How to Do Tourism in Albania?

How is Tourism in Albania?

In the last two decades, the contribution of Albania's tourism and travel sector to the country's gross domestic product (GDP) has steadily increased to over 8%, creating employment and accounting for 38% of total exports. In retrospect, 2019 was Albania's best year for tourism, with 6.4 million foreign visitors and sectoral earnings of $2.3 billion. The future looked promising.

Unfortunately, when COVID-19 swept the globe, the number of international arrivals dropped by 60%, and the sector's earnings fell to $1.1 billion, with the accommodation sub-sector shrinking by 75% in the second quarter of 2020. 60% earned less than 10% of their 2019 revenues, and more than half of the employees in the sector were laid off.

Fortunately, as travel restrictions eased and economies initiated recovery efforts, the tourism sector rebounded with the arrival of 5.7 million foreign visitors, and tourism earnings reached pre-pandemic levels in the summer of 2021. Just as the sector was getting back on its feet, Russia's invasion of Ukraine delivered a second blow. The good news is that despite the war, the summer of 2022 was even better - as of October, the country had received 6.8 million visitors, and estimated earnings exceeded $3.3 billion.

While the recovery has been rapid and remarkable, COVID-19 exposed the tourism sector's vulnerability to external shocks, highlighting the need for a more diversified, resilient, and sustainable tourism sector.

Challenges

Now, as hotels, restaurants, and operators recover from the economic impacts of the pandemic, they face three major obstacles:

Staffing: While the pandemic's impact on visitor numbers and earnings has completely reversed, it has worsened the shortage of qualified personnel. Kliton Gerxhani, President of the Association of Albanian Tour Operators (ATOA) and co-owner of Albania Holidays DMC, said, “Since there is no proper tourism school, we have invested a lot in training our staff on the job over the last five to 10 years. Still, we had to let them go; first the young employees, then the more experienced ones.”

In 2022, the skills shortage continued to harm the sector. As the industry tried to bring back staff following the revival of tourism in Europe, many had already found jobs in other sectors or moved abroad, leading to a decrease in service capacity. In response, providing training courses for the accommodation sector and also for maritime activities could solve the skills gap issue through training programs that grant recognized international certificates.

War in Ukraine: Although the war did not affect the total number of visitors to the country, it triggered logistical and supply problems for the sector. Supply chain disruptions and rising food and oil prices increased costs, reducing the sector's revenue share in 2022. COVID-19 and the war in Ukraine also changed tourist behavior with a higher rate of booking cancellations, affecting supply planning and logistics, and underscoring the need for booking management and digitalization.

Opportunities and Branding: Albania is generally known as a seaside destination for tourists who prefer shorter stays with low individual spending levels - a profile associated with an undiversified tourism value chain with a limited number of attractions and activities.

Unfortunately, Albania's “blue tourism” sub-sector, including boating, diving, recreational fishing, and water sports, remains largely undeveloped. Also, despite Albania's unique cultural heritage, culture tourism represents a small fraction of the industry.

The Future of Tourism in Albania

The Albania Country Private Sector Diagnostic (CPSD), prepared by the IFC and the World Bank and published in June 2022, highlights major investment opportunities for the private sector. It also underlines the need for a strong policy roadmap that can set the course for a higher value-added, more diversified, and sustainable tourism sector.

As the pandemic has led to a shift in tourist preferences from mass tourism to small-group outdoor tourism, this could be a good opportunity for Albania. The country could reposition its tourism sector to appeal to new markets and rebrand itself as a destination for niche and high-end tourism.

Furthermore, linking blue tourism in coastal areas with nature, food, and culture-focused tourism in the country's mountain forests and well-preserved villages could increase average spending, extend the average length of stay, reduce seasonality, and alleviate pressure on overcrowded tourist spots. Implementing the government's Blue Tourism Strategy could increase international arrivals by 208,000 annually and boost tourism revenue by over $400 million per year.

However, transitioning to a more diverse and sustainable tourism model will require large investments, for example, in marinas and nature-based activities. Albania's domestic tourism will need to address critical infrastructure bottlenecks while increasing air connectivity and expanding road networks to develop and promote tourist circulation.

Albania will need to invest in regulations and environmental measures, along with water and waste management, to ensure destinations are sustainable. The growth of ecological and cultural tourism will require special accommodation and supporting infrastructure for the country's national parks, inland villages, and cultural heritage sites. Additionally, developing a skilled workforce, supporting firms with innovation and technology transfer, and improving access to finance for tourism operators will be key.

With strong government support, timely investments in infrastructure, and effective policy and regulatory measures, the private sector can contribute to a robust tourism industry and make Albania a top tourist destination while preserving its underlying natural and cultural assets.