Analyse of the sector 30/11/2010
Crisis, but not a calamity

The global economic crisis hit the Slovenian travel and tourism industry, and temporarily reversed its development. While the crisis exposed some mistakes, it also had beneficial effects, as it showed the true problems of the industry, which were previously covered by extremely good overall results. Some companies may go bankrupt and some investments may run aground, but the healthy core of the industry in Slovenia will survive intact, and continue to develop more strongly.

 

Large investments will increase the potential of the industry and help it weather the storm

 

The largest investments in the Slovenian travel and tourism industry continued apace. Helped by the plentiful funds available from the EU and the national government, companies, local municipalities and the national government invested a great deal of money in projects to help expand tourism capacity and quality. There were almost no tourism companies in Slovenia which did not invest in expansion, renovation or new developments in the past few years. The infrastructure in which they operate also received a significant boost. As the investment drive is expected to last at least until 2013, it will help transform and expand the industry and move it up the value chain. The first investments, which started in 2007, were already on the market when the crisis hit, and this helped some companies to weather the storm exactly when they needed it.

 

Gambling is in crisis

 

For years the most important driver of tourism development, gambling (and tourism attractions in general) has fallen behind other segments. With fewer visitors came suffering profitability and cost-cutting measures, leading to a reversal in investment. These will in turn lead to attracting even fewer visitors and will reinforce the vicious cycle. One positive trend is growing competition in the Slovenian gambling industry, but most new entrants lack the scale needed to finance investments in new attractions, such as the cancelled gambling theme park near Nova Gorica. Even worse, the more serious threats of increased competition from online gambling and from looser regulation in Italy could hit the industry precisely when it is worst prepared to deal with these developments.

 

Next step: internationalisation

 

With a developing and growing market, some Slovenian companies have developed into large and important players in their markets. However, if they want to continue their expansion they will have to look for opportunities abroad. With a strong currency and stable domestic conditions, at least some large tourism companies, probably in travel accommodation, will turn their attention to the countries of former Yugoslavia. As the crisis hit these markets more than Slovenia, there might be some mergers and acquisitions in the near future.

 

Health and wellness is at its peak

 

One of the fastest developments in the Slovenian travel and tourism industry was experienced in health and wellness. Years of huge investment transformed a socialist-era infrastructure into a modern and expanded number of resorts which are increasingly attractive to foreigners. While 2009 saw a temporary reversal of the number of foreign tourists, these resorts attracted larger numbers of domestic tourists, who were usually surprised by the dramatic changes, and will continue returning in future years. Combined with foreign visitors, and still investing in expanding their capacity further, they will reap the benefits in future years in the form of increased arrivals and spending.