Банкеръ Weekly



GERMAN LEISURE INDUSTRY GIANT TUI INVESTS EUR10-15MN IN BULGARIA ANNUALLYValentin Yossifov, Manager of Travel Partner Bulgaria, to the BANKER weeklyMr Yossifov, how did you manage to convince such a big player as TUI to invest in a comparatively small leisure industry market as Bulgaria?- You'll be probably surprised to hear that the agency started operations with fixed capital of DEM500,000. At that time (1994) two banks could be opened with such capital assets. What the Germans staked on then was the human resource, i.e. the personnel they had already trained and on which they relied for selling successfully the specific Bulgarian tourist product. I can assure you that highly qualified specialists in leisure industry are trained in Bulgaria. This is proven by the fact that in many of the popular leisure industry destinations, such as the Turkish resorts, Dubai, etc., many of the key figures like front-managers, receptionists, animators and others, are Bulgarians. However, it is already clear for anyone that Bulgaria is a tourist market which is constantly developing and has good prospects, but no system has been created yet for motivating and taking advantage of this personnel. The sad fact is that our competitors abroad pay them several times more than they get in Bulgaria, and in the same time they cost to their employers several times less than their colleagues with the same skills and qualification from the EU.It is widely known that in recent years many people without professional experience in the branch, who have made money from other activities, invest their capital in leisure industry. How do you estimate the positive and negative aspects of that process?- Will you be surprised if I tell you that it is a positive process in my opinion. It makes me happy when money comes into Bulgarian leisure industry. It is not my task to judge if this money is clear and legitimate. But it is a fact that the branch has begun to develop very quickly since big economic and financial groups started investing in the sector. I believe that a good businessman should not be thinking very much. He should be good at calculations. The lack of experience made them seek experts and specialists, and this created a market of the professional labour in the branch. And the possibility to invest much money at a time enabled them to offer a new product - the so-called club tourism. Holiday villages and VIP complexes were set up, whose investment threshhold is not less than BGN10MN, but this will attract principally new kind of clients to Bulgaria. On one hand, because these establishments offer the luxury which is required by such clients, and on the other hand - the opportunities which these complexes offer will lengthen the tourist season. The Germans have been spending their holidays in Bulgaria for many years. What attracts them to this country and how have they changed their requirements to us?- What they like in Bulgaria most of all is the perfect ratio between prices and the quality of the services they get. I think we are overcritical to ourselves sometimes and we seem not notice the qualitative leap in that respect, resulting from the private property in most of the tourist establishments. The few exceptions (that could be met anywhere) do not change the overall picture, and it is that the foreign vacationers get very good services for the money they pay. We have only one competitor in that respect, and it is Thailand. Let me give you a simple example: in any sufficiently expensive hotel in Bulgaria a beer costs about BGN2, and coffee can be had at about BGN1.50, i.e. EUR1. Nowhere in the world there are such prices in hotels of that category. In Cyprus you'll have to pay EUR6 for the same cappuccino. What else should Bulgaria offer in order to be competitive to its neighbour countries, which also offer attractive and largely similar tourist packages?- We are on the global tourist market and we have to comply with and develop according to the laws and trends in international, not regional tourism. We compete not only with Turkey and Greece, but also with the Dominican Republic, Tunisia, and Maldives. The requirements of any holiday maker are the same everywhere - to have undisturbed and pleasant vacation, to have his caprices satisfied, to see something interesting, exotic, different. The marketing analyses of the concern TUI show that Bulgaria should be aiming to offer the so-called UST products, i.e. unique, specific things that are not offered by another company or resort. Until recently it was considered a minus for the Bulgarian tourism that from the point of view of the average client there are no sights of global interest in this country, such as the Acropolis, the pyramids in Egypt, the tower of Pisa, Carthagen, or the Great Chinese Wall. Therefore, we should manage to offer an attractive and non-standard tourist package, including an emotional and interesting tour round Bulgaria with all the unique (although not large-scale) sights, which make our country remarkable. In other words, Bulgaria should be selling amusement rather than sights. I believe, this is the key to the profitable future of Bulgarian leisure industry. What is exactly TUI's participation in the construction of hotels in Bulgaria, which are already more than ten - four in Sozopol, six in Primorsko, and the newest one - Hellios Beach in Obzor?- This is an interesting form of co-financing, that could be called partner's credit, because it is allocated at much more advantageous terms than any bank loan. For comparison, I'll tell you that according to German legislation, the interest on that kind of credit cannot exceed 6-7% while Bulgarian banks extend loans at 12-16% interest at least. Moreover, the amount of the credit in Bulgaria cannot cover more than 50% of the volume of necessary funds. It's only natural that TUI stakes on the preferential use of the future establishments, but this investment is undoubtedly profitable for Bulgaria, because fresh money enters the country and working positions are created. Hotels of European standard are being constructed by Bulgarian firms that are already in the business. Unlike the other creditors, leisure industry concerns control the building process as they want everything to comply with their requirements and quality standards. Would you specify the amount of money that has been invested so far?TUI invests about EUR10MN in the construction of lesiure industry facilities annually, and in 2002 the amount reached EUR15MN. It has invested in nine new hotels at Golden Sands, Elenite, Obzor, and Sunny Beach. You can assess yourselves if the rumours about the reflux of German holiday-makers from Bulgaria are true or not.

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