Doc. 7976

23 December 1997

Need to accelerate the development of tourism in central and eastern Europe

Report

Committee on Economic Affairs and Development

Rapporteur: Mrs Vlasta Stĕpová, Czech Republic, Socialist Group

Summary

Tourism is a major world industry whose importance will grow even more in the years to come. This holds in particular for central and eastern Europe, which was largely closed to international tourism during the cold-war era and where tourism development as a consequence has suffered somewhat compared to western Europe.

Yet the countries of central and eastern Europe - with their rich architectural heritage, natural treasures, pasts and traditions - are already becoming significant tourism destinations and are doing their utmost to tackle the new challenges. The report calls for all of Europe to support such development.

I.       Draft resolution

1.       In a Europe which, following the divisions of the past, is rapidly coming together, tourism is becoming a major contributor to international understanding and peace as well as to employment and economic growth. Europe, which is already the world's major tourist destination, now faces the challenge of enhancing tourist exchanges across the entire continent, and notably toward its central and eastern parts which during the decades of confrontation suffered significant disadvantages in the development of this sector.

2.       If the countries of central and eastern Europe are to be able to tap more fully their enormous tourism potential in terms of architectural heritage, natural treasures, cultural and ethnic diversity and cost advantages in tourism services, they need to take urgent and determined action in various fields and be assisted in doing so by the countries in other parts of Europe.

3.       The Assembly, with this in mind, calls on the member states of the Council of Europe:

i.       to share more fully their experiences, positive as well as negative, as regards tourism development so as to allow the countries of central and eastern Europe to avoid pitfalls such as overburdening the natural environment or laying excessive emphasis on the quantitative as opposed to qualitative aspects of tourism growth;

ii.       to enhance co-operation and co-ordination efforts aimed at defining a coherent European tourism policy that complements and supports national tourism promotion measures;

iii.       to have the international institutions in which they participate - such as the European Bank for Reconstruction and Development, the World Bank, the OECD, the United Nations Development Programme, the United Nations Economic Commission for Europe, and the European Union - support infrastructure development projects and devote greater attention and resources to the expansion of the tourism industry in central and eastern Europe;

iv.       to initiate joint programmes for the training of different categories of employees involved in the build-up of tourism in central and eastern Europe, such as landscape planning, hotel management, catering, travel agency development, computer literacy, security and languages - drawing also on the expertise of the World Tourism Organisation in this field;

v.       to facilitate travel for tourists by making available adequate information and by the quickening of border crossing procedures, in particular, the granting of visas when required;

vi.       to carry out legislation efficiently and to cooperate in the elaboration of a legal framework and computerised information exchange network, both at national and international level, in order to protect tourists against physical attack, theft and fraud involving credit cards and currency transactions;

vii.       to pursue, within appropriate international fora, such as the World Tourism Organisation and the OECD, efforts to facilitate the choice of the tourist by strengthening his rights as a consumer, for instance, enhancing the possibility to compare services offered by hotels and other tourism facilities.

4.       The Assembly more particularly encourages the countries of central and eastern Europe:

i.       to do their utmost to establish tourism policies which preserve and make better use of the richness and diversity of their natural and cultural heritage while promoting a balanced growth of tourism;

ii.       to take clear position on the development of tourism by finalising and adopting national tourism laws in conformity with the guidelines established by the specialised international tourism organisations and the appropriate bodies of the European Union;

iii.       to aim for greater co-operation among them and within the competent international institutions in order to harmonise and co-ordinate their tourism promotion policies, particularly as regards lowering of taxation, providing better consumer rights protection for tourists, marketing of multi-destination package tours, crossing of borders and development of transfrontier tourist regions;

iv.       to improve methods of collecting data on tourism in the country in order to make them comparable within a European statistical framework;

v.       to increase the responsibility of national tourism boards for regional tourism promotion aimed at more even distribution of tourist flows;

vi.       to seek the right balance, specific to each country, between public and private involvement in the promotion of tourism, while recognising the essential contribution that governments can make in providing an overall framework fostering the country's image abroad;

vii.       to stimulate the creation of lasting partnerships between the public and the private sectors, to encourage the development of small and medium-sized enterprises in the travel and tourism fields as a means of creating employment opportunities, and to ensure that such enterprises are not overburdened by excessive regulations;

viii.       to pay particular attention to the demographic trend toward the 'grey tourism' in Europe by adapting facilities and medical services to the needs of the elderly;

ix.       to further expand their automatic cash dispenser machine and credit card servicing network, considering their importance for tourism development.

III.        Draft order

1.       The Assembly is aware, on the one hand, of the educational and cultural aspects of responsible tourism, and, on the other hand, of the opportunities which treasures of national heritage offer for the development of tourism and asks its Committee on Economic Affairs and Development to pursue its activities in the field of sustainable tourism development and in particular to examine, jointly with the Committee on Culture and Education, the possibilities of bringing out the full value of historical monuments and sites in this respect.

2.        Furthermore, the Assembly asks its Committee on Economic Affairs and Development to study and report to it on the situation as regards the medical and social provision for visiting foreign tourists in Council of Europe member states, including the disabled, and possibly to suggest measures to improve the situation where such may be needed.

IV. Explanatory memorandum by Mrs Stepova

Contents

I.       Background

II.       The Role of Tourism in the World Economy

III.       Central and Eastern Europe as a New Tourist Destination

IV.       Promoting and Developing Tourism in Central and Eastern Europe

V.       Concluding Remarks

I.       Background

1.       On 10 March 1997, Mrs Stepova and others in the Parliamentary Assembly presented a motion for a Resolution (Doc. 7822) on the need to accelerate the development of tourism in Central and Eastern Europe in which they called for greater attention to be paid by the governments of the countries in transition to the qualitative and quantitative expansion of the tourism sector, in particular through the establishment of clearer financial priorities and enactment of appropriate legislation. An appeal was also made to Western European countries to contribute to this process by sharing relevant information and expertise. The Assembly's Standing Committee in May 1997 referred the motion to the Committee on Economic Affairs and Development for a report.

2.       The present introductory memorandum is a continuation of the Parliamentary Assembly's work in this field since 1990 - the European Tourism Year - when it adopted Recommendation 1133 (1990) on European Tourism Policies, inviting the governments of member states, among other things, to "set in place appropriate structures to foster a multidisciplinary approach" to the phenomenon of tourism in all its aspects - especially economic - and to "promote a non-destructive form of quality tourism in Europe". It should be noted that the countries of Central and Eastern Europe were not members of the Council of Europe at the time.

3.       Each year the countries of Central and Eastern Europe receive an average of 52 million tourists, a figure which seems to have stabilised after a sharp increase following the end of the Cold War. However, not all of the countries concerned seem sufficiently aware of the long-term economic potential of the tourist industry.

4.        According to the president of the World Travel and Tourism Council (WTTC), the development of the tourism sector could create as many as 7.4 million jobs over the next decade in the region, corresponding to between 7 and 11 % of their GDP. It is to be noted, however, that this estimate includes not only hotels and restaurants but also the transport industry, food and equipment supply services, etc.

5.       The scope of the present memorandum is to evaluate public and private efforts of the countries in transition to promote tourism, to arrive at a rudimentary quantity/quality conclusion as regards measures undertaken and planned, and likely trends to develop and reshape the sector. By shedding light on various strengths and weaknesses, opportunities and risks in this sector within a global economic and tourism context, the Rapporteur hopes to arrive at a number of concrete proposals for a first consideration by the Committee on Economic Affairs and Development.

6.       The main focus will be on central and east European countries as destinations for international, out-of-region tourism, rather than on 'internal' or domestic tourism, especially since data on the latter are still relatively sparse and inconsistent. The Rapporteur also aims to highlight the mutual interdependence between the development of tourism and that of modern infrastructure.

7.       While the remarkable post-1989 developments increasingly blur the former East-West differences in Europe, they still nevertheless reveal a diversity when it comes to the countries that make up the region of central and eastern Europe. To the individual characteristics of countries has been added a vivid sense of national pride, used to attract tourism. Place will be given in this report to a comparison of country profiles and tourism policies, and to an evaluation, however incomplete and subjective, of the progress made by individual countries in this domain.

8.       Most of the figures quoted are from the statistical surveys of the World Tourism Organisation, while the definition of a 'tourist' is that used by the United Nations and the World Tourist Organisation (henceforth to be referred to as the WTO, not to be confused with that other WTO, the World Trade Organisation). A 'tourist' is thus considered to be "any person spending at least one night but not more than a year in a place other than his usual residence for a purpose other than that of paid occupation". The definition thus embraces not only holiday makers, but also businessmen, pilgrims, sportsmen, etc. but excludes migrants and diplomatic or military travel. 'Tourists' are not to be confused with 'visitors', who comprise a broader category of people, ranging from tourists to up-to-one-day transit travellers. The Rapporteur has also chosen to include Albania, Croatia, Slovenia, and Yugoslavia under the heading of central and eastern European countries (rather than southern European).

II.       The Role of Tourism in the World Economy

9.       Tourism plays an ever greater role in bringing people and countries together. In Europe it raises the awareness of Europeans of their common cultural and natural heritage through the very diversity of that heritage. It undoubtedly motivates them to learn foreign languages and promotes mutual understanding of one another's situation and thereby contributes to peace. The more people travel, the more difficult it will be for them to accept any demagogue's tales about any alleged 'evilness' of another nation. Some might object that there was tourism also before the First and Second World Wars; but tourism in those days was restricted to the very upper crust of society (who were, presumably in consequence, largely against the wars in question), whereas the masses had very rarely travelled anywhere, even within their own countries. Today, with the opening up of central and eastern Europe, tourism is a remarkable tribute to the process of democratisation and assumes a highly political, pan-European significance.

10.       Despite its long tradition, tourism has only more recently become, and has been recognised as being, of substantial economic, social, cultural and environmental significance to modern society. The right to annual holidays is now widely recognised; to spend these holidays abroad is becoming a custom, reflecting people's curiosity about other countries. Furthermore, spending holidays abroad is no longer a privilege of the fortunate few who can afford it and who possess the necessary linguistic abilities. The tourist industry has developed sufficiently to enable greater numbers every year to benefit from it. Concepts such as the 'tourism phenomenon' and the 'mass tourism era', involving the movement of millions and even billions of individuals, have become part of the everyday language.

11.       The economic dimension of tourism is becoming of major importance for the world as well as for individual countries. Tourism is a key source of jobs, national revenue and investment, and a crucial element in the balance of payments of several countries. The worldwide turnover of the industry today stands at around $ 423 billion. It accounts for nearly 30 % of the global trade in services and employs over 6 % of the world's work force.

12.       The freer movement of persons, a rise in the duration of paid leave, liberalised and hence cheaper air services, and an expanding and increasingly affluent middle class have all contributed to making tourism the major industry which it is today. Tourism - whether near- or far-distance - has become more affordable, and hence more accessible to ever broader strata of the population. The WTO reports a 4.6 % increase in 1996 over the previous year (see table 2 in the Appendix) - 593 million - in the number of people travelling abroad for business and pleasure and a 7.6 % rise in earnings from tourism (to the previously mentioned $ 423 billion). European countries like Spain, France, Italy, Britain, Austria and Germany are well ahead as tourism earners - after the United States which is in the first place.

13.       Tourism is increasingly diverse - ranging from its association with business travel or cultural events, to straightforward shopping expeditions. As a result, tourist sites have ceased to rely merely on, say, history, landscape or monuments to attract visitors and are instead putting greater emphasis on entertainment and recreation facilities.

14.       Quality growth is already an essential part of the tourism policy strategies of many European countries, such as Austria, Switzerland, Greece, Luxembourg, Portugal, Spain and Turkey, which aim to offer quality and value for money to have people go there, and come back. Quality development entails better staff training (service, welcome, languages etc.), a more even spread of tourist flows over the year but also spatially to more destinations, to avoid congestion and too large variations in tourism-related employment.

15.       Tourism is part and parcel of a changing world economy, in which services have grown to become the largest single component. Its growth needs to meet expectations of both nationals and foreign visitors equally. However, the supply of tourism services varies considerably from country to country and between regions. For example, there is more hotel accommodation along the few miles of beach east of Palma de Mallorca in Spain than in the whole of Belgium. In Hungary and Poland there is a real boom in the construction of new accommodation to cater for an increasing number of visitors. Others, like Bulgaria and Romania, are primarily attempting to recapture their previous tourism flows, to maintain their extensive tourism infrastructure built up during the communist era and to adapt it to new requirements.

16.       Development of tourism depends critically on the human resources behind it. In terms of employment tourism - by definition labour-intensive - is one of the main sources of jobs in most countries of the world. In Cyprus alone the industry employs one in three of people in the active population. The World Travel and Tourism Council in London projects that tourism will generate as many as 2 million jobs in the EU alone over the next 10 years and even more in Eastern Europe, where tourism facilities still lag behind the needs.

17.       While tourism can offer greater economic prosperity to hosts and joy to those who engage in it, it also carries certain risks if poorly managed. It can denature local cultures, upset vulnerable social structures, place an excessive strain on weak infrastructure facilities such as roads (60 % of holiday-makers use a car), pollute and even destroy landscapes (such as mountainsides at ski resorts), and even jeopardise public health (such as when hepatitis or salmonella epidemics break out at densely populated tourist sites). A different kind of tourism - called "intelligent tourism", as opposed to the more haphazard, 'industrial' type of tourism, - presents itself as an alternative, since every action concerning tourism runs the risk of contributing either to a "creeping destruction" or to reduce some of the above-mentioned problems. Statistics confirm that more and more tourists head for cultural events and festivals. Mr W. Leu, Executive Director of the Brussels-based European Travel Commission welcomes this trend, because, as he puts it, "a hundred uneducated tourists cause more harm than ten thousand educated ones".

18.       With increased global competition also for tourists, 'quality' in tourism and its corollary 'intelligent tourism' are becoming more important. The question then becomes what, if any, should be the role of governments and public authorities in general in the promotion of tourism. While tourism should clearly in the main be operated by private interests and according to market principles, the latter may, as has been suggested above, act to its own long-term disadvantage so that 'the market destroys the market'. Examples abound: coastal regions along, or islands in, the Mediterranean that have been 'paved over' and attract either fewer tourists or types of tourists that are less interesting for the host country.

19.       All the important tourist countries have national tourist boards responsible for marketing and promoting the country's image and tourist attractions, with national government, the regions and the private sector are normally represented on them. Budgetary difficulties have, however, caused cutbacks in public financing of tourism promotion and administration. Whether for reasons of budgetary constraints or policy, some countries, such as the United Kingdom, have abandoned national tourism promotion altogether. Others are increasingly devolving responsibility for tourism development to local authorities.

20.       However, most countries maintain a governmental role, yet limited, in tourism administration. Private interests are not always able to present a good overall picture of the country or its individual regions. The key therefore may lie in a sharing of the roles between private actors (accommodation, etc), local and regional authorities (restoration of the architectural heritage, cultural events, fairs, local infrastructure, etc) and national authorities (attracting foreign tourists, making one's own country more attractive in the eyes of one's own citizens-tourists, national events for instance of a sport nature, transport infrastructure). As these lines are written (July 1997), the Tour de France bicycle race has just been concluded, followed by millions around the world. Its annual holding requires the contribution of all the parties just mentioned. One can only guess how many millions of tourists it helps attract to France, by the good will it creates and the sceneries of the French countryside and different cities it presents. Not all countries can have a Tour de France, but ever more countries are trying hard to come up with comparable events in the most varied fields.

21.       But governments, indeed countries as such, have a larger responsibility if they want to ensure tourism on their soil. They have to be able to ensure political stability and peace. We have all seen the tragic consequences of the civil wars in the former Yugoslavia. What is less well known are the consequences for tourism in the region, and hence for the livelihood of thousands of people depending on it. The collapse of the Yugoslav Federal Republic, a country which possessed ideal climate and coastal conditions for mass tourism, caused tourism earnings to drop by almost 70% in the first few months of 1991. Furthermore, internal tensions in one country often have repercussion in the neighbouring ones. Neighbouring Bulgaria experienced a 50 % decline in a number of Romanian and Yugoslav tourists and a 33 % reduction in tourist transits as a result of the events in Yugoslavia.

22.       Further away, in Africa or South-East Asia, countries that suffer from internecine conflict have seen their tourist trade suffer mightily. Conversely, the more tourism grows in economic importance, the more a government and the entire 'body politic' in a given country will have to think twice before taking action which jeopardises political stability and peace. Only 'happy' regions within a country, only regions which are allowed and indeed encouraged, to express their own personality, and special characteristics will attract tourists any larger numbers. In this way, too, tourism serves to encourage what the Rapporteur would call the 'positive forces' in world history (even though she is far from underestimating the strength of the evil ones...) .

23.       Similarly, countries will feel the pressure to ensure economic growth and development by pursuing healthy economic policies. Only countries that have their transport and overall infrastructure in order, or that can mobilise the funds necessary to restore their national heritage in an attractive manner, will be able to attract tourists in important numbers. To illustrate the latter, one only has to look at the inspiring examples of the Spanish 'Paradores' sites (beautifully located historical, or stylish new buildings) and French historic castles - luxury-style guest houses that were restored by tourism companies or private owners to serve the culturally avid tourists, who often enough are indigenous. Spread throughout the country, these establishments offer a more personalised welcome to their visitors and yield a wide-ranging presentation of regional history, arts, sightseeing and even cooking. The Spanish Paradores managers are considering ways of better adjusting their facilities to the needs of travelling families and to provide increased employment opportunities for handicapped persons. Here tourism also has a strong educative influence. The experience undoubtedly merits a separate report, in particular as regards its potential in central and eastern European countries.

24.       The trend towards decentralisation of tourism management and promotion has affected governments' attitude towards international co-operation in the area. Thus, the Madrid-based World Tourism Organisation - an international, intergovernmental tourism body created 23 years ago by the United Nations (although independent of it) saw a number of important tourism destination and origin countries (such as the USA, Canada and Belgium) abandon governmental support to national tourism promotion and subsequently withdraw from membership in the relevant international bodies. As one way to adapt to this trend the WTO considers including non-governmental organisations (NGOs) and private sector structures among its affiliated or regular members, subject to the necessary statutory adjustments. The Rapporteur visited the WTO when preparing this report and subsequently integrated her observations into the text. She wishes to thank most cordially this organisation for their valuable input to her report.

III.       Central and eastern Europe as a new tourist destination

25.       Although tourism was never entirely ignored by the communist regimes in central and eastern Europe before the events of 1989-1990, it was considered of low economic priority and even seen as politically risky. Foreigners bring in new ideas and, to the extent that they are wealthy, may indicate to local people that the domestic economic situation and political system may not be the best, as the communist regimes proclaimed. It is difficult to control tourists' movements and their conversations with local people. Tourism for these reasons do not marry well with dictatorships of any kind. Indeed, tourism in central and eastern Europe at the time, though much less important than today, may well have contributed to a not negligible degree to the collapse of communism in the region.

26.       Thus, tourism development in central and eastern Europe prior to 1989 was basically at the level of that during the period between the two world wars, while western Europe sped ahead to become the world's primary tourist destination. Historically, there was at first, during the 1950s and early 1960s, the "empty table" argument, whereby the current destitution was (of course in part rightly) blamed on the war, and economic development through industrialisation given absolute priority over tourism development or the conservation of the national heritage.

27.       The subsequent "social realism" period brought about a revalorisation of national history and culture. It served to encourage domestic tourism and 'intrazone' tourism through the opening to neighbouring socialist countries. With the exception of Yugoslavia and Bulgaria, the majority of foreign tourists were from the CMEA (Council of Mutual Economic Assistance) countries.

28.       During the period of 'economic realism' in the 1980s, tourism, although controlled in all manners possible (complicated visa requirements, compulsory currency exchange, control of itineraries, etc) in several countries became more accepted and even encouraged by the regime, especially tourists from the market-economy countries were welcomed as a source of foreign currency. From the quantitative-qualitative point of view the infrastructure offered to foreign visitors was insufficient and did not meet international standards. International tourism management was often in the hands of Ministries of Tourism which also served as travel agency monopolies. Ordinary people in the centrally planned economies - ie those without wealth or political connections - could not travel to non-socialist countries. As a result, by 1989 international tourism in the region area did not account for more than 1 % of combined GDP.

29.       The countries in central and eastern Europe therefore entered the transition phase ill-equipped to respond to the rapid expansion of the West European package-holiday industry, and they were largely by-passed by Western tour operators. (Yugoslavia, adopting a more pragmatic attitude to labour and tourism mobility, was the sole exception in the region: since 1948 it experienced a continuous growth of tourist arrivals from the western countries) The infrastructure inherited from communism - relatively good roads, but poor shopping and sanitary facilities, well placed but low-standard and insufficient hotel and restaurant facilities, outdated telecommunications, and limited receptive capacity of airports - were such that the hospitality of local people could hardly find adequate expression. Although tourism facilities are steadily improving, overcharging for poor quality is still not an unrare practice in the region.

30.       With the fundamental political and economic changes that have taken place in central and eastern Europe over the last few years, tourism has taken off in a big way, even though the situation needless to say varies considerably from country to country. In terms of incoming western tourists registered at the end of the 1980s (1985-1989), the CEE countries experienced an increase of about 28 %, while the growth over early transition period (1989-1991) did not exceed 13 %. Hungary showed the most spectacular performance, with increases of 37 % for 1989 and 41.5 % for 1990 - a logical consequence of the country's determination to liberalise the tourist trade and ease bureaucratic hassles well ahead of the 1989 political changes. Tourism has also been helped by the relatively weak currencies in many of the countries, making stays cheaper for visitors from strong-currency countries. This situation will of course change as the economies in question develop further and their currencies strengthen.

31.       The economic impact of international tourism in the region has remained relatively modest by global standards, despite its currently attracting around a forth of all of Europe's international tourist arrivals and close to 12% of Europe's total income from tourism (as compared to only about 4 % in the 1985-1991 period and less than 7% in 1992). However, the role of tourism in the national economy of CEE countries has been steadily growing. Thus, in 1996 tourism already generated 7.8 % of the Czech GDP and 18.8 % of its export earnings.

32.       The development of tourism necessitated urgent and substantial initial investment. Scarce domestic financial resources were primarily directed toward the restructuring of industrial production to make it fit for market economy requirements. Service-producing tourism development was generally left to the growing private sector.

33.       Tourism investment became an object of competition at three levels: between CEE countries, to see who could build up the sector more quickly than the rest; between western companies for CEE business; and between east and west Europe for foreign investment, principally from North America and Japan. With the conclusion of numerous bilateral agreements on the protection of investment and with its cheaper but qualified labour and its newly opening markets as additional attractions, the CEE region held an increasing allure for capital and for business travellers.

34.       Multilateral aid through major international financial institutions - the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development, the European Investment Bank and others - was crucial in starting infrastructure projects and encouraging inward investment. During the 1990-1993 period, international assistance to the region totalled close to $ 16 billion, though it was unevenly spread: per capita figures range from $ 0.7 in Ukraine to $ 280 in Hungary - with Russia ($ 12.7), the three Baltic countries ($ 35.5), Albania ($ 44), Bulgaria ($ 92), Poland ($ 132), Romania ($ 185) positioned in-between.

35.       Further disparities are revealed in the distribution of private foreign investment, amounting to around $ 18 billion over the same period, most of it going to the Czech Republic, the Slovak Republic, Hungary, Slovenia and Poland. Foreign investment in the tourism industry has particularly favoured the luxury hotel sector in capital cities, with international chains like Marriott, Sheraton Holiday Inn, Group Kempinski, Hilton and Intercontinental supporting new construction and buying into existing real estate.

36.       Beside accommodation it is the transport and communications sectors that have attracted the largest share of tourism-related investment. Examples include the upgrading and extension of the highway system (principally in Hungary, Czech Republic and the Baltic countries), the buying into privatised airlines (such as when Alitalia acquired 30 % of the shares in the Hungarian MALEV), and a number of subsidiary services, such as in-flight catering, duty-free shops and ticketing. The central and east European countries also started attract western catering services, with North American fast- food outlet chains and soft drinks industries as clear leaders now present almost everywhere.

37.       With foreign travel suddenly possible and increasingly affordable to a growing share of the populations in the CEE countries, it is not surprising that it should have taken off the way it has. In the 1989-1991 period alone it showed an almost fourfold increase in Czechoslovakia and a doubling in Bulgaria, and the increase has continued ever since. No doubt the figures for these and other countries in the region would have been even more impressive if the economic capabilities of the willing-to-travel nationals of transition countries had been more at one with their eagerness to visit foreign lands. It is remarkable how much of a priority is given by various social strata - prevented for at least two generations from travelling abroad - to visiting other countries, and this is largely regardless of age, status and income.

38.       The purchasing power of inhabitants is still often extremely limited for anything more than a short stay in a wealthier west European country. For many it is still more manageable to visit other countries in central and eastern Europe. Western Europe therefore has an additional interest, apart from many others which do not form the subject of this report, to help raise living standards in the CEE area. In the post-industrial area, where the importance of tourism is bound to rise even more, western Europe cannot afford to lose out on the economic potential represented by a prosperous central and eastern Europe.

39.       Happily enough, the quantitative and qualitative differences between the spending power of western and eastern visitors are beginning to narrow. Polish estimates concerning visitors to Warsaw in 1993 suggested, for example, that those from the former Soviet Union, comprising more than half of all overseas visitors to the city, came mostly for shopping purposes and spent an average of $450 per person, while North American visitors, predominantly leisure tourists, spent an average $ 782. The impact of tourism on the outlook and way of life of many people is undoubtedly increasing, since the travellers absorb and bring home to their countries impressions of different ways of doing things, including in business. On the other hand, with the massive return of eastern Europeans into the world of travel, a new type of tourist was born. Thus, for instance, many tourist operators started to include central and east European languages and traditions of hospitality into their packages.

40.       Any political instability and uncertainty about the future in eastern and central Europe, - and the Rapporteur of course hopes they will never occur - is likely to hurt tourism and worsen a given country's position in the competition for foreign investment, including in the tourism sector.

41.       According to the WTO, Europe in 1996 was the most visited among all regions of the world, absorbing half of world receipts from international tourism and almost two thirds of arrivals. Arrivals of foreign tourists in central and eastern Europe in the same year reached over 87 million (a growth of 10 % from the year before), while tourism receipts showed year-on-year increases of 26.7 % in 1995 and 20.2 % in 1996 (i.e. considerably more than the pan-European average of respectively 15.5 % and 6 %; see also tables 1, 2 and 3 in the Appendix).

42       Tourist arrivals do not always equate tourism income. Despite an slight decrease in tourist arrivals from the previous year, Hungary in 1996 saw its tourism receipts increase by 30 % (making it the second biggest tourism beneficiary in Europe after Turkey). This points to the importance of proper investments to attract wealthier visitors. Meanwhile, 1996 witnessed an acceleration in both the growth rate of arrivals and receipts in the Czech Republic, the Russian Federation and Poland.

43.       The remarkable thing has thus happened that the countries of central and eastern Europe, only a few years into transition, have managed to revive a tourism industry that fell seriously behind under communism and are now offering serious competition to other parts of the world, including western Europe. It has the will, the human capacity and increasingly the financial means to pursue this process. Yet many hurdles remain to be overcome, as we shall see in the following.

IV.       Promoting and developing tourism in central and eastern Europe

44.       In today's central and eastern Europe, tourism development cannot be treated in isolation from the general process of economic, political and social transformation. For example, the previous underdevelopment of the services sector has, as we have seen, had direct consequences for tourism. Increasing personal mobility, enhanced and reoriented foreign trade and investment, price liberalisation, the encouragement of entrepreneurial activity, privatisation, deregulation and efforts, sometimes successful, to achieve currency convertibility have contributed significantly to enhancing foreign as well as intra-national tourism.

45.       This being said, a further upgrading of existing, and the building of new, accommodation, transport and communications infrastructure will be pivotal in both the spatial and structural development of tourism in the region. Furthermore, the huge multiplier effect of the tourism industry in other sectors of economy should be duly recognised.

46.       That tourism is uniquely suited to private initiative has already been recognised by the countries in Central and Eastern Europe. Yet the regulatory, legislative and financial framework needs to take more explicit account of this than is the case at present. Following privatisation, former state tourist agencies have lost their monopoly position and have entered into fierce competition both with newly established domestic travel companies and with foreign tour operators such as American Express Travel Service, TUI, and Thomas Cook.

47.       One particularly attractive environmental feature makes the prospects for tourism so exciting in central and eastern Europe: the urban and village architectural heritage has suffered less from unbridled economic development than is the case in many Western countries. The lesser reliance on individual transport has meant less congestion. Vast areas of unique natural beauty have remained intact, whether we are talking about lake Balaton in Hungary, the Plitvice Park in Croatia, the Bialowieza National Park in Poland or the splendour of mountain regions. There is thus the precious opportunity to preserve and enhance these and so many other treasures while at the same time enhancing the overall tourism potential there - provided, of course, it is carried out in a sensitive way, keeping in mind not just immediate gain but also the necessity of long-term sustainability.

48.       As was remarked by many participants in a recent Parliamentary Assembly conference (11-13 September 1997 in Rodez, France) on a Pan-European policy for mountain regions, successful experiences are those which integrate tourism, local development and the protection of nature. Countries' adhesion to, and implementation of, international agreements on nature preservation and interregional co-operation, can greatly help protect and restore vulnerable areas. In this context it is worth recalling that the Council of Europe has prepared a series of recommendations and guidelines on sustainable tourism development in coastal areas.

49.       In this context, a golden rule is that the scale of development should not be so grand that there is a risk of 'having tourism kill tourism'. A prudent development based on private initiative, not forgetting for that matter the responsibility and potential role of public or semi-public bodies in providing a suitable overall framework, is often to be preferred over more grandiose schemes. Furthermore, tourism development which ensures growth while respecting the environment opens up new opportunities for cross-border co-operation.

50.       Recent developments in the countries of central and eastern Europe have shown a tendency towards greater regional influence, as more decision-making power is yielded by central governments to local and regional instances. This sometimes complicates matters also for tourism development, especially when it comes to legislation and finance. But it can also facilitate the realisation of projects as competencies and responsibilities come closer to one another.

51.       As experiences in west European countries demonstrate (and some central and eastern ones, too), private initiative through non-governmental organisations can be very effective in ensuring that environmental criteria are respected in the economic development of the tourist industry. In many countries the concentration of tourist flows towards fewer but better equipped destinations coexists, happily though rather paradoxically, with a demand for wilder or quieter environments. The attraction of virgin lands, rural areas and natural parks is growing. Pure 'laisser-faire' policies, leaving tourism development to private initiatives alone, may not be enough for sustainable development of the sector; nor is, of course, any state monopoly over tourism to be recommended. Both extremes risk causing either healthy market principles or the rights of consumers to suffer.

52.       Many Western travellers still do not have a clear perception of the particular individual identity of the different countries in Eastern Europe they may be visiting, unlike what is the situation in western Europe, where decades of public relations have firmly placed the Eiffel Tower in Paris and the Costa Brava in Spain. Advertising campaigns, whether private or public, could usefully remedy the situation. Planting a seed in a potential traveller's mind is likely sooner or later to carry fruit. However, sowing the germs of interest requires substantial practical information when a visit is actually planned.

53.       National tourism offices alone cannot deal efficiently with the extreme diversity and quantity of enquiries that is likely to follow, which is why the establishment of outlets in target foreign countries may rapidly become necessary. Hungary, for example, in 1997 opens tourist information offices in Tokyo, Stockholm and Cluj (Romania). The Internet with its 'home pages' offer additional opportunities, including for individuals. Thousands of bed-and-breakfast suppliers now advertise on the Internet, permitting thousands of would-be tourists to 'see' the premises and the surroundings on his/her computer, and of course bypass any intermediaries, thereby reducing costs to both customer and supplier.

54.       European travellers are particularly important for tour operators in central and eastern Europe. Only 5% of the Benelux nationals, 7% of the Germans and Swiss, 11% of the French and 16% of the British go beyond the European area when travelling as tourists. It is at the same time important for the countries concerned to try to convince their own nationals to discover or rediscover their country's cultural and natural heritage. Stimulating domestic travel can help to develop new types of tourism, such as family camping or bicycling (often referred to as 'green tourism').

55.       Another, less season-fixed form of tourism that might usefully be further developed in the CEE region is cultural tourism. It has the potential of attracting growing numbers of comparatively wealthy visitors from near and far. Worth mentioning in this context is the huge potential of the so-called 'third generation' tourist market. In the year 2000, one in four Europeans will be over 65 years of age. In the European Union countries alone the number of persons over 60 is set to rise above 60 million by the year 2000. They are often retired persons - all potential travellers, many of whom have the double advantage of time and money. They are increasingly attracted by tourism, particularly in the low seasons. Tourism development policies should therefore be more sensitive to senior citizen needs, also as regards medical care.

56.       One way to promote and facilitate tourism is to remove the many obstacles to tourist movements that currently exist, such as lengthy and often costly passport and visa requirements, cumbersome currency exchange procedures or lengthy waiting times at border crossings. The Rapporteur is aware of the security- and migration-related concerns that lie behind many of these requirements, and also the tit-for-tat mentality shown by one country in retaliation to another. And yet she feels that a lot could be done to reduce the obvious inconveniences to tourists, who on their return home may discourage their friends from visiting the country in question for good. It should be remembered that word-of-mouth is by far the most important means of enhancing, or stifling, tourism. (Long waits at borders are not only afflicting central and east Europeans. Germany submits motorists entering form Austria to careful checks in spite of both countries' membership in the EU's Schengen agreement, by which border controls are to be done away with. The reason is that Germany is preoccupied over allegedly lax Austrian border controls at entry posts from the east and south. The issue shows the interdependence of tourism in the different parts of Europe.)

57.       Surveys carried out by the WTO reveal that hotel grading exists in the majority of countries and is either compulsory (official) or voluntary (commercial). Procedures for establishing official classification are usually vested with the bodies appointed by and reporting to the national tourism authorities. Despite long-standing efforts, institutions such as the EU and the OECD have not been able to harmonise hotel classification standards. Arguments have been put forward in favour of more diversified classification standards to take specific regional aspects into better account. The absence of any internationally accepted hotel classification system in the transition countries should therefore not be seen as a serious drawback, and can partly be remedied through co-operation with international tourism organisations such as the WTO, and internationally recognised private certification bodies, or simply commercial companies, especially when the use of a trade name can be assumed to signify a quality guarantee to the foreign customers targeted. Whatever method is adopted, travellers need to be properly informed to exercise free choice of price and comfort.

58.       Modernisation of the banking system is necessary if tourism is to expand. For reasons of personal security and comfort, western travellers increasingly prefer electronic means of payment and cash collection. Although an increasing number of tourist caterers in CEE countries accept payments by credit card, important improvements are needed in the rapid servicing of traveller's checks and in the expansion of the automatic cash dispenser machine network.

59.       Access to medical care should be facilitated and seen as basic consumer right. Social security systems should be developed to enable the tourist who falls ill to be reimbursed through his or her insurance. At the very least travellers should be informed about any health risks they may be exposed to in a foreign country. Subscribing to international health coverage insurance scheme has to become a must in any traveller's plans.

60.       The CEE countries compete among themselves as tourism destinations not only in terms of prices but also as regards quality or, more precisely, as regards the most attractive 'price/quality ratio'. As was highlighted at a recent WTO seminar in Warsaw in September 1997, one effective way to improve quality and maintain a competitive edge over competitors is to enhance safety and security for tourists, so that they feel confident in choosing European destinations. The main ills afflicting tourists in Europe these days are vehicle or handbag theft, currency exchange cheating, and fraud involving credit cards or travellers' cheques. The majority of these problems could be avoided through proper planning and preventive measures that are the shared responsibility of tourism authorities, travel businesses and the travellers themselves. The former two should in particular assume the task of improving their information to tourists. Aiming at EU membership, the CEE countries should ensure that they meet the consumer protection objectives outlined in Article 7 of the European Package Travel Directive (1990).

61.       Holiday 'timesharing' of real estate is little known and not widely practised in the CEE area. Relatively well structured and legally regulated in Western Europe (although fraud is not infrequent), timesharing is increasingly offered to middle-class central and eastern Europeans, but its development into a creditworthy tourist branch is hampered by an incomplete legal framework in many countries, and by fraudulent practices by certain international "ghost" companies of the kind seen previously in many European countries. Nevertheless, timeshare holidays have a serious potential in CEE.

62.       The more important host countries, such as Hungary and the Czech Republic, have more recently reviewed their tourism marketing strategies, or are about to do so. Faced with a levelling off in tourist arrivals and revenue, Hungary has since 1994 adopted a more outgoing and co-ordinated marketing campaign to attract tourists. The most pressing tasks facing the Czech Republic include coping with rising prices (including a 23 % VAT which is the second highest in Europe - see figures in table 4 of the Appendix) curtailing a recent rise in crime against tourists and to improve the treatment of visitors by local tourist businesses.

63.       The development of the human resources in the tourist industry is gaining due attention in these countries as elsewhere. In the past, mediocre service often put off visitors. The need for training in hotel management, catering, travel agencing, computer literacy, security and crisis management, communication and foreign languages are considered the most imperative. Significant assistance in these areas has been rendered in different CEE countries through the European Union's PHARE programme, the United Nation's Development Programme and the British Know-How Fund (KHF). In Bulgaria a Tourism Reconstruction Board was created in 1993 with the aid of PHARE and the KHF. The transitions countries could also take advantage of the tourism education and training programmes developed by the WTO, as well as its various guidelines and publications.

64.       As unemployment has become a growing concern in the transition countries, particular attention needs to be paid to the job creation potential of tourism. While direct benefits from tourism in terms of employment are easily traced through key businesses involved, including tour operators, hotel chains and airlines, a less visible but nonetheless dominant force and a major employment source in tourism business is a large number of employees in small and medium-sized enterprises (SMEs) such as restaurants, camping sites and guest houses. A greater recognition by CEE governments of tourism development as a primary generator of employment should be supported by targeted policies in education and training, infrastructure and transport planning. In these sectors innovative and lasting partnerships between the public and the private sector can help optimise the tourism industry's contribution to lowering unemployment, as it was highlighted at the recent OECD conference on partnerships in tourism (27-28 October 1997, in Rome).

65.       In order to allow our societies to fully enjoy the benefits of tourism they must facilitate for all citizens the best possible access. As in other parts of the world, CEE countries have a significant number of persons with health impediments who could engage in travel if tourism facilities were properly equipped. Thanks to scientific and technological advances and a growing social awareness of the needs of handicapped persons, handicapped people can and should be able to enjoy the same kinds of tourist pleasures as other people. The countries in the region should introduce policies that can realise these possibilities.

V.       Concluding remarks

66.       Tourism has become an integral and increasingly important part of the economies of the countries of central and eastern Europe, generating employment, revenue and new businesses. More than any other sector, it depends on impressions and experiences lived, constant attention to service and promotion. The move from state to private management, from centralisation and monopoly to decentralisation and competition, has been as painful and costly as it was necessary. A lot has been done to realise the enormous tourist potential of all the countries in the region. Meanwhile, countries in the region compete against each other to become the preferred destination. This is as it should be, and it should not keep them from co-operating with each other on the many issues that will increase overall tourism to the region. It remains for each country to decide whether - and if so under what management, public or private - there should be a 'national tourism policy' or not. As we have seen, countries in western Europe have opted for different solutions, depending less on 'ideology' than on cost-benefit considerations.

67.       The tourist market in CEE countries shows a dualistic structure: a large number of small firms compete with a small number of large firms - some domestic, some foreign- owned. Whether the big firms are so dominating or so colluding with each other as to justify anti-monopoly or anti-cartel action is for each government to decide. Essentially the role of national governments would be to ensure a favourable general business climate and an adequate legal framework providing for fair competition and consumer rights, to furnish the necessary transport and communications infrastructure, to contribute to the restoration and maintenance of the cultural heritage and to protect sensitive environmental sites.

68.       This is, then, the spirit in which the Rapporteur submits her introductory memorandum on the subject for a first discussion in the Committee on Economic Affairs and Development. She looks forward to the many comments and improvements of her colleagues, some from central and eastern Europe and therefore able to relate their particular experiences and policy recommendations, others from western Europe and therefore in possession of a longer experience of the role of tourism in a market-oriented economy. But all in quest of a Europe where all parts of the continent can contribute to the ultimate purpose of tourism: to discover other lands and people in joy and peace.

Appendix

Reporting committee: Committee on Economic Affairs and Development

Budgetary implications for the Assembly: none

Reference to committee: Doc. 7822 and Reference No. 2188 of 28 May 1997.

Draft resolution and draft order unanimously adopted by the committee on 27 November 1997.

Members of the committee: MM. Davis (Chairman), Mrs Degn (Vice-Chairperson, MM. Bloetzer, Valleix (Vice-Chairman), Aliko, Andreoli, Behrendt, Bilinski, Billing, Mrs Blattmann, MM. Bogár, Bonet Casas, Mrs Bribosia-Picard, M. Brunhart, Mrs Calner, M. Cunliffe, MM. Cusimano (Alternate: Turini), Dumitrescu, Mrs Durrieu, MM. Elo, Eyskens, MM. Figel, Frey, Mrs Frimannsdottir, MM Galanos, Galváo Lucas, Mrs Gatterer, MM. Gonzalez Laxe, Gusenbauer, Gylys, Kacin, Kamhi, Kiratlioglu, Kirilov, Koucky, Kutznetsov, Lambergs, Le Grand, Leers, Liapis, Malinowski (Alternate: Wielowieyski), Merkushov, Mitterrand, Muravschi, Obuljen, Pereira Coelho, Poppe, Puche, Rigo, Rippinger, Rutskoy, Sceberras Trigona, Siebert, Mrs Squarcialupi, Mrs Stepova, Mrs Stoyanova, MM Szalay (Alternate: Barsony), Telgmaa, Townend, Tripunovski, Vasile, Verivakis, Mrs Verspaget, MM. Wallace (Alternate: Deasy), Yavorivsky.

N.B. The names of those members present at the meeting are printed in italics.

Secretaries to the committee: MM. Torbiörn, Bertozzi and Ms Ramanauskaite.