Romania Tourism Report Q2 2008

Tourism Overview EU accession, at the beginning of 2007, clearly had an extremely positive impact on the number of foreign visitor arrivals to Romania (and the tourism sector as a whole). Latest official customs data for the first eleven months of 2007 show that foreign visitor arrivals totalled nearly 7.1mn, representing a very strong increase of some 27.2% compared with the corresponding period a year earlier. Most of the visitor arrivals came from European countries (94.2%), while 62.3% of arrivals came from the EU. Over the same period, and after considerable growth in 2006, the number of Romanian departures abroad was up a significant 23.5% year-on-year (y-o-y) to some 10.1mn.

Hospitality The hospitality sector appears to have had a very good year in 2007. Latest official data for the period January to November 2007 show that tourism nights in all accommodation establishments totalled around 19.5mn (foreign and domestic tourists), an increase of 8% compared with the same period a year earlier.

Data for foreign tourists show an even stronger 10.8% y-o-y increase to over 3.4mn overnight stays in the same period (17.5% of total overnight stays). The number of foreign visitor arrivals in collective accommodation establishments, meanwhile, was also up 13% y-o-y, to nearly 1.5mn visitors (around 23% of total arrivals).

Forecast Scenario The dynamics of real GDP growth in Romania are playing out as anticipated, and we maintain our forecast of 5.8% expansion for 2007. Providing the deficit on the current account does not destabilise the domestic currency in coming months, we are also expecting a strong out-turn for growth in both 2008 and 2009, and we have upped these forecasts to 6.2% and 4.9% respectively. Growth in 2008 will be driven by increased government spending, as well as generous wage and pension settlements stoking private consumption, even as more restrictive monetary policy attempts to rein in domestic credit growth.

BMI estimates that the number of foreign arrivals totalled around 7.7mn in 2007, up well over a quarter on the previous year. The outlook for further increases in arrivals over the forecast period to 2012 remains extremely favourable, although growth is anticipated to slow from 2008. The positive outlook is underpinned by the ongoing stimulus provided by EU membership and the government's policy of boosting tourist interest in the country. However, our medium-term forecast of appreciation of the Romanian currency, the leu, against the euro, and an expected slowdown in the eurozone - the major source of arrivals - is likely to constraint inward tourism.

Tarom The national flag carrier, Tarom, looks set to record buoyant growth in passenger numbers in the wake of EU accession. Data for the the first ten months of 2007 show that the airline recorded an impressive 33% y-o-y increase in total scheduled passenger numbers, to over 1.4mn passengers. These figures should contribute to the company's aim of sharply increasing gross profit in 2007.

Wizz Air The Hungarian low-cost carrier Wizz Air will open its eighth operating base in Central and Eastern Europe in Cluj - its second base in Romania - in May 2008, with one new Airbus A320 aircraft and local crew, along with new services between Cluj and Valencia and Milan-Bergamo (from May 2007). The carrier has moved its entire Transylvanian operations to Cluj Airport, including flights to Budapest, Rome, Barcelona and London. A new Cluj-Dortmund route as well as a Cluj-Bucharest domestic flight will also commence from February 2007. According to the company, Wizz Air aims to become the largest low-cost airline in Cluj as well as Romania.