Tourism: catering to Eastern Europe
2008
While overnight stays from the Austrian tourism industry's traditional markets are growing below average, the importance of Central and Eastern European countries (CEE) is rising dramatically. Austria's beautiful scenery and high level of service in particular make it an attractive travel destination. Guests from CEE are an especially attractive target group, since they are less sensitive to price and when on vacation, they tend to spend more than tourists from Western Europe. Although Austrian hoteliers look primarily to Russia for considerable growth potential, they are underestimating new EU member-states Romania and Bulgaria. These are the main findings of a new study entitled "Central and Eastern Europe is a future market for Austria's tourism and hotel industries" by Roland Berger Strategy Consultants and the Austrian Hotel Association (ÖHV). The study examined Bulgaria, Serbia (incl. Montenegro), Croatia, Poland, Romania, Russia, Slovakia, Slovenia, the Czech Republic and Hungary.
The share of guests from the CEE countries is still low. In 2007, just 5.5% of overnight travelers hailed from this region, with Hungary representing the largest group and a share of 22.6%. The Czech Republic followed closely behind (20.8%), then Poland (15.5%) and Russia (11.8%). "What makes this region important for the Austrian tourism industry is the above average growth of the markets. Whereas Western European markets are all but stagnating, in Eastern Europe annual growth of over 10% is the norm," explains Thomas Reisenzahn, General Secretary of the ÖHV. For instance, the Romanian tourism market has grown an average of 39.7% per year since 2000, the Bulgarian by 17.4%. Hungary, Russia and the Czech Republic all booked annual growth rates of over 12%. By comparison, the German market (of particular importance for Austria) shrank in the same period by 1.4% per year. The Austrian market grew by one percent, the Dutch by 3.5% per year.
Romania and Bulgaria growing the fastest
It's not just the markets that are growing. "Guests from CEE countries tend to extend their stays, while those from the traditional countries are staying for increasingly shorter periods. Last year, guests from Russia stayed an average of 0.7 days longer than in 2000; Germans and Austrians shortened their stays by half a day. Furthermore, the incomes of travelers from the region are experiencing above average growth. Here the main drivers are Russian tourists, who have been spending over 30% more each year over the past seven years," says Dr. Julian Pötzl, study author and tourism expert at Roland Berger's Vienna office. It's no wonder then that the potential of Russian guests is seen as particularly high in Vienna and Tyrol. Both of these spots are top destinations for Russian winter sports enthusiasts and travelers doing city tours. "The countries with the highest growth rates – Romania and Bulgaria – haven't yet established themselves as a future market," says Pötzl.
Opening hours and transportation infrastructure present obstacles
The study refutes a further misconception regarding tourists from CEE: "Contrary to popular belief, guests from Western Europe are considerably more price-sensitive than those from the East," states Reisenzahn. It is Austria's picturesque landscape, cleanliness and quality that make it an attractive travel destination. For Russian tourists, shopping is another big draw. In contrast, the shared historical heritage, lower prices and cultural similarities play no role in choosing Austria for vacation. Disadvantages of the alpine land – especially as perceived by Russians tourists – are its limited opening hours and strict entry regulations. Guests from Central and Eastern Europe also complain about poor travel connections. "Here it's clear that too little has been done to expand the transportation infrastructure to our Eastern neighbors," comments Reisenzahn.
Offers for guests from CEE being expanded
Austrian hoteliers are already responding to the flood of tourists from Russia and CEE. 56% of the companies surveyed hire employees with suitable language skills. Vienna and Tyrol are leaders in this area. 32% of enterprises offer information in CEE languages and 20% have adapted their websites accordingly, incorporating the languages used most often: Russian, Croatian, Hungarian and Czech. Carinthian companies are responding primarily with multilingual menus for the new target group. Moreover, the majority of Austrian accommodations are planning to align themselves more strongly toward guests from CEE and Russia. Language courses for employees are already being offered.
Of those surveyed, 64% have entered into a cooperative agreement with at least one travel agency in CEE or Russia. Only with agencies in Romania and Bulgaria is there still a very low level of business. Pötzl summarizes the situation: "This raises the question: is advertising being used properly? These two countries are the central growth markets in the region, and companies are missing out on considerable potential." He recommends focusing on regional growth markets, exploiting the entire portfolio of marketing tools and doing away with stereotypes. The study authors call upon policymakers to improve conditions for entry and visas, and to extend shop hours. "Opening the employment market also has a positive effect on tourism. That's why the UK, which employs an especially large number of Polish workers, ranks second on the popularity scale for travel destinations," says Pötzl.
Roland Berger Strategy Consultants, founded in 1967, is one of the world's leading strategy consultancies. With 35 offices in 24 countries, we have successful operations in all major international markets. In 2007, we generated approximately EUR 600 million in revenues with more than 2,000 employees. Our strategy consultancy is an independent partnership owned by about 170 Partners.
The Austrian Hotel Association (Österreichische Hoteliervereinigung, or ÖHV) represents the interests of over 1,100 operators of accommodations. This is the highest number of members since the ÖHV was founded. ÖHV members offer over 63% of the beds in 4- and 5-star hotels. These enterprises stand out due to their outstanding service quality, specialization and/or long-term innovative power. Members of the ÖHV employ approximately 30,000 people, or 30% of all those in the hospitality industry, achieving sales of roughly EUR 900 million.
