase of about 15% year-on-year (y-o-y), but somewhat lower than in the previous year. Moreover, a downward trend in growth was evident in the latter part of the year. Almost 63% of visitor arrivals were from the EU member states. Of the latter, Hungary accounted for the largest proportion of arrivals (35% of the total), followed by Bulgaria (20%), Germany (9.4%), Italy (7.8%) and Poland (5%). Although latest data are for just one month, figures for January 2009 suggest that a sharp weakening in the number of foreign visitors is on the cards, with the number of arrivals down almost 8% compared with the same month in 2008.

Hospitality Official figures for 2008 represent a poor performance for the hospitality sector, particularly for foreign visitors. Data shows that tourism nights in all establishments that offered accommodation amounted to 20.7mn (foreign and domestic tourists), up just 0.6% compared with a year earlier. Foreign tourists though recorded a 6.3% y-o-y decline in overnight stays to about 3.4mn (16.2% of the total). At the same time, foreign visitor arrivals in collective accommodation establishments declined by 5.5% y-o-y to around 1.5mn (nearly 21% of total arrivals). Hotel occupancy rates were just over 41%, which was slightly weaker than in 2007. The most recent data are for January 2009 and show a significant deterioration in the hospitality sector, with tourism nights (foreign and domestic tourists) in all accommodation establishments down 16% y-o-y, of which foreign tourist nights fell nearly 22% compared with January 2008. Over the same period, foreign visitor arrivals in collective accommodation establishments declined more than 18% y-o-y.

Forecast Scenario Having highlighted that the risks were on the downside, BMI now expects a much weaker scenario for foreign visitor arrivals in 2009 and we now anticipate a decline of at least 10% y-o-y. This rests on recent gloomy data for arrivals in December and January, and further downward revisions to real GDP growth in the eurozone - the major source of arrivals in Romania - along with our revised forecast of a deeper recession in Hungary in 2009 and only modest recovery beyond 2011. A slight pick up in foreign visitor arrivals, though, is anticipated next year.

Tarom In 2008, for the national flag carrier, Tarom, reported operating revenue of US$404mn, up 10% y-o-y, but overall it recorded a loss of US$28mn (following a profit in 2007), chiefly due to increased fuel costs.

The airline also recorded a significant slowdown in passenger growth, up a modest 5% y-o-y to about 1.8mn (after 32% y-o-y growth in 2007). Moreover, in November and December 2008, Tarom experienced relatively sharp falls in passenger traffic y-o-y.

Wizz Air Hungarian low-cost carrier Wizz Air aims to carry 1.7mn passengers to an from Romania in 2009 and become the market leader on the Romanian low-cost market this summer. This is after carrying close to 900,000 passengers to and from Romania in 2008, a substantial increase of 148% y-o-y.