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National Tourism Development Strategy 2009 - 2013

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					       Republic of Macedonia
Government of the Republic of Macedonia




National Tourism Development
     Strategy 2009 - 2013




                                          i
This report is a result of the project, “Preparation of the National Tourism
Development Strategy 2009-2013”, executed by the Ministry of Economy and
supported by the United Nations Development Programme and United Nations World
Tourism Organization.

The views expressed in this publication are those of the authors and do not
necessarily represent those of the United Nations, including UNDP, or their Member
States.



Publication Date:         April 2009
Lead Author:              Jim Flannery, Tourism Planner, UN World Tourism Organization

Co-authors:               Richard Batchelor, International Marketing Planner, UN World Tourism
                          Organization
                          Jim Fletcher, Economist
                          Ljupco Dimovski, Tourism Products Expert
                          Aleksandar Ivanovski, Environment Expert
                          Kokan Grcev, Culture Expert
                          Dori Pavlovska-Georgievska, Economy Expert
                          Vasko Bosevski, HR Development Expert
                          Zoran Tuntev, Infrastructure Expert

Editing Manager:          Dejan Rajcanovski, Project Manager, UNDP

Coordination and          Zoran Manevski, State Secretary, Ministry of Economy
support provided by:      Zoran Nikolovski, Ministry of Economy
                          Vanessa Satur, UN World Tourism Organization
                          Anita Kodzoman, UNDP
                          Akihito Kono, UNDP
                          Samir Memedov, UNDP




                                                                                     ii
          Republic of Macedonia
   Government of the Republic of Macedonia




    National Tourism Development
         Strategy 2009 - 2013




Supported by:




                                             iii
iv
            National Tourism Development Strategy 2009-2013

                                                        Contents

FOREWORD................................................................................................................9
EXECUTIVE SUMMARY .......................................................................................111
  THE VISION FOR MACEDONIAN TOURISM ...............................................111
  MACEDONIA’S TOURISM PRODUCT...........................................................111
  MACEDONIA’S TOURISM PERFORMANCE .................................................12
  MACEDONIA’S REGIONAL COMPETITOR’S PERFORMANCE...............16
  MACEDONIA’S FUTURE PERFORMANCE TARGETS ...............................18
  A SUMMARY ACTION PLAN TO MEET THE TARGETS ............................22
  THE SUMMARY ACTION PLAN .......................................................................23
PART I ........................................................................................................................27
  THE VISION FOR MACEDONIAN TOURISM .................................................27
PART II .......................................................................................................................28
CURRENT PERFORMANCE..................................................................................28
  1. Tourism Products and Services..............................................................28
    1.1      Accommodation ..................................................................................28
    1.2      Spas ........................................................................................................33
    1.3      Natural Heritage...................................................................................35
    1.4      Cultural Heritage .................................................................................38
    1.5      Performing Arts ...................................................................................43
    1.6      Museums and Galleries.....................................................................44
    1.7      Activity Tourism ..................................................................................46
    1.8      Rural Tourism ......................................................................................49
    1.9      Wine Tourism .......................................................................................51
    1.10 Conference Facilities .........................................................................52
    1.11 Inbound Tour Operators and Group Handlers.............................53
    1.13 Conclusions..........................................................................................56
  2. Access and Infrastructure ........................................................................58
    2.1      Air Access.............................................................................................58
    2.2      Road Transport....................................................................................65
    2.3      Borders and Border Crossings .......................................................68
    2.4      Signage ..................................................................................................68
    2.5      Railway and Water Transport ..........................................................69
    2.6      Other Infrastructure............................................................................70
    2.7      Visa Regime..........................................................................................71
    2.8      Conclusions..........................................................................................72
  3. Environmental Impacts..............................................................................73
    3.1      Current Pressures on Natural Heritage Sites............................733
    3.2      Status of Natural Heritage Sites......................................................75
    3.3      Main Factors Leading to Nature Degradation .............................77
    3.4      Main Characteristics of Natural Heritage Visitor Flow..............78
    3.5      Legal Aspects of Natural Heritage Protection.............................79
    3.6      Roles and Responsibilities...............................................................80
    3.7      Conclusion............................................................................................81
  4. Markets and Marketing ..............................................................................82
  Markets ..................................................................................................................82
    4.1      Arrivals and Overnights ....................................................................82


                                                                                                                               v
    4.2      Seasonality ...........................................................................................86
    4.3      Accommodation Occupancy............................................................88
    4.4      Profile of Foreign Visitors.................................................................88
    4.5      Foreign Visitor Activities ..................................................................92
    4.6      Conclusions..........................................................................................94
  Marketing...............................................................................................................95
    4.7 Role of the Agency for Promotion and Support of Tourism ....95
    4.8      Marketing of Macedonia as a Tourism Destination ...................97
    4.9      Conclusions........................................................................................100
  5. Economic Impact and Investment Climate ........................................101
  Economic Impact ..............................................................................................101
    5.1 Contribution to Gross Domestic Product (GDP) .......................101
    5.2      Contribution to Foreign Exchange Flows ..................................102
    5.3      Contribution to Employment..........................................................103
    5.4      Contribution to Central Government Revenues .......................105
    5.5      Economic Linkages and Leakages ..............................................107
    5.6      Multiplier Effect of Tourism............................................................108
    5.7      Conclusions........................................................................................108
  Investment Climate...........................................................................................109
    5.8      Investment Levels in the Hotels and Restaurants Sector .....109
    5.9      Privatisation........................................................................................113
    5.10 Development Strategy .....................................................................113
    5.11 Regulation...........................................................................................114
    5.12 Trade Policy........................................................................................115
    5.13 Investment Policy..............................................................................115
    5.14 Company Registration.....................................................................115
    5.15 Technological Industrial Development Zones ..........................116
    5.16 Competition ........................................................................................116
    5.17 Price Control ......................................................................................116
    5.18 Sources of Funds..............................................................................116
    5.19 Tax Incentives ....................................................................................117
    5.20 Investment Protection and Trade Agreements .........................117
    5.21 Current Barriers to Entrepreneurship .........................................118
    5.22 Benchmarking....................................................................................118
    5.23 Conclusions........................................................................................120
  6. Human Resources ...................................................................................121
    6.1      Tourist Industry Definition..............................................................121
    6.2      Quantitative Analysis of the Tourism Industry Workforce ....122
    6.3      Qualitative Analysis of the Tourism Industry Workforce.......128
    6.4      Overview of Current Institutions and Programmes.................129
    6.5      Conclusions........................................................................................137
  7. Tourism Organisation and Management ............................................138
    7.1      Current Legislation...........................................................................140
    7.2      Ministry Organisation ......................................................................144
    7.3      Tourism Industry Organisation.....................................................145
    7.4       Conclusions ......................................................................................147
  8. SWOT Analysis .........................................................................................148
PART III ....................................................................................................................150
THE WAY AHEAD – STRATEGIC DIRECTIONS ............................................150
  9. Tourism Products and Services............................................................150


                                                                                                                             vi
    9.1       Iconic Products..................................................................................150
    9.2       Product Presentation / Development...........................................152
    9.3       Tourism Product Development Recommendations ................156
  10. Access and Infrastructure .....................................................................165
    10.1 Air Transport ......................................................................................165
    10.2 Road Transport..................................................................................166
    10.3 Tourism Road Signs.........................................................................167
    10.4 Railway and Water Transport ........................................................169
    10.5 Visa Issues..........................................................................................169
  11. Environment ..............................................................................................170
    11.1 Development vs. Protection and Management.........................170
    11.2 Promotion............................................................................................171
    11.3 Management and Protection ..........................................................173
    11.4 Plans, Studies and Strategies .......................................................176
    11.5 Conclusions and Recommendations ..........................................178
  12. Marketing and Targets for Growth ......................................................181
    12.1 Targets 2009-2013.............................................................................181
    12.2 Marketing Objectives .......................................................................183
    12.3 Priority, Secondary and Opportunity Markets ..........................184
    12.4 Branding ..............................................................................................187
    12.5 Strategic Approach...........................................................................190
    12.6 Promotional and Information Materials ......................................199
    12.7 Conference Tourism.........................................................................200
    12.8 Summary of Recommendations....................................................201
  13. Economic Development and Investment Strategy..........................203
  Economic Development ..................................................................................203
    13.1 Market Projections in the Short and Medium Term.................203
    13.2 Recommendations on Enhancing Economic Benefits...........206
    13.3 Summary of Recommendations....................................................209
  Investment Strategy .........................................................................................209
    13.4 Existing Investment Incentives .....................................................209
    13.5 Reccommendations for Investment Policy................................210
    13.7 Summary of Investment Recommendations .............................213
14.    Human Resources Development .........................................................214
    14.1 Outlook - Projection of Growth in Tourism Employment.......214
    14.2 Challenges and Issues ....................................................................216
    14.3 Priority Actions..................................................................................218
    14.4 Human Resources Planning in the Ministry of Economy ......223
    14.5 Conclusions – The Way Forward..................................................224
  15. Tourism Organisation and Management ...........................................226
    15.1 Organisational Roles and Functions ...........................................227
    15.2 Proposals for Organisation in Tourism ......................................233
    15.3 Legislation ..........................................................................................244
    15.4 Licensing and Categorisation........................................................244
    15.5 Summary of Strategy and Recommendations ..........................245
  16. Tourism Awareness.................................................................................247
Part IV.......................................................................................................................249
ACTION PLAN ........................................................................................................249
APPENDIX I.............................................................................................................264
  SELECTED EXAMPLES OF BEST PRACTICE ...........................................264


                                                                                                                             vii
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      Republic of Macedonia           National Tourism Development Strategy 2009-2013
Government of Republic of Macedonia




           Republic of Macedonia Tourism Development Strategy
                               2009-2013

FOREWORD

Together with agriculture, the Government of the Republic of Macedonia has identified
tourism as a priority sector for development. A “Master Plan Study for Tourism in the
Republic of Macedonia” was produced in 2003 but it was not implemented. This new
Tourism Development Strategy for 2009 – 2013, is intended to provide the existing
stakeholders, foreign and local investors as well as international donor agencies, with the
framework and necessary confidence to commit to tourism in the Republic of Macedonia.

The framework created and the confidence expressed will be guided by the ‘Vision for
Macedonian Tourism’ which will by 2013 have established its image as a notable
European destination for cultural and natural heritage-based tourism and be recognised for
its environmentally sensitive and sustainable, high quality products and services
developed in line with global best practice.

The Republic of Macedonia has a rich array of natural, historical and cultural tourist
assets. It is a place still largely unspoilt with the unique and diverse beauty of its lakes,
high mountains, virgin woods, rivers and streams and many cultural monuments and
archaeological sites reflecting the place where Saint Paul introduced Christianity to Europe
and the Greek, Romans and Ottoman Turks left their footprint.

The Republic of Macedonia is a small, land locked country of 25,713 sq km and a
population of just over 2 million. It is situated in the southern part of the Balkan Peninsula
bordered by Albania, Greece, Bulgaria, Kosovo and Serbia. At the break up of
Yugoslavia, Macedonia moved from being a republic within Yugoslavia to being a fully
independent and sovereign state.

Macedonia has a diversified topography, with hills, valleys, mountains, rivers, large and
small lakes and spas. It is renowned with its rich biodiversity. Nearly half the territory is
agricultural land and just over a third is forested.

The capital is Skopje, located in the north. The city of Ohrid (a UNESCO World Heritage
site) with its lake is the most prominent tourist area in the country. Other larger cities are
Bitola, Kumanovo, Prilep and Tetovo.

The Republic of Macedonia has an open economy with foreign trade accounting for 90
percent of GDP. While it is vulnerable to external factors it has progressed to become
both a politically and economically stable country.

After independence it suffered recession, the economy started to slowly grow in 1996.
Since 2005 the growth rate has been around 8 per cent. Per capita GDP stands at Euro
2,550. Inflation is low, just over 2 per cent, and the national currency the Denar is tied to
the Euro and is stable. However, unemployment stands at an unacceptable 36 per cent.
Foreign tourist numbers based on the number of stays in registered accommodation have
increased dramatically in recent years after the regional problems, from 99,000 in 2001 to
254,957 in 2008. In the same period, domestic tourism also grew nearly 50 per cent from
234,000 to 350,000.

Based on border crossing statistics, the total number of foreign tourist arrivals in 2006 is
estimated to have been between 930,000 and 1,020,000.

The main source markets by volume were Serbia, Greece, Bulgaria and Albania. Tourism
is unevenly distributed around the country and is concentrated in a few locations such as
the Ohrid Lake area and Skopje.

The climate is continental with a Mediterranean influence making it attractive for both
winter and summer tourism. With improved infrastructure and proper presentation of its
many and diverse tourist attractions it can be appealing to the discerning tourist.

The country was designated as a candidate country for membership by the EU in
December 2005. It will qualify for aid under the Instrument for Pre-Accession Assistance
(IPA) 2007-2008. The Tourism Development Strategy, in addition to guiding government,
FDI and domestic investment, will enable the allocation of IPA to tourism in a most
effective manner




Skopje

April 2009




                                                                                         10
                              EXECUTIVE SUMMARY


THE VISION FOR MACEDONIAN TOURISM

The Republic of Macedonia will by 2013 have established its image as a notable European
destination for cultural and natural heritage-based tourism and be recognised for its
environmentally sensitive and sustainable, high quality products and services developed in
line with global best practice.

MACEDONIA’S TOURISM PRODUCT

Macedonia’s tourism product is a rich combination of cultural and natural heritage which is
characterised by a largely pristine landscape of lakes and mountain scenery much of
which possesses a relative remoteness and peace rarely found in this 21st Century world.
Macedonia too has been a crossroads for millennia as peoples and armies have moved
back and forward across its land bringing their various cultures and spiritual beliefs and
leaving evidence of their passage for future generations to enjoy. The Romans built the
first basic roads some of which are followed by European Route E-75 which connects
Brussels to Athens but Macedonia is still relatively unknown despite its historic and
strategic importance.

Macedonia’s most highly valued and globally important feature is the UNESCO World
Heritage Site which incorporates both Ohrid Lake and the lakeside town of Ohrid, a
combination of rare environmental, scientific and cultural significance which in many ways
represents the very essence of Macedonia’s tourism product. The lake is one of the oldest
in the world and bears comparison with Lake Baikal in Russia and Lake Titicaca in
Peru/Bolivia while the town, with its medieval architecture and street plan, was originally a
Neolithic settlement and now claims the longest continuous human settlement, dating back
7,000 years.

In the area around the lake there are many attractive villages, churches, monasteries and
holy sites plus Galicia National Park, one of Macedonia’s three principal National Parks
and thus the ease with which a visitor can enjoy numerous cultural and natural heritage
features in many particular locations around the country is evident here.

Several major examples of the secular and spiritual built heritage from Neolithic through
Greek, Roman and Ottoman periods to more recent times are found across the country
including the Kokino Neolithic Observatory at Kumanovo, the ancient Kale Fortress site in
Skopje, the 4th Century B.C. Greek city of Herclea Lynketsis at Bitola, the 2nd Century B.C.
Greek Theatre at Stobi, the Roman amphitheatre at Bitola, the 10th Century fortress at
Ohrid, the 11thCentury Bigorski monastery and frescoes at Debar, the 13th Century
Treskavec monastery and frescoes at Prilep, the early 16th Century Jaja Pasha and Aladza
mosques at Skopje and Tetovo and the old Turkish quarter of Skopje.

The three National Parks of Galicia, Mavrovo and Pelister protect rich and rare flora and
fauna and the spectacular natural landscapes in which they are found but they also offer
wide ranging opportunities for rural and adventure tourism including special interest
sporting activities like hunting, fishing, skiing, hiking, mountaineering, caving, horse riding
and cycling/mountain biking.


                                                                                            11
     Eco-tourism and rural tourism activities are also available in many locations outside the
     National Parks where imaginative small businesses in accommodation, food/beverage
     production, handicrafts, guiding and sporting activities provision have set up, sometimes in
     cooperation with each other as in eco-tourism villages like Brajcino. The development of
     wine and food trails and spiritual/monastery themed routes which combine these special
     interests with accommodation, meals and guided tours has further extended the country’s
     tourism product.

     National folklore and traditional arts and crafts are highly regarded in Macedonia and
     represent an important dimension of national culture which can be enjoyed by visitors at
     numerous festivals, concerts and exhibitions throughout the year. Macedonia also
     cherishes the memory of its many historical and cultural figures whose lives and works are
     clebrated in museums, public buildings and monuments, including a statue in Skopje for
     the Macedonian born, world famous humanitarian, Mother Theresa.

     MACEDONIA’S TOURISM PERFORMANCE

     Foreign and Domestic Visitor Arrivals and Overnights

     The high point for both foreign and domestic visitor markets in Macedonian tourism was
     2000 and the events of 2001 precipitated a collapse of in excess of 50 per cent in both
     markets that year. A major recovery took place the following year and generally strong
     trend growth has been exhibited from the foreign visitor markets since, as shown in Table
     1, (visitor arrivals) and Table 2, (visitor overnights) below, with 2007 seeing the year 2000
     figures surpassed for the first time.

                     Table 1: Foreign Visitor Accommodation Registrations 2000-2008
            2000        2001       2002        2003   2004      2005       2006              2007      2008

Accom      224,016     98,946    122,861     157,692    165,306     197,216    202,357      230,080   254,957
Regists
Annual
increase    23.9        -55.8      24.2        28.3        4.8        19.3        2.6        13.7      10.8
%
      Source: SSO Statistical Yearbook of the FYRM, 2007 and SSO News Release, 09.02.2009



             Table 2: Foreign Visitor Overnights in Registered Accommodation 2000- 2008
            2000       2001       2002      2003       2004      2005    2006       2007               2008
Overn’ts   493,867 212,751 274,720 346,200 360,589 442,988 442,845 518,088                            587,447
Annual
increase     4.1        -56.9      29.1        26.0        4.2        22.8        -.03       17.0      13.4
%
      Source: SSO Statistical Yearbook of the FYRM, 2007and SSO News Release, 09.02.2009



     The domestic market has not been so buoyant following its own recovery in 2002,
     suffering further declines and lower growth rates thereafter. However, it is clear from the
     figures for 2008, shown in Tables 3 and 4 below, that although recovery beyond the 2002
     position has been achieved, the figures are still well below the results for 2000.



                                                                                                      12
                       Table 3: Domestic Visitor Accommodation Registrations 2000-2008
            2000          2001       2002        2003        2004        2005        2006        2007        2008
Accom
           408,507       234,362    318,851     325,459     299,709     312,490     297,116     306,132     350,363
Regists
Annual
increase     10.7         -42.6       36.1        2.1         -7.9        4.3         -4.9        3.0        14.4
%
       Source: SSO Statistical Yerbook of the FYRM, 2007 and SSO News Release, 09.02.2009


              Table 4: Domestic Visitor Overnights in Registered Accommodation 2000- 2008
             2000       2001      2002       2003       2004      2005    2006       2007                     2008
Overn’ts   1,940,772    1,041,831   1,575,664   1,660,667   1,504,845   1,527,053   1,474,550   1,501,624   1,648,073
Annual
increase     5.5          -46.3       51.2        5.4         -9.4        1.5         3.4         1.8            9.8
%
      Source: SSO Statistical Yearbook of the FYRM, 2007 and SSO News Release, 09.02.2009

      The comparative strength of the foreign visitor market is undoubtedly due to business
      related demand and this is evident from the more typical uniform seasonality pattern of this
      market exhibited across the year whereas the pattern for domestic demand demonstrates
      dramatic peaking during the traditional holiday months of July and August which account
      for nearly 85 per cent of their annual registrations and overnights.

       A Government-commissioned Border Crossing Survey conducted in 2004 (and thus far
      not repeated) found that Skopje is the destination for almost 50 per cent of foreign visitors
      followed by Bitola and Ohrid with around 15 per cent each while it is clear that for the
      domestic market, the traditional summertime attraction of Ohrid is the main destination for
      their overnight stays.


      Principal International Visitor Nationalities

      The principal source markets for foreign visitors (the top four most significant markets) to
      Macedonia in 2007 (latest available Country data), as shown in Table 5 below, are its
      immediate neighbours, with Serbia-Montenegro, Greece, Bulgaria and Albania (in that
      order) being responsible for almost 48 per cent of foreign registrations (arrivals) and 49 per
      cent of overnights. Serbia-Montenegro and Greece have always been the leading
      nationalities.

             Table 5: International Arrivals and Overnights by Top Generating Markets, 2007
            Country of Origin                    Arrivals                   Overnights
                                         Numbers           %         Numbers            %
      Serbia-Montenegro                      44,661            19.4             116,909          22.6
      Greece                                 28,618            12.4              58,525          11.3
      Bulgaria                               18,901             8.2              37,246           7.2
      Albania                                17,573             7.6              39,831           7.6
      Rest of The World                      120,327           52.4             265,577          51.3
      TOTAL                                  230,080           100.0            518,088          100.0
      Source: SSO, Tourism in the Republic of Macedonia, 2003 to 2007




                                                                                                            13
The Value of Tourism

The weakness of data available upon the tourism sector is particularly pronounced when
attempting to analyse the financial and economic value of tourism. Existing industrial
classifications used to categorise and collate data are inadequate for capturing the breadth
of the sector and this requires the use of easily identifiable data for the hotels and
restaurant sector as a proxy for the wider tourism industry and, as a result, this almost
certainly under represents the turnover/value of the sector.

Similarly, while the data on foreign exchange flows drawn from the travel account within
the Services Section of the Balance of Payments will cover foreign exchange transactions
conducted by foreign visitors, it will almost certainly include similar transactions by
Macedonian residents for purposes unrelated to the tourism sector (perhaps overseas
resident Macedonians remitting to or making foreign exchange payments in Macedonia)
and thus use of this data as a proxy for the contribution of foreign tourists to total foreign
exchange flows almost certainly over-represents of the value of this indicator.

In the absence of visitor expenditure and accommodation occupancy surveys and before
the development and introduction of a Tourism Satellite Account, any assessment of the
value of tourism to the economy can only be broadly indicative. Thus while it is understood
that foreign visitors and especially those staying overnight in registered accommodation
are leading the expansion of value and the contribution of tourism to the economy due to
their healthier growth and their much greater spending power compared to the largely
seasonal, slower growing and weaker spending domestic market, identifying an accurate
value for the overall contribution of tourism to GDP is difficult.

Tables 6 and 7 (latest data available in each Table) below show the year on year growth of
foreign exchange flows from tourism and the growth in year on year turnover from the
hotels and restaurants sector respectively, while Table 8 presents this same data but
expresses it as a percentage of national GDP for those same years. What Table 8
therefore demonstrates is that whereas growth in absolute terms is seen in both foreign
exchange flows and turnover in the hotel and restaurants sector, this growth as a
percentage of GDP is progressive for foreign exchange flows but static, at best, for the
hotel and restaurants sector. In addition, and bearing in mind the comments in the
paragraph above about the difficulties in assessing the contribution of the tourism sector to
the Macedonian national economy (GDP), it would appear that this contribution lies
somewhere between the figures shown for these two indicators i.e. somewhere between
1.7 per cent and 2.7 per cent of GDP.


             Table 6: Foreign Exchange Flows from Foreign Tourists 2003 - 2008
                      2003       2004       2005       2006        2007        2008
     Earnings
     (EUR              49.9       57.9      72.3       102.4      134.9       166.9
     Millions )
     Annual
                        -         16.0      24.9       41.6        31.7        23.7
     increase %
    Source: National Bank of Macedonia, 2008 and March 2009




                                                                                           14
              Table 7: Turnover from Hotel and Restaurants Sector 2003 - 2007
                           2003       2004        2005       2006        2007
           Revenues
           (EUR            72.3        77.0       82.5       84.9         96.9
           Millions )
           Annual
                             -         6.5         7.1        2.9         14.1
           increase %
         Source: State Statistical Office, 2008




    Table 8: Contribution to GDP from Foreign Exchange & Hotel/Restaurants 2003-2008
                    2003       2004        2005      2006       2007        2008
      Estimated
      GDP
                    4,110      4,335      4,684      5,097      5,800      6,090*
      (EUR
      Millions)
      Foreign
      Exchange
                    49.9        57.9       72.3      102.4      134.9       166.9
      (EUR
      Millions)
      Foreign
      Exchange
                     1.2         1.3        1.5       2.0         2.3        2.7
      as a % of
      GDP
      Hotel and
      Rest
      Turnover      72.3        77.0       82.5       84.9       96.9        N/A
      (EUR
      Millions)
      Hotel and
      Rest
      Earnings       1.8         1.8        1.8       1.7         1.7        N/A
      as a % of
      GDP
        Source: State Statistical Office, 2008 and National Bank of Macedonia
        *Estimate Based on Assuming 5% Growth in 2008 Over 2007



Employment in Tourism

Table 9 below compares the expansion of employment in the hotel and restaurants sector
with expansion in the overall working population and shows steady growth in both the
numbers and the percentage of the national workforce employed in the hotels and
restaurants sector. It would also appear that employment in the tourism sector (hotels and
restaurants) is in fact growing faster than in the economy as a whole, almost doubling
between 2003 and 2007, compared with only 8 per cent growth for the wider economy as
a whole in the same period.




                                                                                       15
         Table 9: Hotel/Restaurant Employees in the Working Population 2003-2007
                           2003        2004       2005       2006        2007
          Estimated
          Working
                          545,108    522,995     545,253    570,404    590,234
          Population

           Hotel/Rest
           Employees           9,880         12,672     13,558   19,034   18,995

           Hotel/Rest
           Employees
                                1.8              2.4     2.5      3.3      3.2
           as % of
           Total W/fce
           % Growth of
           Working              -2.9             -4.1    4.3      4.6      3.5
           Population
        Source: State Statistical Office, 2008



MACEDONIA’S REGIONAL COMPETITORS’ PERFORMANCE

It is useful to view Macedonia and its tourism product in the context of a selection of its
regional neighbours and competitors. Despite the fact that there is considerable variety in
terms of the size, level of economic development and diversity of principal tourism product
represented by the nations chosen, they nonetheless offer a constructive viewpoint for
consideration of how the Macedonian economy and its tourism sector broadly compares at
present while at the same time also offering some aspirational/inspirational direction for
the future.

Tables 10 and 11 below are split between the principal economic/tourism indicators and
the leading comparative tourism products for clarity of understanding. The major economic
and tourism indicators in Table 10 have been drawn from the annual UNWTO
compendium of Tourism Market Trends (TMT), Europe edition, which presents a concise
set of comparative data for research and analysis purposes.

          Table 10: Some Principal Comparative Economic and Tourism Indicators
 Country               Principal Comparative Economic and Tourism Indicators
              Area     Pop     GDP    GDP/     GDP%     Int      Int      Int    Int
             Sq km    Mills   Eur Bil  Cap     Gr’wth   O’nt    Tour    Tour    Tour
             ‘000’s            2006     Eur     2007   Arivs   Nts Mil   Rev   Rev as
                                       2006             Mil     2006   Eur Mil  % of
                                                       2006             2006    GDP
                                                                                2006
 Albania       29      3.2     7.26   2,303      6.0   0.06     0.13     805    11.1
  Austria      84      8.3    257.90 31,212      3.4   20.3     62.8   13,255    5.1
 Bulgaria     111      7.7     25.24  3,281      6.2    5.2     11.8    2,061    8.2
Czech Rep      79     10.3    113.90 11,095      6.5    6.4     17.0    4,396    3.9
 Hungary       93     10.1     89.93  8,925      1.3    9.3      8.5    3,371    3.8
Macedonia      26      2.0     5.10   2,550      5.1    0.2     0.44     102     2.0
 Romania      238     21.6     97.68  4,514      6.0    1.4      3.2    1,034    1.1
  Serbia       88      7.4     25.31  3,402      7.3    0.5      0.9     317     1.3
 Slovenia      20      2.0     30.45 15,149      6.1    1.6      3.4    1,425    4.7
Source: UNWTO, TMT 2007 Edition



                                                                                        16
In terms of physical size and population size, Macedonia compares most directly with
Albania and Slovenia but in terms of most of the other indicators, Macedonia ranks either
lowest or second lowest. Albania and Macedonia have, respectively, the lowest and
second lowest levels of international arrivals, but it appears that Albania generates several
times the level of foreign exchange earnings from its international arrivals than does
Macedonia whose earnings are the lowest of all the nations compared. GDP per head of
population is lowest in Albania but not much higher in Macedonia while Slovenia has a
GDP per head nearly six times that of Macedonia.

 It is quite clear therefore that the volumes and values of Macedonia tourism are at the
lowest end of the comparative range presented here and this demonstrates that
Macedonia is lagging behind its regional competitors; however, it also demonstrates that
there is a considerable opportunity to catch up with the progress made by its neighbours
and implementation of the tourism strategy is designed to accelerate this process.

Table 11, which compares the leading national tourism products of these same countries,
has been drawn from their National Tourism Organisation websites and identifies the
direction and focus of their choice of leading national tourism product categories and this
has enabled the top three products to be identified in each country. Macedonia would thus
appear to be competing directly with Albania, Austria, Romania and Serbia on cultural and
heritage tourism, with Albania and Serbia on Mountains and rural tourism and with Albania
and Bulgaria for beach tourism.

                  Table 11: Leading Comparative National Tourism Products
Country                        Leading Comparative National Tourism Products
             Beach        City        Conference Culture /   Mountains Spa /       Ski /
             /Lake        Break                  Heritage    / Rural   Health      Sports
Albania           *                                   *           *
Austria                                   *           *                                *
Bulgaria          *                                                        *           *
Czech                          *          *                                *
Hungary                        *          *                                *
Macedonia         *                                   *           *
Romania                        *          *           *
Serbia                         *                      *           *
Slovenia                       *                                           *           *
Source: National Tourist Organisation Websites

These comparisons are of course somewhat indicative since the beach tourism in
Macedonia is lake-based and not sea water based as in Albania and Bulgaria while both
Romania and Slovenia also have considerable mountain and rural tourism resources
which compete directly with those of Macedonia.

A number of case study examples of best practice followed in the development of several
of the national tourism product categories identified in Table 11 above, can be found in a
separate Appendix at the end of this report.




                                                                                            17
MACEDONIA’S FUTURE PERFORMANCE TARGETS

The success of the Development Strategy can first and foremost be monitored by the
extent to which the Action Plan is implemented and be judged by the extent to which the
‘success criteria’ identified for each activity within the Plan are achieved. The Action Plan
with its extensive list of ‘success criteria’ may be found below in Part 4 of this report.

Additionally, and arguably more explicitly and simply, the clearest signs of progress
resulting from the implementation of the Development Strategy will be found in the
performance of several key statistical indicators and their targets which have been set
down in Section 12, Marketing and Targets for Growth, and Section 13, Economic
Development and Investment Strategy, within Part III of this report. These principal
statistical indicators and their targets are also presented at Tables 12 to 18 below,
covering the volume and value of foreign and domestic visitors together with an estimate
of their joint contribution to GDP.

It must be noted however that the weaknesses in the existing data available for the tourism
sector places constraints upon the analysis that can be conducted upon them and action
to deal with this statistical issue is described within Part 4 of this Srategy, the Action Plan.
In addition, it must be further noted that a five year time horizon is particularly short to
demonstrate the benefits of the Development Strategy since the time lags between the
implementation of many of the actions (including those of a marketing nature) and the
realisation of results can easily take two to three years, alongside of which is now laid a
worldwide economic downturn whose impact could be felt for at least the next two years.


Targets – Foreign Visitors

It has taken until 2007 for foreign visitor registrations in accommodation to match (and
surpass) the 2000 level, enhanced by a 14 per cent rise in 2007 itself. This recent strength
has been maintained with a solid 10.8 per cent growth in 2008 despite the background
weaker international economic situation which is starting to influence travel decisions.

In view of the recent strong registrations performance in 2007 and 2008 and in recognition
of the significance which the international economic slowdown will have for the next two
years, (and bearing in mind the current low level of promotional activity by Macedonia in
foreign markets, particularly when there is increased publicity from competitor destinations
such as Serbia, Montenegro and Bulgaria), it is considered that an average annual growth
forecast of 5-8 per cent is reasonable. However, provided the restructuring and
coordination of marketing activity recommended in this strategy is implemented promptly,
growth should improve as the wider economic climate strengthens from 2011, reaching an
on going level of 8 per cent annual growth from 2013 onwards. The target assumptions
and resultant forecasts are shown in Table 12 below.

The UNWTO is forecasting that worldwide tourism growth will stagnate or decline in 2009
(a 0 to -2 per cent forecast) however this is a worldwide average which is a combination of
both positive and negative outlooks from different parts of the world. In 2008 for example,
Eastern Europe (which includes Macedonia) showed annual growth of 2.6 per cent
whereas Western and Southern Europe showed a decline in growth of 1 to 2 per cent and
although even Eastern Europe demonstrated a decline of 1.5 per cent in the final quarter
of 2008, the characteristics of the foreign visitor markets for Macedonia (the importance of


                                                                                             18
regional visitor markets, the business market and the visiting friends and relations (VFR)
market) suggests that their familiarity with Macedonia and knowledge of its generally lower
level of market prices can limit some of the impact of the global financial crisis and
therefore support continuation of visitor growth at more moderate rates.

The UNWTO medium to longer term forecast for international growth in worldwide tourism
is around 4 per cent annually and while it is true that in the last few years Macedonia has
enjoyed growth in excess of this level (see Tables 1 and 2 above) as a consequence of the
strength of the world economy, and that a weakening of the world economy is expected to
be reflected in lower levels of tourism growth for Macedonia, nevertheless, the
combination of Macedonia’s favourable mix of foreign visitor markets together with the
implementation of the National Tourism Development Strategy, is still anticipated to result
in a maintenance of tourism growth at levels above the UNWTO medium/longer term
average but at the more moderate rates than before, shown in Table 12 below.

         Table 12: Target Foreign Visitor Accommodation Registrations 2008-2013
                           2008*     2009      2010    2011      2012      2013
        Accommodation 254,957 267,705 281,090 297,955 318,812 344,317
        Registrations
        Annual increase
                            10.8      5.0       5.0     6.0       7.0       8.0
        %
       * Actual           Source: State Statistical Office and UNWTO Consultant Estimates

The past trend has been for overnights to increase and decrease very much in line with
accommodation registrations. Although it is an objective to increase the length of stay of
leisure visitors, it is likely that this will be offset by an increase in shorter duration business
trips. Consequently, the overnights target is set at the same rate of increase as for
registrations except for 2008 where the estimate has been based on the availability of data
for that year. Table 13 below presents the target assumptions and resultant forecasts.

       Table 13: Target Foreign Visitor O’nts in Registered Accommodation 2008-2013
                          2008*       2009      2010      2011    2012      2013
       Overnights        587,447 616,819 647,660 686,520 734,576           793,342
       Annual increase
                           13.4        5.0       5.0       6.0     7.0       8.0
       %
     * Actual           Source: State Statistical Office and UNWTO Consultant Estimates



The Target Revenues shown in Table 14 below are presented in millions of Euros at 2008
values and thus there have been no assumptions or provisions made for the possible
effect of inflation which could improve the nominal value of these figures.


     Table 14: Target Revenues from Foreign O’nts in Rgtd Accommodation 2008- 2013
                                            2008    2009 2010 2011 2012 2013
    Revenues (EUR Millions at 2008 values) 166.9* 175.2 184.0 195.0 208.7 225.4
              Annual increase %             23.7     5.0    5.0  6.0    7.0     8.0
  Source: National Bank of Macedonia, 2009 and UNWTO Consultant Estimates

* This is the National Bank of Macedonia figure for 2008 taken from the travel sector within
the Services Account of the Balance of Payments. The $US figure in the Balance of
Payments has been converted to Euros using prevailing conversion rates.


                                                                                                19
Targets – Domestic Visitors

Setting targets for domestic tourism is much more problematic. Growing affluence on the
one hand is likely to stimulate additional day-off taking – second and third holidays,
particularly short breaks. This will generate more demand outside of the peak summer
season, particularly for winter holidays. On the other hand, however, if and when visa
restrictions are relaxed on outbound travel this will reduce both the cost and hassle of
foreign travel. Then a significant increase in foreign travel can be predicted as
Macedonians’ pent up desire to visit other countries and friends and relatives abroad can
be fulfilled more easily. This should result in a decrease in peak season demand for
domestic holidays and a corresponding increase in outbound travel over the summer
months.

The net effect of this is likely to be a slower increase in domestic registrations and
overnights of about 3 per cent per annum in the medium to longer term. Immediately,
however, it is not considered likely that visa restrictions will be lifted soon and short term
international economic weaknesses may stimulate greater domestic holiday taking
particularly by those Macedonians who might have travelled outside the country. Thus the
targets for domestic visitor registrations and overnights in Tables 15 and 16 below
demonstrate strong growth in 2008 followed by lower growth during the next two years
when international economic circumstances are anticipated to have an impact on the
Macedonia economy before slightly lower rates of growth in registrations and visitor
overnights are expected from 2011, once economic recovery tempts more Macedonians to
travel abroad on holiday, instead of staying at home.

         Table 15: Target Domestic Visitor Accommodation Registrations 2008-2013
                             2008*       2009    2010     2011       2012      2013
   Accommodation
   Registrations            350,363 367,881 386,275 397,863 409,799 422,093
   Annual increase %          14.4        5.0     5.0      3.0        3.0       3.0
    * Actual         Source: State Statistical Office and UNWTO Consultant Estimates


      Table 16: Target Domestic Visitor O’nts in Registered Accommodation 2008-2013
                    2008*      2009        2010         2011     2012       2013
     Overnights 1,648,073 1,730,477 1,817,000 1,871,510 1,927,656 1,985,485
     Annual
     increase        9.8        5.0         5.0          3.0      3.0        3.0
     %
    * Actual    Source: State Statistical Office and UNWTO Consultant Estimates

Preparation of targets for revenues from domestic visitor overnights is even more
problematic since no data is collected on the subject and no surveys have been
undertaken. The value of domestic tourism is not high in view of the relatively low levels of
pay in the domestic economy and thus the extent to which discretionary income is
available for tourism purposes. However, it is important not to ignore the value of a sector
which is currently generating in excess of 1.6 million overnight stays per annum and
therefore a judgement has been made using crude anecdotal evidence which suggests
that an average of Euros 15, per person per overnight stay, may be a reasonable figure to
adopt as a basis for preparing the target revenues in Table 17 below. No allowance for
inflation has been made in the preparation of these target revenues.



                                                                                           20
   Table 17: Target Revenues from Domestic O’nts in Regtd Accommodation 2008-2013
                     2008*      2009     2010        2011      2012      2013
      Overnights 1,648,073 1,730,477 1,817,000 1,871,510 1,927,656 1,985,485
      Revenues
      (EUR
      Millions at     24.7      25.9      27.2        28.1     28.9       29.8
      2008
      values)
      Annual
      increase         9.8       5.0      5.0          3.0      3.0       3.0
      %
    * Actual     Source: State Statistical Office and UNWTO estimates




Targets – Tourism Sector Contribution to GDP

Once again, the importance of demonstrating the value of tourism to the economy can be
assisted by the preparation of estimates which show the contribution of both domestic and
foreign visitors to national GDP.

Having separately identified both foreign and domestic revenue targets for 2008 – 2013 in
Tables 14 and 17 above, the two are now combined in Table 18 below and presented as a
percentage of national GDP. This Table demonstrates the steady growth in the
contribution of tourism to GDP from 3.1per cent in 2008 to 3.4 per cent in 2013.

To prepare this table it has been necessary to make assumptions about the future growth
of national GDP and this has been done with reference to recent World Bank and IMF
statements upon the Macedonian economy. It has been assumed that GDP growth in
2008 is 5 per cent on the basis of National Bank of Macedonia estimates, but this is
expected to fall to 3.0 per cent in 2009 and 2010 rising back to 5 per cent from 2011 to
2013 according to the international organisations referred to above. Once again, no
allowance for inflation has been made.


    Table 18: Target Contribution to GDP from Domestic and Foreign Visitors 2008-2013
                      2008       2009       2010       2011       2012       2013
     Estimated
     GDP (EUR
     Millions at      6,090      6,272      6,461      6,784     7,123       7,479
     2008
     values)
     Tourism
     Earnings
     (EUR
                      191.6      201.1      211.2      223.1     237.6       255.2
     Millions at
     2008
     values)
     Earnings as
                       3.1        3.2        3.2        3.3        3.3        3.4
     a % of GDP
               Source: National Bank of Macedonia and UNWTO estimates




                                                                                        21
A SUMMARY ACTION PLAN TO MEET THE TARGETS

Tourism as an economic activity is arguably the most diverse and furthest reaching of any
sector of the economy in that it has a greater number of meaningful connections and
economic linkages with other sectors than any other economic activity and as such has an
important (but less widely understood) role to play in economic development.

Government national economic planning programmes and legislation from 2004 have
identified the tourism sector as having potential for growth and as a priority for
development, recognising its job creation potential and ability to provide support for other
wider national objectives. This favoured priority status contrasts with a failure to implement
an earlier tourism development strategy plan prepared in 2003 and is an encouraging
position from which to view the opportunity of this new strategy, the starting point from
where the realistaion of Macedonia’s tourism potential can begin.

The tourism industry is a largely private sector driven activity but it requires the support of
a positive public sector framework and enabling environment to assist its progress,
particularly in a situation where, as in Macedonia, development of the sector and
Government support for it has been historically weak. Putting the necessary organisational
building blocks and budgets in place within the public sector is a fundamental pre-condition
for implementing the Strategy and for facilitating greater public and private party
communication and cooperation to effectively realise the potential of Macedonian tourism
and its extensive linkages across the economy.

The Development Strategy SWOT analysis has identified a series of key initiatives and
recommendations covering product development, infrastructure, human resources, natural
and cultural heritage, marketing, investment and organisation which is both a reflection of
the potential of Macedonian tourism but also a recognition of the limited attention paid to
the sector by Government in the last few years.

The recommendations below have in turn been translated into a detailed Action Plan
which expands upon the recommendations, identifies appropriate activities, and identifies
lead and support organisations and indicative budgets. The detailed Action Plan for
realising the potential of Macedonian tourism may be found in Part 4 of this report and is
summarised below:




                                                                                            22
                            THE SUMMARY ACTION PLAN


I – Recommendations for development of products and services

Iconic Products
   • World Heritage Site for Markovi Kuli - Prilep and Cocev Kamen - Kratovo
   • Pursue NASA claim on Kokino as a pre-historic observatory
   • Mother Theresa House Reconstructed
   • Green Tourism Destination/ Organic Food

General Tourism Products
  • Signpost Scenic Routes to diversify tourists to off highway attractions
  • Develop itineraries to achieve regional spread of tourism
  • Draw up a list and promote tourism activity products

Accommodation
   • Quality Pension Style Hotels – Family operated, small, traditional
   • High Quality International Brands – Skopje
   • Low-budget recognized brand on Corridor X
   • Monastery Accommodation – co-operate in marketing guide, brochure

Accommodation Categorisation
   • Introduce annual fees to contribute to cost for regular assessments
   • Review criteria and introduce subjective qualities – food, decor, service etc
   • Regularise Grey Market accommodation

Lake Ohrid
   • Shoulder Season conferences and festivals

Nature Parks
   • National Park business plans
   • More tourism activity in parks to more fully exploit their potential
   • Build two interpretation centres
   • Improve and upgrade Mountain Huts, children’s and worker’s accommodation

Wine Tourism
   • Immerse as part of Rural Tourism
   • Develop scenic itineraries, walking, rural accommodation and traditional cuisine
   • Tikves Wine Route Foundation be assisted with signposting and marketing

Rural Tourism
   • Brajcino as extraordinary example of development challenges
   • Pehcevo, Berovo, Kolesino, Bansko, Mokrino, Smolare, Vevcani, and Galichnik all
       have potential
   • Municipalities, Agency for Promotion and Support of the Tourism, NGOs support
       with joint development programs and promotions




                                                                                        23
Culture and Handcrafts
   • Publish annual calendar and events
   • Bring Tour Operators and cultural organisers together
   • Grouping events and packaging
   • Use crafts and culture in promotional activities

Spas
   •   Upgrade/renovate
   •   Convenient for local and regional markets
   •   Be health/wellness centres rather than medical facilities
   •   Commission market study

Hunting
  • Stricter controls over illegal hunting
  • Increase stock
  • Targeted marketing when stocks and controls in place
  • Commission market study

Conferences and Meetings
  • Produce comprehensive directory/brochure of conference facilities
  • Commission study into potential national conference centre


II – Recommendations for access and infrastructure

Air Access
    • Pursue full implementation of European Community Aviation Area Agreement for
       III, IV and V Freedoms
    • Provide conditions for low cost carriers

Road Transport
   • Implementation of road improvements in the National Development Plan (NPD)
   • Improve signposting
   • Extend use of Brown Tourism signposting
   • Develop criteria for using such signs

Visa and Immigration controls
   • Allow EU citizens to enter on National Identity cards

III – Recommendations for Human Resources Development (HRD)

Identification of future needs for employment in the tourism and training needs
   • Conduct survey on labour to identify employment and training needs
   • Tourism management training

Improvement of hospitality and education in tourism and training within the
educational system
   • Improved procurement of education training equipment
   • Increase the percentage of practical training classes



                                                                                     24
   •   Develop training programmes

Improvement of the liaison between the educational system and the industry
   • Establish Human Resource Development Committee in tourism

IV - Recommendations for Environment and Cultural Heritage management and
protection
    • Improve environment management
    • Improve protection of natural heritage
    • Identify cultural heritage sites with tourist potential
    • Improve protection of cultural heritage
    • Manage visitors on natural heritage sites by their better informing
    • Identify additional natural areas of tourist potential which needs protection

V – Recommendations for Marketing

   •   Improve the collection, analysis and dissemination of visitor statistics
   •   Improve the collection, analysis and dissemination of accommodation occupancy
       data
   •   Establish a well resourced marketing department within the Agency for Promotion
       and Support of Tourism
   •   Develop a powerful tourism brand with assistance from an international
       consultancy
   •   Develop and maintain a central tourism product and services information database
       as a resource for all promotional and distribution media
   •   Further develop and expand the national tourism portal as the comprehensive and
       impartial data source for information on tourism opportunities in Macedonia
   •   Further develop the Tourist Information Centre network with standardised services
       and procedures and staff training
   •   Develop a cohesive and coordinated range of destination promotional materials
   •   Marketing of the Macedonian tourism destinations and attractions internationally

VI – Recommendations for Economic Development of Tourism

   •   Improved statistical data - ensuring pre-conditions for the introduction of a Tourism
       Satellite Accounts (TSA) system in the next 5 years;
   •   Increased government investment in tourism, having in mind its important
       contribution to GDP, employment, foreign exchange earnings and government's
       revenues;
   •   Strengthened linkages of tourism with other sectors (such as agriculture), assisted
       by an awareness/seminar programme which will lead to a reduction in economic
       leakages.

VII – Recommendations for Investment
    • Cooperate with Agency for Foreign Investments to get priority status for tourism
    • Establish a small business advisory service for the tourism sector
    • Organise and launch an investment forum/fair for potential tourism investors
    • Assist the process of Land Cadastre development
    • Improve the banking sector



                                                                                         25
VIII – Recommendations for Tourism Organisation
    • Strengthen the Tourism and Catering Sector at the Ministry
    • Strengthen the Agency for Promotion and Support of Tourism
    • Have municipalities adopt roles as recommended
    • Classification/categorisation system for accommodation to be implemented as a
        development tool in addition to its use as a marketing tool

IX – Recommendations for Tourism Awareness
    • Develop and implement a Tourism Awareness Programme




                                                                                26
                                        PART I

                THE VISION FOR MACEDONIAN TOURISM

The Republic of Macedonia will by 2013 have established its image as a notable European
destination for cultural and natural heritage based tourism and be recognised for its
environmentally sensitive and sustainable, high quality products and services developed in
line with global best practice.




                                                                                       27
                                                 PART II

                                 CURRENT PERFORMANCE


1.        Tourism Products and Services

In this chapter we look at the range of tourism products and services in Macedonia,
identifying the types, locations and where possible the quality and suitability for both
domestic and international tourists

1.1       Accommodation

According to the Statistical Yearbook from 2006, the tourism accommodation structure is
made up of 72,637 beds: 16,187 or 22,46 per cent are so-called basic facilities: hotels,
overnight lodging houses, motels and tourist facilities and 55,782 beds or 77,54 per cent
goes to complementary capacities.


                       Table 1.1: Capacity of the accommodation facilities in 2005
      Accommodation establishment                         Number of Beds            %
      ‘Basic Facilities’
      Hotels                                                          14,369       20.0
      Overnight lodging houses                                            347       0.4
      Motels                                                            1,371       1.5
      Tourist facilities                                                  193       0,6
      ‘Complementary Facilities                                                      .
      Tourist camps                                                   11,991       15.5
      Spas                                                              1,096       1.6
      Mountain lodges and houses                                           47       0.3
      Enterprise vacation facilities                                    7,347      10.3
      Facilities for children and adolescents                           7,717      10.9
      Temporary lodging facilities                                        534       0.7
      Sleeping cars                                                     1,680       2.2
      Private rooms                                                   25,818       36.0
      TOTAL                                                           72,637       100.0
      Source: Statistical Yearbook of the Republic of Macedonia, 2006



In the last 10 years the total number of beds has decreased (in 1996 there were 7.030
more beds than in 2005). This stagnation can be marked in all types of accommodation,
but the biggest decrease of beds is found in tourist camps.

One of the most significant attributes of this structure shown in Table 1.1 above is the fact
that more than 89 per cent of all Basic accommodation capacities is in hotels.
Complementary capacity’s biggest share is in private rooms (46.52 per cent) and tourist
camps (20.01 per cent).




                                                                                           28
      Figure 1.1: Type of Accommodation facilities in Macedonia - 2005 in percentage
                      Te mporary C hildren and Youth
                    accommodation    Re st Houses
                       facilities        10%
                         1%                     A u to Camps
                                                     3%
                                                                    Hotels
                                                                    31%

                Wor kers Rest                                                Pe nsions
                  Hou ses                                                      1%
                   35%
                                                                  Motels
                                                       S pa
                                Mountain houses                   10%
                                                       2%
                                     1%
                                                            Overnight houses
                                                                  6%
                                      Tourist settlements
                                             0%
              Source: State Statistical Office

Figure 1.1 above demonstrates that in terms of the number of accommodation facilities
available in Macedonia in 2005, the largest number (35 per cent) were Workers Rest
Houses, followed by Hotels (31 per cent) then Motels and Children and Youth Rest
Houses with 10 per cent each.


Hotels




In Macedonia currently there is a limited presence of international hotel chains (except for
Best Western – Holiday Inn). This lack of international hotel chains is limiting the
opportunity to attract foreign tourists and at the same time to expose western industry
standards that could be easily replicated in other local hotels. There is growing awareness
for the need to invite some international hotel chains to Macedonia. Some attractive
locations in Skopje and in Ohrid have been identified and international tenders are to be
organised to attract potential foreign hotel chains/investors.

The accommodation facilities in Macedonia in 2006 were categorised by the star system
(till 01.08.2005 as seen from the State Statistical Office data the system applied was still
based on categorisation A, B, C as previously used in ex-Yugoslavia). The new
categorisation has not been applied to all accommodation facilities. There are 50 per cent
more hotels/motels in addition to the categorised ones to be found in the business
directories, travel agency brochures which have not been evaluated. The application of



                                                                                         29
the star system brought an order in categorisation of the accommodation services, but it is
not following international standards in its application. This is especially true for the 4 or 5
star hotels where neither the physical conditions (the space of the room, the number of
entertainment facilities (swimming pool, children’s playground) or the provision of business
equipment (internet, small office, fax service) and the quality of services (it is slow,
limited offer of international, at least European, dishes, the wine card only local, etc.)
respond to the standards.

Table 1.2 below shows that the number of 5 star hotels in the two most important
destinations, Ohrid and Skopje, is limited, Ohrid has only one and Skopje five 5 star hotels.

Outside of Skopje, Ohrid, Struga and Marovo there is a shortage of hotel accommodation
particularly of the medium to upper range. This shortage of upper range hotels is further
compounded by the over categorisation of the properties.


 Table 1.2: Hotels by Category and by the new Regulation of the Ministry of Economy - 2007
                     Location       5*      4*     3*       2*      1*
                     Skopje          5       4      5       10      5
                     Ohrid           1       6      4       11      7
                     Struga          -       2      -       1       2
                     Gevgelija       2       -      -        -      1
                     Bitola          -       1      -       3       1
                     Prilep          -       1      -        -      1
                     Gostivar        -       1      -       2       3
                     Mavrovo         -       1      3       2        -
                     Krusevo         -       -      1       1        -
                     Tetovo          -       -      1        -      1
                     Probistip       -       -      1        -      1
                     Veles           -       -      1        -       -
                     Strumica        -       -      -       2        -
                     Bansko          -       -      -        -      1
                     Stip            -       -      -       2       1
                     Kicevo          -       -      -       1       2
                     Vinica          -       -      -       1       1
                     Kumanovo        -       -      -       1       1
                     Kocani          -       -      -        -      1
                     Negotino        -       -      -        -      1
                     Delcevo         -       -      -        -      1
                     Resen           -       -      -        -      1
                     Pretor          -       -      -        -      1
                     Total           8      16     16       37     33
                       Source: Ministry of Economy


More than 80 per cent of all beds are concentrated in the lake destinations. Skopje has 10
per cent. Beds in the major mountain resorts are taking around 5 per cent and spas have
only 1.7 per cent of all capacities in Macedonia.

Bearing in mind the quantity and quality of all classified hotel establishments, it is evident
that there is a shortage of 4 and 5 stars hotels. They simply can not meet current market
demand in the peak summer season. From the other side, the main (summer) season,
especially in Ohrid and other lake (and mountains) destinations lasts only 45 - 60


                                                                                             30
days/year. With these performances, almost all of these hotels can be described and
defined as strictly seasonal accommodation units.

According to HOTAM, in the last 3 years the average annual rate of hotel occupancy
nationally was approx. 45-48 per cent. Certain improvements (but not more than 50 per
cent occupancy) are expected this year.

Because of the very short season the occupancy level in Ohrid is below this national
average. The situation with Skopje hotels is quite different. The average annual rate of
occupancy is just over 70 per cent. Skopje hotels are empty during the weekends. In the
capital of Macedonia the demand for quality hotel accommodation is still much bigger than
the current offer.

In other cities and towns (outside the lakes districts and Skopje, especially Prilep, Veles,
Tetovo, Gostivar, Kumanovo etc.) the hotel situation is poor: one (or two) city hotel(s),
usually old and not attractive for the international market. Bitola, Gevgelija and Strumica
can be recognized as urban areas with a few reasonable hotels. The location of these
cities near the Greek border is the main reason for this; all hotels are oriented on casino
tourism (gambling is forbidden in Greece and a lot of people are coming to Macedonia for
that reason).

Other Accommodation

More than 36 per cent of all recognised accommodation capacities in Macedonia are in
private rooms as demonstrated in Table 1.1 above, (most of them concentrated in Ohrid,
some in Krusevo, Skopje, Struga, and Dojran). There is still no special attention made by
the local authorities for registration and categorisation of these units. First very modest
steps have only been made in Ohrid, without significant effects.

The percentage of so called “workers’ rest houses” (35 per cent) both in the number of
facilities and in number of accommodation units (rooms) is higher than the percentage of
hotels (31per cent) can be seen in Figure 1.1 but most of their facilities are old, with limited
offer, unresolved ownership and management issues. There may be potential if there is
proper reconstruction to provide a market oriented offer.

The children’s and youth accommodation facilities were recently offered by the
Government for sale (Auction), and most of them are in very bad physical condition.

They are situated in the all tourist areas (mountains, lakes, ski resorts, national parks) and
with reinvestment have potential for tourism.

                               Table 1.3: Auto Camps as of 01.08.2005
          Auto Camps                             Number of camps      Available beds
          Total                            12          1,025               8,900
          I category                        2           260                2,000
          II category                       6           148               43,350
          III category                      4           617                2,550
       Source: State Statistical Office




                                                                                             31
  Table 1.4: Equipment at Auto Camps and Special Services as of 01.08.2005
          Equipment             Total      Category I     Category II    Category III
   Number of camps               12            2               6             4
   Food store                    9             2               5             2
   Phone cabin                   11            2               6             3
   Tennis court                  3             -               2             1
   Volleyball playground         5             1               2             2
   Basketball playground         6             1               3             2
   Football playground           8             2               4             2
   Mini golf                     2             1               1              -
   Ping-pong                     8             4               4              -
   Laundry service               3             1               2              -
   Source: State Statistical Office


The existing 12 auto camps identified in Tables 1.3 and 1.4 above are categorised in three
categories with just two in the highest category and located on Ohrid Lake shore. The
camps are more than twenty years old, with old fashioned facilities, style and offer. The
two first category camps are also equipped with some sport facilities, and one of them
offers a free internet zone. The camps are totally seasonal, open only in high summer
season (June-September).

The organisation of the camps is old, with limited space in the surrounding of each unit
and little privacy. The electricity system and sewage is only effective in two camps and is
rather problematic in all the other ones. The hygiene and maintenance is a large problem
in almost all camps.

There are 6 camps at the Ohrid shore of which 5 are still working. There are three on the
Prespa shore of which only one is active. One in Skopje which is non active and two in
Dojran, which have been re-opened after 10 years inactivity.

Overall the sites no longer meet modern tourism expectations. A number of the sites are
in attractive locations and with reinvestment in modernisation have good potential.

Restaurants

In 2005, there were 2.190 restaurant establishments in Macedonia. According to the legal
framework (Law on hospitality, 2005) all restaurants should be registered and categorised
by the international stars rating standards. However, this has not been implemented.




                                                                                        32
This lack of star rating is not seen as a deficiency by visitors, who select where to eat
mainly from recommendations and guide books, not star ratings. The categorisation
implementation effort could be saved; the essential being that health and safety
regulations are strictly enforced.

There appears to be a lack of traditional restaurants in Macedonia (especially in Skopje
and Ohrid) with old style interior, furniture, costumes, traditional folklore music,
Macedonian and other ethnic food and drinks. Most of the restaurants in Macedonia are
oriented to fast food menus, grill and well-known (but inappropriate) international cuisine.

The total number of seats in restaurants in 2005 was 131.379. The total number of
employees in tourism business in 2005 was 10.671.


1.2      Spas




Table 1.5 below shows that there are eight spa resorts, built or renovated around the
1970’s, currently operating in Macedonia. The treatments offered are almost entirely of a
medicinal nature and, except (to a very limited extent) for Debar and Negorci Spas, do not
cater for the wellness and beauty sectors, for which there has been an expanding demand
in Western Europe and elsewhere. Map 1.1 below shows the locations of the eight spa
resorts.

                               Table 1.5: Spa Resorts in Macedonia
                Name/Location              °C       Accommodation     Medical    Wellness
                                                          Units      Personnel
  1       Bansko/Strumica                   72             70                        -
  2       Kezhovica/Shtip                   57             25                        -
  3       Negorci/Gevgelija                 40             20                        -
  4       Banja/Kocani                    37-70             -            -           -
  5       Katlanovo/Skopje                24-53            90                        -
  6       Proevska/Kumanovo                 30             50            -           -
  7/8     Kosovrasti, Banjiste/Debar      38-48            612
Source: State Statistical Office




                                                                                         33
                                   Map 1.1: Spa Resorts




There are no other entertainment facilities or other offer outside of the spa complexes.
The tourist can feel bored and isolated, sharing the place with “ill” people. The ownership
and management of the spas is unclear. Except for Bansko, Banjiste, Kosovrasti, and
Negorci, very few private investments are thought to have been made in the last five
years.

Legislation is pending whereby spas will decide whether they are purely medical
institutions and thereby not subject to accommodation standards and classification. It is
anticipated that the current accommodation in most spas, shown at Table 1.6 below,
should be classified as of one or two star quality.

Visitor length of stay at spas is generally 10-15 days and occupancy is high year round.
While catering mostly to the domestic market, many foreign visitors, mostly from the
diaspora, also stay at the spas. For promotional activity there is a heavy reliance on word
of mouth publicity and local advertising.

Some spas are upgrading their treatment and accommodation facilities and contemplating
expansion. Based on the steady domestic demand this is a logical strategy. It may also
permit an expansion of business from regional markets. However, expansion into other
markets will require either the provision of a unique treatment not available elsewhere
and/or development of ancillary wellness and beauty facilities with accommodation of at


                                                                                        34
least 4 star calibre. Any decision to expand in this way should be based on research of
market potential bearing in mind there is strong competition in markets such as Hungary
and Bulgaria.

                 Table 1.6: Accommodation facilities in the Spa Resorts 2005
                             Spa resorts
                 Hotels                                          2
                 Spa (hospital)                                  6
                 Workers Rest Houses                             1
                 Total                                           9
               Source: State Staistical Office



1.3    Natural Heritage

National Parks

Accommodation facilities in the mountain areas are limited as Table 1.7 below shows, but
the three national parks are well managed areas, dedicated to the protection of the
environment. In recent years there were many investments in mountain area activities for
tourists (mountain bike trails, horse rides, hiking trails, etc.). These are still in the early
stage and their future will directly depend on tourism growth from the present low level.

                 Table 1.7: Accommodation Facilities in the Mountains 2005
                           Mountain areas
                 Hotels                                        15
                 Motels                                        5
                 Mountaineers houses                           2
                 Workers Rest Houses                           12
                 Children and youth Rest Houses                11
                 Total                                         45
               Source: State Statistical Office

The mountain houses are managed by the local mountaineering associations and offer
minimum services for mountaineers, hunters, hikers etc. They need investment for
improvement and expansion. The amount of private investment has been very low to
date, public investment may be required.

The workers’ and children’s rest houses in the national parks are still active and provide a
basic level of service which meets the expectations of the existing visitors.




                                                                                            35
Lakes
              Table 1.8: Accommodation facilities in Other Tourist Places 2005
                Other Tourist Places (mostly lake resorts)
               Total                                                172
               Hotels                                                35
               Motels                                                 7
               Overnight houses                                       1
               Tourist settlements                                    1
               Workers Rest Houses                                  106
               Children and youth Rest Houses                        21
               Temporary accommodation facilities                     1
              Source: State Statistical Office

Table 1.8 above shows the supply of accommodation available, mostly in the lakes areas
during 2005.

70 per cent of the accommodation facilities that were available at Prespa Lake twenty
years ago have closed. Plans to build an exclusive resort there have recently been
announced by a foreign company.

Ohrid Lake area is different. In the past few years there have been significant investments
in improving the accommodation facilities especially in hotels where the ownership has
been resolved. However, seasonality is a problem for the viability of the hotels. The
carrying capacity of the existing infrastructure will not accommodate any further increase in
visitors during the peak summer months.

Dojran Lake has re-opened many accommodation facilities in the last three years with new
investments in accommodation following the entertainment (casino) tourism needs.

There are small investments at the artificial lakes, like Mladost, near Veles and Debarsko,
near Debar that are responding to a market demand.

The large numbers of workers’ rest houses near the lakes are mostly in ruins. They have
not been used for years, and have not been privatised. They are the remnant of the
painful closure of the large companies whose affairs have not been resolved. Some are
located on attractive sites and are becoming eye sores that need to be addressed.

Caves

The caves in Macedonia are managed mostly by different speleological associations.
Most of them do not have lighting, and only a few are interpreted. There are almost no
investments in the signposting to caves and their interpretation, except from donations.
The caves which are open to the public are listed in Table 1.9 and located on Map 1.2,
below.




                                                                                          36
                          Table 1.9: Caves Open to the Public 2005
                               Cave            Location         Lighting
                  1      Samatska dupka    NP Galicica             -
                  2      Sarkova dupka     NP Mavrovo
                  3      Veligdenska       Sopiste                 -
                  4      Bozguni           Sopiste                 -
                  5      Belo voda         Demir Kapia             -
                  6      Pesna             Makedonski Brod
                  7      Matka 1           Skopje
                  8      Matka 2           Skopje
                  9      Matka 3           Skopje
                  10     Gjonovica         Makedonski Brod         -
                       Source: Speleological Association

                                  Map 1.2: Main Show Caves




The largest and most attractive are the ones in the Matka area and in Makedonski Brod.
There are regular weekly visits to the caves organised by PEONI, and also on request for
large groups.




                                                                                     37
1.4    Cultural Heritage

Religious Monuments

Tables 1.10 to 1.12 below, list some of the most important of the numerous religious
monuments in the country, consisting of Christian churches and monasteries and Islamic
mosques. These reflect the rich history of the Republic of Macedonia and Map 1.3, below,
identifies the locations of these main religious heritage sites. Map 1.4 then shows the
locations of those Monasteries which offer accommodation to paying guests from the
general public.

                                    Table 1.10: Churches
                            Church               Location              Interpretation
              1      Sv. Arhangel Mihail   Stip                               -
              2      Sv. Atanasij          Resen
              3      Sv. Dimitrija         Bitola                             -
              4      Sv. Jovan Kaneo       Ohrid
              5      Sv. Naum              Ohrid
              6      Sv. Gjogjija          Kurbinovo                          -
              7      Sv. Gjorgija          Staro Nagoricane                   -
              8      Sv. Bogorodica        Debar                              -
              9      Sv. Bogorodica        Veljusa, Stumica
              10     Sv. Spas              Skopje
              11     Sv. Leontij           Strumica
              12     Sv. Pantelejmon       Nerezi, Skopje                     -
              13     Sv. Pantelejmon       Ohrid                              -
              14     Sv. Sofija            Ohrid
              15     Sv. Kliment           Plaosnik, Ohrid
              16     Sv. Stefan            Ohrid
            Source: Ministry of Culture, Macedonian Orthodox Church, Municipality of Ohrid


                                    Table 1.11: Mosques
                              Mosque               Location           Interpretation
               17    Jeni                       Bitola                       -
               18    Ajdar Kadi                 Bitola                       -
               19    Imaret                     Struga                       -
               20    Arabati Baba Teke          Tetovo
               21    Painted mosque             Tetovo                        -
               22    Kurshumli An               Skopje
               23    Sultan Muratova mosque     Skopje                        -
               24    Mustafa Pashina            Skopje                        -
               25    Jahja Pashina              Skopje                        -
               26    Cifte Amam                 Skopje                        -
            Source: Ministry of Culture, Macedonian Orthodox Church, Municipality of Ohrid




                                                                                             38
                      Table 1.12: Monasteries
         Monastery               Location     Accommodation
   27    Deljakovce           Kumanovo             -
   28    Djurche              Krusevo
   29    Joakim Osogovski     Kriva Palanka
   30    Jovan Bigorski       Mavrovo
   31    Sv. Gjorgija         Negotino
   32    Kalishta             Struga               -
   33    Karpino              Kumanovo
   34    Konce                Radovis
   35    Kuceviste            Skopje               -
   36    Leshok               Tetovo
   37    Lesnovo              Probistip
   38    Markov manastir      Skopje
   39    Matejce              Kumanovo             -
   40    Matka                Skopje               -
   41    Sv. Arhangel Mihail  Berovo
   42    Sv. Arhangel Mihail  Prilep
   43    Mokliski             Kavadarci            -
   44    Sv. Naum             Ohrid
   45    Sv. Nikola           Kriva Palanka        -
   46    Sv. Nikola           Skopje               -
   47    Sv. Pantelejmon      Skopje
   48    Pobudze              Skopje
   49    Slepche              Demir Hisar
   50    Slimnica             Demir Hisar          -
   51    Treskavec            Prilep
   52    Sv. Zaum             Ohrid                -
   53    Zrze                 Prilep
Source: Ministry of Culture, Macedonian Orthodox Church, Municipality of Ohrid




                                                                                 39
                           Map 1.3: Main Religious Heritage Sites




The religious facilities in Macedonia are owned and managed by the respective religious
communities. They are open for visitors but as there are no separate times (from Mass
times) for tourist’s visits there is frequently a mingling of the ones who came to see the
history and culture and the others who came to pray.

Interpretation is generally missing, if there is one it is usually written in Macedonian, or
Albanian except in the case of Ohrid. The interpretation is bad; the tourist can not make a
clear picture of its importance and the story behind it. The interpretation can only be given
by a guide, who should be contacted in advance. Some of the churches and monasteries
ask for an entrance fee from foreign tourists.




                                                                                          40
Some of the monasteries offer accommodation, which varies a lot in the standards and
type of services. In some of it the tourists are pretty independent and can use the kitchen,
have their own bathroom, but in others you are practically part of the monks’ life for the
duration of their stay. The potential for monastery accommodation is high but is not
always recognised as such by the responsible episcope.

                       Map 1.4: Monasteries Offering Tourist Accommodation




Archaeological sites

                         Table 1.13: Main Archeological Sites in Macedonia
        Site       Location              Manager            Signage Interpretation   Guiding
1    Stobi         Near        Ministry of Culture, STOBI                               -
                   Negotino archaeological site
2    Heraclea      Bitola      Ministry of Culture,
                               Museum of Bitola
3    Skupi         Skopje      Ministry of Culture,             -          -            -
                               Museum of Macedonia
Source: Ministry of Culture




                                                                                            41
                               Map 1.5: Main Archaeological Sites




Other main heritage attractions

                           Table 1.14: Other Main Heritage Attractions
      Site          Location          Manager         Signage Interpretation    Guiding
Markovi Kuli       Prilep                 -                                -           -
Samoilova          Ohrid          Museum of Ohrid
Tvrdina
Skopsko            Skopje        The city of Skopje
Kale
Marvinci           Gevgelija             -                  -               -
Vinicko kale       Vinica      Municipality of Vinica                       -          -
Stara carsija      Skopje       The city of Skopje
Source: Ministry of Culture

Both the archaeological sites and other heritage attractions presented in Table 1.14 above,
lack interpretation and this is the greatest problem for potential tourists. There is rarely a
map or guide to lead visitors through the sites. If there is one, more often it is twenty or
more years old. In some cases the responsibility for site management is not clear, the
sites not secured, as well as not being properly conserved.




                                                                                           42
1.5    Performing Arts

Theatres

The theatres in Macedonia, listed in Table 1.15 below, are independent institutions which
are partly financed by the Ministry of Culture, local governments, and private funds for the
productions they stage. Most of them are so–called people’s theatres. All of the theatres
perform in the local language only. This is a problem for foreign visitors, except for those
attending the opera or ballet at the Macedonian National Theatre in Skopje. Unfortunately
the National Theatre in Skopje is closed for opera and ballet performances during the
summer months.
                       Table 1.15: Location of Theatres in Macedonia
                                     Theatre                   Location
                   People’s theatre                          Kumanovo
                   People’s theatre                          Bitola
                   People’s theatre “ZER”                    Probistip
                   Drama theatre “Jordan Hadzikonstantinov” Veles
                   People’s theatre                          Stip
                   People’s theatre                          Ohrid
                   People’s theatre                          Prilep
                   People’s theatre                          Strumica
                   Macedonian National Theatre               Skopje
                   Drama theatre                             Skopje
                   Children’s theatre                        Skopje
                   Turkish theatre                           Skopje
                   Albanian drama theatre                    Skopje
                 Source: Ministry of Culture

Festivals

The festivals of high regional importance (listed in Table 1.16 below) are well organised
and attract domestic and foreign tourists

                        Table 1.16: Location of Festivals in Macedonia
                                 Festival                            Time
              Ohrid Summer Festival                          12/07-20/08
              Balkan Festival, Ohrid                         July
              Balkan Festival of Folk Song and Dance
              Skopje Jazz Festival                           Mid October
              Skopje Film Fesival                            March
              Skopje Summer Festival                         June – July
              Galichka Wedding                               12 July
              Skopsko Leto                                   21/07-10/08
              Struga Poetry Evenings                         End of August
              Strumica Carnival                              March
              Vevcani Carnival                               April
              Prilep Beer Fest                               July
              International Classical Drama Festival, Stobi
            Source: Ministry of Culture



                                                                                         43
There are many more regional festivals which, with publicity, have potential to develop into
international events.

1.6    Museums and Galleries

There are many museums and galleries in Macedonia and their locations are listed
respectively in Tables 1.17 and 1.18 below. Some contain important and interesting
artefacts and exhibits. However, with a few exceptions, the displays are dull and
uninformative, lacking enlightening interpretation or animation of any kind. To add to this
the lighting within the museums and galleries is poor. There are also many reported
incidents of visitors finding the museum and gallery doors closed and no indication of
opening times.


                        Table 1.17: Location of Museums in Macedonia
                                Museums                      Location
                  Military Museum                      Skopje
                  People’s Museum                      Ohrid
                  Museum of Bitola                     Bitola
                  Museum of Strumica                   Strumica
                  Historical Museum                    Krusevo
                  Ilinden Uprising Museum              Krusevo
                  Museum of the town of Negotino       Negotino
                  Museum of the city of Skopje         Skopje
                  Museum of Macedonia                  Skopje
                  Museum of contemporary arts          Skopje
                  Museum of Tetovo region              Tetovo
                  Museum-Galler of Kavadarci           Kavadarci
                  People’s Museum                      Sveti Nikole
                  People’s Museum                      Gevgelija
                  People’s Museum                      Veles
                  People’s Museum Nikola Nezlobinski Struga
                  National Museum                      Kumanovo
                  National Museum                      Prilep
                  Nature Science Museum                Skopje
                  ASNOM Museum                         Pelince, Kumanovo
                Source: Ministry of Culture




                                                                                         44
       Table 1.18: Location of Galleries in Macedonia
              Galleries                    Location
 AnaGor                            Skopje
 Anina                             Skopje
 Antika                            Bitola
 Antiko                            Skopje
 ARS                               Bitola
 Art House                         Skopje
 Atelje Atanas Dudam               Ohrid
 Marijak                           Skopje
 Bezisten                          Stip
 Bezisten                          Skopje
 Bukefal                           Struga, Skopje, Ohrid
 RA                                Skopje
 Gral                              Skopje
 Daut Pashin Amam                  Skopje
 Drvo Art                          Skopje
 Dudidko                           Skopje
 El Greko                          Skopje
 Impresija                         Skopje
 IN                                Skopje
 J’NO                              Ohrid
 Kasver-C                          Skopje
 Kodeks VM                         Skopje
 Kulturno Informativen Centar      Skopje
 Leonardo                          Skopje
 Momir                             Ohrid
 Lotrek                            Struga
 Monet                             Skopje
 Osojnica                          Vinica
 Pinokio                           Stip
 Sv. Kiril i Metodij               Bitola
 Temenida                          Bitola
 Jeni Dzamija                      Bitola
 Cifte Amam                        Skopje
 Dzani                             Kocani
 City Art Gallery                  Kumanovo
Source: Ministry of Culture




                                                           45
1.7    Activity Tourism

Winter sports

Table 1.19 below, provides the details of the locations of ski resorts, lifts, trails and
organisers in Macedonia.

         Table 1.19: Location of Ski Resorts, Lifts, Trails and Organisers in Macedonia
             Name/Location         Ski Trail      Ski Lift            Organiser
         Mavrovo 1                Easy                        Zare Lazarevski Club
         Mavrovo 2                Easy                        Zare Lazarevski Club
         Mavrovo 3                Easy                        Zare Lazarevski Club
         Mavrovo 4                Medium                      Zare Lazarevski Club
         Mavrovo 5                Medium                      Zare Lazarevski Club
         Mavrovo 6                Medium                      Zare Lazarevski Club
         Mavrovo 7                Difficult                   Zare Lazarevski Club
         Mavrovo 8                Difficult                   Zare Lazarevski Club
         Popova Shapka 1          Easy                        PK Ljuboten, Tetovo
         Popova Shapka 2          Easy                        PK Ljuboten, Tetovo
         Popova Shapka 3          Medium                      PK Ljuboten, Tetovo
         Popova Shapka 4          Difficult                   PK Ljuboten, Tetovo
         Popova Shapka 5          Difficult                   PK Ljuboten, Tetovo
         Krusevo 1                Easy                        AD Ilinden, Krusevo
         Krusevo 2                Medium                      AD Ilinden, Krusevo
         Strezevo, Pelister       Easy                        JP Strezevo, Bitola
         Nizepole, Pelister       Medium                      JP Strezevo, Bitola
         Begova Cesma, Pelister Medium                        JP Strezevo, Bitola
         Mavrovo                  Snow Board                  Snow Board Association
         Sapka, Tetovo            Snow Board                  Snow Board Association
        Source: Ministry of Culture

The three most popular winter sports resorts for domestic and regional tourists are
currently Popova Shapka, Pelister and Mavrovo. The former experienced damage to ski
lifts and its reputation as a result of the Kosovo conflict and has been in decline. There are
20 kilometres of ski runs at Popova Shapka and 7 kilometres at Mavrovo with all levels of
slope difficulty available. Because of their elevation their seasons are normally relatively
long.

Both Popova Shapka and Mavrovo have a good range of hotel, apartment and private
accommodation and are reasonably accessible from their local airports – Skopje and Ohrid
respectively. Pelister is within easy reach of the accommodation and other facilities in
Bitola. Both accommodation and ski pass rates are competitive. Provided attractive air
transport can be provided through charters and/or low cost airlines there is good potential
to attract foreign ski business. Mavrovo is privately owned and is a positive example for
other ski resorts.

Ownership, maintenance and inadequate investment are problems hindering development
and growth.




                                                                                            46
Snow-boarding is a new winter sport activity introduced in the last 5 years and still
managed and organized by an NGO.

Promotional activity currently concentrates on the domestic market.

Hiking/Biking

Hiking and biking activities are organised and managed by NGOs, local governments or
national parks. Most of the existing trails are well marked, but the interpretation is lacking
and Table 1.20 below, presents the locations and features of the various hiking and biking
trails in Macedonia.

             Table 1.20: Locations and Features of Hiking/Biking Trails in Macedonia
           Trail             Hiking/      Location     Length Signage Interpretation
                              Biking
  Asan Djura              Hiking        NP Galicica      15 km
  Galicica                Biking        NP Galicica      23 km                    -
  Golema Livada-          Hiking        NP Pelister       3 km                    -
  Kopanki
  Kopanki-Pelisterski     Hiking        NP Pelister      12 km
  oci
  Rotino-children trail   Hiking        NP Pelister       2 km
  Brajcino-Pelisterski    Hiking        NP Pelister      15 km
  oci
  Trebiste-Lokuvski       Hiking        NP Mavrovo        6 km                    -
  ezera
  Rostuse-Duf             Hiking        Near NP           3 km
                                        Mavrovo
  Galicnik-Jance          Biking        NP Mavrovo        6 km       -            -
  Mavrovo-Bogdevo-        Biking        Near NP          40 km                    -
  Trnica                                Mavrovo
  Elen skok-Selce-        Biking/Hiking Near NP          25 km                    -
  Tresonce                              Mavrovo
  Boskov most-Jama        Biking        Near NP          23 km                    -
                                        Mavrovo
  Berovsko ezero          Biking/Hiking Berovo           18 km
 Source: Ministry of Culture

The investment in these tracks is being provided through a variety of donors and is not
providing adequate resources for long term management and maintenance of the trails.
Participation of local government in the process of maintenance of existing trails and
building new ones is still limited. The potential to organise more trails is considerable,
especially if it is planned in combination with other activities and facilities which can then
be marketed as a single tourism product.

Extreme sports

Extreme sports are a rather new activity, still managed and operated by groups of
enthusiasts in clubs or NGOs as local government involvement is incidental. Table 1.21
below provides a listing of activities available with their locations and organisers.




                                                                                           47
       Table 1.21: Locations and Organisers of Extreme Sports Activities in Macedonia
             Name/Location              Activity                  Organiser
     Crna reka                    Rafting             NGO “Transverzalec”, Gostivar
     Otmarova karpa, Matka        Rock Climbing       Sport Climbing Association, Skopje
     Centrala, Matka              Rock Climbing       Sport Climbing Association, Skopje
     Pier, Matka                  Rock Climbing       Sport Climbing Association, Skopje
     Dom, Matka                   Rock Climbing       Sport Climbing Association, Skopje
     Matkino trlo, Matka          Rock Climbing       Sport Climbing Association, Skopje
     Via Feratte, Demir Kapija    Rock Climbing       Sport Climbing Association, Skopje
     Radar Petra, Demir Kapija    Rock Climbing       Sport Climbing Association, Skopje
     Arena, Demir Kapija          Rock Climbing       Sport Climbing Association, Skopje
     Kifla Rak, Demir Kapija      Rock Climbing       Sport Climbing Association, Skopje
     Kaneo, Ohrid                 Rock Climbing       Sport Climbing Association, Skopje
     Trpejca, Ohrid               Rock Climbing       Sport Climbing Association, Skopje
     Sv. Nikola, Ohrid            Rock Climbing       Sport Climbing Association, Skopje
     Zli Dol, Ohrid               Rock Climbing       Sport Climbing Association, Skopje
     Ploca, Stip                  Rock Climbing       Sport Climbing Association, Skopje
     Magarevo, Bitola             Rock Climbing       Sport Climbing Association, Skopje
     Treska ,Skopje               Kayaking            Sport Association Skopje, Skopje
     Radika, Mavrovo              Kayaking            Sport Association Skopje, Skopje
     Ljilacica, Veles             Paragliding         Vertigo, Skopje
     Krusevo                      Paragliding         Vertigo, Skopje
     Ohrid                        Paragliding         Vertigo, Skopje
     Pelister, Bitola             Paragliding         Vertigo, Skopje
     Ajvatovci, Skopje            Paragliding         Vertigo, Skopje
     Karadzica, Skopje            Extreme biking      XMKD, Skopje
       Source: Association of Extreme Sports and responsive NGOs

The tourism offer for extreme sports is low and is available mainly to local tourists-
enthusiasts rather than as a commercially organised offer for potential tourists.

Paragliding is a new activity offered, whereas Kayaking is a traditional activity of sport
associations in Skopje and it is also offered to tourists. It is a well equipped and organised
activity, especially in the spring and autumn season in the region of Treska River and
Radika River.

Rafting and rock climbing are new activities organised by the Sport Climbing Association
of Skopje. There are monthly programmed tours both for members and tourists.

There are excellent conditions for gliding and also pilot training facilities at sports airfields
such as Stenkovec.

Hunting

The total number of hunters visiting Macedonia probably does not exceed 1,000 a year.
However, this is a highly lucrative market segment with expenditure directly related to
hunting exceeding Euros 2,000 per person on average. Table 1.22 below shows the
locations and types of hunting available in Macedonia.




                                                                                              48
                Table 1.22: Location and Type of Hunting Activities in Macedonia
                         Hunting Site Location           Type of Wild Game
                  Dojran                               Wild boar
                  Bogoslovec                           Birds
                  Katlanovo                            Pheasant
                  Mazdraca, Sar Planina                Wild boar, wild goat
                  Brezovec, Bistra                     Wild boar
                  Jasen                                Wild boar, wild goat
                  Polaki                               Wild boar, wild goat
                 Source: Master Plan for Tourism, Louis Berger 2003

Although there are some 45 hunting associations there are relatively few organisations
actively marketing hunting abroad. These include the major private operator Micei, the
National Parks Authority and Forests. Marketing is undertaken through websites and by
networking. Operators also have links with a number of specialist hunting tour operators.
There is also participation in a number of exhibitions in Europe with specialist hunting
sections, either on tour operator stands, or independently.

Day rates for hunters are around Euro 200 for accommodation and facilities. To these
have to be added trophy fees. These are competitive regionally.

The carrying capacity of the hunting areas far exceeds the current game population and
there is much potential to expand the numbers of hunters provided game numbers are
increased. As identified in the Ministry of Agriculture, Forestry and Water Economy’s
Strategy for Sustainable Development of Forestry there is a need to introduce a
reproduction centre for the breeding of additional endemic species in order to repopulate
hunting areas.

Support for the marketing of hunting is also required to enable visitor numbers to increase
to a level where income is sufficient to maintain a high profile annual promotional
programme.

1.8    Rural Tourism

Rural tourism is a new activity for Macedonia. As part of the nature conservation and
environmental protection some attempts have been made to enhance it and Table 1.23
below, identifies the location and types of rural tourism activities available in Macedonia.
                           Table 1.23: Existing Rural Tourism Locations
                  Location      Accommodation Catering Trails           Sightseeing
           1      Brajcino
           2      Vevcani
           3      Berovo
           4      Pehcevo                                        -           -
           5      Smolare               -                                    -
           6      Bansko                                         -
           7      Mokrino               -
           8      Kolesino              -
           9      Galichnik
           10     Zrnovci
                 Source: SOROS and responsive municipalities


                                                                                         49
                            Map 1.6: Main Rural Tourism Areas




Map 1.6 above, shows the location of the main rural tourism areas in Macedonia although
the only “fully” organised rural tourism village is the village of Brajcino, where
accommodation, catering, trails and activities are established. Another village, Zrnovci is
planned to be similarly organised in the future. There are a lot of attractions and trails
organised in the Malesevija (Pehcevo, Berovo) with accommodation and catering, as well
as attractions and catering only in the Belasica area (Kolesion, Bansko, Mokrino,
Smolare).

The attractive nature of the western Mountains and long history and tradition has been
only been interpreted in Galichnik so far. There is far more potential.

The village of Vevcani is another good example of organised trails and attractions, as well
as accommodation and catering, but it is again as the previous examples an isolated short
tourism product.

There is a need to connect a number of areas in order to offer at least a one week product
with different activities and to package these for the market



                                                                                        50
1.9    Wine Tourism

There are some 54 commercial wineries in the Republic of Macedonia. A number of these
identified in Table 1.24 and located on Map 1.7 below, are starting to offer wine tasting and
other services on a formal basis for visitors, in order to promote their brands and direct
sales.

        Table 1.24: Location and Facilities of Wineries Open to Visitors in Macedonia
            Location                        Accommodation        Catering    Tastings
        1 Bovin, Negotino                          -
        2 Pivka, Negotino                          -                 -
            Fonko, Negotino
        3 Kamnik, Skopje
            Elenovi, Demir Kapija
        4 Popova Kula, Demir Kapija
        5 Lepovo, Kavadarci                        -
            Tikves, Kavadarci
            Vadarska Dolina, Kavadarci
        6 Cekorovi
            Jostela, Gevgelija
       Source: Exploring Macedonia and Wine Association, Enology Club



                        Map 1.7: Wineries Offering Tours and Tastings




                                                                                          51
In the Republic of Macedonia wine tourism is very new product, as part of some other
tourism offers, or as a day excursion. Wineries report that most visitor traffic is currently
generated direct rather than through travel agencies and tour operators.

The offer consists of tasting different wines, tours in the production area, some history
lessons, stories, as well as good traditional catering and shopping possibilities.

There is a need for the organisation of more accommodation facilities within the area, as
well as the organisation of wine trails that will be connected into a cohesive product. The
Tikvesh Wine Route Foundation is active in this area, but with limited resources.

1.10    Conference Facilities

The Republic of Macedonia has a very limited range of commercial conference facilities.
There is no large scale purpose-built conference centre in the country. A number of
venues are capable of handling large scale meetings, principally in Skopje, and these are
listed in Table 1.25 for Skopje and Table 1.26 for Ohrid and Struga. However, the Skopje
Fair can accommodate up to 5,000 persons and has 3,546 theatre style seats. In addition
it has two other rooms seating around 150 theatre style.

The majority of conference facilities are in hotels with Skopje’s Alexander Palace having
the largest room seating 1,400. However, there is no capacity to hold break out sessions
for a thousand delegates and catering for large numbers is also difficult. This situation is
similar in other major hotel venues both in Skopje and Ohrid.
                       Table 1.25: Conference Capacity of Hotels in Skopje
         Hotel              Accommodation          Biggest rooms capacity         Breakout Rooms
                                facilities               and style              Theatre Style Capacity
  Holiday Inn           163 rooms                              700 theatre       7 rooms 20 - 450 seats
                        15 apartments
  Alexander Palace      135 rooms                             1.400 theatre       5 rooms 20 - 500 seats

  Continental          194 rooms                                     1.000        2 rooms 50 - 400 seats
                       6 apartments
  Karposh              59 double rooms                           60 theatre        2 rooms 10 - 40 seats
                       5 apartments
  Best Western         75 double rooms                         100 cocktail       3 rooms 20 - 120 seats
Source: Tourism sector, Local authority Skopje

                  Table 1.26: Conference Capacity of Hotels in Ohrid andStruga
         Hotel            Accommodation          Biggest room capacity        Breakout Rooms Theatre
                              facilities               and style                   Style Capacity
   Metropol            1 president apartment                500 Theatre          5 rooms 50 – 450 seats
                       5 apartments
                       200 rooms
   Belvi               19 apartments                        300 Theatre         2 rooms 100 – 200 seats
                       180 rooms
   Granit              6 apartments                         250 Theatre
                       227 double rooms
   Ineks Gorica        5 VIP apartments                     450 Theatre          3 rooms 20 – 100 seats
                       150 rooms
   Donco               8 apartments                         250 Theatre               1 room – 35 seats
                       50 rooms
   Drim - Struga       1 apartment                          350 Theatre        6 rooms – 50 – 250 seats
                       199 rooms
 Source: Tourism sector, Local authority Ohrid



                                                                                                           52
The main hotels provide modern meeting equipment including simultaneous translation
faculties.

Many hotels outside the two main centres offer small conference facilities, such as Molika -
Bitola, Sirius - Strumica, Bistra - Mavrovo, Ambasador - Skopje, Sileks, Riviera or
Millennium Palace - Ohrid, etc.

The hotel conference facilities in Ohrid and Struga are particularly important as means of
attracting off-peak business.

The meeting facility provision is currently geared very much to the domestic market, with
some regional meetings also being attracted. There is a lack of consolidated data on
conference venues from which meeting planners can select destinations and which might
be used for promotional purposes.

During and after the EU accession phase there will be increasing opportunities for The
Republic of Macedonia to attract regional and international conferences. There will be
opportunities for additional meeting venues offering main meeting rooms in the 250-1000
seat range with plentiful break out rooms with a similar capacity in total and also ability to
cater to these numbers in other parts of the same venue.

1.11 Inbound Tour Operators and Group Handlers

Table 1.27 below lists the location, number and licence type of licensed inbound and
outbound tour operators and group handling operators licensed in Macedonia.

                  Table 1.27: Inbound Tour Operators and Group Handlers
                     Licence Category       A         B         V
                     Skopje                   79         19       22
                     Ohrid                     3          2        3
                     Struga                    2          1        4
                     Prilep                    2          1        6
                     Bitola                    7          3       13
                     Gostivar                  1          -        5
                     Tetovo                    3          2        8
                     Kavadarci                  -         -        2
                     Gevgelija                  -         1        -
                     Strumica                  3          2        3
                     Stip                      2          -        2
                     Kocani                    1          1        5
                     Bogdanci                   -         -        -
                     Kumanovo                  1          5       10
                     Veles                     1          1        2
                     Radovis                    -         1        3
                     Probistip                  -         -        -
                     Debar                      -         -        3
                     Kicevo                    2          -        7
                     Negotino                  2          -        -
                     Resen                      -         -        -
                     Total                   106         32       99
              Source: Local Municipalities, Ministry of Economy and State Statistical Office



                                                                                               53
Licence A travel agencies organise inbound and outbound trips, Licence B are more
domestic tourist oriented and Licence V are mostly transport operators. The inbound
agencies and tour operators are the ones that possess License A. This does not mean
they are active in the field.

Of the total of 120 present in Skopje and shown in Table 1.27 above, (Licence A) only four
are known as inbound tourist operators. There are two in Ohrid and one in Bitola that also
work with inbound tourism.

The travel agencies lack capacity both in human resources, in finances and organisation to
maintain long-term relations with the foreign tour operators. While some might expect the
Association of Travel Agents (ATAM) to promote its members and their services in the
foreign markets this is not a role it has embraced. It would also be very difficult for the
association to do in the absence of any general promotion of the country as an attractive
tourist destination


1.12 Tourist Information Centres and Tour Guides




Internationally, the role of Tourist Information Centres is to provide information to visitors
on the local and regional and national tourism facilities, attractions, accommodation and
services and to reserve accommodation, car hire, tours etc. In many instances they
charge for these services as well as collecting commissions and selling tourist maps,
publications and souvenirs. Table 1.28 below, lists the locations and services available at
existing Tourist Information Centres in Macedonia and Map 1.8 shows their location within
the country.




                                                                                           54
               Table 1.28: Tourist Information Centres in the Republic of Macedonia
      Name/Location        Ownership/       Working    Souvenirs Maps Guides Accommodation
                          management         hours                         Offered  Bookings

1   TIC, Skopje             Tourism                 Not
                            Association of      operating
                            Skopje, (NGO)       at present
2   TIC “Lihnidos”,         Municipality of        9-21
    Ohrid                   Ohrid
3   TIC, Bitola             Municipality of       10-18      -         -
                            Bitola/”Centar
                            za kulturna
                            sorabotka”
                            (NGO)
4   TIC, Strumica           Municipality of       10-20                -
                            Strumica /
                            “Aquila Aurea
                            Makedonika”
                            (NGO)
5   TIC, Osogovo,           Municipalities in     08.30-               -
    Kocani                  the Osogovo           16.30
                            region, GTZ         (weekdays
                            project                only)

6   TIC, Berovo, Berovo     Municipality of       10-14                -
                            Berovo, UNDP /      (weekdays
                            Finland project       only)

7   TIC, Gevgelija          Apollonia             08-24                -
                            Casino UNDP/          June-
                            Finland project     September
     Source: Ministry of Economy




                                                                                     55
                           Map 1.8: Tourist Information Centres




Most of the tourist information centres have appropriate working hours, except the ones in
Berovo and Kocani, which are not open at the weekends, when most tourist arrivals are
expected. Only Ohrid offers tour guides through the information centre. The centres in
Ohrid and Bitola offer information on car hire.

Information about accommodation and catering as well as museums/ theatres/ galleries is
provided everywhere, but only Bitola has the possibility to arrange accommodation (make
reservations).

1.13   Conclusions

Outside of Skopje, Ohrid, Struga and Mavrovo there is a shortage of quality
accommodation. Only 20 per cent of accommodation, nationally, (14,000 beds) is in
hotels but their accommodation categorisation criteria and its implementation is not aligned
to international standards and there is only a limited presence of international
accommodation brands, which can help stimulate higher operating standards. Monastery
accommodation is a potential tourism asset if publicised effectively.

Workers’ and children’s accommodation is significant in quantity but mostly in very poor
condition with unclear ownership and not suitable for the tourist market while auto camps
and camp sites are well below European standards. Up to 50 per cent of accommodation


                                                                                         56
is in the unregistered and unofficial (grey) market. The spa tourism offer is of low quality
and would need complete renovation / reconstruction to match European spa and wellness
product standards.

The National Park tourism offer is at a low development level but has good potential as a
product and as a revenue source for the parks.

Lake Ohrid has reached its carrying capacity in the peak summer months, but has
significant rooms capacity at other times. Lakes Prespa and Dojran have development
potential, but this needs to be strictly controlled to avoid the environmental errors of the
past.

Show caves have good visitor potential but currently possess poor facilities, including
safety standards, lighting and interpretation.

The rich religious heritage is a major asset, but interpretation and the retail offer is mostly
very poor. Even major archaeological sites and museums are poorly interpreted and have
limited retail offers.

Few winter sports destinations offer international quality facilities but other activity sports
have good potential once improved organisation, coordination and promotion takes place.

Rural tourism has good potential, but requires improved organisation, product presentation
and promotion. Wine tourism is an emerging product linked to rural tourism and has
equally good potential.

Responsibility for the maintenance of hiking and biking trails is unclear and there is a lack
of municipal funds for investment. Fishing is an important activity for the local or regional
markets. Hunting has good potential subject to an intensive game breeding programme
and strict enforcement of controls on the sport.

There is a severe shortage of competent inbound tour operators with equipment and
promotional resources and the Tourist Information Centre network is incomplete, lacks
coordination and professional operating standards.




                                                                                            57
2.        Access and Infrastructure
Air access is important for the economic development of the Republic of Macedonia. The
improvement of air transportation systems will facilitate the accelerated development of
industry, international trade and tourism. The road and rail network is equally important for
access and distribution within the country.

2.1       Air Access

Current Situation

There are two international commercial airports in Macedonia:

      -   Skopje Airport - Alexander the Great (mainly by scheduled flights: 93 per cent); and
      -   Ohrid Airport - St. Paul the Apostle (by charter flights, almost 100 per cent).

In 2005, air traffic in the Republic of Macedonia accounted for approximately 600.000
passengers, some 530.000 (88 per cent) through Skopje Airport and 60,000 (12 per cent)
through Ohrid Airport.

There are five sports airports and fifteen landing strips for agriculture and trade aviation.
The two international airports are controlled by the government through Public Enterprise
for Airport Services (PEAS). As the two airports are only 150 km. apart there is no
commercial domestic air traffic.

The Republic of Macedonia has one airline - Macedonia Airlines (MAT), which is privately
owned and designated as the national carrier enjoying veto rights and controls over
competitors entering the market and air fares.

                        Table 2.1: Skopje Airport – Alexander the Great
                       Distance to city                     22 km
                       Number of stands                      15
                       Check in desks                         8
                       Number of gates                4 (2 dep. / 2 arr.)
                      Source: PEAS

Skopje airport is the main international airport in Macedonia and its principal features are
presented in Table 2.1 above. In the year 2000 it had traffic of more than 1 million
passengers but since then the traffic dropped because of the internal conflict (2001).
Economic and tourism development will increase traffic in the coming years. Increased
security may restrict passenger handling capacity to fewer than one million.

According to the Development Plan (elaborated with the support of the CARDS
programme), 1.2 million passengers are predicted for the year 2030. This is considered a
cautious forecast and does not take into account potential impacts of EU membership;
therefore a higher passenger throughput is likely. A reorganisation of passenger
movements or an increase in terminal capacity will need to be examined.




                                                                                           58
The airport is carrying out all ground handling and self-handling is not accepted (except for
catering). This is contrary to the ECAA rules on ground handling which should be allowed
to some extent for any size airport and to the full extent possible for airports with more
than 1 million passengers.

Passengers flow at the airport (in the situation of normal slot allocation) is approx. 240
passengers per peak hour on 8 check-in counters. The same situation with the passengers
flow can be found on arrival desks. However, due to the latest development of modern
security technology (taking a photo of all passengers when they come to or leave
Macedonia), the flow might be little bit slower (approx. 180 passengers per peak hour).
The biggest problem with congestion can be found in the mornings (especially around
06.00), slot time for departure asked for by all airlines.

Airlines Operating on Skopje Airport:

            o   Macedonia Airlines;
            o   Croatia Airlines;
            o   Adria Airways (Slovenia);
            o   Austrian Airlines;
            o   JAT Airways (Serbia);
            o   Malev Airlines (Hungary);
            o   Turkish Airlines;
            o   Czech Airlines;
            o   Alitalia;
            o   British Airways;
            o   BH Airlines (Bosnia & Herzegovina);
            o   Helvetic Airways (Swiss).

Having in mind the size of aircrafts, Skopje Airport can handle almost all types of aircrafts,
including long haul (for example Airbus 310 or Boeing 747).

Skopje Airport is managed safely. Written procedures cover all vital aspects of airport
activity. The original versions of the ICAO and IATA publications are in use. The
Emergency plan is approved and airport safety staff is properly trained. The technical
conditions of the airport and equipment are good. The Safety Management System is
being developed now and is at an advanced stage. The inspections performed by the CAA
Airport Department and random audits made by airport users show that the level of safety
is high.

Regional competitiveness of Skopje Airport

Within an area of 50 km there is no other airport. The closest airport (within an area of 100
km.) is Pristine Airport (Kosovo), but still under very strong air space restrictions. In the
area of 200 - 300 km there are: Thessalonica (Greece), Sofia (Bulgaria), Nis (Serbia),
Podgorica (Montenegro) and Tirana Airport (Albania).

All these airports are serving their own catchment areas within their national boundaries,
bearing in mind current visa and border restrictions and thus competition between them is
low. However, the full implementation of the European Common Aviation Area (ECAA) and
the future improvement of the road network in the Balkans will result in a much higher level
of competition among these airports.


                                                                                           59
Airport Arrivals

The time table of flights for Skopje Airport is limited to direct connections with 20 cities
from 14 different countries. More than 90 per cent of Macedonian air traffic goes through
this airport. Almost all destinations are either major European cities, or important
destinations on the Balkan Peninsula. However, of all these connections, only 6 cities have
daily flights to Skopje. Table 2.2 below, presents the most recent available data from
PEAS on detailed traffic handled by Skopje Airport.

                           Table 2.2: Traffic Statistics for Skopje Airport
                                                 2004            2005         2005/2004 %
FLIGHTS
Schedule flights                                    6.880             8.238         19,7
Charter flights                                         537             595         10,8
Cargo flights                                           527             754         43,1
Others (military, VIP)                              2.996             2.514         16,1
Total aircraft movements                           10.940           12.101          10,6
PASSENGERS
Incoming passengers                               245.572          256.561          4,5
Outgoing passengers                               249.039          264.778          6,3
Total Passengers                                  494.611          521.339          5,4
Total Cargo                                       2.283,1           2.305,4         3,2
        Source: PEAS, 2006


                  Table 2.3: No. of Air Movements and Passengers at Skopje Airport
                        Year            Movements            Passengers
                       2000             24,234                          1,019,905
                       2001             16,673                            495,204
                       2002             13,725                            508,258
                       2003             12,428                            494,247
                       2004             10,940                            494,611
                       2005             12,101                            521,339
                       2006             12,637                            542,319
                       2007             13,085                            626,644
                   Source: PEAS, 2007




Table 2.3 above shows the historic pattern of total aircraft and passenger movements at
Skopje Airport for the period 2000 to 2007. Year 2000 was the most successful year for


                                                                                            60
Skopje Airport in the last decade. It had traffic of more than 1 million passengers
(principally because of its proximity to Kosovo and its very specific post-war air transport
needs situation). Since then traffic fell because of the internal conflict in 2001 and has lost
ground in terms of aircraft movements but recovered gradually in passenger numbers.

                        Table 2.4: Ohrid Airport – St. Paul the Apostle
                       Distance to city                     10 km
                       Number of stands                       13
                       Number of check in desks               5
                       Number of Gates                        2
                     Source: PEAS

Ohrid is a small, but well managed, airport with a maximum capacity of 300.000
passengers per year and its principal features are presented in Table 2.4 above. Only 5
check-in desks and 1 conveyor belt now limit the number of simultaneous operations to
only two.

The technical conditions of the airport and equipment are good. Ohrid Airport is very
convenient as an alternative for diverted aircraft due to good weather conditions all year
round. An Airport Safety Committee exists at the airport. The Airport Operation Manual in
draft version is waiting for CAA approval. The Safety Management System is at an
advanced stage, and the Emergency plan is approved by the CAA. Training is organised
mostly in close cooperation with Skopje Airport.

According to the airport management, passenger flow at the airport (in the situation of
normal slot allocation) is approx. 300 passengers per peak hour on 5 check-in or arrival
desks. However, due to the latest development of modern security technology (taking a
photo of all passengers when they arrive and leave Macedonia), the flow might be little bit
slower (approx. 200 passengers per peak hour).

Airlines Operating at Ohrid Airport:
           o Macedonia Airlines;
           o Adria Airways (Slovenia);
           o Helvetic Airlines (Switzerland);
           o German Wings (Germany)
           o JAT Airways (Serbia);

Having in mind the size of aircraft, Ohrid Airport can handle almost all types of aircraft,
including long haul (for example Airbus 310, but excluding Airbus 380 and Boeing 747). It
needs certain modification and improvement of its infrastructure in order to handle larger
aircrafts, especially those used for cargo operations and long haul flights.

Regional Competitiveness of Ohrid Airport

In the area of 50 km there is no other airport. In the area of 150 km there is Tirana Airport
(Albania). In a range of 250 km there are the airports in Corfu (Greece), Thesalloniki
(Greece), Pristine (Kosovo), Nis (Serbia), Tirana (Albania), Tivat (Montenegro) and
Podgorica (Montenegro).


Airport Arrivals



                                                                                            61
Table 2.5 below presents the most recently available air and passenger movement data
for Ohrid Airport for the period 2000 to 2007. The summer time table of flights for Ohrid
Airport is limited on direct connections with 7 cities and 36 flights per week and only 10 per
cent of total Macedonian air traffic goes through this airport. Ohrid Airport management
estimates that more than 80 per cent of passengers on this airport are leisure tourists. The
decline in passengers in 2007 is due to enforced closure of the airport for some weeks for
technical reasons.

              Table 2.5: No. of Air Movements and Passengers at Ohrid Airport
                         Year         Movements      Passengers
                         2000           2051           65,941
                         2001            998           53,954
                         2002           1,079          60,209
                         2003           1,032          51,082
                         2004            656           32,497
                         2005           1,088          53,930
                         2006           1,025          50,366
                         2007           1,109          45,515
                       Source: PEAS, 2007

Aviation Security

The Republic of Macedonia is a member of ECAC and ICAO and therefore has full access
to the confidential and specific security measures of Document 30 from ECAC and Annex
17 from ICAO.

Both Skopje and Ohrid airports have approved security programmes but do not have
security training programmes. Screeners are trained by the Police. Security awareness
trainings have been conducted, records are kept.

Macedonia Airlines (MAT) has developed an Air Carrier Security Programme based on the
formats of Doc 30 from ECAC. The Programme was approved by the CAA. MAT
maintains very high security standards and their staff give the impression of being well
educated and trained in the field of aviation security.

Air Transport Organisation Structure

The Macedonia air transport sector has several segments to its organisational structure:

           The Ministry of transportation and communications (MTC) has the power in
           formulation and implementation of the legislation, realisation of Government
           policy, but also supervision on the Civil Aviation Agency;
           Civil Aviation Agency (CAA) is the regulator of national air sector. It is an
           independent government body (finances come from services for air navigation
           taxes, services for airport infrastructure, licences, certifications, approvals, etc.);
           Air Navigation Services Provider (ANSP) - fully state-owned company, provides
           services on air traffic navigation, with exclusivity for Macedonia air space);
           Public Enterprise for Airport Services (PEAS) “Macedonia” - owner of the 2
           airports, sole provider of all airport operations, but also commercial services
           (parking, food, beverage, catering, retailing, etc.);
           Commission for accidents and serious incidents investigation; etc.


                                                                                               62
Aviation Act

A new Aviation Act was adopted in 2006. It recognises three enterprises: CAA, ATC and
Airports. It makes a distinction between operational and regulatory responsibilities. The
CAA very clearly has the regulatory responsibility. The Act is very clear and detailed in
approach. However, in several instances it will be necessary to amend the law when the
Republic of Macedonia fully implements the ECAA agreement.

The present regulatory situation is fairly traditional and out of step with a liberal market
approach. The new aviation act has a clear text about changing the situation. However,
the concept of a public enterprise is engrained in the legal system and according to it, the
use of public enterprises opens the door for state aid.

The Aviation Act also envisages concession of the airports in Macedonia by domestic or
foreign companies through a public tender. It is also emphasised in the latest approved
National Aviation Strategy (2007). However, nothing has happened thus far.

The Republic of Macedonia has not yet established an independent accident investigation
body and provisions in the aviation act do not comply with EU Directive 94/56.

Air Transport Agreements

The Republic of Macedonia has ratified the Chicago Convention and the International Air
Services Transit Agreement of 1944 and the Montreal Convention of 1999. However, the
most significant guideline to meet the targets for EU incorporation of the Republic of
Macedonia is the successful implementation of the multilateral agreement on the
establishment of European Common Aviation Area (ECAA). Among other things, this
agreement will give the strongest boost to air access and consequently tourism
development.

ECCA agreement is the key element for air traffic development in the Republic of
Macedonia and also one of the key elements for total economic development of the state.

The ECCA agreement was signed in June 2006 and ratified by the Government in
February 2007. It commits the state (and all other signatories) to adopt a very important list
of EU regulations for the air transport sector. This includes:

       Legislation for market access, traffic rights and fares total liberation;
       Regulation of ground handling and slot allocation;
       Regulation on safety and security;
       Regulation on Single European Sky (SES) and air traffic management;
       Consumer rights and environmental standards.



Some of this legislation has been implemented successfully. For example, Competition
rules and State aid rules are fully compatible with EU rules, both being applied in 2006 by
an independent organisation (Competition Commission).               But, high priority for
incorporating other EU rules should be given to legislation that is falling within the first


                                                                                           63
phase according to Protocol V of the ECAA Agreement and to areas where conflicts exist
between ECAA law and the existing rules in Macedonia.

Unfortunately, the Republic of Macedonia has not implemented ECAA Regulation 2027/97
(air carrier liability in the event of accidents) and ECAA Regulation 785/2004 (insurance
requirements for air carriers and aircraft operators), although these are fundamental tools
of implementation of the Convention.

The present administrative practices are based on fairly old bilateral practices which mean
for example that timetables and air fares are required to be filed for approval. Air fares are
compared against IATA agreed fares. These procedures will also suffer fundamental
changes with ECAA Agreement (especially with ECAA Regulation 2408/92 and ECAA
Regulation 2409/92). The combined effect of these two Regulations should be that it is the
responsibility of the individual air carrier to decide on fares and rates, capacity, frequency,
type of aircraft and routing. The air carriers can be required to file the data but only for
information not for approval. Article 35 of the Aviation Act seems to indicate this but it
needs to be spelled out in a by-law.

Slot Allocations

Slot allocation is carried out by the airport management. It does not appear to be
transparent or neutral. This will be transferred to an independent body with the
implementation of the ECAA agreement.

Macedonia Air Transport (MAT)

The full implementation of the ECCA Agreement will alleviate one of the major issues in
Macedonia air access: The MAT monopoly. The Government of the Republic of
Macedonia concluded an agreement with the MAT (2001) according to which MAT is the
protected national airline with a veto on other airlines entering the market, charters and on
fares to be charged.

The agreement between the Government and MAT was investigated by the Competition
Commission and the provisions which gave a veto to MAT on new competing services was
found to be contrary to the EU competition rules. Finally, according to Article 4 of Protocol
V of the ECAA Agreement, this MAT agreement should be terminated immediately when
the ECAA Agreement enters into real effect.

According to research done by the Center for Research and Policy Making - Skopje
(2006), comparison between the number of flights and destinations on the Skopje and
Sofia shows that in Macedonia there are only a few airlines that fly to a small number of
destinations. On the other hand, Bulgaria (now EU member state) with its great range of
airlines and destinations is one of the countries in the South Eastern Europe (SEE) Axis
with much cheaper flights.



           Table 2.6: Comparable flight prices from Skopje (Athens/Sofia/Tirana)
                             to other European destinations
       From                  To                     MAT            Low cost carriers
Skopje                      Milan           236 EUR



                                                                                            64
Athens                                                                      80 EUR
Skopje                                            230 EUR
                               Frankfurt
Athens                                                                      164 EUR
Skopje                                            210 EUR
                                Prague
Sofia                                                                       132 EUR
Skopje                                            230 EUR
                               Frankfurt
Sofia                                                                       59.99 EUR
Skopje                                            236 EUR
                                 Milan
Tirana                                                                      120 EUR
 Source: Centre for Research and Policy Making, Cheap Flights to Macedonia - Mission Impossible, Skopje,
                                            September 2006

In general, MAT is economically very vulnerable. It has a problem with old debts,
especially to Macedonian airports. So far it operates on a small profit basis ($1.5 mil),
using a fleet of only 1 Boeing 737 (leased) and 1 Bombardier CRJ900 (it will receive 2
more CRJs, one in 2007 and one in 2008). It is completely financed by private capital.

According to the MAT website, it is now (2007) possible to make online bookings.
However, the most of the bookings (80-90 per cent) come from personal contacts, e-mail
and travel agencies.

It is not possible to get data on load factors for MAT or other airlines.

In the last few years MAT has entered into code-sharing agreements with Austrian Airlines
and Swiss. This is also an encouraging development. They also intend to enter into some
co-operation with other airlines. More recently MAT has introduced low fares on some
routes and no longer exercises its veto on other airlines fares and schedules.

Conclusion:

According to Ministry of Transportation and communications, the full package of ECAA
legislation should be implemented by 2010. Until then, air transportation and also tourism
will be seriously challenged with the remaining elements of closed sky, restricted flights,
bad hubs connections and expensive air tickets.

Both international airports in Macedonia play modest role in the transport of passengers:
approx. 675.000 passengers/year (2007), some 630.000 (93 per cent) on Skopje Airport
and only 45.000 (7 per cent) on Ohrid Airport. Air traffic also had no significant role in
transport of tourists to Macedonia. According to the Louis Berger Tourism study (2003),
only 30 – 38 per cent of all tourists are using air transport to come to Macedonia.




2.2      Road Transport

Introduction



                                                                                                       65
All ongoing structural reforms of the Government are in line with the country’s efforts for
EU accession. Among other sectors, the land transportation sector has a key role to play
in reaching the high targets, enforced by the EU. That includes:

•   To have a modern, well maintained and integrated road transport network system in
    place adapted to the needs of the country and in support of the sustainable
    development and growth of the national economy as well as regional and international
    trade.

The geographic location of the Republic of Macedonia (20°27'32'' - 22°18'04'' Eastern
latitude and 41°31'04'' - 42°22'21'' Northern longitude) can be considered as of excellent
tourism value, with its confirmed geo-strategic importance, especially in the context of
tourism development, where relevant categories are:

       the most frequented tourist transit routes in Europe;
       the most significant traveller generating regions in Europe;
       the main competitive destinations in Europe; and
       the main regional competitive destinations and their tourist appeals.

The transport sector has an important part to play in the national economy. According to
the Strategy on Macedonia Transportation System (adopted in 2007), the share of
transport, storage and communication activities in GDP totalled 8per cent in 2005.

In 2005 the transport, storage and communication activities totalled 16.781 or 9.6 per cent
of all registered businesses.

According to the statistics related to the number of employees by sector of activities for
2005 (Statistical Yearbook, 2006), 33.110 persons (or 6 per cent of all employed in
Macedonia) worked in the transport, storage and communication activities.

The Ministry of Transport and Communications has registered 2.020 companies in
Macedonia engaged in international road transportation activities. The number of CEMT
licenses issued for 2007 is 662.

Roads Infrastructure

The Ministry of Transport and Communications has a main role in the transport policy, but
several other independent bodies and public institutions are in charge of various areas of
the transport sector.

Among others, the most important body is the Fund for National and Regional Roads of
Macedonia, covering several areas: road planning, construction, maintenance and
financing. Its investment budget has increased significantly over the years. In fact, the
road maintenance budget is transferring to Macedonia Pat (MP), a state-owned company,
responsible for maintenance the main road network and operating as a direct contractor to
the Fund.

According to current legislation, provision of resources for construction and maintenance
of the road infrastructure in Macedonia is under the responsibility of the Fund. The extra-
budgetary funds are being financed primarily through the National budget. The largest part
comes from international loans and grants; a small part comes from car registration taxes,


                                                                                        66
fuel taxes and toll road charges. New projects and network maintenance are carried out
according to the Public Investment Projects’ annual updates (PIP).

The Road Transport Infrastructure of the Macedonia is characterized by a relatively high
density (except of the national highway network). Total length of roads in Macedonia is
13.494 km:
       906 km main roads,
       3.806 km regional roads;
       216 km highway;
       548 km international “E” roads;
       4.690 km local;
       3.876 km gravel roads.

The road network appears to be in a good baseline condition for undertaking further
development. Table 2.7 below presents an assessment of the general condition of the
road infrastructure as prepared by the European Bank for Reconstruction and
Development (EBRD).

               Table 2.7: Assessment of the Condition of Roads in Macedonia
                                             Good        Medium       Poor
        Highways                              60%         30%         10%
        Main                                  60%         30%         10%
        Regional                              45%         27%         28%
        Local                                 20%         30%         50%
        Gravel                                            50%         50%
                 Source: EBRD, Institutional and Road Planning Study, BCEOM, 2005

The overall condition of the road structure (especially main and important regional roads)
is lower in comparison to European and some neighbouring countries’ standards. In
general, the existing structures are strong and have good quality.         Main roads and
highways, which handle the bulk of the traffic, are in better condition than those roads of
second and third importance. The worst conditions can be seen on low-traffic regional
roads.

The 2 main strands of the state road network are: Corridor X (well developed north-south
corridor) and Corridor VIII (still waiting for formal construction to start in Macedonia),
connecting the Black and Adriatic Seas.

Corridor X, with a total length of 172 km, is passing through the country in a north - south
direction. Almost 71 per cent of this main link has been already finalised to modern
highway standards and the remaining sections (approx. 29 per cent of the total length) are
ready for further tender procedures. However, the biggest disadvantage of this route is
associated with the provision of rest areas with modern services and restaurants.
Considering the very large number of travellers that transit the country via this corridor,
(with estimates of some 3.5 million every year), it is clear that on this road there is almost
no provision for proper rest areas, accommodation and other service facilities that might
attract travellers to stop for an hour or two, or perhaps to even take an overnight break.
Corridor VIII, with a total length of 304 km, is passing through the country from east to
west. Unfortunately, it is still undeveloped and cannot be compared with Corridor X. Only
27.6 per cent of the total length is already built to modern highway standards, and another
8.7 per cent is currently under construction.


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2.3    Borders and Border Crossings

According to the National Strategy for integrated border crossings management, the
number of official border points in Macedonia is 20:

       15 road border points:
           o 5 to Serbia (the most frequent is Tabanovce, near Kumanovo);
           o 3 to Bulgaria (the most frequent is Deve Bair, near Kriva Palanka);
           o 3 to Greece (the most frequent is Bogorodica, near Gevgelija); and
           o 4 to Albania (the most frequent is Kafasan, near Struga).

       3 rail border points:
           o 2 to Serbia; and
           o 1 to Greece

       2 air border points: (Skopje and Ohrid Airports)

The border crossing issues depend mainly on several elements:

       successful implementation of the modernisation of customs regulations;
       improvement and operability of the cross border buildings; but also
       enhancement of the battle against smuggling, corruption and illegal human trade.

In general, individual travellers from EU countries can easily cross the Macedonia border.
They do not need visas. Their passports or ID-s (for Greeks) are accepted. Passport
checking is computerised on all road border points. Besides driver licence and registration,
car travellers need a green card and international driver’s licence. Customs formalities are
very quickly processed, especially those connected with personal luggage and the cars’
compartments.

In order to make the checking of all travellers as fast as possible, group travellers’ busses
have a separate gate line on all road border points, with dedicated police and customs
officers.

2.4    Signage

Directional and information signage in Macedonia is very poor and insignificant, both at
national and destination level. On all border points there is a lack of information and
destinations signs.

However, good examples can be found in Ohrid, where in 2007 local authorities introduced
new and well-defined road signs for the most popular locations. It is now evident that
visitors in Ohrid are encouraged to find more sites and attractions, where they may spend
a more interesting visit and possibly more money.

Other cities (especially Skopje, Bitola, Tetovo, Gostivar and Prilep) have only a few
information signs and often confusing direction signs. There is also an almost complete
lack of the international brown tourism signs on main roads that indicate tourism facilities
and attractions. Those which can be found, however, rarely conform to international
design.


                                                                                          68
There are no information centres or offices at the borders apart from a seasonal centre at
Gevgelija.


Conclusion

In general, Macedonia has relatively good basic road infrastructure for tourism. All
developed destinations (especially lake and mountain resorts and national parks) are
connected to the bigger cities and main corridors through modern tarmac roads. However,
signage is nearly non-existant, and there is a significant lack of rest areas, well equipped
services and restaurants, both on the international and regional road network.

2.5    Railway and Water Transport

The history of railway transport in the Republic of Macedonia started in 1873, when the
first railway track from Skopje to Thessalonica in Greece was constructed. Today the
railway network is about 925 km in single track lines and normal gauge. Only 1/3 (233 km)
of the railway network is electrified (25 Kv, 50 Hz).

The main railway track on Corridor X from (Tabanovce - Gevgelija, 230 km) is a single-
track line, electrified and equipped with relay signal system, which allows a good exchange
of communication by fibre-optic cable. However, the last renovation on this trans-
continental line took place some 30 years ago.

The total length of the railway infrastructure over Corridor VIII is about 307 km in the
territory of Macedonia. Only 152 km (55 per cent) are constructed and operational. One
section of 89 km (25 per cent of the total length) remains to be constructed on the link
toward Bulgaria. On the other side, 66 km (20 per cent of the total corridor length)
connecting the country with Albania is awaiting construction.

In addition to an incomplete basic infrastructure network, there are several factors
explaining the relatively small share of the railways in the modal shift of the country. The
main issues are related to the geographic specifics of the country (short distances
between major destinations within the country), technical and technological backlog,
preventing the railway company from fully developing its potential, especially regarding
international traffic.

The railway network is operated and managed by Macedonia Railways, a public owned
company, the sole provider of railway services in the country. This company is heavily
indebted and will continue this trend, unless significant reforms take place regarding its
structure and management. The operational losses are currently covered by the National
Budget at the expense of capital expenditure. The on-going process of company
restructuring is a matter of lengthy governmental procedure.

In 2005, the railway transported 0.9 million passengers and 3.1 million tones of goods.
Unfortunately, it has almost no role in tourism development, bearing in mind that the rail
network does not reach the main tourist destinations and regions (especially lake and
mountain destinations like Ohrid, Struga, Prespa, Dojran, Mavrovo or Krushevo);




                                                                                         69
Macedonia is a small landlocked country. Approach to the neighbourhood ports (especially
Thessaloniki in Greece and Duress in Albania) is established through road and railway
(only to Thessalonica) connections. For all landlocked countries, seaport access is vital to
the development of the national economy. Rights of the landlocked countries are defined
by United Nations Convention on the Law of the Sea (1982), which allows them to enjoy
the freedom of transit through the territory of transit states by all means of transport.
Therefore, it is essential for Macedonia to have special bilateral agreements in place with
its neighbouring countries for the use of strategic and preferential ports, based on
economic need and to ensure the competitiveness of Macedonia in the global economy.

Water transport can be found only on Ohrid Lake, with small ships (25-100 passengers)
and approx. 1,300 registered small boats (8-10 passengers). So far all bilateral Macedonia
- Albanian agreements for regular water transport have no significant regional importance.

2.6       Other Infrastructure

Electricity

According to the State Statistical Office, the gross national electricity consumption in 2005
in Macedonia was 8.541.116 MWh (mega watt hours). Domestic production share is some
81.3 per cent and import share is only 18.7 per cent (mostly from Serbia and Bulgaria).

Total gross production of electricity in Macedonia comes from thermal and hydro systems
in this proportion:

      -   Thermal systems:     78.51%
      -   Hydro systems:       21.49%

The biggest consumers of electricity are:

      -   Households (35%);
      -   Industrial sector (27.9%); and
      -   Other sectors (12.9% of the gross national electricity consumption).

Some villages and rural areas, ideal for development of rural tourism, are not connected to
the main electricity supply network.

Water supply systems

Only 2 per cent of Macedonia territory is covered with water. There are 53 natural and
artificial lakes and 35 rivers.

Water supply in Macedonia is drawn from natural sources such as lakes, subterranean
water, accumulations and watercourses. Natural sources are the most abundant source of
supply, delivering 63 per cent of total water capacity, almost 100 per cent of which is
unpolluted.

There are 2 regional water supplying systems, 106 local systems and 17 tall artificial
dams. Total water network length: 8.110 km. All systems are functional, with minor
sporadic problems with old pipe lines and leakages.



                                                                                          70
Populations in the 10 largest urban areas in Macedonia often have water supply problems:
Gostivar, Resern, Veles, Kumanovo, Stip, Strumica, Valandovo, Kriva Palanka and Dojran.

Many villages and rural areas, ideal for development of rural tourism, have no reliable
water supply systems.

PTT

Macedonia Post is a public enterprise, covering the entire territory of the country, with a
network of more than 300 postal offices and units employing more than 2.000 people. It is
a public operator for both domestic and international postal services.

Macedonia Telecom is a private-public enterprise (51per cent owed by Hungarian MATAV,
a subsidiary company of Deutsche Telecom), providing all telecommunication services in
the country (100 per cent coverage of the territory).

T-Mobile (Deutsche Telecom), Cosmofon (Greek OTE) and VIP-Austrian mobtel are the
three operational mobile phone technology providers.

The entire territory is als covered with WIFI Internet.

Taxis

In 2006 in Macedonia there were 2.419 taxi cars. In the urban, sub-urban and inter-city
transport these cars were carrying 14.645.000 passengers, driving approx. 63.439.000 km.
In all bigger cities and main tourist destinations taximeter and radio-operating systems are
functional.

2.7     Visa Regime

The visa regime is very positive for tourism development. As is evident below, citizens of
the current most important tourist generating countries do not require a visa to enter and
stay in Macedonia as a tourist.

Citizens of the following tourist generating countries can enter and stay in Macedonia as
tourists without a visa

           Serbia;
           Greece*
           other EU countries ;
           Slovenia;
           Croatia;
           Montenegro;
           Turkey;
           Israel;
           USA.
* Since 2008, EU citizens can enter Macedonia on their identity card .




                                                                                         71
Citizens of the following selected countries still require a visa to enter Macedonia:

           Russia;
           Canada;
           Ukraine;
           Australia;
           China.


2.8    Conclusions

The present level of passenger air fares is an impediment to tourism growth. The
implementation of the National Aviation Strategy will open the way for the removal of such
impediments. The roads and waterways, with the completion of planned constructions and
some improvements will be adequate for foreseeable tourism development. Rail plays a
very small part in tourism at present and will not be a significant contributor in the medium
term. Information signage is practically non-existent. The withdrawal of the visa
requirements for the citizens of the EU member states and the permission to enter
Macedonia on their identity card could also have a measurable impact on the growth in
tourist arrivals.




                                                                                          72
3.     Environmental Impacts

The development of the tourist industry in the Republic of Macedonia, if not sustainable,
might present a threat, especially to the environment and the natural heritage of the
country. As there are many definitions and terms associated with sustainable tourism we
emphasise the one that states:

“Sustainable tourism development meets the needs of present tourists and host regions
while protecting and enhancing opportunities for the future. It is envisaged as leading to
management of all resources in such a way that economic, social and aesthetic needs can
be fulfilled while maintaining cultural integrity, essential ecological processes, biological
diversity and life support systems”

3.1    Current Pressures on Natural Heritage Sites

As a branch of tourism, eco-tourism demands sustainability where natural attractions,
among which are natural heritage attractions such as mountains, gorges, caves, chasms,
rivers, lakes, springs, mineral and thermo-mineral waters, forests, and extraordinary
landscapes, would be unchanged by tourism processes and activities.

The possible negative impact of the tourist industry on the environment in Republic of
Macedonia is seen mainly through the deterioration and depletion of natural resources,
pollution increase, and physical impact.

Natural resources

The highest pressure in terms of consumption on the natural resources occurs when they
are scarce or limited. With tourist development the consumption of these resources is
increased and proportionally the pressure is increased.

One of the main negative impacts of tourism development is over consumption or non
sustainable use of water resources. The water used is mainly by lodging facilities for
sanitation, cooking, cleaning, drinking, hygiene, swimming pools, watering etc. The
overuse of water especially in the arid areas or areas with water scarcity results in water
shortages to the population of the area where water is consumed. There is also a
possibility of degradation of aquatic ecosystems belonging to the watershed from which
the water is extracted.

Energy, food and other raw materials, which might be in short supply, is also a factor for
the negative impact of tourism development on the environment. It is due to the fact that
in the tourist season the high demand for these resources, in order to meet the high tourist
expectations, is connected with greater extraction and transport, which exacerbate
physical impact and pollution.

Pollution

Air and noise pollution is caused mainly by transport by land, air, road and rail and
increases proportionally to the number of tourists and their mobility. The noise from



                                                                                          73
transportation and recreational vehicles is an important pollution issue but almost always
neglected. It is important not only as a human health impact but also as a negative impact
to the wild life altering natural activity patterns.

Solid waste is one of the main issues in the areas with high concentration of tourist
activities in the Republic of Macedonia. The lack of waste management in the natural
heritage sites exacerbates even more the communal solid waste problem in the area. The
solid waste management comprised mainly of collection and disposal of the waste if
neglected can have a negative effect on the aquatic and terrestrial ecosystems, can have
negative human health impacts and can deteriorate the scenic assets of tourist sites.

In the regions with tourist activities, besides the waste water coming from the local
population and industry, the waste water pollution is increased because of the sewage
coming from the hotels, recreation and other facilities used by tourists. In the Natural
Heritage sites such as Ohrid, Prespa and Dojran and parts of Mavrovo National Park,
which gravitates to the Radika River, certain but not fully efficient effort has been made to
introduce waste water collecting systems and waste water treatment plants. In all other
natural heritage areas such system do not exist.

Aesthetic Landscape Pollution

Often tourism fails to integrate its structures with the natural features and indigenous
architecture of the destination. Large, dominating resorts of disparate design can look out
of place in any natural environment and may clash with the indigenous structural design.
A lack of land-use planning and building regulations in many destinations has facilitated
sprawling developments along river and lake shores, valleys and scenic routes. The
sprawl includes tourism facilities themselves and supporting infrastructure such as roads,
employee housing, parking, service areas, and landfills.

Physical Impact

Inadequate construction activities and infrastructure development such as the
development of tourism facilities (accommodation, water supplies, restaurants and
recreation facilities), road and airport construction are leading to land degradation and
irreversible loss of natural habitats and deterioration of scenery. One prime example of
physical impact is construction of ski resort accommodation and facilities, which frequently
requires clearing forested land. The primary protection measure in such situations would
be a plan to control the urbanisation of touristic weekend settlements. Another notable
case is the illegal construction of various touristic structures on the shores of natural lakes.
Adverse impacts are evident not only in the degradation of surrounding upland
ecosystems, but also in the direct pollution of the lakes themselves. There are many
specific examples of this (Lagadin on Ohrid Lake, 1,200 weekend houses around Mavrovo
Lake within Mavrovo National Park etc).

It is worthwhile mentioning that the desire for more tourist-recreational centres at the
expense of habitat conservation (particularly mountain springs and streams, tall grass
communities etc) is constantly growing.




                                                                                             74
3.2    Status of Natural Heritage Sites

The Republic of Macedonia contains exceptional terrestrial and aquatic habitats and many
important plants and animal species that are currently vulnerable to anthropogenic
influences among which are the influence and the pressure from the tourist industry.
Protection is inadequate because the network of protected areas is insufficient and its
establishment was not based on specific and systematic criteria. Threatened habitats or
species, management plans and operations are lacking or ineffective (except within the
three national parks).

Natural heritage means the parts of the nature and sites consisting of geologic, physical
and geographic or biological formations or a group of such formations, which have
extraordinary value from the aesthetic, conservation or scientific point of view.

Natural heritage may be:
       protected areas;
       strictly protected or protected wild species;
       characteristic minerals and fossils or speleological objects.

Ecosystem means a spatial, dynamic complex of biocenosis and non-living environment
that interact as functional entirety.

Natural heritage is part of a certain defined ecosystem. Taking this into account the most
important ecosystems, and within them Natural Heritage sites in Republic of Macedonia
which are of tourist significance, are the mountain and aquatic ecosystems. The current
status of the key ecosystems in the Republic of Macedonia reflect both the local
environmental conditions in which they develop and global climate changes and the extent
of anthropogenic impacts over individual ecosystems.

Environmental Status of the Mountain Ecosystems

Floral and faunal components of the mountain ecosystems are not generally endangered
and their distribution and preservation correspond to the specific environmental conditions
of each mountain massif. Mountain ecosystems within the three national parks of the
Republic of Macedonia (Galicica, Mavrovo and Pelister) are protected by specific legal
regulations and management plans. For the time being the only National Park with a
management plan along with a business plan which encompasses tourism development is
Pelister National Park. Mavrovo and Galicica National Parks are in the process of making
their management plans.

The factors affecting the state of mountain ecosystems are varied. These include
overgrazing and the uncontrolled removal of certain plant species for sale or personal use.
The construction of ski-lifts, mountaineers’ towers, television transmitters and other aerial
systems usually installed on mountain peaks often causes degradation of some of those
plant communities, which have restricted distributions on the summits of the mountains
(because of the configuration of the terrain, strong winds etc). With regard to the faunal
component of the mountain ecosystems, indirect anthropogenic impacts do not threaten
the stability of the populations. The only treat to the faunal component of the mountain
ecosystem is illegal hunting, which is minimal within the auspices of the National Parks
due to the presence of the ranger service and controls.



                                                                                          75
Environmental Status of Aquatic Ecosystems in the Republic of Macedonia

The status of Ohrid Lake is slightly better than that of the other two natural lakes, Prespa
and Dojran. Nevertheless, the proper functioning of the existing integrated
collection/treatment system for communal and industrial wastewater along the shoreline of
the entire lake is necessary. One of the main disturbances of Lake Ohrid as the main
tourist destination and in the same time natural heritage site is lake traffic, which is mainly
encompassed by the transportation of passengers on Ohrid Lake during the tourist
season. The pollution caused by the motorboats especially the release of oil and petrol
directly to the lake is contributing highly to the overall pollution to the lake. Solid waste
management especially on the beaches of the lake is not satisfactory.

The continuous reduction of the water level of Prespa Lake over the years has adversely
affected the state of the floating vegetation and faunal communities in the littoral zone of
the lake. The presence of large quantities of organic silt on the lake bottom accelerates
the process of eutrophication, which manifests itself with the appearance of phytoplankton
blooms during the summer period. With it the water quality and visibility is deteriorating
which have a negative influence on the tourism in the area.

The status of Dojran Lake is the most alarming. Since 1988, the level of the water has
drastically fallen, contributing to a decrease in water depth and receding of the shoreline,
accompanied by a complete loss of the littoral zone and its related biological communities.
The accelerated eutrophication has led to intensive sedimentation and a dramatic
reduction in the epibenthic communities, as well as serious changes in the structure of the
Algal microflora. These changes have particularly affected the reed zone and other
aquatic macrophytic vegetation. In order to restore the disturbed environmental balance,
efforts have been made to bring additional quantities of water to the lake, which is
expected to improve the state of the biological communities within the lake ecosystem.
Currently Lake Dojran is experiencing a steady come back of tourist visits.

The status of riverine ecosystems in the Republic of Macedonia is also alarming. Almost
all of the rivers are under great direct and/or indirect anthropogenic pressures.

The situation with the major recipient of all types of wastewater (communal, industrial and
agricultural), i.e. the Vardar River is worst. The situation with the other river ecosystems
(Bregalnica, Crna, Lepenec, Pcinja, Zletovica etc.) is similar. Reservoirs have been built
on some rivers, and these represent a sink for persistent substances (e.g., Kalimanci and
Tikvesh Lakes). The reservoirs which provide drinking or industrial water (Mavrovica,
Strezevo, Turija), although experiencing slight effects from natural eutrophication, have
experienced deterioration in quality in past years due to inappropriate fish stocking and
exploitation. Benthic communities in the riverine ecosystems are showing reduced
abundance, which will ultimately lead to a decline in fish populations. Six out of the 20
endemic fish species within the Republic of Macedonia are found in riverine ecosystems.
Three of these are considered to be globally threatened species.

Wetland vegetation, which used to develop over large areas of swamps and marshes
within all the valleys of Macedonia, experienced great changes under past drainage
regimes which converted most of these ecosystems into arable land.




                                                                                            76
The relict wetland communities, which today appear mainly in a fragmentary state, are the
most endangered. Some which were present near natural lakes have been destroyed
simply because they represent unwelcome marsh vegetation. Some of the wetlands which
are still preserved are important in serving to explain the genesis of wetland vegetation in
the Republic of Macedonia. Only Belchishta Marsh still exists in its original state, where
the population of Otters (Lutra lutra), a globally threatened species, is the largest. Apart
from their high ecological value as part of aquatic ecosystems wetlands can serve as a
high tourist value especially for the birdwatchers.

Water capture/extraction from mountain springs and streams often causes the desiccation
of mountain marshes and bogs, and thus the degradation of wetland communities. These
effects have been recorded on the mountains Yakupica, Nidze, Baba and Shar Planina.

3.3    Main Factors Leading to Nature Degradation

The basic factors which have led to the current unfavourable state of the nature in the
Republic of Macedonia include general historical processes, a bad socio-economic
situation, an unstable political situation, inadequate spatial planning and inappropriate land
use.

Several basic reasons for the problems of nature protection implementation are:
       A low level of education and a lack of information, especially in rural areas, which
       has contributed to a low awareness in the general population of the relationship
       between human activities and the environment, the sustainable use of biological
       resources and the sustainable transfer of biotechnology;
       Growing poverty, which does not recognise the principles of sustainable
       development, is manifesting itself through illegal forest and other resource overuse,
       hunting and fishing overuse, non-sustainable development of agriculture etc.;
       Incomplete legislation;
       Low institutional capacity in terms of educated and trained staff, equipment and
       resources;
       Uncontrolled urbanisation, deagrarisation (in the traditional sense) and
       industrialisation are the main processes that disturb the environmental balance
       (considering the cumulative effects of pollution);
       Stagnation of the economy and use of outdated technologies and lack of treatment
       of wastewater and waste gases, which leads to deterioration of nature;
       The process of earning a profit under highly competitive market conditions, the
       permanent trend toward globalisation and the favouring of newer, more profitable
       varieties which have fully supplanted the indigenous, low producing and/or less
       profitable genetic types.

The Impact of Fires in Natural Heritage Sites on Tourism

Wildfires in the Republic of Macedonia are usually the result of wilful arson or negligence.
The extent has increased considerably over recent decades and the risk of wildfires is
expected to grow. A number of large fire situations in recent years in the Republic of
Macedonia have revealed the vulnerability of tourists and tourism facilities to the direct and
indirect effects of wild fires especially in the most visited natural heritage areas during the
summer period. Examples are National Park Galicica, National Park Pelister and
Monument of Nature Lake Ohrid.



                                                                                            77
Fires burning under extreme weather conditions are a threat to camp grounds, national
parks and other tourist resorts. On the other hand tourists are not always aware of the
potential danger of becoming trapped by wildfires or of being a source of wildfires due to
negligent handling of barbecue fires or smoking.

There are two levels of impact on tourism caused by fire in the natural heritage sites:
chronic and acute:

       Chronic impact on tourism

Species of plants and trees with low tolerance to fire cannot regenerate and biodiversity
drops. Simultaneously erosion of the unprotected soil is aggravated, which in turns lowers
soil fertility.

When the biodiversity and the landscape attributes of the natural heritage site are
degraded the tourist assets of the site along with the natural assets diminish the tourist
value. Thus tourist appeals and potential, when biodiversity and landscape are lost or
deterioration occurs, can be dramatically changed in a negative sense.

       Acute impact on tourism

The other is more dramatic and is acute when fire occurs in the natural heritage site to
force tourists to evacuate from the area.


3.4    Main Characteristics of Natural Heritage Visitor Flow

The existence of tourism in Republic of Macedonia is very closely linked with its favourable
geographical position enabling conditions for tourism development within the region. Very
important elements of the tourist offer depend on its natural heritage attractions.

The regional distribution of tourist visitor flows indicates that the western region of
Macedonia registers the biggest number of tourist arrivals. It is due to the high
concentration of natural tourist attractions in this region. As a result of this, Macedonia’s
most popular and developed tourist centres are situated here: Popova Šapka, Mavrovo,
Ohrid, Struga, Prespa, Pelister and Krusevo.

Other tendency which is particularly characteristic is the concentration of the tourist visitor
flows in lake areas and the capital. Their average absorption is 70 per cent of total tourist
arrivals. The visitor flows in the lake areas taking into account especially the ones which
are natural heritage sites is due to the following:

       Lake areas absorb highest part of tourist arrivals (average 46,7 per cent) because
       they are also the most developed tourist places in Macedonia as well (particularly
       Lake Ohrid);
       There is a good communication between lake areas and other regions.
       Highways are part of the regional and international road network.
       Airports Petrovec and Ohrid are in their vicinity.




                                                                                            78
Besides the Lake Ohrid region, other places of interest from a tourism point of view are
Lake Prespa, Lake Dojran. The winter resorts Šar Planina Mountain, Bistra, Kruševo,
Pelister and Kozuv are also on the list for highest visitor flows.

The mountains and the mountain huts in the Republic of Macedonia along with the picnic
places are attracting visitors for mountaineering, hiking, biking, other sports or leisure
activities, sightseeing, collecting of wild plants or fungi used for food or medicine. These
places are visited mostly during the weekends and holidays. Usually every bigger
settlement has its famous picnic destination e.g. Skopje (Matka, Markov Manastir, Saraj,
Vodno Mountain), Kicevo (Krusino), Tetovo (Teke, v. Lesok Monostery St. Atanasij),
Kumanovo (River Pcinja, Skackovce, Gradiste, Strnovac), Berovo (Berovo Lake), Strumica
(Velusa and Vodoca Monasteries and Kolesino and Smolari waterfalls) Bitola (Mountain
Baba) etc.


3.5    Legal Aspects of Natural Heritage Protection

The national law in the area of environment is on ongoing process for approximation and
harmonization with the EU law. Complete harmonization with EU legislation will be
achieved when bylaws will be drafted on the basis of the laws in the area of environment.
This will contribute to increasing the environmental standards and assets which
encompass also nature heritage protection and promotion.

Several most important environmental sectors were reviewed in order to set the legal
environmental status of the aspects that are intrinsically connected with the tourism
industry.

The Horizontal sector is comprised of EIA (Environment Impact Assessment) and Strategic
Environmental Assessment (SEA). The process of implementation of the requirements of
the EIA and SEA is ongoing. Significant steps have been taken with respect to
environmental awareness and access to environmental information, including development
of a communication and awareness strategy. The Law on Environment incorporates the
basic provisions of environmental liability with regard to the prevention and remedying of
environmental damage.

In the air quality sector a National Programme for Ambient Air Quality Monitoring needs to
be drawn up and the monitoring of the air quality has to be improved. All major pollution
sources are identified in a cadastre. Air quality standards needs to be further aligned with
the Guidelines on Air Quality of the World Health Organisation.

Waste management is one of the most serious and most evident environmental issues in
Macedonia. The Law on Waste Management needs to be aligned with the acquis and the
waste management policy defined in the National Environmental Action Plan (1996,
revised in 2006) needs to be reviewed to include acquis-related targets. Moreover, there is
a need to develop and implement waste management plans in accordance with the acquis.
The lack of suitable infrastructure hampers adequate waste disposal in general and
disposal of hazardous waste in particular. In order to comply with the acquis in the field of
waste management, significant investments will need to be made. There are no or little
effort in to implementing selection and recycling of the waste, which will highly contribute
towards waste minimisation.



                                                                                          79
For the water sector there is a lack of an integrated approach to water resources
management, overlapping responsibilities and competences, lack of institutional
coordination and inefficient performance, weak enforcement of legal requirements on water
quality, absence of appropriate legal requirements, lack of waste water treatment plants,
insufficient sewage system networks, outdated or no water quality monitoring system. Many
urban water supply systems are in an unsatisfactory state, there is lack of rural water supply
systems, irrigation schemes are in general in a poor state, fee collection rates are low, there
is limited data on water consumption, drainage systems are in a poor condition, etc. All
these issues are severely damaging the sustainability in water use in Republic of
Macedonia. In the new Law on Water which was adopted this year there is effort to involve
the principle of integrated water management and clearly state the roles and responsibilities
in the water sector. Still the law has to be implemented.

In the nature sector most of the EU legislation on nature conservation has been
transposed into the Law on Nature Protection. However, significant efforts are required on
the development of secondary legislation as well as to ensure the implementation of
legislation. Management of protected areas is incomplete, with the exception of national
parks, and is non-existent in certain cases, despite legislation providing for integrated
protection both inside and outside protected areas. Several problems exist within the
sector, such as the lack of establishment of an inter-sector approach to biodiversity
conservation, inadequate level of compliance with national and EU regulation, lack of
information on nature management, low level of public and institutional awareness and
lack of a monitoring system for biodiversity.

3.6    Roles and Responsibilities

The Ministry of Environment and Physical Planning (MoEPP) is fully responsible for the
management and supervision in the field of protected areas and protected species. The
Ministry of Agriculture, Forestry and Water Economy is responsible for forest management
and forest protection outside of protected areas, as well as for the regulation of the hunting
and fishing field and the plant protection field (the latest concerns agricultural plants).
According to the Law on Nature Protection (Official Gazette no. 67/04), national parks are
transformed into National Park Institutions to be responsible for the management of
national parks. The administrative supervision over their operations will be performed by
the MoEPP, while the Administration of Environment (in the frame of the MoEPP) is
performing professional supervision over their activities. Bodies within the Ministry of
Agriculture, Forestry and Water Economy include the Plant Protection Directorate and
State Forestry and Hunting Inspectorate.

Table 3.1 below, presents the roles and responsibilities of the institutional bodies operating
in the field of protected areas and protected species.




                                                                                           80
      Table 3.1: Roles and Responsibilities of the institutional bodies for key environmental
                                            functions
Key environmental management functions                    Responsible
Regulation                                                     MoEPP
                                                               MoAFWE
Policy making and Planning                                     MoEPP
                                                               MoAFWE
Monitoring                                                     MoEPP
                                                               LSG units – Municipalities

Registration Licensing and Permitting                          MoEPP –Administration of Environment
Inspection                                                     MoEPP – State Env. Inspectorate
                                                               LSG units – Municipalities
Enforcement of legal instruments related to natural            MoEPP – State Env. Inspectorate
    heritage                                                   LSG units – Municipalities
                                                               MoAFWE
                                                               State Inspectorate of Forestry and Hunting
Financial plans and economic instruments                       MoEPP, MoAFWE
                                                               MoF
Public information and Consultation                            MoEPP – Public Info. Office;
                                                               LSG units – Municipalities
                                                               Universities
                                                               NGOs,
                                                               Professional Associations
Source: Various Ministries, Municipalities, NGO’S, Universities and Professional Bodies


3.7       Conclusion

Waste management is poor and environmental management, procedures and
implementation is weak. The lack of land use planning and building regulations has
facilitated sprawling developments along river and lake shores. The aquatic ecosystems
are under severe threat from a number of pressures.




                                                                                                      81
4.     Markets and Marketing

Markets

4.1 Arrivals and Overnights

Statistical data available to track the evolution of tourism to Macedonia comes from two
sources. Firstly the border crossings and secondly the data supplied by registered
accommodation establishments on occupancy. The latter source is the most often quoted
as “official” statistics.

Border Crossing Data

The Ministry of the Interior operates the Border posts of the Republic of Macedonia. The
data they collect on arriving and departing foreigners is historically not sufficiently detailed
to permit an accurate evaluation of foreign tourism. Border posts count arrivals and
departures of foreign nationals. The departures figures are 20-30 per cent lower than the
arrivals, presumably because a stricter control is made of arriving foreigners than when
they depart.

                 Table 4.1: Arrivals in Macedonia 2000-2006 by Mode of Transport
 Mode             2000        2001        2002        2003      2004        2005        2006
 Air             262,972     104,809     115,667      104,197   104,638    129,238      119,529
 Rail              67,358      33,119      41,001      42,454    41,467      43,797      53,472
 Road          2,534,366 1,592,430 1,922,462        2,035,900 2,447,648 3,072,814     3,196,288
 Total         2,864,696 1,730,358 2,079,130        2,182,551 2,593,753 3,245,849     3,369,289
Source: Ministry of Interior

Table 4.1 above and Table 4.2 below present the visitor arrival figures as collected by the
Ministry of Interior and this shows that the dominance of Road as a means of travel (95 per
cent) has increased since 2000 with Air not recovering to 2000 levels since the internal
conflict in 2001.

                  Table 4.2: Share of Arrivals by Mode of Transport 2000 and 2006
                                       %         2000      2006
                                     Air            9.2       3.5
                                    Rail            2.4       1.6
                                    Road           88.5      94.9
                                    Total         100.0     100.0
                                 Source: Ministry of Interior

Data is not regularly collected by the immigration officials on the type of visit – Transit, Day
or Tourists (staying a night or more in the Republic). In 2004 the State Statistical Office
undertook an exit survey of foreign visitors over a four month period of the peak season
but despite its importance and value it is not certain whether or when this survey is likely to
be repeated. The survey, whose results are shown in Table 4.3 below, identified 29 per
cent of arrivals as tourists (staying a night or more).




                                                                                             82
                                      Table 4.3: Visit Type 2004
                                                              %
                                   Day Visit                28.41
                                   Transit                  42.53
                                   Staying Visit            29.06
                                   Total                    100.0
                                  Source: State Statistical Office

Although this was just one sample survey valid for a single year, by applying this ratio to
arrivals data for the 2000 to 2006 period, an estimation of tourist arrivals can be made for
this period and this is shown in Tables 4.4(1) and 4.4(2) below.

      Table 4.4(1): Estimated Foreign Tourist Arrivals 2000-2006 (29% of total arrivals)
                   2000     2001       2002      2003       2004     2005        2006
      Tourists   832,478 502,842 604,195 634,249 753,745 943,244 979,115
       Source: Ministry of Interior data and State Statistical Office 2004 Survey

     Table 4.4(2): Estimated Foreign Tourist Arrivals 2000-2006 (29% of total arrivals)

                                E s tim a te o f T o u ris ts 2 0 0 0 -2 0 0 6
                                       (2 9 % o f to ta l a rriv a ls )

          1200000

          1000000

           800000

           600000

           400000

           200000

                  0
                        2000       2001        2002       2003       2004        2005   2006

       Source: Ministry of Interior data and State Statistical Office 2004 Survey

Based on this estimation and allowing for a +/- 5% margin of error, between 930,000 and
1,020,000 tourists visited the Republic of Macedonia in 2006.

The seasonal spread of foreign visitors (all types) indicates a main peak in the summer
(July, August and September) with a secondary peak over the New Year and Christmas /
Winter Sports holiday period. This seasonal trend is similar both for all visitors (shown in
Table 4.5 below) - of 450,000 in the main peak in August to just over 150,000 in February,
and for those tourists staying in registered accommodation (shown in Table 4.6 below) -
with over 60,000 visits in August to 20,000 in February.




                                                                                               83
                                  Table 4.5: Visitor Arrivals by Month - 2006

                                        Visito r Arriv a ls b y M o n th - 20 06

               5 0 0 ,0 0 0
               4 5 0 ,0 0 0
               4 0 0 ,0 0 0
               3 5 0 ,0 0 0
               3 0 0 ,0 0 0
               2 5 0 ,0 0 0
               2 0 0 ,0 0 0
               1 5 0 ,0 0 0
               1 0 0 ,0 0 0
                 5 0 ,0 0 0
                          0

                                               h r il  y     e    ly
                                 ar
                                    y   ry a rc A p M a J u n J u         us
                                                                             t
                                                                                    r be
                                                                                         r     r er
                                      a
                               nu b ru M                               u g m b e cto        be
                             a                                       A                     m emb
                           J     Fe                                            t e O ove ec
                                                                         S ep         N     D

               Source: Ministry of Interior

                      Table 4.6: Foreign Visitor Overnights by Month - 2006

                              O v e r n ig h ts b y F o r e ig n V is ito r s in R e g is te r e d
                                        Ac c o m m o d a tio n - 2 0 0 6 b y m o n th

              7 0 ,0 0 0

              6 0 ,0 0 0

              5 0 ,0 0 0

              4 0 ,0 0 0

              3 0 ,0 0 0

              2 0 ,0 0 0

              1 0 ,0 0 0

                      0
                               Ja n Fe b Ma r Ap r Ma y J u n          Ju l   Au g S e p O ct N o v D e c

               Source: State Statistical Office

In 2006, the border post statistics also record nationality of visitors. As this is not further
analysed by type of visit it does not give a clear picture of the relative importance of source
markets for tourists.


                                                                                                            84
The Ministry of the Interior is in the process of introducing Integrated Border Management
systems. It is essential that the State Statistical Office and the Tourism Department of the
Ministry of Economy be included in the Coordination Committee of this project.

Registered Accommodation Data

The accommodation data can be misleading. The number of “visits” registered does not
equate to the number of tourists. Firstly, because many visitors will stay in more than one
accommodation establishment and thereby be counted several times. Secondly, because
many visitors do not stay in formal accommodation but with friends and relatives, in private
accommodation or in other accommodation that does not make returns to the State
Statistical Office. As there is no regular data on the number or percentage of VFR (Visiting
Friends and Relatives) visitors, the information drawn from the accommodation data may
not apply to all visitors to the country.

However, visitors staying in formal (registered) accommodation are those most likely to be
influenced by promotional activity and to book their visit through operators or direct with
other suppliers. Their profile is consequently broadly indicative of where marketing activity
might best be applied.

Tourism peaked in Macedonia in the late 1980s. Following independence, gradual
increases were registered until an accommodation registration total of nearly 225,000 was
reached in 2000 as seen in Table 4.7 below.

                Table 4.7: Foreign Accommodation Registrations 2000-2007
                                    Year Registrations
                                  2000               224,016
                                  2001                98,946
                                  2002               122,861
                                  2003               157,692
                                  2004               165,306
                                  2005               197,216
                                  2006               202,357
                                  2007               230,080
                                Source: State Statistical Office

The accommodation registration figures in Table 4.7 also indicate that tourism to
Macedonia has only just recovered to 2000 levels following the internal conflict of 2001. A
closer study of the source markets of these registrations reveals that most regional
markets have recovered well since 2001. However, Albania and Bulgaria have not
recovered to their former levels. This might be partly a result of the significant
development of tourism facilities in their own countries competing with Macedonia.

Within Europe there has been limited recovery from the main source markets of Germany
and the UK. Austria and Italy have exceeded 2000 visitor levels. Some smaller markets
have shown higher growth rates from a low base. Australasian and Israeli visitors have
grown rapidly. The USA and Canadian markets have performed poorly, which results in
part from the reduction in aid workers coming to Macedonia and reluctance to travel since
the 9/11attacks.


                                                                                          85
The top source markets by nationality in 2007 are shown in Table 4.8 below and it is fully
representative of both the present and earlier periods of this decade whereby the countries
in the top half of the table in particular, have retained their positions almost unchallenged
throughout the period.

         Table 4.8: Top 15 Source Markets for Accommodation Registrations - 2007
          Rank Country of Origin       Registrations 2007 % change since 2000
           1     Serbia & Montenegro          44,661               26
           2     Greece                       28,618               35
           3     Bulgaria                     18,901               -21
           4     Albania                      17,573               -20
           5     Slovenia                     13,046               147
           6     Croatia                      12,326               165
           7     Turkey                        8,907               34
           8     Germany                       8,840                -8
           9     USA                           7,978               -34
           10    Great Britain                 5,789               -10
           11    Austria                       5,186               102
           12    Italy                         5,123               17
           13    Bosnia & Herzegovina          4,887               51
           14    Netherlands                   3,705               -32
           15    France                        3,594               -14
       Source: State Statistical Office

This league table indicates a healthy spread of source markets, though a fairly heavy
dependence on regional countries and relatively lower numbers from Western Europe.

In total both visits and overnights are still around 10 per cent lower than in 2000. Because
of multiple registrations, meaningful length of stay data cannot be drawn from these
figures.

4.2    Seasonality

The figures in Tables 4.9 and 4.10 below indicate the seasonality of overnights in
registered accommodation by foreign and domestic visitors respectively for 2006 (the most
recent detailed breakdown available). The fluctuations depicted through the year are
similar to those of previous years and are also considered to be representative of the
present situation.




                                                                                          86
Table 4.9: Seasonality of Foreign Overnights in Registered Accommodation 2006

                        O v e r n ig h ts b y F o r e ig n V is ito r s in R e g is te r e d
                                  Ac c o m m o d a tio n - 2 0 0 6 b y m o n th

       7 0 ,0 0 0

       6 0 ,0 0 0

       5 0 ,0 0 0

       4 0 ,0 0 0

       3 0 ,0 0 0

       2 0 ,0 0 0

       1 0 ,0 0 0

                0
                         Ja n Fe b Ma r Ap r Ma y J u n          Ju l   Au g S e p O ct N o v D e c

        Source: State Statistical Office



 Table 4.10: Seasonality of Domestic Visits to Registered Accommodation 2006

                    O v e r n ig h ts b y D o m e s tic V is ito r s in R e g is te r e d
                               Ac c o m m o d a tio n - 2 0 0 6 b y m o n th

        6 0 0 ,0 0 0


        5 0 0 ,0 0 0


        4 0 0 ,0 0 0

        3 0 0 ,0 0 0

        2 0 0 ,0 0 0


        1 0 0 ,0 0 0


                    0
                           J a n Fe b Ma r Ap r Ma y Ju n        J u l Au g S e p O ct N o v D e c

        Source: State Statistical Office




                                                                                                      87
The charts indicate that the volume of domestic and foreign overnights is broadly
comparable in numbers for the months of June to September. In July and August there is
a significant increase in domestic overnights.

There is not a major peak in foreign overnights in the summer. This probably indicates
that a high percentage of foreign visits are business related, with a turn down in business
travel being compensated for by a corresponding increase in leisure travel in the summer.

There is an upturn in both domestic and Greek overnights in January, presumably related
in part to winter sports activity.

The surge in summer domestic demand is accommodated for largely in camping and
private accommodation facilities.

4.3    Accommodation Occupancy

The data collected by the State Statistical Office does not permit the calculation of
occupancy in accommodation establishments for each month of the year, but only on an
annual basis. Additionally the calculation is based on all accommodation units being open
throughout the year, whereas many only operate during the “season”. In 2005 only 78 per
cent of hotels operated for the full 12 months of the year. 5 per cent operated for more
than five months and 7 per cent were open less than five months.

The year round occupancy level of 39 per cent quoted by the SSO for 2005 is therefore
very generalised and lower than reality.

The following is, however, apparent:

           Occupancy at Lake Ohrid and Lake Prespa is high for only a very short summer
           season, though boosted to a certain extent in the shoulder season by
           conference business
           The mountain resorts are under performing during the summer and experience
           only short periods of high occupancy during the winter due to the limited spread
           of school holidays
           Skopje and other business centres have a more even year round occupancy
           with dips at weekends and during holiday periods.
           Spas have good year round occupancy.

A spreading of the academic summer and winter holidays would assist in improving resort
occupancy.

4.4    Profile of Foreign Visitors

The only data available on the profile of foreign (non-resident) visitors and their purpose of
visits is gathered every five years in two surveys undertaken at borders and in
accommodation units – ‘Survey of Foreign Visitors - Poll of Border Crossings 2004’ and
‘Survey of Foreign Visitors – in Accommodation Facilities 2004’. Both are undertaken in
the June to September period and results are weighted to give annual data.




                                                                                           88
Table 4.11 below provides a breakdown of all visitors crossing the borders in 2004, of
which only 29 per cent are tourists spending one or more nights in the country.


                               Table 4.11: Foreign Visit Type
                                 Visit Type          %
                               Day Visit            28.4
                               Transit              42.5
                               Staying Visit        29.1
                                                    100.0
                             Source: SSO Border Survey 2004

Day visitors, and to a lesser extent transit visitors, are significant contributors to the
economy through their expenditure. In 2004 the average expenditure of day visitors was
MKD 3,153 and MKD 1,125 by those in transit.

The analysis of the Purpose of Visit of tourists shown in Table 4.12 below indicates that
overall a quarter of tourists are on business and a further quarter comes for leisure
purposes. A high percentage – nearly 40 per cent - comes to visit friends and relatives
(VFR).

There are significant variations in the purpose of visit by source market. There is a strong
incidence off VFR from Serbia and Montenegro, whereas Albanians are more likely to
come on holiday. The stated motivation for travel from neighbouring countries may need
to be considered with caution. However, the data on other countries is probably more
reliable. There is a high level of VFR traffic from Other Countries – one in three visits.
Leisure and business from these markets are at similar levels – each at 27 per cent.

                      Table 4.12: Foreign Tourist Purpose of Visit - %
            Country                Vacation Business        VFR          Other
            Albania                  63.2         5.5       28.9          2.3
            Bulgaria                 55.4        25.2       10.4          9.0
            Greece                   45.6        13.1       32.9          8.4
            Serbia & Montenegro      11.6        24.8       58.7          4.9
            Others                   27.6        27.0       33.3         12.1
            Total                    26.0        24.0       39.0          6.7
              Source: SSO Border Survey 2004

The percentage of 39 per cent VFR visitors equates closely to those staying in family
accommodation. There is a high incidence of visitors using their own accommodation –
presumably mostly expatriates.

Most significant is that only 38 per cent of tourists stayed in commercial accommodation
as shown in Table 4.13 below. Much of the statistical information on tourism in Macedonia
is based on data drawn from registered accommodation. Even though they may not be
paying commercial rates for their accommodation, the 62 per cent of visitors staying in
their own or family accommodation are significant contributors to the economy. Unlike for
Transit and Day Visitors, data on expenditure by this segment is not available.




                                                                                         89
                 Table 4.13: Accommodation Used by Foreign Tourists - %
                                   Paid         Friends &                    Other
             Country           Accommodation    Relatives     Own            (car)
       Albania                      70.4           29.6        0.0            0.0
       Bulgaria                     80.7           19.4        0.0            0.0
       Greece                       54.2           45.8        0.0            0.0
       Serbia & Montenegro          31.1           68.9        0.0            0.0
       Others                       33.0           28.3       34.5            4.2
       Total                        37.8           39.6       20.1            2.5
       Source: SSO Border Survey 2004

Skopje is the most popular location for overnight stays by all foreign visitors, as shown in
Table 4.14 below– both those using commercial accommodation and staying with friends
and relatives.

                  Table 4.14: Overnight Location of Foreign Tourist Stays
                               Location                 %
                               Skopje                 47.0
                               Bitola                 14.6
                               Gevgelia                0.6
                               Strumica                0.7
                               Ohrid                  13.0
                               Struga                  5.7
                               Kumanovo                5.3
                               Kriva Palanka           0.3
                               Other                  12.9
                              Source: SSO Border Survey 2004

Tourists staying in paid accommodation form the main target market of the tourism
industry. This is the prime segment the Agency for Promotion and Support of the Tourism,
accommodation and tour operator and travel agency sectors need to attract to the country.
Their profile is consequently of particular importance.

In 2004 the average length of stay of tourists using paid accommodation was 3.15 days
(2.15 nights), which varied according to nationality as may be seen in Table 4.15 below.




                                                                                         90
                Table 4.15: Average Length of Stay of Foreign Visitors - Days
                               Country                  Days
                               Albania                   2.69
                               Bulgaria                  2.58
                               Serbia & Montenegro       2.94
                               Greece                    2.63
                               Austria                   3.13
                               Bosnia & Herzegovina      3.15
                               Croatia                   3.13
                               France                    4.36
                               Germany                   3.26
                               Italy                     3.34
                               Netherlands               3.50
                               Russia                    2.83
                               Slovenia                  2.73
                               Turkey                    2.03
                               UK                        3.87
                               USA                       4.13
                               Other                     3.62
                               Average                   3.15
                           Source: SSO Accommodation Survey - 2004

Predictably visits by tourists from neighbouring countries were on average the shortest.
However, stays by visitors from longer haul countries were also relatively short indicating
brief business visits and the inclusion of Macedonia as part of a regional tour.

82 per cent of tourists have visited Macedonia previously and many are frequent visitors
as may be seen in Table 4.16 below. One in five is a first time visitor. This is a relatively
healthy balance between first time and repeat visitors, though the percentage of first time
visitors needs to be increased to ensure long term growth.

                          Table 4.16: Previous Visits to Macedonia
                                 Visits                %
                                 None                 18
                                 Once                 19
                                 2-3 times            26
                                 4 and more           37
                                 Total               100
                           Source: SSO Accommodation Survey - 2004

Table 4.17 below indicates that foreign visitors show a high degree of independence in the
organisation of their visits to Macedonia with 44 per cent claiming not to have made prior
arrangements. A further 46 per cent make some advance reservations. Only 10 per cent
are on group visits or book via a travel agent. This emphasises how imperative it is to
market direct to potential visitors and to provide them with destination and accommodation
information and direct booking facilities.




                                                                                          91
                      Table 4.17: Foreign Tourist Organisation of Visit
                       Organisation Method                        %
                       Independent                                44
                       Independent with advance reservations      46
                       Independent booked via travel agent         3
                       Group through agent                         4
                       Group through club, association, etc.       3
                           Source: SSO Accommodation Survey – 2004


4.5    Foreign Visitor Activities

The Foreign Visitor Surveys do not provide much information on the activities of visitors.
However, some insights can be drawn from the data. Expenditure data shown in Table
4.18 below indicates an unusually high percentage spend on accommodation. As 85 per
cent of visitors consider they receive good value for money this is not considered to reflect
high prices being charged, rather a lower than usual expenditure on other activities. A lack
of entertainment options in the country and particularly a poor retail offer (in the form of
handicrafts and souvenirs), is evidently one cause of this.


                          Table 4.18: Foreign Visitor Expenditure
                            Expenditure                   %
                            Accommodation                 59
                            Food & Drink                  27
                            Shopping                      11
                            Entertainment                  1
                            Local transport & Other        1
                           Source: SSO Accommodation Survey - 2004

Visitors rate the excursion possibilities very highly – 94 per cent consider them good or
very good as may be seen in Table 4.19 below.




                                                                                          92
                        Table 4.19: Evaluation of Excursion Opportunities

                                  E xcur sion P ossibilities




                        60

                        50

                        40

                        30

                        20

                        10

                         0

                                  B ad           Good         V er y Good




                              Source: SSO Accommodation Survey - 2004

Similarly the natural attractions of the country are very highly appreciated as may be seen
in Table 4.20 below.

                    Table 4.20: Evaluation of Nature and Surroundings


                               N atur e and Sur r oundi ngs




                  80

                  70

                  60

                  50
                  40

                  30

                  20

                  10
                    0

                                B ad             Good           V er y Good




                              Source: SSO Accommodation Survey - 2004




                                                                                        93
However, there is a somewhat less positive opinion of the environment, as shown in Table
4.21 below, possibly a reflection of the poor waste management in many parts of the
country.

                       Table 4.21: Evaluation of Ecological Conditions


                              E cological C onditions




                  50


                  40


                  30


                  20


                  10


                   0

                             B ad            Good          V er y Good




                           Source: SSO Accommodation Survey - 2004

4.6    Conclusions

Current statistics do not permit a clear appraisal of the number of tourists and other
visitors, nor of their activity and expenditure in the Republic of Macedonia. Contiguous
countries provide the bulk of visitors, while western European and North American visitors
have a higher per visit spend. There is a healthy level of repeat visitors indicating
satisfaction with the visit experience.

The majority of trips are either booked independently or not pre-booked. This indicates
either a lack of packaged arrangement available internationally or more likely that
Macedonia is seen as an accessible country for independent travel.

Currently statistics on tourists relate mostly to those using registered accommodation.
Border crossing data, while potentially far more valuable, currently gives only an indication
of the volume of tourism to the Republic of Macedonia. There needs to be a
comprehensive measure of visitors for transit, day visit and staying visits together with
country of residence and purpose of visit. Data on accommodation occupancy is
inadequate for estimating additional accommodation needs to meet future demand, while
absence of this data does not help identify problems of seasonality in accommodation.




                                                                                          94
The current twin 5 yearly exit surveys are helpful in providing a partial profile of foreign
visitors, but need to be combined into a single annual exit survey to provide essential
visitor profile and expenditure data.


Marketing
4.7     Role of the Agency for Promotion and Support of Tourism

Agency for Promotion and Support of the Tourism” is the term used to describe the
organisation which heads up a destination’s tourism industry.

Destination marketing is the primary role of the Agency for Promotion and Support of the
Tourism. It may have a regulatory and development function, which is aimed at providing
the range, quality and standard of products the market needs. It may have a HRD role to
ensure adequate numbers of skilled staff are trained for the industry. This provides
service levels to meet market expectations. But all these functions contribute to the core
role of effective marketing of the destination.

The Agency for Promotion and Support of the Tourism has the responsibility to undertake
those marketing functions and activities, which the tourism industry cannot fulfil effectively
alone. Its prime marketing roles can be summarised as follows:

      1. Destination Image Building

The Agency for Promotion and Support of the Tourism must project internationally the
image of Macedonia. This entails researching the key appeals of Macedonia to visitors
from different markets and increasing awareness of the full range of these appeals through
advertising, extensive public relations activity and information dissemination.

A major part in this task is to establish a powerful brand image for destination Macedonia,
within which both the destination as a whole and the constituent products and services
supplied by the tourism industry can be promoted.

The Agency for Promotion and Support of the Tourism is also responsible for mitigating
adverse publicity for the destination as and when it may arise.

      2. Market Research and Intelligence Gathering

The Agency for Promotion and Support of the Tourism should, in cooperation with the
industry at large, research current and potential markets. It will do this by collecting
directly and indirectly data on tourism to the region and country. This will include visitor
statistics and profiles; occupancy / load factor data; expenditure data; individual market or
segment surveys; etc. It analyses this data in order to identify market trends, make
growth projections, and identify product development opportunities.         This information
should not only be used in the Agency for Promotion and Support of the Tourism’s
marketing and development planning, but also be disseminated to industry suppliers and
investors to assist them in their own planning.

Apart from statistical research the Agency for Promotion and Support of the Tourism
should also gather information on the structure of source markets in order to identify new


                                                                                           95
opportunities and the best means of market penetration. This will include the compilation
of databases of trade and media contacts of particular value and interest to Macedonian
tourism suppliers.


   3. Information Provision

The Agency for Promotion and Support of the Tourism is perceived by the potential visitor,
tourism industry abroad and foreign media as the prime source of comprehensive and
impartial information on the tourism attractions, products and events in Macedonia.

In order to live up to this perception it must seek to establish efficient information
distribution systems.     These will include destination websites; outlets abroad for
distribution of promotional and informational publications and materials; tourist information
centres in Macedonia; contact databases of trade, media and consumers; etc.

Relevant communications materials should be produced by the Agency for Promotion and
Support of the Tourism for dissemination through these channels, such as print, audio-
visuals, display materials, newsletters, press releases, etc.

The objective of this information provision service will be to provide the appropriate
information to the client – trade, media and tourists – when and where they need it.

   4. Pioneer

The Agency for Promotion and Support of the Tourism will explore new markets, new
segments and new marketing techniques on behalf of the tourism industry. To this end it
may make exploratory missions to markets, which appear to have growth potential, prior to
proposing promotional activity to the trade in general. It will also research new market
segments, typically special interest markets, in order to determine how best product may
be shaped and presented to the segment. New marketing techniques will also be tested,
such as consumer e-newsletters and other Internet based techniques.

   5. Marketing Coordinator

The Agency for Promotion and Support of the Tourism will seek to coordinate marketing
activity on behalf of the tourism industry, firstly to create a higher profile and impact for
Macedonia, and secondly in order to reduce the cost in time and money to tourism industry
partners. This will typically take the form of the coordination of promotional events such as
trade exhibitions and consumer promotions, the organisation of sales missions and
availability to advertise in media with targeted distribution.

Additionally the Agency for Promotion and Support of the Tourism will assist “competitor”
suppliers and small, as well as large, businesses to combine in joint promotions. These
may be products, such as accommodation or activity operators, or thematic, such as
heritage or wine trails.


   6. Monitor of Visitor Satisfaction




                                                                                          96
As a key part of its research work the Agency for Promotion and Support of the Tourism
will regularly survey visitors in order to identify their level of satisfaction with the quality of
products and services they receive, value for money, etc. Gaps and deficiencies in
product and service supply will also be identified. This information will be used to
stimulate improvements in standards and encourage appropriate training within the
tourism industry.


4.8     Marketing of Macedonia as a Tourism Destination


Government

The Tourism and Catering Department within the Ministry of Economy currently fulfils very
few of the responsibilities of an Agency for Promotion and Support of the Tourism. The
Department has an establishment of 10 persons (currently four posts are vacant ). It is
divided into two units; one for Policy and International relationship, the other for Product
Licensing and Classification and Collaboration with the industry and other governmental
agencies. The former Promotions Unit has been removed and consolidated in the general
Promotions Unit of the Ministry of Economy.

The current structure does not allow for the delivery of the core functions of an Agency for
Promotion and Support of the Tourism, which the government would be expected to
deliver in support of the tourism sector.

The marketing role is in effect largely dysfunctional, consisting of coordination and funding
of participation by Macedonia in a range of tourism exhibitions in Europe; the production of
some core promotional materials; and the hosting of occasional familiarisation visits by
tour operators and media. Support is also given to the ExploringMacedonia.com Internet
portal through official endorsement. There is no formal programme of research into
markets leading to the identification of priority markets and segments and formulation of an
integrated marketing programme within the available resources.

Travel Industry

The private sector, while undertaking sales and promotional activity on a unilateral basis,
also collaborates in joint activity. This is reflected in the actions of the two largest trade
associations, the Hotel Association of Macedonia (HOTAM) and the Association of Travel
Agents of Macedonia (ATAM).

HOTAM has 55 hotels in membership out of a total of 120 in the country.

HOTAM is active in participation in travel exhibitions abroad, mostly in conjunction with the
Tourism and Catering Department of the Ministry of Economy. It has also been active in
inviting and hosting groups of tour operators and media representatives from abroad with
positive results. This last activity one would normally expect to by initiated by the Agency
for Promotion and Support of the Tourism and implemented with industry support.



Internet


                                                                                                97
The national portal for tourism is at www.exploringmacedonia.com.           This site was
established as a commercially self sustaining enterprise with the assistance of USAID and
is officially supported by the Ministry of Economy in a private / public partnership with
ExploringMacedonia.com. It provides a wide range of information on tourism and has
been accessed extensively since its launch early in 2005 – currently about 200,000 page
views a month. In order to be sustainable it features selected suppliers who pay an annual
membership fee on a sliding scale and also pay commission on bookings generated by the
site. Smaller operators may, in particular, not be able to afford these costs and not be
featured on the site. This restricts the comprehensiveness and impartiality of the
information provision, which might be seen as a negative factor.

The importance of a national tourism website cannot be emphasised enough, particularly
for a country such as Macedonia, which has great appeals for independent travellers, who
are increasingly likely to use the Internet for planning and reservations purposes. The
maintenance costs of a site and especially the daily updating required is a commitment for
which resources must be found. Advertising or paid entries and commission payments, as
well as sponsorship, are logical sources of such resources.

However, there is a governmental and Agency for Promotion and Support of the Tourism
responsibility to provide publicity for all quality suppliers. Currently, apart from official
approval, the Tourism and Catering Department is not contributing proportionately to the
website PPP in terms of information for inclusion on the site and publicity for it.

It would be counter productive to set up a separate Agency for Promotion and Support of
the Tourism site, but the support of the Ministry for www.exploringmacedonia.com should be
made conditional on comprehensive listings of suppliers being featured. Those willing to
pay commission or fees should be given enhanced entries and direct website linkages.

ExploringMacedonia.com has undertaken a number of promotional activities to publicise
not only the site but also the destination as a whole. These include sponsoring
familiarisation visits by Yahoo Travel, Conde Nast Traveller and, in the near future, a
French mountain biking magazine editorial team. The resultant publicity for Macedonia is
most welcome, but should normally have been organised by the Agency for Promotion and
Support of the Tourism, leaving ExploringMacedonia.com to concentrate on achieving a
high profile for the site among search engines and on the Internet.

Promotional Materials

The Ministry of Economy Promotions Department is now responsible for the production of
promotional materials required by the Tourism and Catering Department. There is no
annual programme of material production, rather a demand led approach. The main
collaterals are:

           Destination brochure – English, German, French and Albanian editions – 24
           page A4
           Useful Information bi-lingual booklets – English/German, English/French and
           English/Macedonian editions – 28 page 10x20cm
           Multilingual Map of Macedonia – Macedonian, English, French, German and
           Russian – A2
           Document wallet


                                                                                          98
           Carrier bag

This range of publications is appropriate for the basic consumer promotional activities of
the Agency for Promotion and Support of the Tourism. Both in terms of pictures and text
they are well conceived. There are, however, many weaknesses in the current print items.
For example,

            although the Macedonia tourism logo is always used there is no common
            design to the range of publications.
            the Destination Guide is effective in building a positive image for Macedonia,
            but fails to provide some basic information on how to travel to Macedonia and
            where additional information may be obtained.
            in the Useful Information publication there is no specific information on
            accommodation, which is a primary concern of visitors
            the ExploringMacedonia.com website address should also appear prominently
            on the cover of all publications in order to direct readers to a further source of
            information and encourage them to book
            the Map of Macedonia is very detailed and sufficient to enable motorists to
            travel the whole country. Some of the reverse might be used for more specific
            practical information for motorists, such a breakdown procedures, emergency
            phone numbers, etc.
The range of publications needs to be reviewed and their related roles defined. As part of
its marketing planning, the Agency for Promotion and Support of the Tourism will need to
identify the annual requirement for quantities of promotional materials, the distribution
outlets, language editions and pertinent content.

Research and Statistics

Currently statistical data on tourism to and within Macedonia is drawn from five main
sources:
           Ministry of Interior monthly border crossing figures
           State Statistical Office (SSO) monthly data on visits and overnights at
           registered accommodation premises
           SSO annual census of registered accommodation capacity
           SSO five yearly ‘Survey of Foreign Visitors - Poll of Border Crossings’ – latest
           edition in 2004.
           SSO five yearly ‘Survey of Foreign Visitors – in Accommodation Facilities –
           latest edition in 2004.

These all provide valuable information to assist in tourism development and marketing
planning. There are some inherent weaknesses in the structures and interrelationships of
these surveys, which, if eradicated, would provide a much more useful basis for planning
purposes and render the surveys much more useful. For example the two surveys of
foreign visitors identify expenditure by Transit and Day Visitors and Tourists staying in
registered accommodation, but not other tourists such as the VFR (Visiting Friends and
Relatives) segment.




4.9    Conclusions


                                                                                           99
The tourism industry is active in promoting its services and products and the destination,
but in an ad hoc and uncoordinated fashion. The national tourism portal has made good
progress in making information on Macedonia tourism accessible and providing
reservations facilities. However, the intended private/public partnership on which it is
based lacks public sector support.

The promotional materials produced are of good quality, but published in an ad hoc
fashion and lack both design unity and planned distribution.

The image of Macedonia as a tourism destination is very weak internationally and
insufficient efforts are being made to raise awareness of the country’s many and positive
appeals.




                                                                                      100
5.     Economic Impact and Investment Climate

Economic Impact
Tourism is vital for many countries, due to the income generated by the consumption of
goods and services by tourists, the taxes levied on businesses in the tourism industry, and
the opportunity for employment in the service industries associated with tourism.


Tourism activities in Macedonia experienced noticeable success in the late eighties. At
that time, the country was visited mainly by tourists from other regions of former
Yugoslavia and from other Eastern European countries, but also from Western European
countries such as Germany, Holland and France. Unfortunately, the successive crises
which have since shaken the Balkans drastically reduced the level of tourism within the
region. The events in 2001 in Macedonia have also affected the image of the country in
the eyes of potential visitors and foreign tour operators and travel agencies that drive
perceptions within the global tourism industry. The situation in more recent years is
improving.

5.1   Contribution to Gross Domestic Product (GDP)

Within the structure of GDP, employment and investments, the State Statistical Office
(SSO) of the Republic of Macedonia distinguishes 15 categories, one being Hotels and
Restaurants, which is only a part of the entire tourism sector. The rest of the tourism
products and services (transportation, travel agencies, cultural services,
telecommunications, recreation, entertainment, shopping, etc.) are distributed in the other
categories. It is therefore impossible to calculate the total share of GDP (as well as of
employment and investments) deriving from the tourism sector as a whole.

Without having official data on the share of tourism in GDP it is possible to analyse the
trend in the hotels and restaurants' share of GDP and use this as a proxy for the tourism
sector as a whole. It includes items that do not fall under tourism, but to some extent they
are supplementing the share of tourism products and services not included under this
category. Thus, it can be considered that the figures on hotels and restaurants are
representative of the size of the tourism activities and Table 5.1 below shows the trend in
share of GDP provided by the hotels and restaurants sector between 2002 and 2007.




                                                                                        101
                          Table 5.1: Share of Hotels and Restaurants in GDP 2002 - 2007

                                   8,000

                                   6,000
            Million EUR




                                   4,000

                                   2,000

                                        0
                                             2002 2003 2004 2005 2006 2007
                            GDP             3,987 4,110 4,335 4,684 5,097 5,800
                            Hotels and        69      72     77      83      85      97
                            Restaurants


           Source: SSO, Gross Domestic Product, 2007, Skopje, 2008

After the increase of the hotels and restaurants' share in GDP from 1.7-1.9 per cent
between 2002 and 2003, a fall to 1.6 per cent is evident in 2004 due to the reduced
number of tourists and nights spent in Macedonia that year. In 2005, despite growth in the
nominal value of hotels and restaurants output, the sector’s share of GDP dropped to 1.5
per cent but this position had recovered to 1.7 per cent of GDP as output in the sector
grew faster than that in the economy as a whole in 2006 and 2007.

5.2    Contribution to Foreign Exchange Flows

The increasingly positive share of tourism in the total inflow of foreign exchange from
services is shown in Table 5.2 below.




                                                                                          102
        Table 5.2: Share of Tourism in Total Foreign Exchange Inflows from Services




                                    800

                                    600
              Million EUR




                                    400

                                    200

                                      0
                                          2003 2004 2005 2006 2007
                            Total inflow  335.3 363.7 416.2 477.2 594.2
                            from services
                            Inflow from    49.9 57.9 72.3 102.4 134.9
                            tourism

           Source: National Bank of Macedonia, 2008

Growth in total foreign exchange inflows in the services sector of the economy as
demonsrated by the services account of the balance of payments shows that total inflows
have risen from year on year growth of 8 per cent between 2003 and 2004 to around 25
per cent between 2006 and 2007. However, foreign exchange inflows from tourism have
grown more strongly than the sector as a whole, demonstrating year on year growth of 16
per cent between 2003 and 2004, rising to 32 per cent growth between 2006 and 2007
and exhibiting a peak of 42 per cent between 2005 and 2006.

5.3    Contribution to Employment

Ever since the 1980's, Macedonia has suffered from a high rate of unemployment. At the
time of independence the unemployment rate was close to 24 per cent. The restructuring
of the economy has led to an overall decline in labour demand, and the overall low growth
and lack of major investments have failed to create a sufficient number of job
opportunities.

Recent labour market reforms, including a new Labour Relations Law in 2005, are a step
forward to improving the unemployment situation in Macedonia.

Currently, the rate of unemployment is 35 per cent. It should, however, be borne in mind
that this figure does not take into account the large grey economy, as a result of which the
actual number of unemployed may be significantly lower.

Table 5.3 below presents the contribution of hotels and restaurants to the total
employment in Macedonia:



                                                                                        103
        Table 5.3: Share of hotels and restaurants in the total employment 2001 - 2007



                                800

                                600
             Thousands




                                400

                                200

                                    0
                                        2001 2002 2003 2004 2005 2006 2007
                         Total No       599    561     545     523     545     570     590
                         employed
                         Employed in 10.1       9.9    9.9     12.7 13.6        19    18.9
                         hotels and
                         restaurants


Source: SSO, Statistical Yearbook of the Republic of Macedonia, Skopje, 2007, and SSO web-site:
www.stat.gov.mk

As the table shows, while overall employment in Macedonia has fallen and then recovered
to its earlier position in the period 2001 – 2007, the number employed in hotels and
restaurants in the same period has almost doubled, with particular growth eveident from
2006. Employment in hotels and restaurants has grown from 1.6 per cent of the labour
force in 2001 to 3.2 per cent in 2007. It is important to recognise that tourism is a specific
sector where the introduction of technology does not significantly influence (i.e. reduce)
the number of employees, as it is the case with other sectors. In other words, tourism
services are more labour intensive than other services in the economy. In this respect we
can conclude that in a situation characterised by high unemployment, development of
tourism will contribute greatly to recruitment and the reduction of unemployment.




                                                                                                  104
5.4                   Contribution to Central Government Revenues

Central Government revenues in the period 2001–2007 are shown in Table 5.4 below as
follows:

                               Table 5.4: Central Government's revenues 2001 - 2007


                                 2000

                                 1500
      M illio n EUR




                                 1000

                                  500

                                     0
                                          2001 2002 2003 2004 2005 2006 2007
                        Central Budget    863     950    881     931    1723 1781 1897
                        Revenues


Source: Ministry of Finance, 2008

The chart shows an 85 per cent jump in Central Government revenues between 2004 and
2005 with subsequent modest levels of growth thereafter, this is as a consequence of a
redefinition in the methodology used to calculate these figures from 2005.

To determine tourism's importance in the generation of Central Government's revenues,
we should look at the share it brings to it. However, relevant institutions (Ministry of
Finance, Public Revenues Office) indicate that a breakdown of such data is not available.
Thus, the following Table 5.5 showing selected Government revenues from tourism is
prepared on the basis of statistical parameters available from the State Statistical Office,
out of which different tax categories were calculated:




                                                                                         105
   Table 5.5: Selected Central Government Revenues from Hotels and Restaurants – 2006

   Data from 2006                                                                         Euros
   Turnover (including VAT @ 18%) of catering trade and services                         101,255,000
   VAT@ 18%                                                                               15,445,438

   Total number of nights spent                                                             1,917,395
   Temporary stay tax rate, EUR/night                                                            0.65
   Central government's revenue from temporary stay tax @ 20%                                 249,261

   Total number of employees in hotels and restaurants                                         19,034
   Average net salary in hotels and restaurants                                                 187.2
   Tax exemption                                                                                 47.1
   Personal tax rate                                                                             15%
   Personal tax                                                                             4,800,000

   Total number of business entities (hotels and restaurants)                                   8,298
   Central Register fee for review of the annual financial report                                19.6
   Central government's revenue from annual financial reports                                 162,732

   TOTAL                                                                                  20,657,431
       Source: State Statistical Office Yearbook (SSO) of RM, 2007 and consultant’s calculations



It should be noted that profit tax and excises are not included here because they are
difficult to estimate. The total tax revenue calculated here represents 1.2 per cent of
Central Government's revenues, thus it can be assumed that hotels and restaurants in
2006 contributed more than 1.2 per cent to Central Government's revenues.

It is important to note that in addition to the contribution to Central Government’s Revenue,
tourism activities also contribute earnings to the revenues of the local governments. 80
per cent of the temporary stay tax remains with local governments, as does associated
property tax and communal tax.

 Around 2.9 per cent of the Fund for Pension and Invalidity Insurance revenues from
salaries and around 4.4 per cent of the Health Insurance Fund revenues from salaries
derive from hotels and restaurants.

A summary of this position is presented at Table 5.6 below:




                                                                                                    106
                                   Table 5.6: Summary
                          Central Government Revenues from
                            hotels and restaurants in 2006
                                                            EUR
                       VAT                               15,445,438
                       Temporary stay tax                   249,261
                       Personal tax                       4,800,000
                       Central Registry fee                 162,732
                       TOTAL                             20,657,431
                       Plus:
                           Profit Tax
                           Personal Tax
                           Central Registrar Fees
                           Pension Fund
                           Contributions
                           Health Insurance Fund
                           Contributions
                           Excise Duties
                           Downstream Taxes
                           Induced Taxes
                      Source: SSO and Consultant’s Calculations

5.5    Economic Linkages and Leakages

There are two types of linkages that concern the tourism sector: internal linkages among
the different entities within the sector and external linkages with the other sectors.

It is clear from research undertaken in the course of preparing this National Tourism
Development Strategy that the internal linkages have strengthened. For example, travel
agents, hotels, restaurants, tour guides etc. cooperate more often to produce joint tourism
products which are both competitive and attractive to foreign tourists. This has come about
as a result of market developments where cooperation is a condition for becoming
competitive, but also, due to the support of foreign donor projects promoting cooperation.
One such project has been the USAID funded Macedonia Competitiveness Activity (MCA)
project, which supported tourism and promoted cluster work. However, there is still much
work to be done in order to develop internal linkages strong enough to ensure that tourism
in Macedonia remains competitive.

External linkages exist with many other sectors, one of the more important being the
agricultural sector. For example, Macedonia can offer high quality domestic fresh fruits and
vegetables, grapes and wine to tourists and an example of such a linkage is the
cooperation between the wine producers on the one hand and providers of
accommodation and other tourism services on the other, together developing a wine tour
in the region of Kavadarci, known as "The Wine Route". However, stronger linkages
between tourism and agricultural operators still need to be developed.

Closely connected to this are economic leakages. Many countries have developed their
tourism industry because it can be a means to increase foreign exchange inflows. This is
certainly the case in Macedonia and thus it is logical that such inflows should not be lost
unnecessarily.



                                                                                        107
Ownership of a single national airline flying to only a few external destinations, results in a
loss of potential foreign exchange earnings to foreign airlines for example and although
Macedonia is an agricultural country (12 per cent contribution to GDP of the primary
production, 16 per cent if processing is included), it is a net importer of food, and loses
foreign exchange to pay for imported food. It is thus very important to reduce such
economic leakages by providing foreign tourists with domestically produced food. In
addition, there is much importing of cheap products from Asian countries, primarily China,
including of souvenirs. Imported Chinese souvenirs displace the domestic, hand-made
products that are more expensive. Foreign tourists in Macedonia also use imported
electricity and other imported energy. Macedonia has the potential to increase its
domestic electricity production level, but currently it imports electricity to cover the shortfall
in domestic production over the level of domestic demand. A positive sign recently, is the
Government tender for the building of 62 new small hydro electric plants.

5.6    Multiplier Effect of Tourism

Tourism not only creates jobs in the tertiary sector, it also generates growth in the
primary and secondary sectors of industry. This is known as the multiplier effect which in
its simplest form is how many times money spent by a tourist circulates through a
country's economy.

Money spent in a hotel helps to create jobs directly in the hotel, but it also creates
economic activity and jobs indirectly elsewhere in the economy. The hotel, for example,
has to buy food from local farmers, who may then spend some of this money on fertiliser,
fuel or clothes. The producers and sellers of the fertilisers, fuel or clothes then spend the
money they receive for their products and thus these successive rounds of expenditure
continue to generate further economic activities. Demand for local products also happens
outside the directly related tourism sectors such as in clothes, art, energy etc.

The multiplier effect continues throughout the economy but is balanced by leakages
through the purchase of goods and services from outside the country and the money
spent on such imports is lost to the national economy.

There has been no specific research undertaken in Macedonia to determine the tourism
multiplier value, however, according to Horwath Tourism and Leisure Consulting (1981),
an area's economic composition is the key factor determining the size of a multiplier. The
wider the range of economic activities undertaken in an area, the greater is the amount of
trading which takes place. Hence, the larger is the size of the multiplier.The propensity to
import goods and services is also particularly important, the higher the propensity to import
is, the lower the resultant multiplier value, and hence the lower the benefit to the economy.
Bearing in mind the weak linkages among the sectors and the Macedonian trade deficit, it
is expected that the tourism multiplier may not be very high.

5.7    Conclusions

Employment in hotels and restaurants grew faster than in the general economy. The
tourism sector (hotels and restaurants) contributed Euro 15.0m in VAT alone in 2007 to
government revenue. Other taxes, excise duties, health and pension contributions and the
effects of the multiplier would greatly increase this contribution. However, leakages
through imported food and energy could be significant.



                                                                                             108
Investment Climate

5.8      Investment Levels in the Hotels and Restaurants Sector


              Chart 5.1: Investments in fixed assets in Macedonia by purpose, 2004
                       Public      Education     Other public       Agriculture,
                   administration     1%        utilities, social   hunting and
                    and defense;                 and personal         forestry
                     compulsory                     services             4%      Fishing
      Real estate,                                      1%                         0%
                   social security
       rental and                   Health care and
                         2%
       business                       social work                                 Mining and
        activities                        2%                                      quarrying
           1%
                                                                                     1%
           Financial
        intermediation                                                           Processing
               3%                                                                 industry
                                                                                    15%
         Transport,
        storage and
      communications                                                   Electricity, gas
            14%                                                       and water supply
                                                                            10%
      Hotels and
      restaurants
           3%
                Wholesale and
              retail trade; repair
              of motor vehicles,
               motorcycles and                         Construction
                 personal and                             32%
                  household
                 consumption
                     goods
                       11%


        Source: SSO, Statistical Yearbook of the Republic of Macedonia, Skopje, 2006

The share of hotels and restaurants in the total investment in fixed assets in Macedonia,
as shown in Chart 5.1 above, is around 3 per cent. In 2005, 68 per cent of those
investments were in buildings and structures and 32 per cent in machinery and equipment
and this picture remains essentially unchanged in 2006. As Chart 5.2 below shows, most
of this was concentrated in Skopje and the Ohrid area and this remains true in 2006:




                                                                                               109
     Chart 5.2: Investments in Fixed Assets in Hotels and Restaurants in Macedonia by
                                       Municipalities

                                                      Stip
                                                      3%
                                             Tetovo
                                  Strumica    1%
                                     7%
                                                                   Skopje
                                                                    32%
                               Struga
                                18%


                              Resen
                               0%                                       Bitola
                             Radovis                                     6%
                               0%                                           Gevgelija
                                         Ohrid                                 2%
                                         26%          Makedonski     Kavadarci
                                                         Brod           4%
                                                         1%
       Source: SSO, Statistical Yearbook of the Republic of Macedonia, Skopje, 2006

As can be noted from the Chart 5.2 above, most of the investments (76 per cent) are in the
area of Skopje and Ohrid - Struga. This follows the traditional pattern of concentrating
tourism development in these areas. However, the rest of the country also has great
development potential: rural tourism, culture/history tourism, nature/adventure tourism, spa
tourism etc., but little has been done to stimulate their development.

Table 5.7 below shows the investments in fixed assets in tourism in Macedonia compared
to the total investments in the period 2001-2006:




                                                                                        110
 Table 5.7: Investments in fixed assets in hotels and restaurants in Macedonia 2001 - 2006




                                 1000
                                  900
                                  800
                                  700
             Million EUR




                                  600
                                  500
                                  400
                                  300
                                  200
                                  100
                                    0
                                         2001 2002 2003 2004 2005 2006
                           Investments 567      661     688     773    799     923
                           in fixed
                           assets
                           Investments   15     19.8 14.7 21.9 27.9 25.9
                           in fixed
                           assets in
                           hotels and
                           restaurants

            Source: SSO, Gross Fixed Capital Formation, 2006, Skopje, October 2007

Table 5.7 above demonstrates that whereas levels of total investment have grown steadily,
year on year, investment in tourism assets is less regular year on year. The trend,
however, over the period 2001 to 2006, does show overall growth in the annual level of
investment in the tourism sector and the percentage share of total investment attributable
to tourism shows similar growth reaching around an average of 2.8 per cent of total annual
monies invested.

Table 5.8 below shows the relationship between Foreign Direct Investment (FDI) in
Macedonia across all economic sectors, in comparison with FDI for the tourism sector in
particular, in the period 2001 to 2006.




                                                                                        111
       Table 5.8: FDI in hotels and restaurants compared to the Total FDI 2001 - 2006




                                      400

                                      300
                Million EUR




                                      200

                                      100

                                        0
                                              2001 2002 2003 2004 2005 2006

                              FDI in          326 56.4 58.4 101 84.2 280
                              Macedonia
                              FDI in hotels   2.4   0.3   0.02 0.02       2       4.2
                              and
                              restaurants


     Source: SSO, Foreign Direct Investments, 2001 - 2006, Skopje, October 2007

Foreign Direct Investment (FDI) was negligible pre-1998 (e.g. registering less than 10
million EUR in 1995). Since then FDI has been steadily growing. It reached a peak of
about 330 million EUR in 2001. This was largely attributable to acquisitions by foreign
investors of major companies and banks during the privatisation process. The largest
acquisition was that of the national telecom operator by Magyar Telekom.

A sharp fall in FDI occurred as a result of the crisis in 2001 with total FDI dropping to
between 55 and 60 million EUR in both 2002 and 2003. However, following various efforts
towards achieving economic and political stabilisation, FDI has been on an upwards trend
since 2004. 2006 has seen a significant new wave of investment mainly arising from
privatisations in the energy sector, and certain greenfield investments in Macedonia’s free
economic zones.

Hotels and restaurants were not immune from the delicate political and economic climate
of the post conflict period and after the peak of 2.4 million EUR of FDI attracted in 2001
there were almost no Foreign Direct Investments in hotels and restaurants between 2002
and 2004. Recovery in FDI flows returned in 2005 with a figure of 2.0 million EUR
recorded, approaching the level achieved in 2001 before growing robustly to a new peak
figure of 4.2 million EUR in 2006.




                                                                                        112
Chart 5.3: Foreign Direct Investments in the RM in 2005 according to the activity of investing

                                                        Public
                                                                       Other
                            Real estate, rental   administration and           Agriculture,
                                                                        1%
                              and business            defense;                 hunting and
                                 activities       compulsory social             forestry
                       Financial   3%                 security                     2%
                    intermediation                       2%
                         11%
                                                                                Mining and
                 Hotels and                                                     quarrying
                restaurants                                                        23%
                    2%

          Wholesale and
              retail
               7%
                              Construction
                                  2%




                                                              Processing
                                                               industry
                                                                 47%

       Source: SSO, Statistical Yearbook of the Republic of Macedonia, Skopje, 2006

The Chart 5.3 above shows that hotels and restaurants received 2 per cent of the total
Foreign Direct Investments in 2005 although this slipped to 1.5 per cent in 2006 based
upon the data shown in Table 5.8 immediately above Chart 5.3.

5.9    Privatisation

The privatisation process for State owned enterprises was performed quickly and almost
completely in the 1990’s. Out of about 2000 state owned enterprises, less than 75 are still
not privatised. The government has now engaged upon a final process of privatisation of
the public sector. After the successful privatization of the telecommunications industry and
partial privatisation of the energy sector, the Government now has ambitious plan to
restructure and further privatise the remaining publicly-held energy, transport and health
sectors.

5.10   Development Strategy

In recent years, the government has successfully reduced the fiscal deficits and has
focused on maintaining a low inflation rate, a stable Denar exchange rate, and a low
interest rate. However, as Table 5.9 below demonstrates, both the trade balance and
current account balance are negative and foreign debt is rising during a period of strong
GDP growth and moderate inflation.




                                                                                              113
            Table 5.9: Basic Macroeconomic Indicators of the Republic of Macedonia
                              2001    2002     2003     2004     2005     2006     2007

        GDP growth (%)            -4.5        0.9     2.8     4.1     4.1     4.0      5.0

     Annual inflation (%)          5.5        1.8     1.2    -0.4     0.5     3.2      2.3

   Export FOB (mil. EUR)          845        814     997     1,223   1,493   1,911    2,446

    Import FOB (mil. EUR)        1,230      1,402    1,618   2,038   2,266   2,935    3,634
       Trade balance (mil.
                                  -385       -588    -621    -814    -773    -1,024   -1,188
             EUR)
        Current account
                                  -179       -262    -109    -304     60     -44.9    -181.2
       balance (mil. EUR)


     Foreign debt (million
                                 1,102      1,196    1,326   1,496   1,652   2,495    2,711
            EUR)

Source: Ministry of Finance, Bulletin, August 2008

The government’s future stated objectives will be to support the growth of domestic
consumption, industrial output and create a favourable environment for foreign and
domestic investment. To achieve this, the government has already implemented, and is
still developing, a number of measures, including:

         Further public sector reform including the introduction of private sector investments
         in the public services and infrastructure sectors;
         Continuation of trade liberalisation policies;
         Stricter control of monetary policy to provide businesses with easier access to
         financing;
         Implementation of tax incentives through the creation of tax-free zones and general
         reduction in the overall tax burden.

The Wall Street Journal 2006 Index of Economic Freedom ranked Macedonia among the
top 60 countries. The country was especially praised for its prudent monetary policy and
low fiscal burden.

5.11     Regulation

As a country which presently has a candidate status with the EU, Macedonia is rapidly
harmonising its legislation to accord with the European Union acquis.

There is no single law regulating foreign investment. Rather, the legal framework
applicable to foreign investors is made up of various laws, including: the Trading Company
Law, Securities Law, Profit Tax Law, Personal Income Tax Law, Law on Value Added Tax,
Foreign Trade Law, Law on Takeovers, Law on Foreign Exchange, Law on Investment
Funds, Banking Law, Law on Supervision of Insurance, Audit Law etc.




                                                                                               114
The Constitution of Macedonia guarantees equal treatment for all market participants and
the right for foreign investors to freely transfer and repatriate investment capital and profits.
According to the Constitution, the investor’s right to property is guaranteed. Foreign
investors may acquire property rights for buildings and rights for other immovable assets to
be used for their business activities. They may acquire residential property, but not
ownership rights over construction land. Foreign investors are only permitted to have
land-use rights, not land ownership rights.

5.12    Trade Policy

As a World Trade Organisation (WTO) member Macedonia has committed itself to the
three basic rules of trade conduct: transparency in laws, equal rights and privileges for
foreign and domestic firms and citizens, and most-favoured nation treatment. With the
adoption of the new Trading Company Law, the Republic of Macedonia has managed to
harmonise its trade regime in accordance with WTO rules. Article 4 of the Law provides
for complete foreign trade liberalisation.

Nonetheless, restrictions still exist in relation to:

        export licenses for environment protection, protection of human health, protection
        of animals and plants, protection of historical heritage, trade in military hardware;
        and
        measures for the protection of domestic production from significant increases in
        imported goods, anti-dumping measures, and measures against subsidised import
        prices.

5.13    Investment Policy

Macedonia recognises the importance of attracting foreign investors, valuing their
management and commercial know-how, and the fresh capital that they bring. It has
engaged two special Cabinet Ministers whose sole responsibility is the attraction of FDI.
In addition, there is an Agency for Foreign Investments in the Republic of Macedonia
(MakInvest) dedicated to attracting and assisting foreign investors.

The Constitution stipulates that a foreign person in Macedonia may acquire property rights
under conditions set by law. Furthermore, as already mentioned, the Constitution
guarantees a foreign investor the right to repatriation. A foreign person may establish the
same types of companies as a national of Macedonia. A foreign investor may also be an
individual business person (sole proprietor).

In general, there are no limitations to foreign investment in the Macedonia, except in
specific areas such as military hardware, trade in narcotics, and artefacts of historical and
cultural value.

5.14    Company Registration

A One-stop-shop system has been introduced that enables investors to register their
businesses within 3 days. The registration is made by visiting one office, obtaining the
information from one place and addressing one employee. This significantly reduces
administrative barriers and start up costs. The one-stop-shop system functions within the


                                                                                            115
Central Register via 32 integrated offices located throughout the entire territory of
Macedonia, such as in Skopje, Bitola, Kumanovo, Prilep, Tetovo, Veles and Stip. These
offices are connected in an electronic register that enables efficient and fast company
registration. With the development of e-government services, business entities will soon
be able to register their business electronically.

The Central Registrar has an easily accessible database of companies. Complete
information on potential partners and suppliers can be obtained there as well as on
potential European partners through their home registers (European Business Register).

5.15   Technological Industrial Development Zones

Technological Industrial Development Zone (TIDZ) is a separate customs area within the
Macedonia in which economic activities are performed under special conditions. TIDZ
users can be both, domestic and foreign investors, although some of the benefits available
to foreign investors are not on offer to domestic operators.

Numerous tax incentives are available to foreign investors in the TIDZ with the intention to
make them attractive to the investors. The TIDZ land may be leased to foreign investors
for a period of fifty years, with a possibility of extension for another twenty-five years.

5.16   Competition

The new Law on Competition exists alongside laws on restricted competition and anti-
monopoly. Macedonia still lacks a fair competition law. In practice, state enterprises enjoy
special privileges vis-à-vis their private counterparts. This is an area of concern for the
country’s judicial system and it is not yet clear how Macedonia will address this issue.

5.17   Price Control

Price liberalisation has been essentially completed. The government influences prices
through its remaining state-owned companies mainly in the energy sector. Prices in this
sector (oil derivates, electric energy) are controlled by independent regulatory bodies.

5.18   Sources of Funds

Banks are the main source of financing, since the capital market is generally under-
developed and poorly capitalised. The cost of borrowing remains high and interest rates
currently range from 7 to 13 percent. While companies from Macedonia are free to borrow
from foreign banks without restrictions, the inflow of foreign capital for this purpose has
been minimal.

Tourism is not a sector for which special banking products are developed. However,
commercial banks offering micro crediting support entrepreneurs from different sectors,
including tourism.




                                                                                        116
5.19   Tax Incentives

The range of incentives available to foreign investors in Macedonia includes exemption
from customs duties, various tax holidays and specific tax relief measures. These include
the following:

       According to the Customs law, capital equipment (except automobiles and office
       equipment) of foreign investors can be imported without any charge to customs
       duties;
       Foreign investors are entitled to a profit tax exemption for the profit generated
       during the first three years of operations, provided that foreign capital accounts for
       at least 20 per cent of the total capital and that the company will continue its
       operations over a period of six years;
       There are no taxes on profits that are reinvested in fixed operational assets or used
       for environmental protection.

Other significant incentives include a 100,000 Euros deduction from the tax base with
respect to investments of up to 100,000 Euros in fixed assets. An additional reduction of
up to 25 per cent from the tax base is allowed for investments exceeding 100,000 Euros.
Investors are entitled to select only one of the various incentives on offer.

The Government introduced a flat tax of 10 per cent for corporate and personal income. In
2007, the corporate and personal rates are 12 per cent, reducing to 10 per cent in 2008.
The previous corporate tax rate amounted to 15 per cent, while personal income tax rates
amounted to 15 per cent, 18 per cent and 24 per cent. In order to stimulate additional
foreign and domestic investment, corporate tax on re-invested profit is set at 0 per cent.

In order to avoid double taxation of foreign companies located in the Republic of
Macedonia, 34 double taxation agreements have been concluded on a bilateral basis out
of which 25 are in force. It is expected that the remaining 9 will be ratified soon.

The flat tax system enables transparent and efficient administrative procedures. A tax
system with a sole flat tax allows simple calculation and easy filling out of tax forms. The
tax authorities have established a Special Unit for large tax payers.

5.20   Investment Protection and Trade Agreements

Up to 27 bilateral Investment Protection Agreements have been signed, such us the ones
with: Austria, Albania, Belgium, Byelorussia, Bosnia, Bulgaria, China, Croatia, the Czech
Republic, Egypt, Finland, France, Germany, Hungary, Iran, Italy, Korea, Malaysia, the
Netherlands, Poland, Romania, the Russian Federation, Serbia, Sweden, Switzerland,
Taiwan, Slovakia, Slovenia, Turkey, Ukraine.

Free trade agreements have been signed with the following countries: Serbia, Turkey,
Ukraine, Albania, Bosnia and Moldova. On May 3, 2006, the Parliament ratified an
Agreement on the accession of Macedonia into the Central European Free Trade
Agreement (CEFTA) effective from August 24, 2006. As from the date of entry into force
of this agreement, an earlier free trade agreement concluded between Macedonia,
Bulgaria, Romania and Croatia ceased to exist.




                                                                                         117
5.21   Current Barriers to Entrepreneurship

       Lack of a separate Ministry of Tourism. The department for Tourism and
       Catering within the Ministry of Economy does not have the capacity and power to
       support the sector properly. Additionally the department management changes
       frequently, so it is difficult to maintain long-lasting cooperation with the department;
       Bureaucracy in public administration, resulting in long administrative
       procedures;
       Non-functional judicial system;
       Lack or inappropriate promotion at a national level. A 2006 commercial on
       CNN promoting Macedonia was cited as an example of an expensive untargeted
       activity.
       Lack of foreign investments due to weak promotional activities;
       High taxes, which make Macedonia non-competitive on the regional tourism
       market. They suggest that services provided to foreigners should be considered as
       export and thus, released from VAT. Although the price of labour is competitive in
       Macedonia, the fringe benefits are very high, at 77 per cent of the net salary;
       Bad infrastructure: poorly regulated traffic, lack of parking places in the cities,
       narrow roads in the villages, lack of signage;
       Litter - Lack of awareness programmes, sanctions for littering, and well organised
       waste management;
       High interest rates, which de-motivate potential investors;
       High prices of fuel, which make transportation in Macedonia expensive;
       Lack of skilled labour for the tourism sector, curriculum of the tourism high-
       schools and faculties not adjusted to meet employers’ needs;
       Weak or non-existing associations in the tourism sector.
       Expensive air access to Macedonia due to the monopoly control of Macedonia
       Airlines (MAT);

Having considered the views of the private sector representatives as expressed above the
consultants consider the following to be the more serious barriers to entrepreneurship in
the tourism sector:

       Lack of Government direction or support for the tourism sector
       Lack of destination marketing
       Expensive air access
       Cost and terms of finance

5.22   Benchmarking

A Benchmarking study on the Western Balkans in 2006 prepared by the World Bank
Group shows that regionally at least, Macedonia is a comparatively competitive investment
destination. Tables 5.10 to 5.12 below provide benchmarking for several different
indicators from this World Bank study, including the general business environment, per
unit utility costs and corporate tax rates, for five Western Balkans countries: Croatia,
Bosnia and Herzegovina, ex-Serbia and Montenegro, Albania and Macedonia.




                                                                                           118
                   Table 5.10: General Business Environment




Source: World Bank Group, Multilateral Investment Guarantee Agency, 2006



             Table 5.11: Per Unit Utility Costs, by Country, (in US$)




Source: World Bank Group, Multilateral Investment Guarantee Agency, 2006




                                                                           119
                    Table 5.12: Comparative Corporate Tax Rates (%)




       Source: World Bank Group, Multilateral Investment Guarantee Agency, 2006



5.23   Conclusions

Investments in fixed assets in the tourism sector are low. Hotels and restaurants
accounted for only 3 per cent of total investments in 2006 and 1.5 per cent of FDI in 2006.
Prior to that FDI in the sector was well below 1 per cent. The industry viewed the lack of
destination marketing, bureaucracy and high interest rates as the principal barriers to
entrepreneurship.




                                                                                       120
6.        Human Resources

The size of the tourism workforce has grown rapidly to such extent that today, travel and
tourism is considered to be the world’s largest employer. The potential of tourism for
generating jobs in areas where there are few other alternatives for employment and high
impact on the national economy and development has resulted in efforts by the
Government of the Republic of Macedonia to expand the tourism industry.

The Human Resources Development Strategy will be created as a result of analysis and
examination of the current situation, profiling the tourism workforce quantitatively and
qualitatively, as well as forecasting future market needs of the workforce in terms of
number, skills and qualifications. This part focuses on the current offer of education and
training to create the Tourism Industry Workforce, through evaluation of the curricula and
capacity.

Special focus will be given to the human and organisational capacity of employees in the
Ministry of Economy (MOE) Tourism Department (TD) as key carriers in the process of
implementation of all National Strategy and Policy.

The intention is to produce a practical strategy that will provide clear directions and identify
priority actions for the Macedonian Government that will help in meeting the Human
Resources needs of tourism Industry and ensuring that Macedonia will have an adequate
number of better trained, skilled and qualified people.

6.1      Tourist Industry Definition

The tourism and hospitality industry covers enterprises that directly receive most of their
income as a result of tourism spending, such as establishments that provide:

      Short term accommodation (hotels, motels, apartments etc.)
      Food and beverage (restaurants, catering establishments, markets)
      Recreation and entertainment (various tourist attractions and leisure outlets)
      Travel and Transportation Services (travel agencies, car rentals)

In addition, the industry encompasses other types of enterprise including construction,
manufacturing, retailing, and services. These economic activities do not directly receive
income from tourism spending, but they supply those enterprises that serve tourists
directly. The extensive linkages that tourism creates with other sectors of the economy by
devoting attention to the multiplier effects of tourism consumption are widely recognised.

However, this chapter focuses on the direct workforce: the workforce in the businesses in
which tourists spend their money e.g. hotel and restaurants (sector 55 of National
Classification of State Statistical Office) and travel agencies and tour operators (class 63.3
of National Classification of State Statistical Office).




                                                                                            121
6.2    Quantitative Analysis of the Tourism Industry Workforce

Measuring the Tourism Workforce in Macedonia

It is not an easy task to uncover the scale of the tourism industry workforce in Macedonia
due to the existence of the grey economy (parallel economy). The existence of a grey
tourism economy is evident in Macedonia in the considerable number of undeclared,
unlicensed units and rooms, as well as people who are employed in the tourism sector but
are not registered in the Employment Bureau, and they are not part of official statistics.
This grey economy takes in seasonal unregistered employments, workers on demand
(freelance casual workers), non-registered family members, employees in unregistered
accommodation establishments. The number of such grey economy jobs is significant.
This is especially the case with seasonal employment where most of the additional
seasonal workforce is not registered at the Employment Bureau receiving grey economy
wages in cash. According to the tourism stake holders consulted and the World Bank
Report on the Economy of Macedonia, the percentage of these unregistered employees
can make up to 50 per cent of the total number of employees in this sector.

The second big issue when trying to make a qualitative analysis of the Macedonian
Tourism Industry workforce is the classification used in the State Statistical Office (SSO).
There is no separate industry segment for tourism that includes all the jobs carried by the
Tourism Industry.

However, this Strategy focuses on the information gathered from the SSO for the direct
workforce: the workforce in the businesses in which tourists spend their money e.g. hotel
and restaurants (sector 55) and travel agency and tour operators (class 63.3) taking into
consideration unregistered employees as a significant part of the total number of
employees in tourism.

Total Number of Employees in the Tourism Industry

In 2007, the active population in the Republic of Macedonia counted 907,138 persons.
From the total labour force, 590,234 persons were employed, or 65.0 per cent and
316,905 persons or 35.0 per cent were unemployed.

The rate of activity in 2007 was 55.7 per cent; the rate of employment was 36.2 per cent,
whereas the rate of unemployment was 34.9 per cent.

According to the SSO, approximately 3.5 percent of the workforce – over 20,000 people –
works in tourism and hospitality industry. The hotels and restaurants segment accounts
for a significant share – more than 90 percent of total industry employment. Table 6.1
below shows the total labour force and the numbers employed in the tourism sector for
2007.
                 Table 6.1: Number of Employees in Tourism Sector in 2007
                           Employees                   Number      Percentage
          Total                                         590,234        100
          Hotel and restaurants (sector 55)              18,995       3.22
          Travel agency and tour operator (class 63.3)   1,230*       0.22*
          Source: State Statistical Office and ATAM     * 2006 Data



                                                                                        122
          In recent years, the increasing trend of employment in Hotels and Restaurants is evident,
          as seen in Table 6.2 below, especially in 2006 when the number employed increased
          around 50 per cent compared to 2005. The 2007 figure, although marginally lower than
          2006, should be considered as a consolidation of the previous years dramatic growth.

                Table 6.2: General Trend in Employment in Hotels and Restaurants – 2004 to 2007
                   Employees                  2004         2005           2006             2007
          Hotel and Restaurants
                                             12,672       13,558         19,034           18,995
          (sector 55)
          Source: State Statistical Office


          Nevertheless, if we take into consideration jobs that are not included in this sector and
          unregistered employments, this number will increase by at least 40 – 50 per cent; meaning
          that the unofficial total number of employees in the tourism industry is around 30,000.

          The Hotel Association of Macedonia (HOTAM) states that the total number of employees
          in Hotels and Restaurants is around 50,000. Besides 20,000 official employees, they
          declare that an additional 15,000 non registered (mostly full time) employees and around
          15,000 workers on demand (freelance casual workers) are active in the tourism labour
          force. This is a very big gap between official governmental statistics and the information
          gathered by this professional association.

                              Table 6.3: Segmentation of Employees – Age Structure

                             100,000
                              90,000
                              80,000
                              70,000
                              60,000
                              50,000
                              40,000
                              30,000
                              20,000
                              10,000
                                   0
                                        15 -     20 -   25 -   30 -   35 -   40 -   45 -   50 -   54 -   60 - + 65
                                         19       24     29     34     39     44     49     54     59    64


                           Source: State Statistical Office

          The distribution of the labour force in the Republic of Macedonia is concentrated in
          employees aged between 25 and 50 years old (approximately 70 per cent) as is seen in
          Tables 6.4 and 6.5.

                                    Table 6.4: Age Structure of Employees in Macedonia
             15 - 19      20 - 24      25 - 29      30 - 34      35 - 39      40 - 44      45 - 49       50 - 54     54 - 59   60 - 64   + 65
Numbers       10,174      36,740       65,101        75,603        79,741      84,642       86,585        67,203     42,600    14,578     7,466
%             1.78%        6.44% 11.41%             13.25%        13.98%      14.84%       15.18%        11.78%      7.47%     2.56%     1.31%
          Source: State Statistical Office




                                                                                                                                123
The tourism industry relies heavily on youth for its workforce. While workers between the
ages of 15 and 29 account for 19 percent of the overall workforce in Macedonia, they
account for more than 40 percent of workers in tourism and tourism related services. For
many young people, their first work experience is in the tourism and hospitality industry
since part-time and seasonal work opportunities in the industry often appeals to younger
people combining work and secondary or university studies.

Gender Structure

                   Table 6.5: Gender Structure of the Tourism Workforce
                                        Men             Women
                     Total            61.7 %            38.3 %
                     Tourism          68,0 %            32,0 %
                      Source: State Statistical Office

Proportionately more men than women work in the hotels and restaurants service segment
of the industry. Approximately 62 per cent of the national workforce is male, while
approximately 68 per cent of hotels and restaurants services workers are men as is shown
in Table 6.5 above.

Salary Levels

Wages for many jobs in the tourism industry fall below the average wage in the Republic of
Macedonia. However, the industry is a good entry point for first-time workers joining the
workforce and allows individuals only seeking supplemental income the flexibility to work
part-time.

Because of the employee structure, the many part-time entry-level positions in the industry
and low level of employee qualification, the average wage in hotels and restaurants
services was 7,397.00 MKD for May 2007 – roughly 47 per cent lower than the national
average of 14,100.00 MKD.

This is the structure of declared salary according to SSO. Many of the jobs are declared
on industry minimum salary with the employers avoiding payment of the full amount of
social obligation and taxes. The realistic paid salaries are higher by approximately 30 - 50
per cent compared to declared salary.

For individuals looking for more rewarding long-term career opportunities, the average
wage is also higher in the skilled occupations (i.e. cooks, hotel managers). In addition,
many workers in the industry are able to supplement their wages with tips and enjoy
benefits such as meals, accommodation and travel at reduced costs.

Segmentation by Occupation and Activity (Staff Profile)

Table 6.6 below shows the results for the tourism industry workforce according to the 2006
labour force survey of the SSO. From the table it is obvious that this segment is
composed mainly of 3 groups with more than 90 per cent of the total workforce. Those
important groups are managers and senior officials with 11.2 per cent, service workers
with 71.1 per cent and elementary occupations with 7.8 per cent.



                                                                                        124
              Table 6.6: Employees in Tourism by Occupation and Activity - 2006
 Occupation                                 Percentage of Total  Percentage of
                                            No of Employees      Employees in tourism
                                                                 segment
 Legislators, senior officials and managers          5.9                    11.2
 Professionals                                       9.2                     0.6
 Technicians and associates professionals           11.9                     3.0
 Clerks                                              6.2                     1.6
 Service, shop and market sales workers             13.8                    71.1
 Craft and related trade workers                    13.1                     4.1
 Plant and machine operators                        13.1                     0.2
 Elementary occupations                             24.6                     7.8
Source: State Statistical Office

Starting from Table 6.6 above and based on the other information from the SSO and
professional stake holder associations, an indicative staff profile has been developed and
this is shown in Table 6.7 below. The highest percent are professionals and skilled
workers (mostly recruited with high school diploma). This should be the group that is most
representative of the tourism industry and the most important group to be considered and
observed.

                        Table 6.7: Staff Profile based on the Reports from SSO
                                                           Number Percentage
                  Managerial staff                          2,270        11.2
                  Professional / non - managerial staff     9,505        ~ 46
                  Skilled / semi skilled workers            7,232        ~ 35
                  Unskilled staff                           1,657         7,8
                  Source: State Statistical Office

Ministry of Economy – Tourism Department

Assessment of the department, its employees and organisation

The employees in the Tourism Department in the Ministry of Economy play a vital part in
the Tourism Industry Development in Macedonia. The role of the Tourism Department in
the Ministry is essential in achieving given tasks of policy maker, market regulator and
National Tourism Strategy development and implementation…

In the following chapter a brief evaluation and assessment is given of the organisation, and
employees. There are four key areas:

         The Decree for Organisation and Work of the MoE and the Governmental plan and
         programme for the Tourism Department in the MoE as a starting key point for all
         aspects of HR Management and HR Development;
         The newest version of a proposed organisation structure (systematisation) and job
         description;
         Actual organisational structure and duties;
         HR assessment of the employees in the Tourism Department.



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Organisation and Work of the MoE Tourism Department

The work of the Tourism Department is regulated by the Rule (Decree) for Organisation
and Work of the MoE.

Mainly, the duties of the Tourism Department of the Ministry are divided in 3 parts:

       General Policy Regulation:
           o To propose measures for the creation and implementation of Tourism
                Development policy;
           o To follow the enforcement of legislation;
           o To initiate bilateral agreements for cooperation within this sector;
           o To propose measures for increasing economic activity of Tourism and
                complementary branches;
       Market Regulator and Service Quality Assurance Provider
           o To deliver occupational licenses (Restaurants, Travel Agency, Tour
                Operator, Night Club)
           o To set up criteria and to perform categorisation of Hotels.
       Implementation of Governmental Annual Plan and Program of financed sector
       activities.

According to the Governmental programme for the Tourism Department within the Ministry
of Economy (Programme for General Tourism Propaganda and Information of Republic of
Macedonia for 2007) the main financed activity of this sector should be focused on 11
points:

       Preparation and printing of promotional materials for all segments of the tourism
       offer;
       Promotion of Tourism offer in the foreign media;
       Presentation of Macedonia Tourism at International Tourism Fairs;
       Cooperation with foreign tour operators;
       Preparation of Master Plan and Strategy for the Development of the Tourism in the
       Republic of Macedonia
       Organisation of Business forums and other meetings and conferences;
       Initiating, forming and running a sub-commission for tourism development;
       Cooperation with the community in strategic planning;
       Public awareness Campaign;
       Implementation of the commitments from the Bilateral Agreements;
       Organising training for the Tourism Industry Representatives in Marketing and
       Management.

This is a very long list of objectives. No targets or indicators are given for the successful
implementation of the objectives. The successful implementation of this list needs a
significant number of highly qualified and motivated professionals, skilled in project
management, with an excellent organisation and developed HR Management system that
will support the realisation of this demanding and ambitious programme.



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The Latest Version of a Proposed Organisation Structure for the Ministry of
Economy Tourism Department

The newly prepared act of organisational restructuring with new job descriptions is dated
May, 2007. According to this, the sector for Tourism and Restaurant Services should have
10 persons employed but the job description and responsibilities are not in line with the
above mentioned Government plan. The organisational structure is as follows:


                                        Organisation Chart - May 2007


                                          Department Head




                                               Deputy Head




              Policy & Inernational relation                  Research, Licensing,
                                                                Classification &
                                                                 Cooperation


                                                Unit Head                              Unit Head




                                                 Adviser                                 Adviser




                                           Junior Assistant                          Junior Assistant




                                           Admin Assistant                           Admin Assistant




The government program is marketing oriented; The Marketing Division in the Ministry is
the No 1 priority with a need for high qualified Marketers.

At this moment, there are only 6 employees in the MoE Tourism Department.                               Thus
according to the proposed structure, there is a shortage of 4 people or 40 per cent.

Conclusions:


       There is a large part missing in the Sector responsible for following industry trends
       and proposing measures. The head has been with the Ministry for only a few
       months and 3 people are missing from the planned structure.



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       The responsibilities and efforts of the actual labour force are mainly (90 per cent)
       concentrated on administrative issues: licensing of Hotels, Restaurants, Night
       Clubs.
       There is no Marketing specialist to ensure adequate realisation of the
       governmental marketing oriented programme. Even though tourism marketing and
       promotion are moved to a central department in the MoE, the conclusion is that a
       marketing specialist in the department for tourism is crucial for advising and
       preparing concrete marketing actions.
       Only 1 – 2 people are included in performing other job responsibilities within the
       Tourism Department (analysis, proposing measures, strategy, policy creation…)
       There is no legal expert in the sector that is key, the Policy Maker and Market
       Regulator, nor is the employment of a legal expert planned.
       There is no SMART (Specific, Measurable, Attainable, Relevant, Time – Bound),
       goals and target system implemented.

HR Assessment of the Employees in this Sector

The Tourism Department has 7 employees at the moment. 2 of them have a University
Degree in Economics, 1 have a University Degree in Tourism and Catering, 1 have
Philosophy University and 3 have high school diplomas (students at the Faculty of
Economy). Average age is 38. Average working experience with the MoE Tourism
Department is approximately 4 years. Language skills are at a very low level. IT skills are
satisfactory regarding the administrative issues covered by their job. Project management
experience and skills are missing. All the segments of structured job analysis and process
are missing, including staffing and planning, employee development and employee
maintenance.

6.3    Qualitative Analysis of the Tourism Industry Workforce

Skills and Competence Analysis

The analysis of skills and competence of the Tourism Industry Workforce is a most
challenging task. Contact with all relevant institutions and stake holders did not reveal
relevant, reliable and well structured documents, analyses or surveys that can be used as
a starting point in making qualitative analysis, especially on soft skills and experience
acquired practical competencies.

The only valid and reliable information is the information obtained from the SSO for the
formal education of the reported employees in the Tourism. If we take into consideration
that this number is at least 50 per cent higher than reported and the crucial importance of
setting necessary skills and delivery of competencies though trainings in a non formal way,
this information has no great importance.




                                                                                       128
                             Table 6.8: Formal Education Profile*
                                                            Percentage
                     Elementary                                   22
                     High school                                  48
                     University degree (VI/1 and higher)          22
                     Unskilled Staff                              8
                     Total                                      100
                    * The numbers are approximately based on the reports from SSO

The professional and customer oriented approach is an indispensable factor for tourism
development. Currently, there are deficiencies in the skills as well as the professional
background. The sector is not able to guarantee safe living conditions for its workforce in
spite of the required serious skills and competencies. The skills of already trained and
qualified people vary, mainly because:

       Seasonality of the job – Due to the big discrepancy in the period of high season
       and other periods, the skills are used and mainly developed within the period of
       biggest activity (high season period)

       Employee motivation – The motivation of the employees for training and skills
       development is not very high because:
          o The biggest number is unregistered and unprotected employees;
          o Low salary (minimal wages are characteristic) in comparison with the
              required skills and competencies (qualification, practice, shifts, overwork)

Language and communicational skills are at a very low level within the population over 40
years of age.

The staff in tourism related areas (museum experts, cashiers, taxi drivers) is not aware of
the significance of tourism. The population does not consider tourism as an important
opportunity. During the assessment on skills and competencies within the tourism industry
workforce, there was a strong need expressed for HR Management and HR Development
in this sector (Job Analysis and Job Description, Training and Development of Employees,
Organisational Development, Career Development).

6.4    Overview of Current Institutions and Programmes

The educational system in the Republic of Macedonia is based on the former Yugoslavian
educational system. It is one of the areas where many reforms and experiments have
been undertaken. What is missing is a major structural reform in the area that provides
post secondary studies e.g. University, although reforms and process standardisation are
being implemented elsewhere including the Bologna Declaration on Higher Education.

The education system is organised in 3 parts:




                                                                                       129
       Primary – Regulated with the Law on Primary Education and with the Law on
       changes and amendments to the Law on Primary Education (Official Gazette of the
       Republic of Macedonia No. 51 dated 24.05.2007) primary education is mandatory
       for all children 6 – 15 years of age. Primary education lasts 9 years and is
       organised in three terms. Approximately 235 000 scholars are currently enrolled in
       the Primary Education System.

       Secondary education - based on study plans and programmes for: general
       secondary education, vocational, secondary art education and secondary
       education for students with special educational needs. The secondary education
       enables the students to acquire knowledge and develop skills for work and further
       education. General secondary education and secondary art education last four
       years, while secondary vocational education lasts either 3 or 4 years. Vocational
       education and training may also be implemented according to study plans and
       programmes for two-year vocational training. With the Law on changes and
       amendments to the Law on Secondary Education (Official Gazette of the Republic
       of Macedonia No. 49 from 18.04.2007) secondary education is compulsory for
       every citizen under equal conditions defined by the Law. In accordance with this
       Law secondary education in public schools is provided free of charge.
       Approximately 94,000 scholars are included at this moment in the Secondary
       School System in Macedonia.

       Higher Education - offers graduate, postgraduate and doctoral studies, continuous
       education and studies for increasing, deepening or broadening of certain areas of
       knowledge. Graduate studies at the universities (faculties), in accordance with the
       changes and amendments to the Law on Higher Education (Official Gazette of the
       Republic of Macedonia No. 44 from 25.07.2005), last at least three and at most five
       years. Graduate studies at higher vocational schools last maximum three years.
       Postgraduate studies are organized as postgraduate science or arts studies
       (Master’s degree) and postgraduate expert studies (specialist studies).
       Postgraduate science or arts studies last at least three semesters, out of which two
       are focused on classes and one on preparation of the master thesis. Postgraduate
       specialist studies last for nine months, out of which one semester is focused on
       classes and three months on preparation of the specialist thesis. The highest
       doctoral degree can be acquired by attending doctoral studies and defence of a
       doctoral dissertation or by registration and defence of a doctoral dissertation.
       Doctoral studies last for a minimum of two years. Undergraduate and postgraduate
       studies are organized in accordance with the European credit transfer system
       (ECTS). The procedure for adoption of the new Law on Higher Education in
       accordance with the principles and criteria of the Bologna Declaration is in process
       of implementation.

The need to develop Human Resources for the Tourism Industry was perceived by
officials’ a long time ago. Within the educational system of the Republic of Macedonia,
Tourism Related programmes (tourism management, hotels, restaurants, gastronomies,
etc.) are included in the secondary and higher educational system.




                                                                                       130
Graduate and postgraduate studies

As a part of the higher education system in the Republic of Macedonia, at this moment
there are two educational institutions that produce high qualified graduates for the tourism
industry sector:

        Faculty for Tourism and Organisational Sciences in Ohrid, and
        Faculty for Tourism – Skopje.

Faculty for Tourism and Organisational Sciences – Ohrid

Until 2006, the Faculty for Tourism and Organisational Sciences from Ohrid was the sole
representative of the higher education segment offering educational programmes for
tourism professionals. At this moment, it is the only state financed institution that creates
highly qualified tourism workers. Consequently, as an institution established in 1970 with
a long tradition in preparing personnel for the tourism industry, it is a most important
institution for analysing the actual situation with respect to Human Resources in the
Tourism Industry and for forecasting future HR Development needs.

This institution is part of the second oldest State University, St. Kliment Ohridski.
Established in 1979, this university has almost 30 years of tradition and experience in
education and scientific work.

The Faculty for Tourism and Organisational Sciences from Ohrid offers undergraduate and
postgraduate programmes and distance learning programmes with international
Universities. As a result of identified needs, a sub division of the Faculty for Tourism and
Organisational Sciences was opened in Veles, in the central part of Macedonia, offering
the same type of studies.

According to the Faculty Programme and the information provided by the Faculty for
Tourism and Organisational Sciences from Ohrid, the faculty is offering 3 undergraduate
tourism related educational programmes as shown in Table 6.9 below.

                Table 6.9: Educational Programmes and Number of Students
                                   2006/2007                    2007/2008
Educational Programme       Ohrid     Veles    Total    Ohrid     Veles          Total
Tourism                     138        50      188       113       49            162
Gastronomy                   23        30       53        41       11             52
Hotels and Restaurants       35        18       53        11       22             33
TOTAL                       196        98      294       165       82            247
Source: Faculty for Tourism and Organisational Sciences

The last adaptation and improvement of the study programme was made in 2005, and
applied in 2005/2006. According to those changes the studies are organised on the model
3 + 2 years e.g. 3 years for undergraduate studies and 2 years for postgraduate studies.

For Graduate Students, the Faculty is offering 2 types of postgraduate programmes, one
organised solely by the Faculty for Tourism and Organisational Sciences in Ohrid, and the
second one as a distance learning option, organised in cooperation with foreign
universities.


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The postgraduate studies are offered in 3 groups:

       Tourism Management
       Management in Catering Industry
       International Tourism

They are organised as 2 year studies divided into 4 semesters.

The professorial body is composed by professors from Macedonia and educated mainly
within the institution. The study programmes have good and relevant coverage with
professors, but in the University and faculty there is a lack of programmes for continuing
education of the professorial body, a high average age of assistants and associates,
minimum mobility of the professorial body, inadequate selection and promotion of
professors and associates, and a low level of language skills.

The Faculty has many achievements in the segment of International Cooperation:
      cooperation agreements with foreign Universities,
      participation in many international projects,
      agreements for visiting professors,
      participation in and organisation of different symposia…

On the resources side (materials and space), the average is far below the European
average and University average with only 1.31m2 space per student. The other
resources are very limited (laboratory, practice cabinets) and the quality of education,
especially the quality of knowledge transfer from theoretical to practical skills is poor.

Faculty for Tourism – Skopje

The Faculty for Tourism in Skopje was established and accredited by the licensing board
of the Ministry of Education in 2006. It officially started its activities in the 2006/2007
school year, as a first private educational institution for tourism.

In the first year the faculty was opened for 100 full time and 100 part time students. The
faculty is offering one 3 year programme that will give the title to graduates of Graduated
Tourismologist. Programmes, contents and the manner of study of the Faculty for Tourism
in Skopje and the overall course of study and programme are completely compatible and
adjusted with the Bologna Declaration for Higher Education in the European Union.

After graduation the students can continue with specialised studies (Tourism Specialist) or
Master Studies (Master degree in tourism sciences).

According to the programme, the graduate has to study 27 mandatory (obligatory)
subjects, 6 mandatory (elective) optional subjects and two facultative subjects. Below is
presented the programme of studies:

For graduate students the faculty is offering 2 types of study courses as shown in Tables
6.10 and 6.11 below, Specialised Studies and Master Studies.

Specialised Studies – offering field specialisation and a more practical approach.

Master Studies – a master’s course in Tourism Science.


                                                                                       132
                        Table 6.10: Specialised Studies – Course Subjects
No.                   Obliged Subject                Semester I   Semester II         UCTS
1      Basics of tourist valorisation                    4+0                    56     10
2      Principles and methods of touristic               4+2                    84     10
       regionalisation
3      Kinds of touristic turnovers                                   4+2       84     10
4      Methodology in science-research work and                       4+2       84     10
       touristic informatics
5      Worked out a master work                                                 56     10
6      Elective subject                                               4+0              10
6a     Lake tourism
6b     Mountain tourism
6c     Cultural-educated tourism
6d     Village tourism
       Total number of classes, conveyance and           8+2
       exercises
       Total number of classes in one week                10           16       364    60
Source: Faculty for Tourism - Skopje

                           Table 6.11: Master Studies – Course Subjects
No.                   Obliged Subject                 Semester I  Semester II         UCTS
1      Basics of tourist valorisation                    4+0                    56     10
2      Principles and methods of touristic               4+2                    84     10
       regionalisation
3      Kinds of touristic turnovers                                   4+2       84     10
4      Methodology in science-research work and                       4+2       84     10
       touristic informatics
5      Worked out a master work                                                 56     10
6      Elective subject                                               4+0              10
6a     Lake tourism
6b     Mountain tourism
6c     Cultural-educated tourism
6d     Village tourism
       Total number of classes, conveyance and           8+2
       exercises
       Total number of classes in one week                10           16       364    60
Source: Faculty for Tourism - Skopje


The professorial body is composed of professors from Macedonia and abroad
(Department for Geography, Tourism and Hotel Trade from Novi Sad, College for Hotel
Management in Belgrade, Institute for Economy and Management from Lutsk - Ukraine,
High School for Management of Regional Economy and Tourism from Kielse - Poland,
Faculty for Tourism and Health Management from Opatija, etc.)

For all three years, field research and practical education is anticipated. This should be
performed in May and according to the plans and programmes agreed at the beginning of
each education year. The same approach will be applied for domestic and international
destinations: first year the focus of the field research should be in the Republic of


                                                                                            133
Macedonia, second year the focus is on the Balkan Peninsula, in the third year, field
research and a practical placement will focus on a country with highly developed tourism,
outside of the Balkans (mostly in Germany, Switzerland, Austria, Great Britain, Greece,
Cyprus and USA). The practical placement should be taken by every student, in hotels –
catering subjects, Travel Agencies or a Tourist organisation abroad, after finishing the
second year of studies

Tourism Related Secondary Vocational Education
Secondary education and the future workforce educated in secondary educational
institutions are the main careers of the Tourism Industry Workforce. More than 70 per cent
of the total industry workforce has completed secondary school.

More than 90 000 scholars are included in secondary educational system in the whole of
Macedonia.

The secondary education system is organised in 3 types of secondary schools:
      10 Public (state) secondary schools
      82 Public Municipality schools
      Private Secondary schools

Tourism related programmes are controlled by the Municipality (Public Municipality
schools). They are organised in 3 and 4 year programmes offering 4 areas of
specialisation:
        Hotels and catering industry technicians (4 years program)
        Waiter (3 year programme)
        Chef (3 year programme)
        Confectioner – Pastry cook (3 year programme)

Six secondary schools in the Republic of Macedonia offer tourism related programmes and
their details are presented at Table 6.12 below.




                                                                                      134
 Table 6.12: Tourism Related Secondary Schools Offering Programmes and No of Scholars
 City        Name of the school    Programmes Offered         No of offered   Total No
                                                                        st
                                                            places for I year    of
                                                                scholars      scholars
                                                            according to 2007
                                                             Announcement
 Ohrid      Vanco Pitosevski         Hotels and Catering           68           744
                                     Industry Technician
                                     Waiter                        68
                                     Chef                          102
 Gevgelija Josif Josifovski          Hotels and Catering           34           365
                                     Industry Technician
                                     Waiter                        34
                                     Chef                          68
 Krushevo Naum         Naumovski     Hotels and Catering           34           176
            Borce                    Industry Technician
                                     Waiter and Chef               34
 Skopje     Lazar Tanev              Hotels and Catering           102          981
                                     Industry Technician
                                     Waiter                        170
                                     Chef                          102
                                     Pastry cook                   34
 Štip       Kole Nehtehin            Waiter and Chef               34           103
 Tetovo     Moša Pijade              Hotels and Catering           34           306
                                     Industry Technician
                                     Chef                          34

 TOTAL                                                              952             2675
Source: Ministry of Education


The programmes are composed of:
       44 per cent general topics (not directly related to tourism – History, Informatics,
       Macedonian language and literature….)
       36 per cent tourism related topics (Basics of tourism, Tourism Geography, Travel
       Agency and Hotels activity, Tourism Economics…)
       12 per cent Practical Placement
       8 per cent interest oriented (elective) topics

The study programmes have relatively good and relevant coverage with professors.

Interviews with key industry stake holders revealed a high level of dissatisfaction with
these courses. The scholars were not prepared to work in the Tourism Industry or to
execute the full responsibilities of their job duties it was believed.

The professor’s approach is very theoretical, and the transfer of theoretical to practical
knowledge and skills is very poor. Schools training facilities can offer very limited
conditions. The general conclusions are that it is not possible to train professionals with
this program and with the available training conditions.



                                                                                       135
34 students per class were considered to be a very high number of students for each
class.

The focus must be given to skills acquisitions and practical work.

The scholars are not very interested and motivated to engage themselves in the education
process. The tourism jobs offered to high scholars are not perceived as very attractive
and the public appreciation is not at a high level.

Other Non-formal Educational Courses and Training

The lifelong learning process through the offer of training, courses and programmes is a
very important part of the process of creation of a highly qualify and competent labour
force. This is institutionalised education carried out by professionally qualified teachers
and an educational programme that contributes to the increase in the employee’s
knowledge and skills.

Tourism related courses and trainings on offer can be presented in 3 groups:

   1. Training courses and programmes prepared specifically for Tourism Industry
      Workforce:
          In the structure of the Faculty of Tourism – Skopje IATA authorised training
          centre is offering following training and courses:
              o IATA/UFTAA International certificate for GDS - duties and ticketing
                  (booking payment, reservations, or on a system for global connection
                  with Amadeus, Abacus, Apolo, Galileo and Sabre);
              o Hotels Management;
              o Tourism Management;
              o Internet communication;
              o Tourist guides;
              o Course for civil aviation;
              o Travelling and tourism;
              o Web presentation and etc.

   2. Language and Computer skills courses and training
      The existing offer of language skills courses and trainings of all languages and at
      all level in Macedonia is very big. More than 220 schools for foreign languages are
      operating in the territory of the Republic of Macedonia. The quality of professors
      and quality of programmes is questionable. In the last few years, a Quality
      Assurance Centre - Certification Body – has been taking care of these aspects.

       Regarding the computer and IT skills training offer, there are more than 65
       specialised schools. They are all relatively well equipped. Some courses are
       offered free of charge for some categories of people.

   3. Soft skills training
      In the last few years, the offer of soft skills training is increasing and developing,
      qualitatively and quantitatively. With more than 40 specialised companies, offering
      open training, tailor made training, in-house training, on-line training, this segment
      is growing rapidly. The supply of trainers (domestic and international) and the


                                                                                        136
       quality of training is very questionable. Nevertheless, at this moment Macedonia
       has a sufficient number of experienced and well qualified training providers for the
       majority of the training topics.

6.5    Conclusions

According to the data gathered from the SSO, the Republic of Macedonia has
approximately 20, 000 people employed in the Tourism Industry. However, there is a big
gap between official Governmental statistics and the situation in the field. Some estimates
suggest that the number of undeclared workers is between 15,000 and 30,000 workers.
This should be the first field of intervention. In order to have relevant data and information,
a Tourism Industry Survey is absolutely necessary before taking any serious action.

Regarding the structure, the Tourism Industry Workforce has a very favourable
composition in almost all analysed segments, in education, in ages, and in terms of
population growth.

The professional and customer oriented approach is an indispensable factor for tourism
development. Currently, there are deficiencies in skills as well as in professional
background. The sector is not able to guarantee safe living conditions (poor salaries and
social security packages) for its workforce in spite of the required skills and competencies.

The assessment of the Tourism Department of the MoE clearly demonstrates very limited
capacity in terms of both numbers and skills. Urgent restructuring and capacity building of
the Tourism Department is evidently needed.

The review of current education and training programmes and the effectiveness of these
programmes have made obvious the weakness of the Macedonian educational system.
The shortage of practice laboratories, organised and well structured practical work, poor
transfer of theoretical knowledge and skills into practical skills, enormous gap between
industry needs and educational programmes. The industry is complaining that the
education system is isolated and is producing an unsuitable and unusable workforce. We
must develop a high performing educational system and high performing working
environment if we aim to develop a highly qualified and highly performing Tourism Industry
workforce.




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7.     Tourism Organisation and Management
Introduction

Policy and legislation are the foundations on which the industry is built. The tourism
related policy and the existing legislation and some proposed legislation are reviewed and
commented on in this chapter. These include:

       The Programme of the Government of the Republic of Macedonia 2006 - 2010
       National Development Plan 2007 - 2009
       Spatial Plan of the Republic of Macedonia (2004)

and the following existing legislation and the principal regulations:

       Law of Tourism Activity No. 62/2004
       Law on Catering Activity No. 62/2004
       Law for Tax for Short Stay No. 19/1996 amended 26/2002, amended
       Law on Establishment of Agency for Promotion and Support of Tourism No.
       103/2008
       Rulebook on the Minimum Technical Requirements for Performing Catering
       Activities (Ref to #16/2006)
       Rulebook on The Requirements for Categorisation of the Facilities on the Tourist
       Offer (Ref to #16/2006)

Other legislation impacting on tourism includes the legislation and regulations on
environment, transport, land improvement and training, some of which are considered in
other parts of this report.

The Programme of the Government of the Republic of Macedonia 2006 - 2012

The Programme of the Government sets out the Government’s priorities for economic and
social development. The fundamental aims of the programme are to:

       Improve living standards
       Increase employment
       Fight corruption
       Develop democracy
       Improve inter-ethnic relations
       Establish political stability
       Integrate into the EU and NATO

The Programme considers that “Macedonia has a large potential for tourism development,
though very little of it has been used. Tourism is a form of export and a possibility for
attracting foreign capital. During its mandate, the government will undertake a number of
measures to stimulate the tourism potential of the Republic of Macedonia and to attract
foreign tourists”.




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Towards this end, the Programme proposes promotional campaigns; strengthening the
tourism sector of the Ministry of Economy; targeting hotel management companies and
international tour operators and travel agencies; promoting rural, cultural, heritage, wine
and spa tourism.

The Government will invest in tourist related infrastructure, signage (in English) rest areas
on the highways, improved welcome at border crossings and general maintenance of
tourist sites and attractions, including the preparation of a Macedonian Village project as a
national tourist attraction and attract domestic and foreign investment in the sector.

The Programme also outlines the Government’s intention to protect and improve the
environment through initiatives such as the introduction of economic instruments for
protection according to the “polluter pays” principle; tax and customs incentives;
monitoring, a forestation programme and a public awareness programme to raise the
public consciousness about the environment.

National Development Plan 2007 - 2009

In the National Development Plan 2007 - 2009, tourism development is identified as an
important development priority for the country because of its job creation potential and its
support for the national objectives in trade, exports and investment. It identifies
constraints to tourism growth such as the narrow product range and poor quality, the
geographic concentration of tourism activities in just a few locations and insufficient
investment in infrastructure.

Two large scale projects are identified to be financed or co-financed from public funds over
the three year period, a Ski Center at Galicica National Park (Euro 15m) and a Tourist
Settlement in Koziak including a new road to the site (Euro 30m). The following smaller
projects are also proposed; Cultural Tourism - Markovi Kuli Fortress and Treskavec
Monastery (Euro 1.10m), support for rural tourism (Euro 3.0m), the promotion of
Macedonia (Euro 0.65m) and HACCP standards implementation in catering (Euro 0.45m).

Spatial Plan of the Republic of Macedonia 2004 - 2020

The Spatial Plan of the Republic of Macedonia was adopted by the Assembly in June 2004
with a time frame to 2020. The previous Spatial Plan was adopted in 1982 and its time
frame had expired.

The plan, as its name implies sets out to address use of space to take account of social,
technical, economic and cultural changes taking place not only in Macedonia but also in
the broader international environment.

Goals for the preservation and enhancement of the environment, natural and cultural
inheritance are set out in the plan. These include zoning, capacity definition, monitoring
and controls including the expansion of protected areas. Regional, municipal and area
spatial plans are to take special account of the physical inheritance.

On tourism, the plan sets a number of goals and defines ten tourist regions. The goals are
abbreviated as follows;




                                                                                         139
          To evaluate the most important tourist products for domestic and foreign markets;
          To identify tourist products for development in certain areas;
          To establish the interdependence of spatial units;
          To determine the development directions and areas for protection for tourism
          development;
          To determine priority areas;
          In response to demand, open up new areas;
          To identify possible areas of conflict between tourism and other economic sectors
          and define priorities.

Ten tourism areas are identified as are the geographic areas of importance for
international, regional and national markets. The rationale for these ten areas is not set
out therefore we are unable to comment on them. The geographic areas of importance for
the three markets appear valid.

7.1       Current Legislation

Law on Tourism Activity - No. 62/2004

The Law on Tourism Activity was enacted in 2004. It defines “Tourism Activity” as
including organisation and realisation of tourist travels, family picnics (non commercial
excursions) travel packages in the country and abroad, provision of tourist information, the
organisation and sale of catering and other services such as accommodation, guiding,
travel tickets, car and boat hire, sporting and cultural activities, souvenirs and other goods
for tourists.

It defines a “Travel Package” in the international standard form as a combination of at least
two of the following and covers a minimum of 24 hours

          Transport
          Accommodation
          Other Tourist Service

The law provides for trade companies and sole proprietors who perform tourist activities to
be registered in the central Commercial Register and for natural persons who provide
“small scope activities” to be registered in Municipal Registers. The Ministry responsible
for tourism is empowered to define “small scope activities”.

Licensing and registration of the providers of tourist services and activities is provided for
with the Ministry responsible for tourism prescribing the requirements for
licensing/registration for

      -   Travel Agencies
      -   Tourist Guides
      -   Tourist Companions and
      -   Rural and ecotourism services providers

The Ministry sets out the types of services to be provided by the different categories above
i.e.




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       Travel Agencies selling tickets organising and selling tours and package holidays,
       reservations etc.
       Tourist Guides are those providing guiding services nationally with a range of
       history and cultural and general knowledge about Macedonia. Guides in museums
       etc. and guides for fishing and hunting, mountains and caves or accompanying
       tours from site to site is not considered a “guide” requiring to be licensed as a
       Tourist Guide.
       Tourist Companion accompanies tour groups and has a general knowledge of
       international and national tourist regions and with international language skills.
       Rural and Ecotourism Service Providers are those selling horse riding, hand crafts,
       home produce, photo safaris and rural transport.

Travel Agencies are governed by detailed requirements and monetary insurances
requirements related to size and divided into three groups A, B and C. The titles “Travel
Agency”, “Tours” and “Travel” can only be used in the names of licensed Travel Agencies.

The law also provides for the implementation of the EU Directive on Package Travel,
Package Holidays and Package Tours.

Tour Guides must be citizens of Macedonia and have passed a tour guiding examination
before being licensed.

The law also provides for the operation of Tourist Bureaux for the booking of private house
accommodation, providing information and promotional materials and selling souvenirs,
postcards, maps etc.

Penalties, for infringements of the laws, by way of cancellation of licenses, fines and
compulsory cessation of tourism activities are provided.

Law on Catering Activity - No. 62/2004

The law on Catering Activity was enacted in 2004 and it defines Catering Activity as
including the preparation and service of food and drinks including take away and the
provision of accommodation.

Catering activities carried out by trade companies and sole proprietors are recorded in the
commercial register. Small scope activities carried out by natural persons are registered
by the Municipalities. The Minister prescribes minimum requirements for registration.

Exemption from registration is granted to the providers of food and accommodation
services for employees, or in educational, correctional, social, health care and other
institutions, and the Ministry of Defence, Ministry of the Interior and other public
administration institutions. Minimum requirements for registration are provided for, and
compliance with health, fire protection, environment and safety requirements is also
stipulated. For night clubs, cabarets and discos the Ministry of Interior must be satisfied
regarding public order and traffic safety and these activities may not be in a collective
residential building.

Separate licences are required for the sale and service of alcohol and certain exempted
providers (educational, health and social) are not allowed to sell or serve alcohol.



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Accommodation facilities are classified into Basic Facilities including:
     Hotels
     Hotel Villages
     Apartment Villages
     Motels
     Pensions
     Residences
     Tourist Villages etc.

Complementary Accommodation including:
      Lodging House
      Inns
      Camping Sites
      Private Accommodation (rooms, apartments, houses)
      Resorts (for children, youth workers etc)
      Other (hostels, mountain lodges, temporary accommodation)

Food establishments are classified into:
      Restaurants
      Bars
      Canteens
      Other

Five and four star hotels do not need the special licence for night clubs, cabarets and
discos.

Licence and registration fees are prescribed as are maximum working (opening) hours for
the various categories and for tourist facilities/resorts and Skopje.

Quality level categorisation by stars is provided for with a Categorisation Commission
consisting of five members appointed by the Minister.

The qualifications required by management are stipulated and providers are required to
display accommodation prices in rooms, at reception, and on menus; also notices
regarding young persons and alcohol, the telephone number of the State Market
Inspectorate and data on the type and category of the facility.

The provisions of services by natural persons registered by the municipality are restricted
to houses, apartments and rooms of not more than 10 rooms or 20 beds. For campsites
up to 10 places or 30 guests is the maximum and the provision of breakfast only is
allowed.

Renting is to be done through a travel agency or a tourist bureau on the basis of a
contract. The law stipulates the content of such contracts and the responsibilities of the
provider on the display of notices and prices and giving receipts and the keeping of a
guest register etc.

Catering Services in Village Households, that is the renting of rooms and apartment, in
houses in the villages, is restricted to 10 rooms or 20 beds.




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Home produced (mainly from home production) hot and cold meals, beverages and drinks
may be served to groups of not more that 50 persons. Wine and brandy tasting is also
allowed in village households

Camping is controlled by the municipalities and is allowed only on organised sites.

Provisions are also made for the service of catering services in mobile units, on sailing
facilities and to nudists.

Application procedures and the registration period (three years) are provided for as are the
inspectorate, and penalties for infringement of the law and regulations.

The law stipulates the state administration body responsible for catering matters will
supervise the implementation of the catering activities by the municipalities and can
withdraw the powers of offending municipalities to perform the activities.

Law on Establishment of Agency for Promotion and Support of Tourism No.
103/2008

The Law on Agency for Promotion and Support of Tourism was enacted in July 2008. It
primarily regulates the competences, organization and functioning of the agency.

The main responsibilities of the Agency are the following: professional presentation of all
segments and regions of the tourist offer; preparation and implementation of Strategies for
promotion and development of tourism; preparation of programs for development of the
entirety and of separate kinds of tourism in the country; provision of informative material
for promotion of tourism assets (printed publications, audio and video materials, internet
presentations, souvenirs etc.); preparation of adequate analyses and prognoses regarding
the benefit from tourism income so that future activities and priorities can be well directed;
doing marketing analyses of domestic and foreign tourism markets; active promotion of the
entire tourism potential of the Republic of Macedonia in the country and abroad; form and
develop a unique tourism information system and connect it to other information systems
in the country and abroad; development and promotion of new integral tourism products;
plan and work on the completion of the infrastructure of the Macedonian tourist centers, to
create a complete offer from the cultural-entertainment life, transport, motorway signs, etc;
initiation and realization of international cooperation with renowned organizations and
institutions; suggestion of quality measures and activities for promotion and support of the
underdeveloped parts of the Republic of Macedonia; providing help in attracting
investments for companies which operate in the tourism industry; cooperation with world
famous tour-operators for promoting the country as attractive destination and for attracting
as great a number of tourists as possible; cooperation with private domestic and foreign
entrepreneurs.

Rulebook on the Minimum Technical Requirements for Performing Catering
Activities (Ref to #62/2004)

The Rulebook sets out the definitions and criteria for the various forms of accommodation
such as hotels, motels, boarding houses etc. and for catering facilities serving food such
as restaurants, bars and canteens etc. The details are not commented on in this report
except to state that the number of titles should be reviewed particularly from a marketing
view point.


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Rulebook on the Requirements for Categorisation of the Facilities on the Tourist
Offer (Ref to #62/2004)
The Rulebook sets out the criteria for categorisation of accommodation and food
establishments. Again, they are not commented on in this report.

7.2      Ministry Organisation
The Ministry responsible for tourism is the Ministry of Economy under a cabinet minister. It
is responsible for European integration, industrial policy, energy, minerals and domestic
and international trade as well as tourism.

The Tourism Section is responsible for general tourism policy, licensing and
categorisation of hotels, travel agents etc., enforcement of the legislation, production of
promotional materials, general promotion of Macedonia as a tourist destination on
international markets, the organisation of training for the tourism industry in marketing and
management and public awareness programmes.

As is evident below, the Sector does not have the resources to fulfil its responsibilities. A
comprehensive review and assessment of the sector’s human resources and its inability to
perform is outlined in Chapter 6 (see the chart on page 120).
At the time this Strategy was in its final stage of development, there were only 6
employees in the Tourism Section. There were four vacancies including that of the Head of
the Sector.

Table 7.1 below presents the Ministry of Economy tourism budget and expenditure for
2006/07, showing an operational budget for the department for 2007 of MKD 20.016m, of
which MKD3.016m is for salaries and MKD 7.5m for marketing activities. The Strategy
Project and training takes up the bulk of the balance.

              Table 7.1: Ministry of Economy Tourism Budget and Spend 2006/2007
                                            2006                 Budget 2007
                                 MKD million   MKD million  MKD million  MKD million
Salaries                               3.307                     3.016
                    Sub Total                       3.307                     3.016
Travel                                    1.0                        0.8
Fairs                                   1.35                         3.4
Advertising                              0 .5                        0.5
Promotion Activities                      0.5                        0.2
(Tour Operator/travel agency
visits)
Business Forums                           0.5                        0.6
Publications                            2.65                         2.0
                    Sub Total                           6.5                       7.5
Bi-lateral cooperation                    0.2                        0.3
Training                                  0.2                        1.0
Cooperation Commission                    0.1                        0.3
Municipalities Projects                                              0.6
Tourism Strategy                                                     7.3
                    Sub Total                           0.5                       9.5

                          Total                 10.307                        20.016
Source: Ministry of Economy



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The Tourism Section is inadequately resourced both in manpower and funding to make
any impact on the growth of tourism to and in Macedonia.

The insignificance of the tourism marketing budget for Macedonia is very evident when
compared to the 2005 marketing budgets for the following countries. This is shown in
Table 7.2 below.

      Table 7.2: Agency for Promotion and Support of Tourism, Marketing Budgets 2005
                                                      Euro Million
                         Republic of Macedonia           0.123
                         Romania                           5.7
                         Poland                            7.7
                         Hungary                          17.6
                         Slovenia                          8.5
                         Slovakia                          6.3
                         Czech Republic                    6.8
                         Greece                          121.7
                         Ireland                          66.0
                      Source: Ministry of Economy

7.3    Tourism Industry Organisation

Municipalities in Tourism

The national policy on decentralisation has placed responsibility on the municipalities for
tourism planning and development. Many municipalities have developed plans and
strategies for tourism in their areas. However, the majority of municipalities have not.
They are responsible for controlling the complementary accommodation and collecting the
statistics and bed taxes from these. In most municipalities this is not being done.

Hotel Association of Macedonia (HOTAM)

HOTAM is affiliated to the Economic Chamber of Macedonia and is the representative
body of the hotel sector. It is a member of the International Hotel and Restaurant
Association (IHRA) and has associate membership of HOTREC the hotel and restaurant
industry body within the EU.

HOTAM has 56 hotel members out of 180 hotels in Macedonia. It also has 26 associate
members drawn from restaurants, transport companies and tourism faculties.

HOTAM has been active in promoting Macedonia in some international markets.

The private sector associations – Hoteliers and Travel Agents have come in for some
criticism as being ineffective and not representing their sectors to government. The
Economic Chamber of Macedonia is also considered ineffective in the tourism sphere.

In addition to representing the industry to the government and defending the basic
business interest of the hotel sector, HOTAM has been active in promoting Macedonia in
some international markets. This has been in the absence of any real marketing drive by
the Ministry of Economy.




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The Hotel Association of Macedonia has made a submission to the Government for the
legal establishment of Community Tourism Committees at town, city, regional and national
level with all involved in the benefits of tourism contributing from the bottom up to form an
Agency for Promotion and Support of the Tourism to market the country.

The private sector associations – Hoteliers and Travel Agents have come in for some
criticism as being ineffective and not representing their sectors to government. The
Economic Chamber of Macedonia is also considered ineffective in the tourism sphere.
Communications between the Ministry responsible for tourism and the private sector and
other ministries is considered weak, mainly because of the under-resourced Department of
Tourism and Catering.

While the Hotel Association of Macedonia may be considered ineffective by some hoteliers
it is making very positive efforts to extend the season, promote Macedonia, and create
new tourism products.

The Economic Chambers for Tourism of Macedonia (ECTM)

ECTM are a private sector chambers established in 2008, consisting of tourist operators
and scientific institutions functioning within the tourist industry in the Republic of
Macedonia. The membership is on a voluntary basis for representatives that come from
micro, small and medium sized businesses in the field of tourism in the country. The
chambers currently comprise around 100 members from tourist agencies, hoteliers and
catering providers, transporters and scientific institutions. The primary objective of the
Chambers is to prepare the grounds for improving the business conditions for the tourism
industry as well as to create an environment to treat tourism as an engine of the
development of the economy in the Republic of Macedonia.

The strategic objectives of ECTM are: promotion of tourism, proposing and enforcing legal
regulations for improving the tourism in the country as well as gradual adjustment to EU
standards, intensifying the human potential, technical assistance for development of
tourism, and promotion of Public Private Partnership.

Association of Travel Agencies of Macedonia (ATAM)

The Association of Travel Agencies of Macedonia (ATAM) has 72 members which
accounts for the majority of travel agencies in Macedonia. Except for a very small number
(4-6) who provide an inbound tourist service, outbound travel is the main business of the
remaining members. The association represents its members’ interests to government
and in sector negotiations within the industry.

Skopje Tourism Association

The Skopje Tourism Association is constituted of the Tourism Union of Skopje and the
Tourism Guides Association/Union. In former times the Union was in effect the Tourism
Organisation for Skopje responsible for the promotion of tourism and servicing tourists in
Skopje. It was financed by the bed tax but is no longer so. It now depends on
membership fees and advertising in its Skopje guide. It has 64 members who are guides
but has problems collecting fees. None of the hotels or other tourism entities has taken up
membership. The Association has four staff members and they hope to reopen the Tourist
Information Centre in the near future when problems about their office space are resolved.


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Without funding it is difficult to see it surviving or playing any significant role in tourism
growth

7.4     Conclusions

The Government programmes and plans identify the tourism sector as having potential for
growth and as a priority for development recognising its job creation potential and support
for other national objectives.

The existing legislation is comprehensive requiring only some minor amendments to open
tour guiding to foreign nationals resident in the Republic of Macedonia and provide for the
protection of “Tourist Information Centre” titles. Importantly it incorporates the EU directive
on package travel. The number of titles for accommodation should be reviewed from a
marketing viewpoint, as should the criteria for categorisation and qualitative criteria
considered for inclusion. The categorisation of restaurants should not be proceeded with.

The establishment of the Agency for Promotion and Support of Tourism in the Republic of
Macedonia is an important step forward to the strengthening and further institutionalization
of the Government’s obligations for tourism promotion. Based on the international
experience that indicates the need for including the private sector so as to increase the
efficiency of the tourism promotional activities, the establishment of an Advisory Board at
the Agency for Promotion and Support of Tourism is recommended. This board will consist
of representatives from the tourism industry elected through comprehensive consultations
with advisory bodies, organizations and experts in this area, including the Assembly of
Tour Operators, established for the conduct of this Strategy. The advisory board will
provide advice to the Agency regarding promotion and marketing-related issues; product
development, enhancing human resources and tightening the tourism service standards;
as well as upon the roles and functions of the Agency.




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8.   SWOT Analysis

Strengths
     Hospitable people
     Geographic location
     Temperate climate
     Pristine nature – mountains, forests, lakes and rivers.
     Biodiversity with many endemic species
     Rich cultural heritage
     Organic produce
     Good transport infrastructure – airports and main roads
     Liberal visa regime
     Positive investment incentives

Weaknesses
     No Public-Private Partnership
     Lack of tourism research
     Deficient tourism statistical data
     No planned and coordinated marketing of the destination
     Lack of positive image in marketplace
     Balkan identity

     High air access costs
     Few destination management companies
     Weak and uncoordinated Tourist Information Centre Network
     Lack of road and information signs
     Limited tourism offers

     Much accommodation below market standards
     Accommodation classification system not fully implemented and not aligned to
     European levels
     Low quality spa treatment and accommodation facilities
     Very poor quality camping and caravan sites
     No national conference centre of international calibre
     Tourism and catering training not attuned to market needs

     Lack of interpretation
     Poor conditions of the natural heritage sites due to negligence
     Lack of rest areas on main roads
     Very poor waste management – individuals as well as public sector
     Insufficient environmental management and procedures, and implementation of
     laws
     Unequal spatial distribution of tourism attractions and resorts
     Seasonality




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Opportunities
     New, undiscovered destination
     Growing interest in nature, culture and heritage tourism
     Green and organic destination
     Rural/village tourism
     Village architecture and traditional customs and agriculture as basis for rural
     tourism
     Activity and adventure tourism
     Low cost carriers and fly drive tourism
     Independent motoring tourism
     EU candidate country status as stimulus to investment and interest in visiting
     Gain UNESCO World Heritage Site status for heritage sites
     Regional and EU conferences up to and after EU accession
     Transit corridors
     Regional and cross border cooperation
     Abolish passport requirement for all EU states


Threats
     Increase in environmental abuse destroying the destination’s pure image
     Regional competition
     Resurgence of ethnic rivalries
     Region’s unstable image
     Political disinterest
     Strategy not implemented




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                                       PART III

             THE WAY AHEAD – STRATEGIC DIRECTIONS

9.     Tourism Products and Services

For sales to be achieved the tourism product must be developed to a standard
that meets visitor expectations, be presented as an attractive, “not to be
missed” opportunity, and provide a quality, value for money experience.

The review and analysis of tourism products and services presented in Part
Two of this strategy indicated the deficiencies in products, which should be
addressed in order to meet market needs.


The review and analysis of tourism products and services presented in Part II of this
strategy indicated the deficiencies and gaps in product, which should be addressed in
order to meet market needs.

Below are listed key recommendations of action that should be taken to establishing
quality, contemporary market oriented tourism products and services. This comprises:

       Suggestions for the development of Iconic Attractions
       Recommendations regarding the shaping and presentation of current and future
       products to make them appropriate to and accessible by the market
       Specific development requirements.

9.1    Iconic Products

Unlike many countries (France with the Eiffel Tower, Italy with the Coliseum, etc.) the
Republic of Macedonia does not have a single iconic product or attraction with which the
country is associated. It is clearly not practicable to create an iconic attraction, which
would rank with such high profile tourism magnets as exist elsewhere.

The two key strengths of Macedonia as a tourism destination are its Cultural and Natural
Heritage. It is possible to develop a number of small to medium scale iconic products that
link in with these heritage assets. These can be used to attract media attention and
develop awareness that Macedonia, albeit a small country, has a range of special and
interesting attractions.

Lake Ohrid is already designated a World Heritage Site by UNESCO. This identifies it as
being in the top league of the world’s attractions, yet not much promotional use has been
made of this accolade. It is recommended that additional World Heritage Site status
awards are actively sought for other tourism “products”, and that they are used to
spearhead the destination image building activity.




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The Markovi Kuli at Prilep has been proposed as a World Heritage Site and identified for
special attention in the National Development Plan. Prilep already has other (though
under developed) tourist attractions such as its Tobacco Museum and the Treskavec and
St Michael Archangel monasteries. It is also strategically placed near the Corridor VIII
route. A World Heritage Site accolade could greatly assist in putting Prilep on the tourism
map and help create an additional centre for tourism.

A similar strategy is recommended for the north east of the country, which currently has a
number of uncoordinated tourist attractions and appeals. There is debate about the NASA
claim that Kokino is a significant pre-historic observatory. Certainly the use of the site as
an observatory is not evident to the casual visitor and it would need considerable
interpretation to become a major tourist attraction. However, pursuing a claim for
international recognition would in itself generate publicity and interest in the area.




                                           Kokino

The Neolithic site at Cocev Kamen is more impressive offering a range of visual appeals
and sense of drama to visitors. There are claims that it contains the oldest theatre in the
world. That is something to bring to the world’s attention. It is clearly a unique destination
with great tourism potential, which could be best fostered by focussing the spotlight of
World Heritage Site status on it.




                                        Cocev Kamen



The Republic of Macedonia is rightly proud of being the birthplace of Mother Theresa and
this is reflected in a small museum, statue and demarcation of her birthplace. Far more
benefit could be drawn from the association of Mother Theresa with Macedonia if, instead
of simply identifying the location of her birthplace, the house were re-built on the spot and
devoted to an inspirational portrayal of her life and works and legacy.

Iconic Natural Heritage attractions can be more difficult to develop as they have potential
environmental implications. Also the uniqueness of the natural attractions can often be of
minority appeal. However, the Republic of Macedonia does have a unique natural asset


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that could be developed for tourism with limited environmental impact and possibly greater
conservation potential. That is its concentration of butterfly species, said to be the
greatest in Europe. In a number of countries Butterfly Farms have become a sustainable
combination of visitor attraction and research and breeding establishments for butterflies.
It is recommended that consideration be given to such a development in the Lake Prespa /
Galicica National Park area, which could be of significant interest to visitors to the south
west lake area and in transit along Corridor VIII.

One of the unsung benefits of the Republic of Macedonia is the availability of organically
produced food. Intensive farming techniques introduced in order to increase the quantity
of production may threaten to reduce the organic sector. There is an increasing demand
in Western Europe for organically produced foodstuffs, a demand which far exceeds
supply. This is an opportunity for Macedonia’s agricultural sector where large scale
production is often difficult to achieve.

The relevance of this to tourism is that the appeal of the destination would be greatly
enhanced if it can position itself as an organic destination offering high quality, locally
produced organic foodstuffs, particularly in its rural tourism sector. It is consequently
recommended that the ministries of Economy and Agriculture collaborate to develop the
organic food sector, produce a suitable brochure and web presence. Positioning
Macedonia as a “green” tourism destination may be a major challenge but one worth
giving serious consideration.

9.2    Product Presentation / Development

The tourism destinations and products in Macedonia have developed over many centuries
as a combination of geographic features, historic trading routes and human settlements.
The resultant product range has evolved into a series of
       Resorts, or tourism destinations, where visitors come to have a rest
       Transit routes for visitors on Balkan tours or simply passing through the country
       Itineraries within the country for those exploring elements of the product offer
       Special interest activities

o Resort and Tourism Destination Product Presentation

The resorts are frequently close to major gateways, such as Skopje and Ohrid, but can
also be more remote provided they offer a strong reason to stay. So winter sports centres
like Popova Shapka and spas like Debar are also resorts. Even smaller products can be
considered as resorts, such as rural tourism destinations like Brajcino and Lake Gradce.
The success of resorts depends on their offering a strong core reason to visit and plenty of
additional tourism offerings – sites, excursions, entertainments and other activities – to
retain and engage the visitor.

There are parts of the country which are under developed and undersold as a result of not
succeeding in making their range of attractions well known. In order to be successful a
tourism destination needs:

       Good access
       Accommodation and catering appropriate to its visitors’ needs
       Attractions
       Excursions


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       Activities
       Entertainment
       Marketing

As an example of a location with potential one might take Kratovo, which already,
according to the welcome signs at the entrance to the area, positions itself as a centre for
Alternative Tourism.

Does Kratovo have the elements to succeed as a tourism destination?

Access

Kratovo is off the beaten track. Not on a main road, but served by good quality roads.
Historically it was more important and had a bigger population than Bitola or Skopje, but
the decline in its importance as a mining area has meant it has been by-passed. This is
both good and bad. Much of Kratovo’s heritage has as a result remained unspoilt and
constitutes much of the current attraction to the area. There is also a need for new
economic activity, which tourism could bring.

Accommodation and Catering

Kratovo has one hotel which is not currently operational and will need a major investment
to bring it up to modern standards. This might suggest that the town is a non-starter as a
tourism destination, as current visitors have to lodge in the monastery of St Joakim
Osogovski at Kriva Palanka or in Kumanovo. However, there is a large resource of
potential overnight accommodation in Kratovo itself, which could be coordinated. There
are also a number of good local restaurants, so visitors’ evening meals are already catered
for. There is a café culture atmosphere to the town enhanced by its scenic layout and
wealth of heritage buildings, which make it a potential magnet for tourists who seek a
guest house or traditional home style accommodation away from big cities and resorts.

Attractions

The town itself has many heritage attractions such as its defensive towers and ancient
bridges. There also remain many old streets and shop fronts, which have visual and
atmospheric appeal. In larger towns a simple map locating the attractions – large and
small – can be of great assistance in ensuring the visitor does not miss some hidden
treasures. This ensures greater enjoyment of the visit, a longer stay and more
opportunities for foreign expenditure.

In still larger towns, such as Skopje, guided walking tours at scheduled departure times
from, for example the Tourist Information Centre, can improve the visitor experience
further.

Excursions

There are a number of attractions in the vicinity, including:
       Lesnovo – St Gavril Lesnovski Monastery
       Lesnovo – Millstone quarry caves
       Kuklica – Stone Dolls geological attraction
       Banje spa waters


                                                                                        153
       Cocev Karem Neolithic site
       Etc.

These attractions themselves can individually or in combination form excursions. Further
afield for day trips are locations such as the popular St Joakim Ososgovski Monastery and
Kokino prehistoric site; the archaeological sites at Morodvis and Vinica; and Gradce Lake.

Activities

Hiking is the primary local activity. There is also hunting and fishing locally.

Additional activities could be developed around agricultural production such as cheese and
honey. Similarly traditional local cuisine could be featured in cooking classes.

Entertainment

There are active folk groups, which can be organised for performances to, and interaction
with, tourist groups.

Marketing

The enthusiasm of the local authority for its region’s tourist attractions is evident. Advice
needs to be given to identify the appropriate direction in which this enthusiasm is
channelled.

Kratovo, as one example, would seem to have almost all of the requisite elements to
become a tourism centre. However, it needs direction, leadership and channelling of local
resources if this is to be achieved and an attractive menu of possibilities presented both to
Macedonia Destination Management Companies and to potential visitors.

It is usual for the local authority to undertake this product presentation work and to develop
the publicity materials and possibly local signage (see “finger post” signs introduced in
Ohrid to indicate attractions).

o Transit Routes

Transit routes frequently link major resorts and generally use main thoroughfares. Visitors
in transit can be encouraged to expand their trip in various ways. Firstly, by encouraging
the use of alternative and more interesting routes such as Ohrid to Gostivar via Debar and
the Radika Valley rather than via Kicevo, for example. Secondly by emphasising the “not
to be missed” attractions on main routes – Stobi on the Gevgelija to Skopje route for
instance.

Road signage, as well as publicity material, is a method to encourage these forms of
diversion. Just as heavy goods vehicles can be directed to appropriate roads through
signposting, so visitors can be advised to take a “scenic route”.




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o Tourism Itinerary Product Presentation

There are many attractions that the motoring visitor is unaware of and can miss through
lack of information. This is where suggested itineraries have a major role to play. An
itinerary can take several forms. It may be an extended circuit off the main roads from a
central point encompassing a range of attractions and including diversions to remote
locations and also possibly activities such as walks. Alternatively it may be a scenic route
between two points avoiding the main road.

The development of itineraries offers much more scope for innovation and is of particular
interest to today’s more independent and enterprising visitors. Itineraries can be
developed based on many criteria. They could concentrate on cultural or religious
heritage or feature a variety of attractions and activities, perhaps based on a certain style
of accommodation. They have the advantage of being able to take visitors off the main
routes and achieve regional spread objectives.

The concept can be extended further into a themed trail, such as the Tikves Wine Route,
which seeks to link a network of attractive locations and may eventually feature specific
Wine Route signage.

Such itineraries may be developed by local authorities, car rental companies or by the
Agency for Promotion and Support of the Tourism. They can be promoted in a variety of
ways:
       Simple maps available at local TICs and in local hotels and guest houses and at
       car rental companies
       As suggestions on the ExploringMacedonia website

o Tourism Activity Product Presentation

Special interest activities, such as winter sports, may take place in more traditional resorts
but are more likely to take visitors away from the main tourism areas – hiking, bird
watching, extreme sports and hunting are examples. These niche markets are particularly
valuable for achieving both regional and seasonal spread objectives and frequently involve
rural tourism. Their participants are relatively easy to identify, as well as specialist
operators active in their fields, so presentation of an attractive offer has good chances of
success.

The potential visitor who likes to hike, mountain bike or bird watch, for example, needs far
more information and assistance than to be told that there is good mountain biking at
Krushevo, exhilarating hikes all over the country and excellent bird watching in Prespa and
Tikves. Much more detail is needed both to stimulate the decision to make a trip to pursue
the activity and in order to plan the trip.

Often specialist activities are developed by groups of local enthusiasts, who are happy to
share their expertise with visitors even though there is no specific commercial interest on
their part. It falls both to local authorities and the Agency for Promotion and Support of the
Tourism to work with these groups to prepare the activity product into a “market ready”
format. More commercial specialist sports such as gliding including pilot training can be
projected directly by the operators as value for money options for foreign guests via the
internet and foreign sports clubs.



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In the case of bird watching this may be assembling details of the “what, when, where and
how elements” – listing prime bird watching sites, species and the best time to view them,
viewing facilities, local contacts for access, assistance, information and possibly
accommodation.        This information is required for individuals and for specialist
organisations – clubs and tour operators – to promote visits. Preparation of this data may
also indicate the need for some physical development requirements, such as bird watching
hides, parking, toilets, etc.

The same sort of process is required for other activities – maps and trail details identifying
duration, difficulty and points of interest as well as marked trails for the hikers and bikers,
bike rental facilities and so on. Again these can be used by tour operators as well as
individuals.

Publicity distribution channels for activities include:
        Local outlets such as TICs and accommodation
        Destination Management Companies for inclusion in their package proposals
        Special sections in the ExploringMacedonia website, and
        Specific publications and campaigns run by the Agency for Promotion and Support
        of the Tourism – “Hike Macedonia”, etc.

9.3      Tourism Product Development Recommendations

o     Accommodation

There has been a slight decline in recent years in the number of bedrooms available in the
registered accommodation sector. However, demand has not fully recovered since the
troubles of 2001 and what little occupancy data is available would suggest that there is
plenty of spare capacity in major centres for most of the year. Certainly in the lake resorts
there is very high occupancy for two months of the year in the summer and much pressure
on grey sector accommodation at that time. However, given the very low occupancy
achieved for the rest of the year a major expansion of rooms would be difficult to justify
economically.

What is clear is that the accommodation stock is well below the standards demanded by
the current market. The number of rooms in the one and two star range far exceeds
demand and upgrading or withdrawal from the tourism market is required. Many one and
two star properties may not physically lend themselves to upgrading due to the size of
bedrooms. These may be candidates for conversion to student accommodation or other
alternative uses. Any reduction in room capacity resulting will be made up for by the
construction of new properties more aligned to market requirements.

o     Quality Pension Style Hotels

Special attention should be paid to supporting the development of small family style hotels
that could provide flexible accommodation responding to the needs of the market. The
creation of such a pension style hotels should be encouraged in smaller and developing
tourist destinations, especially outside the big urban centres.

Such pensions should feature the traditional culture, folklore and gastronomy of the
country in their design, décor and preferably organic catering. They should have 10-20
rooms and would most likely be family operated. This will help solve the deficit of the


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accommodation establishments in the areas, which have great potential of tourism
activities, but no accommodation facilities.

o   International Hotel Brands

The presence of international hotel brands is highly desirable, not only for accommodation
purposes, but also to generate confidence in the general quality of accommodation on
offer. One or two quality international hotel brands can alert other investors to the
opportunities in the country. Major hotel brands also provide considerable advertising of
the destination. These hotels will also set standards for accommodation, which should
gradually be transferred to the local accommodation capacities. These brands can also
assist in improving the capacity in hotel management and HR in general connected with
providing high quality accommodation related services. The quality international hotel
chains should be considered for bigger urban areas (possibly only Skopje) where the
circulation of people is higher.

o   Budget Hotel Brands on Corridor Routes

There is a trend in Europe towards inexpensive functional accommodation provided on
main routes or the outskirts of main towns. This is primarily for travellers in transit and
commercial business travellers. These budget hotels minimise the role of staff, have low
running costs and creates almost self-service hotel atmosphere. On the two most
important corridors, E-10 and E-8, accommodation establishments of this type should be
established.

International brand budget hotel operations should be sought as these will provide
requisite reassurance to long distance travellers of the quality standards provided. Suitable
locations on the main routes need to be identified and investment proposals submitted to
major hotel groups.

o   Feature Monastery Accommodation as Special

Monastery accommodation as a unique experience should be further developed. This is a
tourism experience with great potential not just to pilgrims, but to other culturally aware
visitors. In order to bring the existing monastic accommodation product to market, it needs
to be presented jointly, rather than independently as at present. A cooperative of
monastery accommodation needs to be developed with a consolidated listing – print and
website - giving full details of capacities, facilities, monastic obligations, prices and booking
procedures.

o   Lake Ohrid - Seasonality

Lake Ohrid, as the largest lake tourism area, reaches its capacity in the summer months.
The priority here is not to increase the accommodation capacity as additional summer
visitor numbers are likely to be detrimental to the intrinsic appeals of the resorts. Special
attention should be paid to spreading the season and filling the accommodation capacities
all through the year.

Action is already underway to develop the Lake Ohrid area as a year round hotel based
conference destination. This should be further developed through the development of
better equipped and more flexible conference facilities. Given the relatively difficult access


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to the area from longer haul markets, it is considered that this conference business will
remain regional and relatively small scale. The development of a large scale purpose built
conference venue is not therefore advocated.

There are currently a large number of events staged during the summer season. More
concentration should be placed by the local municipalities on creating and expanding
shoulder season events, which have the potential to attract visitors for more than a day.
These may well be cultural events and also seek to enhance religious festivals. To
contribute to the lengthening of the season festivals and events should be organised
during the non-peak periods.

o   Accommodation Categorisation/Classification

Currently the Ministry of Economy’s Tourism and Catering Department does not have the
manpower resources to implement the accommodation categorisation system effectively.
It is recommended that annual registration/licensing fees should be introduced to cover
annual registration and star classification of hotels inspection costs, which should be
applied directly to the administrative overheads of the inspectorate. This should permit
expansion of staff numbers as and when accommodation stocks increase. Such a fee
would not be applied to Bed and Breakfast accommodation.

The criteria need to be reassessed. In particular quality elements should be added to the
criteria in order to give a more realistic assessment of the experience the tourist can
expect.

o   Regularise Grey Market Accommodation

The accommodation service providers are obliged by the law to register all tourists and
collect the tourism tax, which is transferred to the municipality and government. Most of
the private accommodation establishments do not register the tourists and avoid payment
of the tourist tax.

The grey market accommodation needs to be regularised urgently, not just to decrease
tax avoidance, but also to ensure that standards of accommodation are provided. This is
currently a local authority responsibility.

o   National Parks

The National Parks large potential for tourism activities is not fully exploited. Pelister
National Park has developed a tourism related business plan and is already seeing the
benefits. The other National Parks should follow this example. There is a need to build
two initial visitor interpretation centres, up to 20 new mountain huts and upgrade up to 30
existing mountain huts and workers’ and children’s accommodation in the national parks.

The Prespa Park region has significant tourism potential and is considered as an
ecosystem of global significance. There are a number of tourism projects underway in the
region that will improve the natural heritage in the region. Cross border implementation on
an integrated basis is vital to its future




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o   Wine Tourism

Wine tourism is an emerging concept in the Republic of Macedonia developed principally
by the Tikves Wine Route Foundation. This should be seen as a form of rural tourism with
a wine theme. Apart from visits to wineries for tours of production facilities and tastings it
should include a total immersion in the rural environment in a largely wine producing area.
This means offering a menu of visitor options including scenic itineraries, activities such as
walking, cultural visits and cuisine as well as the winery aspects.

The Foundation is pursuing development of this menu of options, but will need additional
assistance in aspects such as signposting and marketing. The wine tourism offer should
be featured by destination management companies and as a separate rural tourism
feature of Macedonia on the ExploringMacedonia.com website. The Tikves project can be
replicated in other wine regions.

o   Rural Tourism/Hiking Tourism

Although there is already much tourism in rural areas, only one rural tourism destination –
Brajcino – can be said to be currently “operational”. Brajcino is an excellent example of
the challenges that need to be overcome, the benefits resulting and on-going requirement
for publicity and efficient operations. Other potential rural tourism locations have been
identified and development is proceeding - Zrnovci, Pehcevo, Berovo, Kolesino, Bansko,
Mokrino, Smolare, Vevcani and Galichnik.

These projects will need municipality, Ministry of Agriculture/IPARD and NGO support.
They will also require joint publicity through the Agency for Promotion and Support of
Tourism in respect of joint promotional material, website publicity and media and tour
operator visits.

Associated activities such as access to the rural landscape through hiking and walking
also need to be addressed and supported by the above actions but additionally require to
be assited through the publication of a suitable brochure/map with trails of different
length/difficulty etc and a website providing much supporting information.

o   Culture Tourism and Handicrafts

The responsibility for the preservation and enhancement of cultural events, activities and
artefacts lies with the ministry responsible for culture and other cultural related authorities.
It is not the responsibility of the tourism sector. Tourism has a responsibility to ensure the
cultural treasures of the country are not damaged in any way by tourism activities.

However, tourism can have a significant impact on the survival and enhancement of
cultural activities and products through providing an additional income source and through
providing a platform and audience for the presentation and exhibition of cultural
performances and artefacts as well as participation in cultural activities. There is also a
responsibility on the tourism organisers to ensure that the experience being offered to the
visitor is authentic and of quality.

Existing festivals and performing arts events will have an existing domestic audience and
support. Initially the Agency for Promotion and Support of the Tourism should identify
festivals that could be considered to be of interest to foreign tourists for inclusion in a


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published calendar of events. Efforts should be made to facilitate partnerships between the
organisers of such events with commercial tourism promoters and tourism workers. The
grouping of a series of events in a circuit or as being complementary to one another will
facilitate packaging for a more complete visitor experience.

o   Traditional Crafts

The following is a range of crafts that have a potential as souvenirs and that could be
incorporated into the proposed Craft Centres where craft making is on public view and the
crafts are for sale to the public. This includes woodcarving products, icons, painted
weavings and pottery products.

       Woodcarving and icon painting

Woodcarving is one of the older handcrafts with a deeply rooted tradition. The existence of
a number of woodcarvers’ guilds around the Republic of Macedonia confirms that it is still
a live craft.

       Weaving

Weaving (carpets, covers and other) and in this context, the traditional wool processing
(spinning, rolling etc.) is an important part of the local traditions. However, while the tools
for weaving are still in existence, in many households the actual weaving is very rare as
industrial products have overtaken traditional methods.

       Pottery

Pottery is a craft that exists in many regions of the country and has not been totally
overtaken by industrial production. With the existence of some societies and associations,
this craft sector has good potential for development within and outside the craft centres.

       Wood Carving

Wood Carving is still strong as a handcraft particularly in the private sector with small-
scale workshops. Some of these workshops might be highlighted and assisted with
promotion provided they showcase the actual making of the products as a visitor
experience and attraction.

       Barrels

Although barrel making was more widely present in the past, it still persists in our times
even in the present condition of its decreased production range. The traditional quality
and the recognised characteristics of this type of handiwork still persist. There are a
considerable number of workshops, which still make products of this kind.

This type of craftsmanship is mainly characterised by commercial objects, mainly used in
the production and storage of alcoholic beverages (barrels etc.), and those used as
souvenirs, and have their own representative look.




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It is expected that some of these products will be promoted in the domain of souvenir
making or in the production of locally recognisable packaging for local products such as
honey, alcoholic beverages, etc.

The visitors’ appreciation of handicraft products is greatly enhanced if they can observe
the making process. A Craft Centre situated initially in one of the main tourism centres
should be considered where craftsmen are invited to come and practice their craft with the
produce on sale in the centre. The centre should be a retail outlet for other crafts people
and where quality is promoted and test marketing is ongoing. Depending on the suitability
of the premises, locating the Craft Centre in the Tourist Information Centre would have
benefits for both.

The culture and crafts of the country can contribute to brand building of the destination. It
is proposed that craft and cultural images be used in the marketing materials for
Macedonia. In summary the recommendations are to:

       Position cultural activities and products to gain from tourism
       Produce an annual calendar of festival and cultural events
       Support partnerships between cultural outlets and tourism organisations
       Coordinate cultural experiences and activities to provide a more complete visitor
       experience
       Focus on quality and authenticity
       Initially select small number of model craft projects as pilots
       Use arts and cultural images in marketing

o   Develop Spa Tourism for Domestic and Regional Markets and Examine Potential
    for Medical Tourism

The Republic of Macedonia’s spas are mostly located in attractive, scenic locations.
Perhaps as a consequence access is not always easy. Although in a few cases
improvements are being made the overall quality of treatment and accommodation
facilities is very low. Spas are required shortly to decide whether they wish to be classified
as treatment centres in the medical sector or as tourist facilities.

It is well known that spa tourism is a rapidly growing sector of tourism. The Republic of
Macedonia has to determine whether it can provide an internationally competitive spa
product.

An initial assessment is that there is limited potential to compete in the international spa,
wellness, health and beauty market. This requires easily accessible locations with four
and five star resort hotels offering a wide range of spa, health and beauty treatments.
There is intense competition for the market from destinations with arguably better natural
resources in terms of water benefits, gas and mud treatments.

Consequently it is recommended that the spa sector in Macedonia should concentrate on
its local and regional market developing its facilities to a good three star level – with some
four star accommodation. The spa offer itself should also be re-presented as a health
rather than medical facility, emphasising invigoration, wellness and preventive benefits not
just cures. A market study should be conducted to identify suitable options for investment
and refurbishment action.



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Given the advantageous cost structure and high standards of certain medical treatments
such as dentistry which are available in Skopje and elsewhere there could be an
opportunity to attract a degree of medical related tourism, particularly from Macedonians
living overseas but also from regional and other international markets. However, a market
study needs to be undertaken to determine the scope and strength of this opportunity.

o   Camping and Caravan Sites-Total Refurbish for Domestic and Regional

The vast majority of existing camping and caravan sites need total refurbishment and
adaptation both for the domestic and for the regional market. The basic accommodation
units, as well as the whole establishment infrastructure need to be improved with a
completely new modern concept of a campsite. Consideration should be given to adopting
the popular Western European concept of tented campsites rather than the current
caravan accommodation. Without major investment, the current sites do not meet
European standards and cannot hope to attract that market.

Given the scenic locations of some campsites, consideration might be given to conversion
into permanent self-catering units in a well designed and well spaced park environment.

Further research to re-assess the market for camping and caravan tourists is needed in
order to select the most profitable and sustainable choice for the future of the existing
ones.

o Improved Interpretation of Heritage Attractions

The wealth of cultural and natural attractions and assets is evident. However, very few
can be easily appreciated as descriptions and interpretation of their content and relevance
is largely absent unless the visitor is fortunate enough to find a good guide.

Museums, archaeological sites, heritage and religious, attractions, show caves, national
parks and nature reserves and so on need to develop their communication with their
visitors. This will result in a more gratifying visitor experience, encourage longer stays and
greater spend. In different ways they all need to adopt the precepts of:

       Welcome
       Orientation, and
       Interpretation

The Welcome aspect refers assistance in finding the attraction though the provision of
details of location and opening hours on publicity material and actual sign posts to the site.
It includes the personal, or at least signed, welcome on arrival.

Orientation involves ensuring the visitor can find their way round the site, museum, church,
etc. and find all the salient elements. Signs and simple maps or floor plans are often
sufficient for this.

Interpretation is often the greatest challenge. The days when a tour guide would escort all
visitors round a heritage attraction are long past. Far more visitors are independent and
there are language barriers to overcome. Today’s visitor wants to be mentally enriched,
but is unlikely to appreciate an academic lecture. The trend is to education with



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entertainment. Various techniques can be adopted from simple multi-lingual descriptive
leaflets (often highlighting the “must see” elements) to audio guides.

It is recommended that the custodians of heritage sites seek assistance in adopting the
techniques most appropriate for their circumstances and that the Agency for Promotion
and Support of the Tourism with NGO assistance organises seminars to outline the
options and methods of implementation to curators.

o   Hunting

Hunting represents a potentially lucrative area for tourism development. There are three
clear lines of action that need to be taken:
            Stricter implementation of legislation to decrease illegal hunting and to exercise
            control over the legal hunting
            Increase in the stock of game through the opening/development of one or more
            reproduction centres
            More targeted marketing following the recommendations of a marketing study
            conducted into the hunting offer once game stocks are adequate and control is
            exercised.

o Conference Market

There is currently a healthy demand for small to medium sized conference facilities with
modern equipment for a range of domestic and regional meeting formats. These
conferences are catered for in the main hotels mostly in Skopje, but also in some other
regional venues. Many of the venues outside the capital look to the meetings market as a
means of generating valuable off-season business.

There is no directory of available conference venues, which can be promoted to domestic,
regional and foreign meeting planners and consequently the Republic of Macedonia does
not enjoy the image of a competitive conference destination.

As integration with the European Union approaches there will be many more meetings,
seminars and training course held in the Republic of Macedonia. The country will also
have the opportunity to bid for more international meetings of varying sizes. Although it
may be tempting to build a major national conference centre to cater for these potential
governmental, non-governmental and corporate events, the market potential and, in
particular, the configuration of large and small meeting rooms, catering and other facilities
required should be researched in advance.

It is therefore recommended that the Agency for Promotion and Support of the Tourism:

       Compile a directory of existing conference venues with full details of seating
       capacities in various configurations, equipment, floor plans and ancillary
       accommodation for promotion regionally and domestically in hard copy and through
       ExploringMacedonia.com
       Commission a study into the potential for a national conference centre, its optimum
       location and configuration together with funding options.




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o   Improved Destination Management Companies (DMC)

Despite there being over 180 travel operators licensed to offer inbound operations there
are only half a dozen active in this type of activity. This makes it difficult for the country to
capitalise on the relatively large number of specialist foreign operators, who might be
interested in Macedonia’s product offer. The skills of destination management companies
are largely acquired through practical experience, so it is not easy to increase their
number.

To assist the current destination management companies to expand their current
operations and encourage new companies to enter the market it is recommended that the
Agency for Promotion and Support of the Tourism research potential foreign operators to
identify individual contacts. It should then facilitate negotiations between them and
Macedonia destination management companies by organising familiarisation visits to
Macedonia and assisting DMCs make contact both through participation at a selective
number of travel exhibitions where pre determined appointments can be made and also by
staging sales missions to foreign operators’ own offices.




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10. Access and Infrastructure


To achieve all the Government’s economic objectives it is important to improve
the transport infrastructure, which will give a further positive impulse to all
economic sectors by providing strong transport connections with other
countries.

The air access is limited and uncompetitive, thus hindering tourism
development.


10.1   Air Transport

The Government’s working plan (2006-2010) states that its main priority is to achieve solid
economic growth. The Government seeks to achieve a higher percentage of employment
and living standards, by promoting better competition, bigger foreign and domestic
investments and full implementation of all structural reforms.

Expansion of air traffic will result with increasing of direct employment, not only in the air
transport industry, but also in other industries, especially in tourism. According to the
Government projections, at least 200,000 EU tourists might visit Macedonia by 2015, using
mostly air transport. This projection affects several important challenges.

The most significant guideline to meet the targets for EU incorporation of Macedonia is
successful implementation of the three phases of European Common Aviation Area
Agreement (ECAA). Among other things, this agreement will give the strongest boost to
tourism development. ECCA Agreement is the key element for air traffic development in
Macedonia and also one of the key elements for total economic development of the state.
This strategy therefore recommends the swift implementation of the three phases of the
ECAA Agreement:

   1. Making III and IV freedoms fully functional (all licensed airliners to be capable to fly
      to or from any destination in ECAA zone, without any frequency of capacity
      restriction)
   2. Liberalisation of the V freedom, and
   3. Liberalization of the rest of freedoms and total implementation of ECAA legal
      framework.

The whole implementation of ECCA Agreement will finally solve the biggest problem in
Macedonia air transport; that is the MAT monopoly. According to Article 4 of Protocol V of
the ECAA Agreement, the MAT agreement (veto on new competing services) should be
terminated immediately when the ECAA Agreement enters into effect. Instead of providing
any further monopoly controls to MAT, Macedonia should create an opportunity for MAT to
become a part of some bigger and more flexible regional (Balkan) joint venture air carrier.
It should be noted that MAT has recently liberalised its fares and its controls over
competing airlines that enter this market.




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Full implementation of the ECAA Agreement will also make positive effects in:

       amending agreement deficiencies for regular air traffic;
       the improvement of connections between Macedonia and main European hubs;
       stimulating competition;
       decreasing air fares;

Aviation Act should be amended in order to include some relevant provisions and provide
a legal base for enacting by-lays vis-à-vis ECAA regulations.
According to Ministry of transportation and communications, the full package of ECAA
legislation could be implemented by 2010. Then, the Republic of Macedonia will be part of
the fully integrated European market, with greater access to some 500 million potential
customers.

In order to foster the development of tourism the Government should also negotiate with
low-cost carriers in order to reduce the cost of travel to Macedonia and expand the route
network.
In the last few years the numbers of passengers handled by airports has been well within
their capacity. However, if growth projections are achieved by the end of this strategy
period (2013) the infrastructure improvements and expansions advocated in the National
Development Plan and National Aviation Strategy will need to be completed. The
extension at Skopje airport should be completed.


10.2   Road Transport

In order to facilitate the movement of tourists, whether for business or leisure, the road
transport improvements detailed in the National Development Plan need to be
implemented, in particular:

       Completion of all sections of the Corridor X (E-75).
       Completion of the “Corridor VIII” project (construction of modern complex road,
       railway, oil, gas and communication system) and its regional connection with
       similar projects in Albania and Bulgaria;
       Updating and retrofitting of all border points in the Republic of Macedonia etc;
       Construction of modern road services and restaurant facilities on the main cross-
       roads and other areas.

There are a number of regional and local roads (so called “tourists routes”), used by
tourists while travelling within Macedonia, where reconstruction, renovation, signposting
and modern rest areas are needed:

       Gostivar - Ohrid;
       Gradsko - Ohrid;
       Mavrovo - Debar - Ohrid;
       Ohrid - St. Naum (highest priority); and
       Ohrid - Resen (via Galicica Mountain).




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Several roads that lead to border points also need special attention (reconstruction and
tourist signposting):

       Ohrid - St. Naum (to Albania) (highest priority);
       Ohrid - Kafasan (to Albania);
       Ohrid - Bitola - Medzitlija (to Greece) (highest priority);
       Resen - Greek border near Prespa Lake; and
       Kumanovo - Deve Bair (to Bulgaria).


10.3   Tourism Road Signs

With an increasing proportion of visitors touring the country in their own vehicles the need
for signage to tourism attractions and facilities becomes more important. Currently the
incidence of internationally recognised brown tourism signs is patchy. The signs
themselves are frequently inconsistent and seldom conform to the internationally accepted
design, shape, style and use of symbols.

There are only a few examples of good brown tourism signage in the Republic of
Macedonia. One such example is that provided for the Stobi archaeological site. Shortly
after the Gevgelija border crossing on the main roads is the first of a series of signs
alerting the motorist to this attraction.




The authorisation and installation of brown tourism signs with white lettering and
pictograms according to European norms is normally undertaken by the Ministry of
Transportation and Communications on national roads and by local authorities for other
roads. There is a need to set national standards in order to ensure continuity of approach
and continuity of signage from national to local roads. It is accordingly recommended that
the Ministry of Transportation and Communications in conjunction with the Agency for
Promotion and Support of the Tourism establish nationwide criteria and prepare a
hierarchy of tourist directional and information signs. The Ministry of Transportation and
Communications should then designate the relevant local authorities to authorise and
erect signs locally.

The provision of brown tourism signs for "public" destinations such as natural attractions,
churches and monasteries, cultural attractions, etc. is usually a responsibility of the local
and roads authorities at their cost. However, it is increasingly common for signs for
commercial attractions such as accommodation, water parks, resorts etc. to be paid for by
the beneficiaries. This entails the introduction of an application and approval procedure. It
should also involve the approval of the design of signs and the specification for their




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manufacture even if the beneficiary is required to contract directly with an approved sign
maker and installer.




Actions on Road Signage

The Ministry of Transport and Communications should, in conjunction with the ministry
responsible for tourism, establish criteria specifying which attractions and services qualify
for the planting of brown tourism signs. Acquisition of existing computer design software
and the contracting of specialist consultancy advice in this process is recommended.
Guidelines included in the criteria will include specifications for:

       Types of attraction and facility qualifying for signs – e.g. historic churches,
       monasteries and mosques, national parks, archaeological sites, monuments,
       museums, etc. rated as of national or local significance, or by level of traffic to the
       location
       The text and symbols to be used including fonts, design and layout
       Shapes and sizes of sign dependent on location, type of road, visibility
       requirements based on speed limits in force, etc.
       Numbers of signs per destination dependent on its importance and the complexity
       of the road network
       Distances from road junctions and the carriageway where signs should be planted
       Manufacture including colours, reflective materials, quality and thickness of metal,
       posts, etc.

Guidelines for the implementation of the national brown tourism sign network should be
issued by the Ministry of Transportation and Communications to local Roads authorities
with recommendations for the development of signage throughout the local authority area
featuring "public" tourist attractions and facilities. These guidelines should either include
copies of the computerised sign design software or the option to access Ministry
assistance for sign designs. Authority to approve installation of brown signs in conformity
with national standards should be devolved to local authorities.




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       Samples of Brown Tourist Signs Conforming to International Criteria




10.4   Railway and Water Transport

Railway transport plays a very small role in tourism as the rail network does not reach the
main tourist destinations and regions and the trains are very slow. However, the Corridor
VIII railway (east-west) might open up some opportunities as it will pass near a number of
tourist destinations. Unfortunately, according to the Government railway strategy for future
development, construction of this very important corridor in Macedonia will not start until
2012.

With regard to water transport on Ohrid Lake, two specific issues should be addressed:

       A feasibility study for the operation of a regular boat service between Ohrid and
       Pogradec in Albania ;
       Construction of modern marinas in Ohrid (one for small boats and one for fast
       boats and yachts) in order to solve the serious mooring and maintenance
       problems, especially with respect to small boats.

10.5   Visa Issues

Even though the visa regime in Macedonia is very positive further steps are recommended
to assist with tourism development.


       While developing its computer system the Ministry of the Interior should explore the
       possibility of permitting on - line registration of all foreign guests by accommodation
       providers.




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11. Environment


The main environmental objective of the tourism development strategy is to
enhance the protection, promotion and management of natural heritage
attractions and general waste management. The present level of awareness of
the importance and implementation of environmental and heritage
management and climate change is weak.



11.1   Development vs. Protection and Management

Strengths:

       The favourable geographical position of the Republic of Macedonia in a central and
       crossroads position on the Balkan Peninsula.
       Fairly undiscovered and new destination for international tourists and the
       international tourist market.
       Mixture of Mediterranean, mountain and continental climates which produces a
       diversity of tourist activities and increases visits throughout the whole year
       Undisturbed nature and rich and unique biological, geological and landscape
       diversity which is becoming a rarity in many other countries.
       Tourist sites with high environmental standards
       High tourist potential of the existing and new proposed natural heritage sites
       Free access to open areas of forests, mountains, banks of rivers and lakes.

Weaknesses

       Unequal spatial distribution of tourist flow and unequal tourist promotion within
       tourist regions in Macedonia
       No clear regulations on management of natural heritage sites
       No management of natural heritage sites (except the three national parks)
       No activities or procedures for determining carrying capacity of natural heritage
       sites
       Improper and lack of signage to the natural heritage sites
       No reception facilities and no guides to the natural heritage sites
       Lack of consideration of the environment when nature heritage sites are visited and
       lack of implementation mechanism to prevent it.
       Weak image of the Macedonian natural heritage sites as tourist destinations
       particularly those which have very good potential but are still not promoted.
       No unified and no consolidated promotion of natural heritage sites i.e. the
       promotion is decentralised to municipalities
       Natural revalorisation in terms of assessment of the natural value of the natural
       heritage sites is needed
       Re-categorisation in terms of assessment of the protection status of the nature
       heritage sites is needed
       Improper institutional network among all institutions involved in tourism.
       Insufficient use of potential for tourist development –the natural as well as cultural
       values.


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       Insufficient development of eco tourism and spa tourism.
       Not fully implemented environmental and nature protection laws

Opportunities

       High interest in eco tourism worldwide
       Established regional and cross border cooperation for natural heritage site
       promotion as tourist destinations
       International appreciation of Macedonia as a tourist destination

Threats

       The position of the Republic of Macedonia in this region which is perceived as an
       unstable region (economically and politically)
       Regional competition from neighbouring countries
       Environmental deterioration
       No political will to understand and implement the concept of eco tourism and
       sustainable tourism development

11.2   Promotion

Enormous natural heritage assets such as undisturbed nature and rich and unique
biological, geological and landscape diversity which is becoming a rarity in many other
countries but the Republic of Macedonia possesses, endow the country with high tourist
potential. Promotion of the natural heritage sites on a National level is needed In order to
activate and utilise this potential thus enabling these assets to contribute to tourist
development.

The notion that the Republic of Macedonia’s natural heritage treasure is fairly
undiscovered by the international tourist market gives a strong incentive to national tourist
industry development, but only if proper promotion is enacted.

Targeted based promotion
The promotion of the natural heritage sites of the Republic of Macedonia must be based
on targeted tourist marketing. Namely, mountain and lake heritage should be targeted
where there is lack of it e.g. The Netherlands rather then e.g. Switzerland. The marketing
should be targeted towards specific interests of the tourist groups like birdwatchers or
birdwatcher societies with promotion of, for example, the Tikves and Ezerani Strict natural
reserves which have high ornithological value.

Current trends in eco tourism internationally, but also nationally, should be identified in
order to use Macedonia potentials towards the creation of eco tourist offers that will meet
the needs of international and national tourist demand.

For the national tourist industry promotion purpose it is viable to have a list with the nature
tourist assets of the specific natural heritage sites or nature sites which possess or might
possess tourist values. Thus it will create a clear picture and facilitate the creation of the
tourist product, a target oriented tourism marketing strategy and a source for promotional
material.


                                                                                           171
Tourism development in its commencing stages should be based on promotion of several
natural heritage sites with the highest tourist potential and management activities oriented
towards sustainable tourism. Thus they will represent flagship sites for the rest to be
promoted. The sites that can be promoted can be chosen from the list of natural heritage
sites list with high tourist potential. It should be taken into account that equal distribution of
the nature sites promotion within the state should be achieved if viable. Thus the
economic benefit will not be centralised in one place but dispersed.

Usually every natural heritage site is intrinsically connected with a certain belief or a story
from the local population. This indigenous knowledge about the site must be taken into
account when preparing the product. The signage in and to the natural heritage site is
also needed with clear directions to the site, prohibition or allowed activities and marking of
the zones of the site.

Attention should be paid to the further creation, as well as improvement and maintenance
of existing accommodation capacities, taking in to account the nature and environment
impact that they will cause.
An accent should be put on the quality of their services and structure of employees,
particularly those in direct contact with guests.

Seasonality
The mixture of Mediterranean, mountain, and continental climate gives the possibility of
tourist activities within the natural heritage sites throughout the whole year. This asset
should be taken into account along with the others for the promotion. Of course distinction
should be made for which period of the year a site can “reveal” its values.

Centralised Promotion

Almost every local community in the Republic of Macedonia with a natural heritage site or
sites within its territory has initiatives, activities, or projects aimed at the development,
marketing and promotion of these sites. These efforts, however, remain independent from
each other and there is a lack of coordination and information of the plans and activities to
the central Government i.e. Ministry of Economy Sector for Tourism. In order to have a
clear overview in the sector of the tourism and targeted plans and actions for developing
the strategy for Tourism, cooperation must be established between the local and the
central government. In order to commence the cooperation it is desirable to address a
questionnaire to the municipalities about their projects, plans, studies and actions for
natural heritage sites tourist promotion, protection and management. Field work is also
desirable to assess the natural heritage tourist values, its status of protection, and
management. The brochures and other marketing and promotion material from the local
governments can be utilised when promoting Macedonia’s Natural heritage but, of course,
with certain predetermined standards. The existence of sectors for Local Economic
Development within the Municipalities should be involved and at the same time be
initiators for such activities.




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Transboundary cooperative promotion

The management of the transboundary habitat network in the Republic of Macedonia is
lacking, although there are some efforts to link the national network of protected areas to
the networks of neighbouring countries through the different projects mainly for integrated
management strategies. One segment of these management strategies can be put in
place for integrated transboundary tourism development.           Examples of managed
transboundary natural heritage site projects are the aquatic habitats Prespa Lake with
Greece and Albania and Ohrid Lake with Albania but also some terrestrial natural heritage
sites such as establishing Osogovo Mountain with the Republic of Bulgaria as part of the
Green Belt (IUCN Initiative) and a joint project for habitat management in the Mavrovo
National Park with Albania.

The decrease of water and the simultaneous deterioration of the water quality have
serious ecological impacts. The ecological decline has a harmful impact upon economic
activities, including tourism, for the local population living in the Dojran Municipality. An
agreement on maximum and minimum levels of Lake Dojran made in 1956 has become
ineffective by the lake level falling below the controlling outfall structure for unsubstantiated
reasons. The most recent meetings have been at government level (July 2002) and at
technical level (September 2003). Although agreeing on exchange of information,
integrated studies, and working towards establishment of a Joint Water Management
Commission, these agreements have not resulted in active cooperation in river basin
planning or management of Dojran Lake

Joint transboundary planning and decision-making in the basin is needed in every natural
heritage site, especially the Dojran Lake.


11.3   Management and Protection

Management

Clearly defined and assigned responsibilities for the conservation and management of
natural heritage sites is needed as well as rules and regulations guiding tourist use of
protected areas.

The law which stipulates the management and protection of the natural heritage sites is
the Law for nature protection. Although having legal acts which clearly define the
management of the natural heritage sites as stipulated by the Law of Nature Protection
this issue has been only partly implemented in practice. The only natural heritage sites,
managed at a certain level, are National Parks and only National Park Pelister has its
Management plan and business plan created where ecotourism is one of the main
revenues to the park. Management plans should be created not only for the rest of the
national parks but also for all of the natural heritage sites as stipulated by the Law for
nature protection. Thus the pollution and any kind of environmental degradation will be
prevented or mitigated, especially the problem with solid waste and waste water, which
occur most often in tourist natural heritage sites in the country. Two concrete examples
are building a water treatment plant in Mavrovo Lake settlements or prohibiting the use of
fuel driven motor boats in Ohrid, Prespa and Dojran Lake.




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The low level of public and institutional awareness for the need of management plans and
protection of the natural heritage sites should be improved with training of the stakeholders
(entities responsible for management and protection of the natural heritage sites: MoEPP,
MAFWE, NGOs, professional institutions in the field of nature and environment protection,
etc).

More strong initiatives to the MoEPP proposing the designation of protected areas should
be expected from the Local self government, NGOs and professional bodies, which work
in the field of nature protection and promotion.

Protection

In the Republic of Macedonia there is lack of financial mechanisms or rules for the
sustainable use of protected areas.          This creates risks for ecosystems, limited
opportunities for profits for local communities, and small-scale contributions to nature
protection. One of the most sustainable approaches in nature conservation is creating
opportunities for economic growth and higher living standards for local communities
around protected areas. When people experience real benefits from protecting nature,
they start investing effort in it. A feeling of ownership of natural resources and the
decisions governing their conservation and sustainable use is an essential condition for
successful ecotourism development. Public institutions at the national level should
appreciate this, initiating a broad participatory strategic planning process at all levels -
national, regional, and local.




One of the biggest concerns towards successful natural heritage protection and promotion
is waste management. The issue with regard to protection is that if it is not managed
appropriately the litter generated is polluting and deteriorating the area. Another issue in a
tourism perspective is that it is destroying the tourism appeal of the natural heritage site.
This is the case in almost all natural heritage tourist destinations in the Republic of
Macedonia.

 This is due to the reason of unclear responsibility for the waste management of the site
(responsible entities must be determined for the waste management of sites. It can be
either the management entity of the natural heritage site or the municipality under which
the natural heritage site territory belongs).




                                                                                          174
Low environmental awareness of the visitors of natural heritage sites can be increased
with information leaflets or brochures for handling the waste along with a signage for the
appropriate places for dumping the litter.




The spatial development and land use are connected with tourism development in the
Republic of Macedonia and must be implemented in accordance with the spatial and urban
plans and conditions.

For every planned activity in nature, which independently or in joint action with other
activities might disturb the natural balance, a nature impact assessment must be
performed.

In the protection of natural heritage intrinsically important is the establishment of a national
monitoring system for biodiversity.

On a national level it is also important to make a re-evaluation and re-categorisation of
existing protected areas in order to be in compliance with the law of nature protection,
hence comply with the IUCN categorisation. This is needed in order to determine the most
appropriate level of conservation and protection measures, as well as management,
stipulated by the Law of nature protection.

The guidelines and methodologies that are going to be elaborated for certain nature
conservation activities (especially elaboration of management plans) are on the level of
sub-laws, and must be foreseen in the MoEPP activities for the near future.

Measures and Activities for Fire Protection

The extinguishing and localising of fires within the National Parks Galicica and Pelister are
very good examples of how one should react when forest fires occur. What is alarming is
the absence of early action for extinguishing or localising fire in the other natural heritage
sites since there is no management entity or fire management present.

One good example of General Prerequisites for the measures and activities for protection
of the Park from fire is as outlined in the management plan of the National Park Pelister:

       Regularly revise the multi-year Fire Protection Programme that includes a plan for
       maintenance and acquisition of equipment;




                                                                                            175
       Prepare Annual Fire Protection Plans for Pelister National Park following the multi-
       year Fire Protection Programme;

       Prepare a study on maintaining viability, biological diversity and dynamics of the
       processes of succession of plant and animal communities in the Park using
       ecological burning based on credible scientific research in the Park;

       Build special places for visitors’ fires

       Following the Fire Protection Programme appropriate recommendations and
       guidance regulating the behaviour of the visitors and the subjects providing
       services and performing economic activities in the Park shall be prepared and
       become part of the Regulation on the Internal Order in Pelister National Park

Fire Protection Recommendations:

       The management entity of the natural heritage site must incorporate fire
       management plans in the management plan of the area if the natural heritage site
       is susceptible to fire. This can be achieved in terms of establishment of a system
       of measures and activities for protection against fires and other natural disasters as
       stipulated by the law of Nature Protection.
       Annual programmes should be developed under the provision of the Regulation on
       Fire Protection (O.J. R.M. 9/89)
       Measures and activities for protection and evacuation of visitors from the areas of
       fires which might occur in the natural heritage sites must be set and enacted.
       Protect the nature area from fire by informing visitors of the precautions to prevent
       fires starting
       Signs explaining the restrictions or permits on the use of fire
       Restrictions on the use of fire such as:

       o   Fire may be prohibited entirely (fire prohibitions are implemented in periods of
           high fire danger, or in the strictly protected areas)
       o   Fire may be permitted only in designated sites
       o   Fire of a certain type may be forbidden (e.g. green wood or locally collected
           firewood)
       o   In high altitude situations, fire may be allowed only with stoves fuelled by gas.

       Evaluation of the damage caused by the fire must be determined and, based on
       the results immediate action must be made for the restoration of the Natural
       heritage site.


11.4   Plans, Studies and Strategies

Country Study for Biodiversity

The Country Study for Biodiversity (2003) reports that the network of protected areas in
the Republic of Macedonia includes 68 sites covering an area of 170,235 ha or 6.62 per
cent of the land surface. The status of protected properties by category is as follows:




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       Three national parks encompassing 108,338 ha or 4.21 per cent;
       Three sites of special natural character covering 2,338 ha or 0.09 per cent;
       14 areas outside nature reserves containing certain plant and animal species,
       2,709 ha or 0.10 per cent;
       48 natural monuments encompassing 56,850 ha or 2.22 per cent.

There is little information on the status or management of protected areas other than for
the three National Parks. It is difficult to recognise conservation priorities for each of these
protected areas' categories since they are not compatible with international system.
Country Study contains different proposals for protected area system compiled from
different sources, not revised and systematised.

National Biodiversity Strategy and Action Plan

The National Biodiversity Strategy and Action Plan (adopted 2004) include several
activities related to eco-tourism:

    a) Strategic approach C - Sustainable use of biodiversity
Action C.5 Promotion of traditional uses of biodiversity and eco-tourism,
Activity C.5.3 Identify and promote locations that are good for eco-tourism.
This activity should be focused on development of a list of eco-tourism locations and
promotion of their use
Plan for execution (2004-2008)

    b) Strategic approach F - Public awareness and education
Action F.1 Increasing public awareness
Activity F.1.1.4 Establish web-page about traditional uses of biodiversity for the
encouragement of eco-tourism
Plan for execution (2004-2005)

     c) Strategic Approach G - Impact Assessment
Action G.2 Strategic biodiversity impact assessment
Activity G.2.2 Conduct Strategic Environmental Impact Assessment (SEIA) for eco-tourism
development
Plan for execution (2005-2006)
Completed SEIA for the impacts to the environment from eco-tourism

      d) Strategic Approach H - Incentive Measures
Action H.2 Concrete economic measures for improvement of biodiversity conservation
Incentive measures for development of eco-tourism
Activity H.2.2.1 Promote the values of biodiversity to domestic and foreign tour operators
Plan for execution (2005-2008)
Establishment of small tourist attractions with appropriate infrastructure development
(information displays, signs etc.).
Activity H2.2.2 Introduce tax and customs incentives for economic and legal entities
concerned with eco-tourism development
Plan for execution (2004-2005)
Adoption of changes in tax and customs regulations in order to facilitate eco-tourism
development


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Even though adopted in 2004, the action plan has not been implemented for the activities
above which are connected to development of ecotourism. This in turn has a negative
consequence of the development of tourist industry in Republic of Macedonia

Second National Environmental Action Plan (NEAP)

The Second National Environmental Action Plan (NEAP) includes several measures and
activities related to eco-tourism:
         Preparation of pilot project: Basis for rural tourism development – village Brajcino,
         Prespa area / or village Maloviste, Bitola area;
         Preparation of Guidelines for sustainable rural tourism (good practice) – relation to
         rural development and agricultural production;
         Preparation of economic instruments and incentives for development of projects in
         targeted potential eco areas;
         Public awareness campaign addressing eco-tourism and cultural heritage.

These activities from the Second National Action Plan connected with tourism have not
been implemented although Brajcino village, throughout the implementation of the 2002
pilot ecotourism project, represents a good and first example of full sustainable nature
resource use income generating activity and a model for preserving the mountain villages
in the Republic of Macedonia. On the market side it has found its own place as an
attractive bed and breakfast offer in exotic places, promoting sustainable development.

11.5   Conclusions and Recommendations

   •   One of the main strengths for tourist industry development of the nature heritage in
       Republic of Macedonia are:
       o the undisturbed nature and rich and unique biological, geological and
          landscape diversity;
       o mixture of Mediterranean, mountain and continental climate;
       o favourable geographical position;
       o high tourist potential and environmental standard of the natural heritage sites;
       o free access to open areas of forests, mountains, lakes and rivers;
       o undiscovered and new destination for international tourists and international
          tourist market

       The promotion of the natural heritage sites of the Republic of Macedonia must be
       based on targeted tourist marketing
       Trends in eco tourism internationally, but also nationally, should be identified in
       order to identify Macedonia potential for the creation of eco tourist offers that will
       meet the needs of international and national tourist demand.
       For the domestic tourist promotional purposes it is necessary to develop a list of
       the specific natural heritage sites and nature sites which possess tourist values and
       which will create a clear picture and facilitate the creation of:
       o the tourist product
       o target oriented tourism marketing strategy
       o sources for promotional material




                                                                                          178
Tourism development in its initial stages should be based on promotion of several
natural heritage sites with the highest tourist potential and activities oriented
towards sustainable tourism
Indigenous knowledge in/about the site must be taken in to account when
preparing the product
Signage in and to the natural heritage sites is necessary with clear directions to the
site, prohibition or allowed activities and marking of the zones/scope of the site
Creation of new accommodation, as well as improvement and maintenance of
existing capacities, is necessary, but must take in to account the nature and
environment impact that they will cause
Reception facilities and professional guides are needed in natural heritage sites
In order to have a clear overview in the tourism sector and to develop targeted
plans and actions for Tourism development, cooperation need to be established
between the local and the central government throughout:
o addressing a questionnaire to the municipalities regarding the promotion,
    protection and management of existing or planned natural heritage tourist sites:
    a) projects
    b) plans
    c) studies
    d) and actions
o Field work to assess the natural heritage sites:
    a) tourist values (e.g. aesthetic beauty, uniqueness etc.)
    b) environmental values (e.g. unpolluted clean environment etc.)
    c) ecological values (e.g. high biodiversity and endemism of species etc.)
    d) status of protection and management (e.g. national park, monument of
        nature etc.)
o Utilisation of brochures, internet sites and other marketing and promotion
    material prepared by the municipalities when promoting Macedonia’s natural
    heritage
o Joint transboundary planning and decision-making for the natural heritage sites
    tourist development and protection. This is needed especially in the Dojran,
    Prespa and Ohrid region.
Clearly defined and assigned responsibilities for the conservation and management
of natural heritage sites as well as rules and regulations guiding tourist behaviour in
protected areas.
By prudent implementation of management plans the pollution and any kind of
environmental degradation should be prevented or mitigated, especially the
problem with solid waste and waste water which occur most often in such tourist
and natural heritage sites in the country.
Issues of climate change need to be addressed in all future development and
tourist practices
The low level of public and institutional awareness for the need of management
plans and protection of natural heritage sites should be improved with training of
the stakeholders (entities responsible for management and protection of the natural
heritage sites):
o MoEPP
o Local self-government
o MAFWE
o NGO
o Professional institutions in the field of nature and environment protection, etc)
o tourist organisations


                                                                                   179
More strong initiatives proposing the designation of protected areas to the MoEPP
should be expected from the:
o Local self government
o NGOs
o Professional bodies which work in the field of nature protection and promotion.
Tourism carrying capacity has to be determined by the management authority for
every natural heritage site when used for tourism
Important for nature conservation in protected areas is the creation of opportunities
for economic growth and higher living standards through tourism development for
local communities (when people experience benefits from protecting nature, they
start investing effort in it and act like stewards)
Responsible entities must be determined for the waste management of sites; it can
be either the management entity of the natural heritage site or the municipality
under which territory the natural heritage site belongs to.
Low environmental awareness of the visitors of the natural heritage sites must be
increased with information leaflets or brochures for handling waste along with
signage for the appropriate places for dumping litter.
The spatial development and use as connected with tourism development in the
Republic of Macedonia must be implemented in accordance with the spatial and
urban plans and conditions.
For every planned activity in nature, which independently or in joint action with
other activities might disturb the natural balance, a nature impact assessment must
be preformed, a limit of acceptable changes to be established and carrying
capacity to be determined.
In the protection of natural heritage intrinsically important is the establishment of a
national monitoring system for biodiversity by the MoEPP
In order to determine the most appropriate level of conservation and protection
measures, as well as management, stipulated by the Law of nature protection at
national level it is needed to undertake:
o re-valorisation in terms of assessment of the natural value of the existing and
    proposed protected areas
o re-categorisation in terms of assessment of the protection status of existing and
    proposed protected areas in order to be in compliance with the law of nature
    protection, and hence comply with the IUCN categorisation
Guidelines on Biodiversity and Tourism Development developed within the
framework of the Convention on Biological Diversity must be taken into
consideration as a comprehensive instrument in order to achieve more sustainable
tourism development.
Tourism carrying capacity must be assessed in each and every natural heritage
site.
Implementation is needed of the actions specified in the National Biodiversity
Strategy and Action Plan.
The measures and activities related to eco-tourism included in the Second National
Environmental Action Plan must be implemented.




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12. Marketing and Targets for Growth

“Marketing is the administrative process whereby customer needs are
identified, anticipated and fulfilled profitably”.

The Republic of Macedonia has an abundance of the agricultural products a
successful tourist destination requires. The country needs to develop and
present them as a quality product offer and then communicate them effectively
to its potential visitors.

The following marketing strategy signposts the road to successful marketing
of Macedonia as an attractive tourist destination.


12.1   Targets 2009-2013

Targets – Foreign Visitors

In its ‘2020 Vision’, the UNWTO forecast an annual average growth rate for inbound
tourism to Macedonia of 4.0 per cent p.a. from 2000 to 2010 compared to a rate of 4.3 per
cent for the Balkans in general. This forecast did not anticipate the internal conflict of
2001, which more than halved the number of arrivals. Although there was a rapid recovery
after 2001 in terms of accommodation registrations, it has taken until 2007 for foreign
visitor registrations in accommodation to match the 2000 level. The rapid recovery also
slowed in 2006 to an annual increase of only 2.6 per cent but recovered with a 14 per cent
rise in 2007 and was maintained by a solid 10.8 per cent growth in 2008 despite the
background weaker international economic situation which is starting to influence travel
decisions.

In view of the recent strong registrations performance in 2007 and 2008 and in recognition
of the significance which the international economic slowdown will have for the next two
years, (and bearing in mind the current low level of promotional activity by Macedonia in
foreign markets, particularly when there is increased publicity from competitor destinations
such as Serbia, Montenegro and Bulgaria), it is considered that the average annual growth
forecast is only likely to be marginally higher, at 5 per cent, than the UNWTO 4 per cent
average for 2009 and 2010. However, provided the restructuring and coordination of
marketing activity recommended in this strategy is implemented promptly, growth should
improve as the wider economic climate strengthens from 2011, reaching an on going level
of 8 per cent annual growth from 2013 onwards as shown in Table 12.1 below.

Due to the current imprecision of the data emanating from border crossing statistics, it is
considered best to set targets on the basis of accommodation registrations for which there
is a more reliable set of historical data and these are used in Table 12.1 below.




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         Table 12.1: Target Foreign Visitor Accommodation Registrations 2008-2013
                            2008*     2009      2010    2011      2012      2013
        Accommodation 254,957 267,705 281,090 297,955 318,812 344,317
        Registrations
        Annual increase
                             10.8      5.0       5.0     6.0       7.0       8.0
        %
       * Actual           Source: State Statistical Office and UNWTO Consultant Estimates



The past trend has been for overnights to increase and decrease very much in line with
accommodation registrations. Although it is an objective to increase the length of stay of
leisure visitors, it is likely that this will be offset by an increase in shorter duration business
trips. Consequently the overnights target is set at the same rate of increase as for
registrations except for 2008 where the estimate has been based on the availability of data
for that year. Table 12.2 below presents the target assumptions and resultant forecasts.

      Table 12.2: Target Foreign Visitor O’nts in Registered Accommodation 2008-2013
                           2008*      2009      2010      2011    2012      2013
       Overnights         587,447 616,819 647,660 686,520 734,576          793,342
       Annual increase
                            13.4       5.0       5.0       6.0     7.0       8.0
       %
     * Actual           Source: State Statistical Office and UNWTO Consultant Estimates



Targets – Domestic Visitors

Setting targets for domestic tourism is much more problematic. Growing affluence on the
one hand is likely to stimulate additional day-off taking – second and third holidays,
particularly short breaks. This will generate more demand outside of the peak summer
season, particularly for winter holidays. On the other hand, however, if and when visa
restrictions are relaxed on outbound travel this will reduce both the cost and hassle of
foreign travel. Then a significant increase in foreign travel can be predicted as
Macedonians’ pent up desire to visit other countries and friends and relatives abroad can
be fulfilled more easily. This should result in a decrease in peak season demand for
domestic holidays and a corresponding increase in outbound travel over the summer
months.

The net effect of this is likely to be a slower increase in domestic registrations and
overnights of about 3 per cent per annum, in the medium to longer term. Immediately,
however, it is not considered likely that visa restrictions will be lifted soon and short term
international economic weaknesses may stimulate greater domestic holiday taking
particularly by those Macedonians who might have travelled outside the country. Thus the
targets for domestic visitor registrations and overnights shown respectively in Tables 12.3
and 12.4 below, demonstrate strong growth in 2008 followed by lower growth during the
next two years when international economic circumstances are anticipated to have an
impact on Macedonia before slightly lower rates of growth in visitor registrations and
overnights are expected from 2011, once economic recovery tempts more Macedonians to
travel abroad on holiday, instead of staying at home.




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       Table 12.3: Target Domestic Visitor Accommodation Registrations 2008-2013
                             2008*      2009    2010      2011      2012      2013
  Accommodation
  Registrations             350,363 367,881 386,275 397,863 409,799 422,093
  Annual increase %           14.4       5.0     5.0       3.0       3.0       3.0
    * Actual          Source: State Statistical Office and UNWTO Consultant Estimates


       Table 12.4: Target Domestic Visitor O’nts in Registered Accommodation 2008-2013
                      2008*      2009         2010        2011      2012      2013
       Overnights 1,648,073 1,730,477 1,817,000 1,871,510 1,927,656 1,985,485
       Annual
       increase        9.8        5.0          5.0         3.0       3.0       3.0
       %
    * Actual     Source: State Statistical Office and UNWTO Consultant Estimates



There are several ramifications of this trend:
           The seasonal spread of domestic overnights should peak less in the summer
           and increase in the off and shoulder seasons.
           The downturn in domestic demand in the summer should be compensated for
           by increases in foreign tourism.
           Increased affluence and experience of accommodation standards abroad
           should make domestic visitors more demanding in terms of quality of facilities
           and service.


12.2     Marketing Objectives

The following Marketing Objectives are recommended for Macedonia Tourism. They
should be reviewed annually as part of the Agency for Promotion and Support of the
Tourism marketing planning process.

         To heighten awareness internationally of Macedonia’s natural, rural and cultural
         tourism attractions and special activities
         To develop a powerful brand image for Macedonia Tourism and launch it
         internationally in conjunction with the tourism industry in Macedonia
         To improve the yield from foreign visitors by targeting markets and segments with
         an above average spend record
         To improve the seasonal spread of tourism
         To improve the regional spread of tourism especially to rural areas
         To facilitate visit planning and booking by ensuring comprehensive information on
         products and services is easily and regularly available to operators and visitors
         To assist Republic of Macedonia suppliers penetrate foreign markets by providing
         market intelligence and collaborative promotional opportunities




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12.3   Priority, Secondary and Opportunity Markets

The selection of priority markets can be based on a number of criteria:
           Volume – numbers of visitors
           Per capita spend
           Season of visit
           Susceptibility to influence
           Accessibility of Macedonia

2007 is the most recent year for which data is available for international visitors
(registrations at accommodation units) but 2004 is the most recent year for which data is
available upon expenditure by foreign tourists.

The monthly accommodation statistics provide the following league table of foreign tourists
in 2007 is presented at Table 12.5 below.

  Table 12.5: Visits (Registrations) by Foreign Tourists in Registered Accommodation 2007
                       Rank Country of Origin         Registrations 2007
                       1      Serbia & Montenegro        44,661
                       2      Greece                     28,618
                       3      Bulgaria                   18,901
                       4      Albania                    17,573
                       5      Slovenia                   13,046
                       6      Croatia                    12,326
                       7      Turkey                      8,907
                       8      Germany                     8,840
                       9      USA                         7,978
                       10     Great Britain               5,789
                       11     Austria                     5,186
                       12     Italy                       5,123
                       13     Bosnia & Herzegovina        4,887
                       14     Netherlands                 3,705
                       15     France                      3,594
                       16     Russia                      1,523
                              OTHER                      39,423
                     Source: State Statistical Office



Per capita expenditure data (all spend while in Macedonia) identified in the 2004
Accommodation Survey is the most recent available and it presents a very different league
table as may be seen in Table 12.6 below.




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                       Table 12.6: Per Capita Spend by Foreign Visitors
                         Staying in Registered Accommodation 2004
                           Market            MKD per visit      Rank –
                                                             MKD per visit
                   USA                                    18,830            1
                   UK                                     12,664            2
                   France                                 12,002            3
                   Austria                                11,660            4
                   Italy                                  11,471            5
                   Germany                                 9,580            6
                   Netherlands                             8,668            7
                   Greece                                  8,486            8
                   Russia                                  8,299            9
                   Croatia                                 8,164           10
                   Serbia & Montenegro                     7,549           11
                   Slovenia                                7,411           12
                   Bosnia & Herzegovina                    7,211           13
                   Bulgaria                                6,260           14
                   Turkey                                  5,632           15
                   Albania                                 4,090           16
                   Other                                  11,803
               Source: State Statistical Office ‘Foreign Tourists in Accommodation 2004’

In terms of total spend by all visitors the Greek and the Serbian / Montenegrin markets are
the most important.

These league tables indicate clearly that in terms of volume of visitors the regional markets
are the most important. However, from a visitor spend viewpoint Western European and
American markets are the most significant.

There is a somewhat better seasonal spread from the longer haul and Greek markets with
some summer peaking of regional markets, particularly among Serbians and Albanians.

As the main objective of tourism is to increase earnings and also because the image of the
country is more developed in the neighbouring countries, it is recommended that priority
for marketing purposes should be given to the Western markets including Greece. The
emphasis in these markets should be primarily on image building and development of
Macedonian destination awareness for independent travellers through the media, but also
be on expanding the network of travel agencies featuring Macedonia as a destination.
However, in recognition of the global economic crisis, the priority should be switched to a
focus on regional markets (including Greece) for the next two years or until signs of
stability in Western travel markets becomes clearer.

In the regional source markets concentration should be on publicity of existing and new
products, principally through the media.

Opportunity markets are also identified, but should not receive specific attention by the
Agency for Promotion and Support of the Tourism until marketing activity in other markets
is well developed or unless a particular opportunity arises.




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       o   Priority Markets:

       Austria
       France
       Germany
       Greece
       Italy
       Netherlands
       Switzerland
       UK
       USA

       o   Secondary Markets

       Albania
       Bulgaria
       Croatia
       Serbia & Montenegro
       Slovenia
       Turkey
       Hungary


       o   Opportunity Markets:

       Australia and New Zealand
       Bosnia and Herzegovina
       Israel
       Russia
       Ukraina
       Scandinavia

Special Interest Segments

The selection of priority and secondary markets is undertaken on a geographic basis.
With respect of special interest segments the location of the enthusiasts is not significant
providing the product offer is strong enough. Subject to appropriate product development
being achieved and/or presentation of the product in a marketable form, the following
niche markets should be approached:
        Winter sports
        Hiking
        Extreme sports, including:
            o Mountain biking
            o Paragliding
            o Kayaking
            o Mountaineering / rock climbing
            o Speleology
        Hunting
        Birdwatching
        Religious tourism
        Conference


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Product / Market Matching

As part of the marketing planning and targeting of promotional activity it is a helpful
discipline to match products to markets in order to identify what to promote where. An
outline match is provided in Table 12.7 below, which will need to be refined during the
Agency for Promotion and Support of the Tourism’s marketing planning and as products
are improved and become “export ready”.


                      Table 12.7: Outline Product/Market Matching Matrix
       Product                 Primary Markets                  Secondary Markets




                                                                                                                                        Serbia & Montenegro
                                                                  Netherlands

                                                                                Switzerland
                                       Germany




                                                                                                                                                              Slovenia



                                                                                                                                                                                  Hungary
                                                                                                                   Bulgaria
                                                                                                         Albania
                                                 Greece




                                                                                                                              Croatia
                    Austria

                              France




                                                                                                                                                                         Turkey
                                                                                                   USA
                                                          Italy




                                                                                              UK




Lake resort                            X         X                X             X             X          X         X
Mountain resort                                                   X             X             X          X
Winter sports                                    X                X                           X          X                               X
Rural tourism                 X        X                          X             X             X    X
Motor touring        X        X        X                  X       X             X             X    X
Spa tourism                                                                                              X                               X
Hiking               X        X        X                          X             X             X    X
Hunting                       X        X                  X
Extreme sports       X        X        X                  X       X             X             X    X
Bird watching        X        X        X                          X                           X
Religious tours                                  X                                                                 X          X          X                    X
Conference                                       X                                                       X         X                     X
Gambling                                         X
Source: UNWTO Consultant Estimate


12.4     Branding

Current Macedonia Brand

There is a great temptation on the part of tourism destinations to say, “Our brand image is
not working, we need a fresh approach. Let’s create a new logo and slogan”. Such an
approach fails to recognise that the brand is mostly an inherited image of the destination or
product that has developed and become instilled in the consumer’s mind over a long
period. It is senseless to try and throw out the existing image and start with something
completely different. As one will note from the world’s major consumer products, such as
Coca Cola, Mercedes or Nike, their brand images are developed over time rather than
undergoing radical changes.




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The key process in the development of the brand of a destination is heightening
awareness of the destination’s positive and desirable elements, as perceived by the target
audience, and minimising the negative aspects. This is an evolutionary process, which
needs to be planned and rolled out consistently over a period of time.

There is clearly a need, however, to refresh and revitalise Macedonia’s brand image. The
main visual demonstration of the brand – the logo and tag line – lack inspiration and
direction. There is a need to undertake the process, which will identify the essences of
Macedonia that have most relevance to identified target markets, and to redefine the core
messages that should be communicated and best means of doing so. This will require
research and engagement of brand specialists.

There are a number of evident weaknesses in the current Macedonia branding.
Macedonia has no single icon There isn’t one symbol that is widely recognised (UK has
Big Ben, France has the Eiffel Tower; Italy the Coliseum). The closest one gets is
probably Alexander the Great. However, “Macedonia” is an evocative word on which
additional positive perceptions can be built.

Branding

There are a number of clear weaknesses in the current brand:
           In terms of logo and tag line the brand presentation is somewhat tired and
           passive.
           The tag line – Cradle of culture, Land of nature - has no “call to action”.
           There is a lack of passion in the brand
           There is a lack of emotional connection with the potential consumer
           The logo is too similar to many others in the region – there’s a lack of
           differentiation – see examples below




The current logo speaks of “The Republic of Macedonia”. This may be politically correct,
but from the visitor perspective it should simply be “Macedonia”.




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Brand and Image Development

Branding in tourism can be defined as: “The creation, development and maintenance of a
mutually valuable relationship between Macedonia (specifically its tourism industry) and a
selected group of travel consumers (target markets) by means of a compelling proposition
or message that will be delivered consistently over time.”

Branding is concerned with identifying, developing and communicating the parts of the
identity that are favourable to specific target groups: it addresses the emotions,
experience, acts introspectively and steadily, is multifaceted, is concerned with
assets/values, with feelings and is heart-driven. Destinations face particular problems in
developing their brands since they cannot change the basic resources and history of the
country.

When a country is mentioned, the listener automatically recalls all he or she knows and
believes about it. The Survey of Foreign Visitors staying in Registered Accommodation
2004 identifies a strong appreciation of Macedonia’s nature and surroundings, but did not
ask other questions about the image of the country. There is no research of perceptions of
potential visitors. The predominant image of Macedonia as a tourism destination held by
the public of the main prospective tourist source markets is most likely vague or neutral.
This is a challenge, but starting with what is, in essence, a largely blank canvas is less
complex than having to correct or dispel widely prevailing negative perceptions.

A major challenge for Macedonia will be to establish the close partnership between
government and the private sector that will be essential to the efficient use of country
branding. Macedonia’s tourism brand needs to be a “nation business” developed in
consultation with the full range of stakeholders – both in tourism and in other export
sectors - the performance of which can be assessed by the international image generated
of the country.

In approaching the task of researching and identifying the most appropriate destination
Macedonia brand positioning, a series of key questions should be posed:

          What is the current image of Macedonia in tourist source markets?
          What attractive elements does Macedonia have that other European countries
          don’t have?
          How can Macedonia create a positioning/a new brand strategy by re-positioning
          or leveraging other countries’ positions to Macedonia’s advantage?

The urgent need is for Macedonia:
   1. to identify and develop a destination brand based on the core attributes of its
       tourism resources, attractions and facilities,
   2. to communicate the components of the brand to tourist source markets – domestic
       as well as international – using the range of marketing and promotional techniques
       and tools appropriate to the stage of development of the individual market and
       segment, and through these actions
   3. to build and establish the perception of Macedonia as a tourism destination
       capable of satisfying the needs and interests of an extensive range of markets and
       market segments.




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In designing the branding approach to produce maximum benefits in establishing
Macedonia’s tourism, it is imperative that careful selection is made of the elements of
Macedonia – i.e. its nature, people, values, traditions, skills, achievements – that can in
combination be presented in a cohesive and persuasive way.

How should the country branding process be achieved?

           Research among Macedonian stakeholders of their experience of the main
           appeals of the country
           Research among previous travellers – possibly undertaken by means of
           canvassing subscribers to the “ExploringMacedonia” website – to identify from
           the visitor perspective the key attractions of the destination, its essences and
           their lingering memories (good and bad)
           Distillation of this research into a SWOT analysis and identification of the core
           values of Macedonia as a tourism destination
           Articulation of the brand, i.e. development of a methodology for its
           communication and examples of options for logos, tag lines and visual
           presentation
           Research among potential visitors of the relative impact of the options
           proposed
           Presentation to Macedonian stakeholders and acceptance of the findings
           Preparation of a “tourism brand manual” for use by the Agency for Promotion
           and Support of the Tourism and all stakeholders
           Preparation of a communications strategy for the brand roll out by the Agency
           for Promotion and Support of the Tourism and industry

This is a specialist exercise that should be undertaken through the appointment of a brand
design house with extensive experience in assisting tourism destinations.

A “Brand Working Team” would need to be formed with which the appointed firm would be
required to liaise closely and should be made up of representatives from the
recommended Tourism Leadership Group proposed for the implementation of this
Strategy.

12.5   Strategic Approach

The available research on visitors to Macedonia, albeit limited and shown in Table 12.8
below, demonstrates clearly that the vast majority of visitors make their own travel
decisions and use travel agents only to a limited extent. One in ten visitors comes on
inclusive tours. Even these visitors will select their destination with limited operator
influence.

                 Table 12.8: Method of Organisation of Trip to Macedonia
                    Method                                        %
                    Independent                                   44
                    Independent with advance reservations         46
                    Independent booked via travel agent            3
                    Group through agent                            4
                    Group through club, association, etc.          3
                    Total                                        100
                   Source: SSO Accommodation Survey - 2004


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It is imperative therefore to market the destination directly to consumers, provide them with
persuasive reasons to visit, make plentiful planning information available and ensure their
travel agent is equipped to provide package or other arrangements if they choose to book
through them.

If it is to make a significant impression on consumers in international markets, Macedonia
tourism has first to establish a strong Agency for Promotion and Support of the Tourism. It
is essential to work from a strong base which can provide logical planning and consistent
marketing of the destination. Once this has been established, the communications and
distribution channels can be developed that are needed to achieve the key marketing
objectives.

Many major tourism destinations have a network of branch offices in their main source
markets promoting their offers directly to consumers, the local media and travel industry.
This is not an approach appropriate for, let alone available to, Macedonia at this stage.
Professional destination representation companies (who undertake media relations, travel
industry relations and sometimes consumer enquiry servicing work) should be considered
once the Agency for Promotion and Support of the Tourism is operational for two or three
prime markets. These companies should be selected on a tender basis with a minimum
three year contract.

Embassies and consulates abroad are used by some destinations for tourism
representational purposes. However, few embassy staff are skilled in developing travel
industry relations and their media experience is often limited to the political arena.
Embassies can act as distribution points for destination information and should certainly be
supplied with promotional materials. It should be noted, however, that, unless required to
obtain visas, consumers and the travel industry rarely consider embassies as a prime
source of tourism information and assistance.

The strategic   approach recommended for marketing in the 2008-2012 period is on four
fronts:
          a)    Research
          b)    Information
          c)    Image Building
          d)    Product Placement

Research is the foundation on which any effective marketing (and development) strategy
must be based. The statistical data currently available only gives sketchy information on
the size, value and profile of Macedonia’s tourism markets. With limited resources
available it is essential that Macedonia targets its markets precisely. Over the five year
strategy period it is recommended that initially the basic systems and procedures for visitor
data collection be refined. Secondly, the Visitor Exit Survey should be undertaken on an
annual or at least biennial basis. These actions should provide sufficient guidance for a
decision to be made towards the end of the Strategy period for specific research to be
commissioned into relevant target markets or segments.

The Information approach is to establish as comprehensive and as attractive an Internet
tourism portal as possible as the core activity. Particularly when linked to reservations
options, whether on-line or indirect, this is a fundamental resource. The content of the
portal must be as comprehensive and impartial as possible and it is imperative that it is
kept up to date. The website will be the visible output of comprehensive product and


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supplier information databases developed by the Agency for Promotion and Support of the
Tourism. The second Information approach is to establish a network of manned Tourist
Information Centres and unmanned Tourist Information Points in the main tourism areas.
Information materials will be developed in conjunction with suppliers and regions to meet
the needs of enquirers.

The Image Building strategy is to generate a heightened awareness of the destination
among relevant consumers in the selected priority and secondary markets. The cost of
mounting advertising campaigns that would have real impact in key markets is prohibitive
for Macedonia at this stage in its development as a tourism destination. Concentration
should be placed on obtaining “free” coverage through travel journalists both in written and
TV media. Additionally, promotional materials will need to be developed for distribution
through pre-identified communications channels and outlets.

Consumer awareness and interest among the public is an important step in stimulating
tour operators to develop a Macedonia product to meet their customers’ demands. The
Product Placement strategy is to expand the range of tours, whether Balkan tours or
Macedonia alone, that is offered in the priority markets. To this end, the Agency for
Promotion and Support of the Tourism should research all tour operators in the priority
markets, including bus operators in the closer source markets, develop personalised
presentations on tour options that coincide with their current product range and encourage
and sponsor them to visit Macedonia on familiarisation and buying visits. Additionally, the
Agency for Promotion and Support of the Tourism will advise and assist Macedonia
operators to develop and present product in a form that will appeal to foreign tour
operators and visitors. Finally, the Agency for Promotion and Support of the Tourism will
coordinate promotional activity of Macedonia operators by mounting exhibition stands,
sales missions, etc targeted at priority and secondary markets in order to make contact
with pre-identified operators.

Research and Statistical data

As mentioned in Part II of this Strategy, statistical data on tourism to and within Macedonia
is currently drawn from five main sources:
            Ministry of Interior monthly border crossing figures
            State Statistical Office (SSO) monthly data on visits and overnights at
            registered accommodation premises
            SSO annual census of registered accommodation capacity
            SSO five yearly ‘Survey of Foreign Visitors - Poll of Border Crossings’ – latest
            edition in 2004
            SSO five yearly ‘Survey of Foreign Visitors – in Accommodation Facilities –
            latest edition in 2004.

These all provide valuable information to assist in tourism development and marketing
planning. There are some inherent weaknesses in the structures and interrelationships of
these surveys, which, if eradicated, would provide a much more useful basis for planning
purposes and render the surveys much more useful.




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In the long term, Macedonia should aim to meet the requirements of a Tourism Satellite
Account, which would achieve comparability of data with international norms and permit
comparison of Macedonia’s performance with countries worldwide1. As a first stage
towards this, some improvements in the current system are recommended.

      o    Border Post Arrivals Data

At all border posts (airports and land frontiers) monthly figures should be recorded of
foreign visitors by;
        Nationality,
        Country of residence,
        Number in party,
        Type of visit
        Purpose of visit.
        Length of stay

Type of visit refers to Transit, Day Visit or Tourist (staying at least one night). Purpose of
visit, should, as a minimum, record whether the visit is for Holiday (leisure), Business,
Conference, VFR or Other. This basic data provides the “universe” data of all visitors to
the country to which other sample survey data may be related. Such recording can be
done on arrival or departure. However, the completion of the forms on departure is more
convenient and can provide more precise information. At land frontiers the forms can be
distributed on arrival to be completed and surrendered on departure, thus speeding the
process.

      o    Accommodation Data

The monthly returns from accommodation establishments provide useful monthly data on
the number of “Visits” (i.e. guest registrations at the establishments) and Overnights by
nationality. Unfortunately this is not related to the rooms available in each establishment
so that occupancy data can be calculated. It is recommended that the survey be adapted
to indicate the Available Rooms in each establishment during the month in question. It is
also recommended that occupancy levels be calculated for

           each star category of each accommodation type
           all accommodation in main tourism areas – Skopje, Ohrid, etc.

This will permit individual properties to compare their performance with the average of their
category of accommodation and/or tourism area. It will also identify seasonal occupancy
peaks and troughs to be addressed through promotional activity.

It would also be of additional benefit, especially to the hotel sector, if data on Revenue per
Available Room (REVPAR) were also made available for each star category and tourism
area.




1
    UNWTO publication ‘Tourism Satellite Account (TSA) The Conceptual Framework’




                                                                                          193
The monthly returns should also require establishments to record the number of
permanent and temporary staff employed during the month. This will make the annual
census of accommodation capacity unnecessary, as data on room and bed capacity and
also employment levels can be calculated on a monthly basis.

The Accommodation Occupancy data resulting from this process should be issued to the
industry not later than two months.

   o   Survey of Foreign Visitors

The two current surveys (‘Survey of Foreign Visitors - Poll of Border Crossings’ and
‘Survey of Foreign Visitors – in Accommodation Facilities’ ) although published separately,
are linked to each other and provide similar data for different visitor types. Such surveys
are generally called Visitor Satisfaction Surveys of Exit Surveys. They should be
conducted on departure. The current Accommodation survey takes place during the
visitor’s trip, which means the information on length of stay and expenditure, for example,
is likely to be inaccurate. It is suggested that in future the surveys be combined and
undertaken on departure with limited questions being asked of Transit and Day Visitors
and a fuller questionnaire prepared for Tourists.

The current two survey approach provides important expenditure data for Transit and Day
Visitors and Tourists staying in registered accommodation. However, no data is collected
on Tourists who stay with friends and relatives or in their own or other non registered
accommodation. This is a major weakness.

It is recommended that a combined survey be undertaken on an annual basis or at least
every other year. Expenditure data should be recorded for all visitor types. The detailed
information of age, group size, number of children, etc. need not be asked each year. The
satisfaction questions can also be rotated from year to year as changes are not likely to be
dramatic. This should permit the inclusion of additional questions on the activities
undertaken by Tourists and Day Visitors in order to secure a better profile of visitors, which
will assist in product development and marketing.

Information

   o   Information Databank

There is a need for a comprehensive computerised information database on the product
offer of the tourism sector. This will encompass data on all forms of accommodation,
transport, service providers, attractions, events, activities and individual tourism
destinations both large and small. This is required as a basis for the supply of current data
to the Tourism Website and other outputs such as information sheets and brochures.

The Tourism Information Databank should also encompass a digitised photographic and
image library of Macedonia’s tourism – sites, scenery, activities, traditions, facilities, etc. –
for use by media journalists and in publicity materials.




                                                                                             194
   o   Macedonia Tourism Portal

Macedonia’s tourism portal ExploringMacedonia.com is a public private partnership, which
has in a relatively short time become a popular and respected destination website. It has
many strengths:

           Diversity of content reflecting the diversity of Macedonia’s attractions
           Regularly updated
           Prompts bookings
           Marketed effectively to search engines, achieving high selection positions
           Self-financing

The portal ExploringMacedonia.com is structured as a partnership with the Ministry of
Economy’s Tourism and Catering Department. However, the private sector partner
currently receives little more than token support from its public sector partner. This is
partly responsible for some of the weaknesses of the site.

An active Agency for Promotion and Support of the Tourism should ensure its website has
comprehensive lists of all accommodation and other suppliers, even if those that contribute
financially through fees or commissions to the viability of the site are featured more
prominently. The Agency for Promotion and Support of the Tourism should also be active
in placing non commercial information on the site, such as hiking and mountain biking
trails, attractions, suggested motoring itineraries and events.

A much greater commitment by the Agency for Promotion and Support of the Tourism to
the website’s continued development is required. The Agency for Promotion and Support
of the Tourism should consider the website as the main outlet for the comprehensive
databases of product information that it needs to compile and maintain.

   o   Tourist Information Centres

One sign of a quality tourism destination is its ability to provide its potential and current
visitors with product and service information when and where they require it. The tourism
portal is the main channel for providing information during the visit planning process. The
Internet is becoming the prime source of pre-trip information and the creation of
comprehensive, flexible and up-to-date websites is vital. Visitors, particularly independent
travellers, also require information during their trip. This may include not only information,
but also assistance in booking accommodation and other services.

In major tourism destinations this role is usually performed by Tourist Information Centres
(TICs). A good Tourist Information Centre will not only operate as an office for tourists to
visit, but also as a distribution point for information through local transport and
accommodation suppliers. The primary role of TICs is to provide information and promote
local tourism products so as to assist tourists have a fulfilling visit and be encouraged to
extend their stay and spend in the area. They also need to provide information on other
parts of the country.

A number of local administrations in Macedonia operate Tourist Information Centres.
There is very little uniformity in the services they provide. Some close early in the evening
and at weekends. In Skopje the TIC is currently not operating as the result of a legal
dispute, but seeks to be self-financing through membership fees, commissions and


                                                                                          195
advertising revenue. This commercial activity is beneficial, but there is still a responsibility
on the part of the local authority to ensure a quality information service is offered.




It is recommended:
       That legislation be enacted to
       restrict the use of the terminology
       Tourist Information Office and
       Tourist Information Centre and the
       international “I” sign to offices so
       licensed by the Agency for
       Promotion and Support of the
       Tourism;
     That local administrations in all major tourist areas establish street level Tourist
     Information Centres in town centres in conformity with guidance to be given by the
     Agency for Promotion and Support of the Tourism;
     That TICs be authorised to sell maps, guides and tourist literature and charge
     commission for reservations;
     That TICs provide the following:
          o Information on tourist products, accommodation and other services
          o Assistance in finding accommodation
          o Literature on local and neighbouring tourist products and facilities
          o A reservation service for overnight accommodation, event tickets sales, etc.
     That TICs assist the Agency for Promotion and Support of the Tourism with media and
     tour operator visits;
     That TICs provide regular updates of tourist information to the national tourism
     database maintained by the Agency for Promotion and Support of the Tourism.
Tourist Information offices may also undertake promotional activity and organise local
events on behalf of their sponsoring organisations.


Image Building - Media Relations

The main focus of the Agency for Promotion and Support of the Tourism should be on
identifying journalists from media with an appropriate audience profile to visit the country.
National media will be a first choice followed by regional and local media with audiences
close to gateways to Macedonia. Relevant special interest media should also be selected.



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Story lines should be developed in the form of press releases to attract the journalists’
attention and for them to use as themes for their articles and programmes.

Media visits should normally be for individuals and customised to their specific interests.
However, group visits of, for example, travel writer association members, may be
appropriate. A high degree of flexibility should be incorporated in itineraries and wherever
possible the Agency for Promotion and Support of the Tourism should provide an escort
with relevant language skills and excellent knowledge of the country. Meetings with
tourism and municipal officials should normally be kept to a minimum and be only at the
request of the journalist.

Product Presentation

   o   The Role of Destination Management Companies - Tour Operators

Like any destination Macedonia has a plethora of things to see and do and places to stay,
which are of interest to the visitor. Making a selection and presentation of these to appeal
to customers is the prime role of destination management companies or DMCs (also
known as inbound tour operators or ground handlers). For resort based stays this is
relatively easy, consisting of a choice of accommodation and selection of activities and
excursions. For touring and special interest visitors it is more complex.

Currently Macedonia has relatively few DMCs, but ones that are proficient in their role.
They have developed a good range of tour and package offerings and concepts either for
Macedonia as a standalone destination, or as a part of a multi-destination tour.

For group business they have already developed networks of partner operators in many
markets and also act as local representatives of regional tour operators. For individual
business they use both these operator contacts and sell direct, mainly through websites or
to visitors after arrival. The recent consolidation of tour operators and travel agent chains
throughout Europe is likely to continue. Medium size operators are being swallowed up,
leaving the large operators and the small specialist operators to serve the markets. A
small destination like Macedonia needs to concentrate on working with these smaller
specialist operators.

There is an on-going need for the DMCs to communicate with existing partners and also to
make new contacts. This is the prime motivation for attendance at travel fairs abroad.
Attendance at travel fairs should be coordinated by the Agency for Promotion and Support
of the Tourism on behalf of operators in order to maximise destination impact and
minimise individual operators’ costs. Only fairs reaching Priority and Secondary market
operators should feature in selection of travel fairs where the Agency for Promotion and
Support of the Tourism offers assistance. The Agency for Promotion and Support of the
Tourism should also research tour operators with potential for Macedonia based in the
catchment area of each travel fair and invite them to the Macedonia stand advising them of
the range of offers that will be featured by Macedonia operators.

Macedonia has potential to attract business from a number of specialist segments
providing the facilities that are required by the potential visitor are coordinated. Examples
are bird watching, religious tourism and extreme sports. A combination of analysis of the
research of specialist operators’ requirements and presentation of the product to meet
their perceived needs is called for. The Agency for Promotion and Support of the Tourism


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should work with the end suppliers as well as innovative DMCs to achieve this and also
fund inspection visits by foreign operators.

Macedonia is not a mass tourism market. Although there are a few charter series coming
into the country and one or two more under negotiation it is unlikely there will be much
expansion in this form of traffic, unless winter sports operators can be persuaded to
feature Popova Sapka or Mavrovo using the Skopje or Ohrid gateways. Group tourism is
more likely to arrive on scheduled air services or by coach. If eventually low cost carriers
are given access to the country this may further decrease the potential for large scale tour
programmes based on charters.

Some products are less susceptible to being purchased as a package, for example rural
tourism or hiking. There is nonetheless a need to coordinate the required product
elements and present them in an appealing format to the customer. The village of Brajcino
has developed a rural tourism offering with a degree of success. This is, however, still
reliant on external assistance to reach its market of mainly independent travellers. Agency
for Promotion and Support of the Tourism support is called for here to assist in the
development of publicity channels through websites, print material and media visits.

In the case of hiking, a selective approach is needed to present the product. The hiker
looks for well marked trails, detailed maps, details of trail difficulty, duration, attractions
along the route, security advice and local accommodation and catering as basics.
Optional extras may be guides and baggage handling services, for example. However, the
basic requirement is for a “do-it-yourself” product, which the Agency for Promotion and
Support of the Tourism needs to both develop with local enthusiasts and to publicise
locally and abroad as there are limited opportunities for DMCs to develop profitable
business out of hiking.

Another form of product presentation is by accommodation type geared to the touring
visitor. A collection of rural guest houses, for example, would have strong appeal to
visitors, who are looking for a more traditional local experience as well as value for money
in their accommodation. This type of marketing collaboration or consortium is found
frequently abroad and has proved most successful. The accommodation sector itself
needs to take the initiative here with Agency for Promotion and Support of the Tourism
assistance.

   o   Cooperative Marketing with Foreign Operators

While the building of greater awareness abroad of Macedonia’s tourism appeals through
media activity is of paramount importance, backed up by easily accessible planning
information on the Internet and elsewhere, it is also important to ensure purchasable
products are available in the marketplace. Overcoming the relatively expensive access
costs to Macedonia from long haul markets is also important. There are various ways of
facing these challenges.

Negotiation of charter series with tour operators and their airline subsidiaries / partners is a
technique that is underway notably through HOTAM initiatives. This involves contributions
to the marketing costs of the foreign operator. The benefit of such approaches is to
achieve a back to back series of flights, albeit for a limited period, and a guaranteed
number of bednights for the accommodation providers involved. Particularly in an area



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like Lakes Ohrid and Prespa this can bring valuable shoulder season business. There is a
downside in that there is rarely a guarantee the operation will run regularly every year.

It would be good to see similar winter season charter series negotiated with Mavrovo and
Popova Shapka ski resorts and charters into Ohrid and Skopje airports respectively. The
ski resort local authorities and hoteliers need to collaborate in such an initiative.

When negotiating joint marketing budgets with foreign tour operators care needs to be
taken to ensure that the investment is linked to the return in terms of passengers and
bednights achieved.

A second form of technique is to sponsor a product placement in a major tour operator’s
programme. This is similar to advertising in that there is usually no guarantee of bookings
resulting, though it does ensure the destination is considered by many targeted
prospective Balkan travellers. This is a much more speculative approach as there is less
pressure on the tour operator to produce results.

A less speculative approach is to enter a promotion and/or an advertising agreement with
a tour operator who has decided to feature the destination. The agreement would be to
share the cost of an agreed planned programme promoting and/or advertising the offer on
an agreed basis with delivery targets agreed. The promotion an/or advertising is consumer
directed, with a call to action through the tour operator or high street travel agents or the
web.

A third technique so far not adopted in Macedonia is collaboration with one or more low
cost carriers in launching new route(s) to Macedonia. The start up costs for a low cost
carrier in establishing new routes are high and they frequently seek publicity contributions
amounting to an average of about Euros 10 per passenger. However, there are distinct
advantages to such an approach.

Low cost carriers have sophisticated and aggressive sales operations to fill their flights and
a strong commitment to do so. Low cost carriers, unlike most charter operations, are not
dependent only on inbound traffic, but provide flights for local travellers, which makes
achievement of high load factors easier. Most low cost carriers tend to work on a year
round basis, with obvious benefits for the destination, and also are usually committed to a
route for the longer term. Provided a decreasing cooperative marketing cost phased over
about a three year period can be negotiated by the airport and public authorities (local and
government) this can prove a most beneficial exercise.

An additional benefit of low cost carrier operations is the competition it brings into the
marketplace with other carriers. As Macedonia is a relatively expensive destination in
respect of airfares, a low cost carrier operation could help improve this situation.

The National Aviation Strategy of June 2007 strongly advocates the attraction of low cost
carriers to Macedonia.

12.6   Promotional and Information Materials

Despite increasing reliance on the Internet for the provision of information there is a
continuing requirement for both promotional and information materials for visitors. The
current range is as follows:


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           Destination brochure
           Useful Information booklet
           Map of Macedonia
           Document wallet
           Carrier bag
           Posters

They are produced on demand; that is as stocks run low, rather than as part of a pre-
planned annual programme of activity. This approach can result in shortages occurring
and expensive short print runs needing to be produced.

The current range of publications is appropriate for general destination promotional
activity. There may be an additional need for specific product publications to target special
interest segments such as hiking and motoring itineraries. A directory of conference
venues would also be a valuable tool particularly to promote off season tourism.

Normally, the Destination Brochure, Useful Information booklet and Map would be printed
annually. The other items, of which the quantities required tend to be less, may be printed
every two years to take advantage of longer print runs and hence reduced costs.

The brochures should be A4, A5 or third A4 format in order to fit standard display racks
and also to facilitate shipment in standard sized cartons.

All publications must reflect the tourism brand and designated design style.

The print run for each publication and language editions should be ascertained through a
survey of identified outlets – programme of international fairs and other promotions,
embassies and other representation offices abroad, requirements of Macedonia operators,
etc. Cost estimates of bulk shipment of brochures should be included in the budgetary
process, so that distribution funds are pre-allocated.

Advice on the content of the individual publications should be sought in order to avoid
omissions. As examples one can mention that there is currently no country map in the
Destination Brochure and no accommodation details feature in the Useful Information
booklet.

Although many of the people of Macedonia are excellent linguists, the translation of each
brochure must be checked by a native speaker of each language.


12.7   Conference Tourism

Macedonia’s conference and meeting facilities are almost entirely based in hotels. There
is no purpose-built conference centre offering a large scale hall for plenary sessions and a
range of ancillary rooms for breakout sessions. This effectively limits the size of meetings
that the country can host. Although this is not a significant product deficiency currently,
the country will be in a strong position to attract many international meetings in the EU pre-
and post-accession phases.




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It is recommended therefore that a study into the market potential and optimum size and
configuration of such a purpose-built centre should be commissioned. Additional
considerations are that the centre should be multipurpose building allowing other, probably
entertainment, uses besides the primary conference use. Also the location will be
important. For international meetings ease of access is of paramount importance and,
although consideration should be given to the Ohrid area as a location in order to stimulate
much needed off-season business, Skopje may well be the best location given its flight
network and larger stock of quality accommodation.

The current range of meeting facilities is mostly used for domestic business meetings,
training courses and hospitality events. The venues are sold individually and there is
much reliance on previous experience in the choice of venue. There is a lack of a
comprehensive directory of meeting facilities detailing their capacities for various meeting
styles and range of ancillary services and equipment. This deficiency makes it difficult for
the meeting planner to review all the options that meet his requirements and also does not
allow the presentation of the Macedonia conference venue offer to be made in the region.

It is consequently recommended that the Agency for Promotion and Support of the
Tourism develop a conference directory for distribution primarily to businesses, NGOs and
other organisations in Macedonia and to business organisations in the region. The data
should also feature on the ExploringMacedonia website.


12.8   Summary of Recommendations

       Improve the collection, analysis and dissemination of visitor statistics
       Improve the collection, analysis and dissemination of accommodation occupancy
       data
       Undertake regular visitor exit surveys
       Establish a well resourced marketing department within the Agency for Promotion
       and Support of the Tourism
       Commission consultants to develop a new tourism brand/logo/slogan for
       Macedonia
       Undertake targeted destination marketing concentrating on a few key markets and
       segments that meet marketing objectives
       Concentrate on tourist resort image building internationally through intensive public
       relations activity
       Conclude agreements with companies which will represent the tourist resorts in
       selected markets
       Develop and maintain a central tourism product and services information database
       as a resource for marketing and media
       Further develop and expand the national tourism portal as the comprehensive and
       impartial data source for information on tourism opportunities in Macedonia
       Present or package products in a format to match target market needs – including
       rural resorts with a menu of activities and sites, itineraries, and special interest
       activities
       Further develop the Tourist Information Centre network with standardised services
       and procedures and staff training
       Establish marketing groups or consortia – e.g. for monastery accommodation, local
       area Bed and Breakfast groups, rural resort cooperatives
       Develop a cohesive and coordinated range of tourist resort promotional materials


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Develop a database and directory of conference venues as the first step in
expanding Macedonia’s domestic and international conference market.
Commission a study to identify the optimum location, size and configuration of a
National Conference Centre.




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13. Economic Development and Investment Strategy
Economic Development


Tourism has the potential to generate significantly more foreign exchange and
government revenue and to create additional employment throughout the country
at all skill levels and with equal gender opportunities.



13.1     Market Projections in the Short and Medium Term

Foreign Visitors

As stated in Chapter 12 above, provided the restructuring and coordination of marketing
activity recommended in this Strategy is implemented promptly, growth should increase
above the rate projected by UNWTO for the Balkans as a whole i.e. 4.3 per cent per
annum to 2010. Thus the target foreign visitor registrations and overnights for 2009 to
2013 presented in Chapter 12 are repeated, respectively, in Tables 13.1 and 13.2 below
simply to assist the understanding of the foreign visitor revenue targets provided in Table
13.3 further below.

           Table 13.1: Target Foreign Visitor Accommodation Registrations 2008-2013
                              2008*     2009      2010    2011      2012      2013
          Accommodation 254,957 267,705 281,090 297,955 318,812 344,317
          Registrations
          Annual increase
                               10.8      5.0       5.0     6.0       7.0       8.0
          %
        * Actual         Source: State Statistical Office and UNWTO Consultant Estimates




       Table 13.2: Target Foreign Visitor O’nts in Registered Accommodation 2008-2013
                            2008*      2009      2010      2011    2012      2013
        Overnights         587,447 616,819 647,660 686,520 734,576          793,342
        Annual increase
                             13.4       5.0       5.0       6.0     7.0       8.0
        %
       * Actual        Source: State Statistical Office and UNWTO Consultant Estimates



The increased number of foreign visitor accommodation registrations and overnights in
registered accommodation will imply an increase in the revenues from foreign visitors.
Since the Strategy recommends targeting countries with above average spend, then it is
expected that the structure of tourists according to the country of origin will change in
favour of the target markets (Europe, Greece and North America). Thus, although the
number of foreign visitor accommodation overnights should increase initially by 5 per cent
in 2009 followed by growth of between 5 per cent and 8 per cent thereafter, and these
rates have been used to project indicative target revenues, these revenues will in practice
increase faster than at these rates as larger numbers of higher spending visitors are



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attracted. However, it is unlikely that this effect will be evident before the end of the target
period because of the current global economic uncertainty and the time lag to be expected
between the implementation of the Strategic Plan, its marketing actions and the
subsequent realisation of its benefits.

The Target Revenues shown in Table 13.3 below are presented in millons of Euros at
2008 values and thus there have been no assumptions or provisions made for the possible
effect of inflation which could improve the nominal value of these figures.

    Table 13.3: Target Revenues from Foreign O’nts in Rgtd Accommodation 2008- 2013
                                            2008    2009 2010 2011 2012 2013
    Revenues (EUR Millions at 2008 values) 166.9* 175.2 184.0 195.0 208.7 225.4
              Annual increase %             23.7     5.0    5.0  6.0    7.0     8.0
  Source: National Bank of Macedonia, 2009 and UNWTO Consultant Estimates

* This is the National Bank of Macedonia figure for 2008 taken from the travel sector within
the Services Account of the Balance of Payments. The $US figure in the Balance of
Payments has been converted to Euros using prevailing conversion rates.

Domestic Visitors

As noted in Section 12 above, setting targets for domestic tourism is more problematic
because of its likely sensitivity to potential changes in visa regulations and growing
affluence. However, it is not expected that visa restrictions will be lifted soon and short
term international economic weaknesses may well support greater domestic holiday
taking. Recovery from that weakness may in turn result in a softening in the level of growth
for domestic holiday taking and these assumptions underly the domestic visitor registration
and overnights targets shown in Table 13.4 and 13.5 below, repeated from Chapter 12 to
assist understanding of the calculation of the domestic visitor revenue targets in Table
13.6 further below.

        Table 13.4: Target Domestic Visitor Accommodation Registrations 2008-2013
                              2008*      2009    2010      2011      2012      2013
   Accommodation
   Registrations             350,363 367,881 386,275 397,863 409,799 422,093
   Annual increase %           14.4       5.0     5.0       3.0       3.0       3.0
    * Actual          Source: State Statistical Office and UNWTO Consultant Estimates

     Table 13.5: Target Domestic Visitor O’nts in Registered Accommodation 2008-2013
                    2008*      2009         2010        2011      2012      2013
     Overnights 1,648,073 1,730,477 1,817,000 1,871,510 1,927,656 1,985,485
     Annual
     increase        9.8        5.0          5.0         3.0       3.0       3.0
     %
    * Actual     Source: State Statistical Office and UNWTO Consultant Estimates

Preparation of targets for revenues from domestic visitor overnights is even more
problematic since no data is collected on the subject and no surveys have been
undertaken. The value of domestic tourism is not high in view of the relatively low levels of
pay in the domestic economy and thus the extent to which discretionary income is
available for tourism purposes. However, it is important not to ignore the value of a sector
which is currently generating in excess of 1.6 million overnight stays per annum and


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therefore a judgement has been made using crude anecdotal evidence which suggests
that an average of Euros 15, per person per overnight stay, may be a reasonable figure to
adopt as a basis for preparing the the targets presented in Table 13.6 below. No allowance
for inflation has been made in the preparation of these target revenues.
  Table 13.6: Target Revenues from Domestic O’nts in Regtd Accommodation 2008-2013
                     2008*      2009      2010        2011      2012      2013
      Overnights 1,648,073 1,730,477 1,817,000 1,871,510 1,927,656 1,985,485
      Revenues
      (EUR
      Millions at     24.7      25.9      27.2        28.1      28.9      29.8
      2008
      values)
      Annual
      increase         9.8       5.0       5.0         3.0       3.0       3.0
      %
    * Actual     Source: State Statistical Office and UNWTO Consultant Estimates

Foreign and Domestic Visitor Revenue Contribution to GDP

Once again the importance of demonstrating the value of tourism to the economy can be
assisted by the preparation of estimates which show the contribution of both domestic and
foreign visitors to national GDP.

Having separately identified both foreign and domestic revenue targets for 2008 – 2013
and presented them in Tables 13.3 and 13.6 above, the two are now combined in Table
13.7 below and shown as a percentage of national GDP. This Table demonstrates the
steady growth in the contribution of tourism to GDP from 3.1 per cent in 2008 to 3.4 per
cent in 2013 at 2008 values.

To prepare this table it has been necessary to make assumptions about the future growth
of national GDP and this has been done with reference to recent World Bank and IMF
statements upon the Macedonian economy. It has been assumed, on the basis of Bank of
Macedonia estimates, that GDP growth in 2008 is 5 per cent, but this is now expected to
fall to 3.0 per cent in 2009 and 2010, rising back to 5 per cent from 2011 to 2013,
according to World Bank and IMF estimates.
   Table 13.7: Target Contribution to GDP from Domestic and Foreign Visitors 2008-2013
                      2008       2009        2010      2011       2012        2013
     Estimated
     GDP (EUR
     Millions at      6,090      6,272       6,461     6,784      7,123      7,479
     2008
     values)
     Tourism
     Earnings
     (EUR
                      191.6      201.1       211.2     223.1      237.6      255.2
     Millions at
     2008
     values)
     Earnings as
                       3.1        3.2         3.2       3.3        3.3         3.4
     a % of GDP
       Source: National Bank of Macedonia and UNWTO Consultant Estimates



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13.2   Recommendations on Enhancing Economic Benefits

The strategies recommended to enhance economic benefits are:

       Improved statistical data
       Increased length of stay and increased tourism expenditures
       Increased government investment in tourism
       increased linkages and reduced economic leakages

Improved Statistical Data

Tourism is attractive for its employment generating capabilities and its potential to
generate foreign exchange earnings which are additional to that generated within the
domestic economy. The evaluation of the impact of tourism activity on the economy has
been hampered by the lack of comprehensive and reliable economic data at both the
industry level and in official statistics. In order to enable the policy makers to make
informed decisions it is crucial to have a well developed system of statistical data.

The Tourism Satellite Accounts (TSA) system is identifying and measuring tourism
expenditure on goods and services produced within the national economy. From this,
tourism’s direct contribution to Gross Domestic Product (GDP) is derived and can be
compared to the contribution to GDP of other industries such as agriculture, manufacturing
or service sector industries.

The basic data sources required to assemble tourism expenditure are direct spending by
international visitors and domestic travellers within the country. Spending by visitors and
domestic travellers needs to be identified by category in order for the links back to
production and source of material to be made.

Examples of the direct spending categories identified in a TSA system are:

       Accommodation
       Food and beverage
       Air passenger transport
       Long distance coach/bus transport
       Other transport
       Retail sales - fuel and automotive products
       Other retail - clothing, souvenirs, handicrafts, jewellery etc.
       Other tourist products - admission fees, personal spending etc.
       Total tourism expenditure

The production of a Tourism Satellite Account (TSA) requires a build up of information
from a number of sources. It is recommended that a project, with Technical Assistance,
be put in place to produce a TSA by the year 2012, with follow up monitoring.

In addition to the TSA, a study should be conducted to determine the Macedonia Tourism
Multiplier.




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Increased Length of Stay and Increased Tourism Expenditure

Macedonia has great potential for tourism because of the: spectacular setting with
exceptional historical and cultural attributes; long history as a tourist attraction with
abundant opportunity to revive tradition; opportunity to create easily accessible, distinct,
unique experiences.

There has been tension in the Industry because tourism traditionally is not seen as “real
business” in Macedonia, due to the lack of customer focused mindset, over-dependence
on “asset model” tourism (lake, hotel, and casino), lack of cooperation within the industry,
over-reliance on government to lead the industry.

According to the “Foreigners Temporarily Living in Macedonia (TLIM) Tourism Survey”
from August 2003 carried out by the USAID MCA, foreigners that temporarily live in
Macedonia travel as tourists frequently. Nearly 70 per cent of high income foreigners travel
more than 3 times in six months; almost one third travel once a month. However, the
amount they spent travelling as tourists outside Macedonia is nearly 60 per cent higher
than the amount spent in Macedonia.

TLIMs would spend more time at a destination – but they claim that they do not have a
compelling reason to stay overnight. Lack of information, poor customer service,
cleanliness and lack of themes/packages are their principal complaints.

As the survey also indicates, all but one of the activities (dining) participated in are non-
revenue earning activities. This underlines the desirability of providing and offering the
tourist a range of other activities that are revenue earning.

Another survey of foreign specialty tour operators conducted by USAID/MCA in September
2003 gave the following findings:

       Demand for specialty/adventure tourism in off-the-beaten track destinations, such
       as Macedonia, is strong;
       Adventure/specialty tour operators seek accommodations ranging from camping in
       pristine locations to mountain lodges to small luxury hotels in unique settings;
       Adventure/specialty tour operators may bring 5 - 500 visitors to a region spending
       $50 to $300+ per day. The average trip length of the specialty operators is 7 days;
       It takes 6 –18 months from conceiving of a new trip idea to actually bringing
       customers to a new destination. Promotional tours in the region must be organized
       for targeted overseas partners.

Bearing in mind the above statement, it can be concluded that the recommendations on
ways to increase the length of stay and tourism expenditure are marketing initiatives which
are discussed in Section 12, the marketing section of this strategy. Special attention must
also be paid to extending the tourist season and increasing the number of tourists in the
shoulder seasons.




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Increased Linkages and Reduced Economic Leakages

The Macedonian tourism sector can offer world-class and unique experiences to visitors
by integrating basic assets (mountains, lakes, cultural, historical) into a unique story which
can be enjoyed by the visitor. The development of a strong and multi-dimensional tourism
sector which can deliver such a successful integrated tourist experience requires strong
linkages between the various stakeholders and it is the breadth and strength of these
same linkages which can enhance the economic value of the sector as a whole.

As pointed out in the Economic Impact Chapter 5 of Part II of this report, tourism has
important linkages with the agriculture sector. High quality food, every day of the year, is
essential to hotels, lodges and resorts. Often the food purchasing bill of a tourism site is
large in the context of the local economy, but surprisingly little is spent locally, even when
farmers are nearby. The challenges of shifting food-sourcing to local farmers are
considerable, yet if it can be done in a way that meets commercial needs and customer
tastes. This is one way in which tourism operations can significantly increase their
contribution to local economic development.

Common problems of sourcing products locally are: inconsistent quality, non-reliability, or
volume of produce, exacerbated by poor transport and lack of communication and
information between supplier and purchaser. The strategies to overcome them could
include:

       The appointment of a farmer extension officer, funded by the Ministry of
       Agriculture/Donor Agency/ tourism private sector, who works directly with farmers
       and the tourism sector on aligning production with the tourism sector needs;
       Expand the collaboration between various relevant connected organisations,
       particularly on agricultural support, including SFARM, AgBiz project and others;
       Arrange for management teams from the hotels and restaurants sector to visit
       farmers, holding workshop days with them to discuss quality and marketing
       procedures. Farmers should also visit the hotels to see how their products are
       being utilised and why the hotels and restaurants' specifications are important;
       Develop a focus on adjusting pricing and contractual arrangements according to
       levels and volumes of trade between different stakeholders.

Strengthening of the inter-connectedness and linkages of tourism, with most of the other
sectors of the economy, especially transport, culture, forestry, environment and agriculture
as pointed out in Chapter 5 of Part II of this report, will encourage greater cooperation and
improve mutual economic benefit while also contributing to a reduction in the economic
leakages of the national economy. This can be achieved through greater awareness and
understanding within both government ministries and the private sector of the breadth and
reach of the tourism sector across many areas of the economy. A programme of
awareness seminars should be developed to improve the levels of understanding of
tourism’s wider linkages.




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13.3   Summary of Recommendations

The economic benefits of tourism could be enhanced if the following recommendations are
taken into consideration:

       Improved statistical data - ensuring pre-conditions for Tourism Satellite Accounts
       (TSA) system in the next 5 years;
       Increased length of stay and increased tourism expenditures - through set of
       marketing measures;
       Increased government investment in tourism, having in mind its important
       contribution to GDP, employment, foreign exchange earnings and government's
       revenues;
       Strengthened linkages of tourism with the other sectors of the economy such as
       agriculture, through an awareness campaign/seminar programme which will
       contribute to a reduction in the economic leakages of the national economy.

Investment Strategy


The existing investment incentives are attractive. The adoption of the National
Tourism Strategy will provide a further impetus for the attraction of additional
investment.



13.4   Existing Investment Incentives

From the analysis of the investment climate in the Economic Impact Chapter 5 of Part II of
this report, it can be concluded that in spite of its small size and modest domestic market,
Macedonia presents a number of realistic advantages for potential investors:

       Macedonia benefits from a strategic geographical position at the crossroads of two
       main European transport corridors;
       It has developed a highly liberalized foreign trade policy and has signed various
       bilateral agreements that give local producers free access to the EU and other
       markets, making Macedonia a highly competitive production and export platform;
       Macedonia offers a stable monetary environment with the lowest inflation rates in
       the region and a stable currency;
        Investors in Macedonia benefit from a very favourable tax environment. The
       corporate income tax has decreased from 15 to 12 per cent, and the Government
       has announced that it will go down to 10 per cent in 2008. In addition, Macedonia
       has Industrial Technological Zones with 10 year tax holidays for corporate profits,
       VAT, customs duties etc.;
       Macedonia has a highly qualified workforce and one of the most competitive labour
       costs in Europe;
       Macedonia applies the highest standards in its corporate reporting and corporate
       governance and already applies EU standards on public procurement, competition,
       State aid, product standards and many other areas.



                                                                                        209
13.5   Reccommendations for Investment Policy

Although the investment incentives listed above represent a competitive set of measures,
they can be improved upon and several recommendations for enhancing the investment
policies are identified below.

1. Extend the Focus of the Agency for Foreign Investments - The Government of
Macedonia has determined five economic sectors as their priority in attracting foreign
investors, and those are:
       Automotive industry
       IT
       Agribusiness
       Textiles
       Pharmaceutical industry.

The Agency for Foreign Investments has prepared sector analyses for the five selected
sectors and these are available to potential investors. In spite of the lack of adequate
statistical data on tourism, a sector analysis on the tourism sector should also be made
available to potential investors in the tourism sector since this will provide necessary
background information which will assist their evaluation of the opportunity for investing in
the Macedonian tourism sector.

2. Improved promotional activities for potential tourism investors - The set of
investment incentives is competitive, and attractive, however, investors have to be
informed about it through promotional activities. It is obvious that the Agency for Foreign
Investments conducts promotional activities, but mainly in the selected five sectors. In the
future, more attention should also be placed on promotional activities in the area of tourism
with a view to attracting potential tourism investors. Invest in Macedonia, with assistance
from the proposed tourism Agency for Promotion and Support of Tourism should target
international hotel chains and interest them in taking up management contracts for hotels
in Macedonia and to identify investment organisations that have already invested in the
hotel sector elsewhere in Eastern Europe with a view to encouraging them to consider
hotel investments in Macedonia. Every effort should then be made to bring the investors
and the management companies together to consider specific opportunities. The
developments which result from such activities will help raise hotel operating standards in
Macedonia and improve the image of Macedonia for tourism and other economic activities.
The effects of such investment, as identified in both the Economic Impact Chapter 5 from
Part II of this report and the earlier part of this Economic Development Chapter in Part III
of this report, will be an improving contribution to GDP, employment, and especially foreign
exchange and tax revenues, since without such investment the levels of these economic
indicators would be much lower.

3. Establish a small business advisory service for potential tourism investors – Most
investment in the tourism sector is generated from sources within Macedonia itself and
much the greater part of this is in smaller to medium scale enterprise development. At
present, however, there is no organisation or agency in place with the knowledge and
understanding of the tourism sector, its market trends and requirements, which can guide
potential investors on product, market, quality, size, location, design, businss planning and
many other issues.




                                                                                         210
It is therefore proposed that an advisory service for small to medium sized business
investment in the tourism sector be established within the Department of Tourism located
in the Ministry of Economy. It is likely that existing Tourism staff could be supplemented by
suitable personnel from within the Ministry of Economy who could be seconded for a
period or made available on an ad hoc basis until the nature of the longer term
requirement becomes clear. The service should also develop a registered list of
professional advisory firms such as architects, accountants, designers, and surveyors etc.
who could offer particular services beyond the capacity of the Department of Tourism.

In addition, the Department of Tourism must develop a close working relationship with
Ministry of Agriculture who are responsible for developing and implementing the EU
funded IPARD rural development initiative which also encompasses tourism focussed
activities. It will be essential for the successful development of rural tourism, which is a
major component in Macedonian tourism that both the Department of Tourism and the
Ministry of Agriculture cooperate closely.

4. A Proposed Investment Forum/Fair – A further approach to encouraging and
assisting the development of tourism is through the organisation of an Investment Forum
or Fair which focuses on tourism sector investment opportunities. The purpose of such a
Forum is to present a ‘shop window’ for investment opportunities in the Macedonian
tourism sector and to facilitate the meeting of potential national and international investors
and operators with the promoters of viable tourism projects. Such an event should not only
bring together investors and projects requiring investment but also the various financial
and other professional intermediaries and operating/management companies which are
needed to support the implementation of project development. An investment conference
focussing on the tourism sector could also be run in association with this event.

The Department of Tourism within the Ministry of Economy should take the lead with this
initiative supported by Invest Macedonia, Macedonian Chambers of Commerce and
relevant leading Ministries such as Agriculture. However, implementation of this particular
action should wait until the development of the small business advisory service, described
above, and the process by which suitable business opportunities are identified is in place.
An event of this nature is likely to require up to a year’s lead time for planning and
preparation and thus for this and Ministerial organisational reasons it is likely that 2011
would be the earliest date at which this Forum could be held.

5. Functional Land Cadastre - Owing to its difficult history over the last 60 years, the
legal status of ownership and land use in Macedonia remains unclear. Confidence in the
registration and cadastre records is low and the records are significantly out-of-date, and
60-70 per cent of apartments are not registered at all. Property ownership is currently not
registered consistently in any central place: notaries maintain a record of transactions they
are involved in, but this information is not publicly available; municipal courts are only used
to record mortgages, and rarely for recording property transactions; and the State
Authority for Geodetic Works maintains a land cadastre and is in the process of
establishing a real estate cadastre.

The recent World Bank’s Foreign Investment Advisory Service (FIAS) study and the 2003
Country Assistance Strategy (CAS) both outline uncertainty of land title as a major
constraint to investment in the Republic of Macedonia. The lack of confidence and
difficulty caused by incomplete records has negative effects on private sector investment
and development of the economy overall: many land transactions are not registered,


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and cadastre and other records (courts, notaries) are incomplete and out-of-date leading
to uncertainty and a lack of trust in the property markets. Another direct consequence of
unclear property rights is the constraints on collateral and mortgage financing making it
difficult for citizens to mortgage and transact property.

The Government of Macedonia has already begun to address the problems in this sector
by establishing a modern real estate cadastre (REC) and the development of modern and
transparent processes for title transfer and permits. Progress however is slow and in 10
years only 44 per cent of the territory has been registered in the new REC, and only two
out of the total 1,870 cadastral municipalities have been completely covered. Overall there
are fundamental technical flaws in the procedures.

The strategic recommendations are: to improve public confidence in tenure security and
lower transaction costs by building more effective land registration and cadastre systems
in Macedonia, contributing to the development of efficient real property markets. The
focus should be on establishing the REC across the territory of Macedonia in an
accelerated timeframe in order to clarify ownership and promote tenure security.

The processes and procedures of the State Authority for Geodetic Works should be
improved to provide efficient registration services through the establishment,
implementation and monitoring of minimum service standards of property registration
transactions. Business process improvement, records management, automation and IT
will all contribute to improved service delivery and legal security for all property owners.

6. Improved banking sector – The banking system has failed to attract strategic foreign
investments in the banking sector. This can partly be explained by the lack of reforms and
the legal framework in this segment of the economy, discouraging foreign investors and
prominent foreign-owned banks. Foreign owners currently in Macedonia are essentially
from Slovenia, Bulgaria and Greece (Nova Ljubljanska Banka, UniBanka, National Bank of
Greece). However, their presence has produced only small changes. Thus, as competition
has increased only slightly, very few new products and services have been introduced on
the market.

The high interest rates charged, particularly in a low inflation economy, and other
conditions attached to lending by the banks have serious negative implications on the
economy and its growth potential. Consequently, the most important factor concerning the
current state of affairs in the banking system is the lack of serious foreign competition (with
one exception) from strong financial institutions that have practically unlimited access to
cheap financing, technical support, and superior management.

To overcome this situation a new bank regulation has been prepared and is expected to
become a law soon. This draft policy measure is a very important step to increase the
existing confidence in the local banking sector. It is set to improve the legal and regulatory
environment, and the field of banking supervision. The new banking legislation sets out the
possibility for the foreign financial institutions to open branches on the Macedonia market.
Namely, banks from the EU will be able to carry out all activities for which they are
licensed in the country of their origin. However, certain standard conditions have to be
fulfilled, such as:




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       A minimum capital requirement in the amount of € 5 million
       An obligation for preparing financial statements and periodical reports for the
       National Bank of Macedonia for the purpose of monitoring ‘bank’ liquidity and its
       operating activities
       Preparing and publishing financial reports on annual basis
       Adopting minimum standards for prevention of money laundering.


13.7   Summary of Investment Recommendations

More investment in tourism could be attracted if the following recommendations are taken
in consideration:

       Extend the focus of the Agency for Foreign Investments
       Improved promotional activities for potential tourism investors
       Establish a small business advisory service in the Department of Tourism
       Plan and implement a proposed investment forum/fair
       Functional Land Cadastre
       Improved banking sector




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14.     Human Resources Development


Tourism is a people to people industry. What tourists remember most is the
people who looked after their needs. Well trained, friendly personnel are a key to
a successful business and to a successful tourist destination. Well trained and
motivated personnel are confident and comfortable in their work. This leads to
happy and friendly staffs that are more likely to interact positively with customers.

Macedonia has a young, vibrant workforce with an inbuilt tradition of hospitality.
There is an urgent need to complement this with necessary skills to ensure a
successful industry.


Tourism is an integrated, complex activity that involves all areas of economic and social
life. Analysing the current development level of tourism (including the Tourism Industry
Workforce and tourism related educational system analysed in Chapter 6 of Part II of this
report), and the existing development potential, it is clear that in the next few years the
tourism industry could become one of the more important sectors of economy. It can play
an important contributory role in the achievement of the Government’s wider economic
objectives.    Within this context, this primarily relates to the realisation of economic
objectives, such as the creation of new employment and an increase in the education level
of the workforce.

The size of the tourism workforce has grown to such extent that today, travel and tourism
is considered to be the world’s largest employer. In Macedonia, according to State
Statistical Office (SSO) data, only 3.5 per cent of the active population are employed in the
Tourism Industry. Nevertheless, the potential of tourism for generating jobs in areas
where there are few other alternatives for employment (balanced regional development)
and the high potential impact on the national economy and development has resulted in
efforts by the Government of Republic of Macedonia to create a National Development
Tourism Strategy with a clear intention to expand tourism industry.

After analyzing the actual situation in the HR field in the tourism sector in Macedonia in the
first part, this second part will focus on a development of Strategy for human resource
development in tourism that will include key measures and activities. The direction and
priority actions provided in the strategy should contribute to a more efficient development
of human resources in tourism industry ensuring that Macedonia will meet the human
resources needs having an adequate number of better trained, skilled and qualified
people. The strategy is focused on development of a high performing workforce, adequate
educational system and stable working environment.


14.1   Outlook - Projection of Growth in Tourism Employment

Market projections (targets) prepared as part of this National Tourism Development
Strategy for the period 2009 – 2013, covering foreign and domestic arrivals and overnights
in registered accommodation may be found in Chapter 12, Marketing and Targets for
Growth, in Part III of this report and they are among the principal factors which must be
taken into consideration when examining the prospects for growth in tourism employment.


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Other factors include the current levels of employment in the sector, the trends associated
with those levels and existing levels of supply, demand and occupancy in the Macedonian
hotel sector.

Table 14.1 below consolidates the target position for domestic and foreign visitor
overnights from 2008 to 2013 presented in Tables 12.2 and 12.4 in Chapter 12, Marketing
and Targets for Growth, in Part III of this report.

Table 14.1: Target Domestic and Foreign Visitors Overnights in Registered Accommodation
                                       2008-2013
                     2008*      2009       2010        2011       2012       2013
    Overnights     2,235,520 2,347,296 2,464,660 2,558,030 2,662,232 2,778,827
    Annual
                      10.7       5.0        5.0         3.8        4.1        4.4
    Increase %
   * Actual           Source: UNWTO Consultant Estimates

According to the figures in Table 14.1, the growth in the number of Overnights in
Macedonia from domestic and foreign visitors in registered accommodation will decline
from the strength of 10.7 per cent in 2008 to a more sustainable level of 4.4 per cent by
2013. This is both a reflection of the anticipated impact of negative trends in the world
economy from late 2008 until 2010 and the time lag which will precede the
commencement of benefits expected from the implementation of the National Tourism
Development Strategy.      Accordingly, there will not be an evident need to see a major
increase in the actual number of employees in the Tourism Industry over the next five
years, particularly as employment in the sector grew by approximately 50 per cent
between 2005 and 2006 (and was largely retained in 2007), except for the creation of new
opportunities resulting from the improvement in service and quality offered by existing
businesses and the development of new products.

Employment in the Hotels and Restaurants services segment of the industry is expected to
grow over the next five years and to generate 1,000 – 2,500 new jobs by 2013 i.e. a
realistic target growth rate of between 5 and 13 per cent over the period compared (based
on a figure of 18,995 employees in the hotel and restaurants sector in 2007 presented in
Table 6.2 in Chapter 6, Human Resources, in Part II of this report) with the target growth of
24 per cent in total visitor overnights between 2008 and 2013 shown in Table 14.1 above.

In support of this relatively modest target expansion of the numbers employed in the hotels
and restaurants sector, the Human Resources Development Strategy will focus on a few
important areas:

       Upgrading the skills of the Tourism Industry Workforce by developing a high
       performing, highly qualified and multi skilled tourism workforce;
       Developing high performing education with an accent on quality instead of quantity
       and measures for collaboration between Employers and Educational Institutions;
       Creation and development of a stable, high performance environment for
       employment in Tourism Industry.




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In addition, two further measures will be proposed:

       Complete reorganisation and introduction of new standards in the work of the
       Tourism Sector (TS) in the Ministry of Economy (MOE) (capacity building and
       strengthening), and
       Launching a Tourism Awareness Programme as a part of one big domestic
       promotional campaign that will lead to a raising of the public awareness underlining
       the importance of the tourism.

14.2   Challenges and Issues

While examining the current situation of the Tourism Industry Workforce and Tourism
Related Education in Chapter 6 of Part II of this report, it was found that the tourism
industry is currently facing a number of significant institutional and labour force challenges.
These include:
        SSO data – SSO as a part of EUROSTAT should be one of the most important
        institutions for the extraction of all necessary information that can be used as a
        basis for planning and execution of all future actions in the tourism sector as well
        as follow up of current trends and adaptation of necessary actions. SSO is the
        number one resource for all necessary information. While working on data
        collection, many difficulties were faced. One example is that Tourism is declared
        as an Industry Segment but consensus isn’t established within the various state
        institutions upon the definition of the Tourism Industry and the methodology
        adjustments to be used when dealing this Industry sector, or on how many regions
        it should be divided into etc. The industry segment is not listed separately, as a
        separate branch and the data gathering process is not easy to carry out. The data
        collection process (for most of the information) is not revised on a regular basis and
        thus does not reflect the true numerical picture. Some of the surveys are only
        made every 5 years and the annual trends are missing.

       Employment Bureau information - Information regarding employment in the
       Tourism segment gathered from other official institutions is not in correlation with
       the real numbers. According to the data gathered from the Employment Bureau
       and analyzed in SSO, the Republic of Macedonia has approximately 20,000 people
       in its Tourism Industry. However, there is a big gap between official Governmental
       statistics and the situation inthe field. Some estimates (consulted tourism stake
       holders and the World Bank Report on the Macedonian Economy) suggest that the
       number of undeclared workers in Hotels and Restaurants could represent an
       additional 15 to 30,000 workers. However, the UNWTO consultant’s estimation is
       that the percentage of these undeclared and unregistered employees can vary
       from between 50 and 70 per cent of the total number of employees in this sector.

       The second major issue with reference to the data from the Employment Bureau
       and SSO is the information regarding average salaries. The average wage in
       hotels and restaurants services was 7,397.00 MKD for May 2007 – approximately
       47 percent lower than the national average of 14,100.00 MKD. Most of the jobs are
       declared on an industry minimum salary and the employers are avoiding paying the
       full amount of social obligation and taxes. Actual paid salaries are higher -
       approximately 30 - 50 per cent higher than the declared salary.




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Even the wages in skilled occupations (i.e. cooks, hotel managers) are declared at
minimum salary. Many workers in the industry are able to supplement their wages
with tips. No existing information was found for tips because they are undeclared
income. This should be a prioritised field of examination. In order to have relevant
data and information, a Tourism Industry Survey is absolutely necessary before
taking any serious action.

The Tourism sector is not able to guarantee safe living conditions (low salary level
and social security packages) for its workforce in spite of the required serious skills
and competencies.

High Staff turnover rate in the industry – Even though specific information
regarding the turnover rate in the Tourism Industry was not found, the general
impression and statements of key stake holders indicate the presence of a high
turnover rate. Compared to other Industries, the Tourism sector has the highest
turnover rate of employees. For the most part, employment in hotels and
restaurants is not considered a serious job mainly because of the seasonality of
employment, low salary levels and unreported employment (which means that the
workers are not able to benefit from the social security package that should be paid
by the employers).

Deficiency in skills as well as the professional background – the Tourism Workforce
is lacking the professional and customer oriented approach which is an
indispensable factor for tourism development. Language and communication skills
are at a very low level within the work force aged 40 and above. The workers in
tourism related areas are not aware of the significance of tourism. Generally,
structured career development, training and development programmes are missing
in the Industry. The efforts for surpassing this situation should be made from all
interested parties - hotels, restaurants and other industry representatives in
executing HR Development programmes, the Government of the Republic of
Macedonia – implementing measures for training subvention, Providers of
Professional training - Improvement of the current training offer.

Educational System Impotency and Maladjustment – The educational system of
the Republic of Macedonia is based on the former Yugoslavian educational
system. It is one of the areas where many reforms and experiments were
undertaken. The formal educational system in Macedonia is producing a high
number of scholars and students in inappropriate working conditions. Because of
the gap between the educational institutions, educational programmes and industry
needs, students are not skilled and trained according to the market needs. The
production of students and scholars is approximately four times larger than the
existing industry absorption capacity and forecast market need. The shortage of
training facilities and practice laboratories, poorly organized and structured
practical work, poor transfer of theoretical knowledge and skills into practice and an
enormous gap between industry needs and educational programmes are some of
the identified weaknesses. The industry is complaining about the education
system as being isolated and producing an unsuitable and unusable workforce. It
will be essential to develop a high performing educational system and a high
performing work environment if the country is to develop a high qualified and high
performing Tourism Industry workforce.



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14.3   Priority Actions

The Industry should be a leader in the process of implementing the National Tourism
Development Strategy. High levels of co-operation and collaboration among stakeholders
within the industry is required for successful implementation of the Strategy. Creative
solutions and an integrated approach to the implementation of the initiatives work best
when stakeholders are cooperating in partnership.

Development of human resources aims at improving the quality of products, services and
profitability of enterprises; furthermore it contributes to the career of employees.

The successful development of human resources is the responsibility of all public and
private partners and the civil society in the field of tourism. Among them, a partnership
involving research, planning, design and implementation of personnel education and
training should be established. Consequently, human resource development actions
should be undertaken in a consensus of all key partners, i.e. the representatives of the
tourism industry – tourist employers and employees – local communities, educational
institutions and entities from the civil society in the field of tourism.

Develop High Performance Education

Transformation of the education system should be made urgently. A modern, innovative,
market requires an educational system that should be developed from the existing
foundations. The accent should be put on production of a competitive labour force not in
terms of numbers but in terms of quality and skills.

   o   Developing the school system
Quality considerations must be emphasized in tourist education. Higher education must be
transformed to improve the quality and strengthen its interdisciplinary character (the
current program is exclusively hotel and catering oriented).

Competitive, foreign language trainings are needed. Tourism must be integrated into the
related university, college courses. The complementary skills set must be developed in a
more tourism friendly way through information and changing of attitudes.

The actions that should be taken in order to improve the quality of education and
development of high performing education are:
       Conduct a Labour force survey that will identify exact industry demands versus
       supply;
       Increase the budget for equipping educational training facilities;
       Increase the number of practical training hours within the educational institution
       (secondary schools and faculties);
       Establish a professional association of faculty, secondary vocational schools,
       employers and the Ministry of Education that will work towards reducing the gap
       between the current educational offer and meeting industry needs in terms of skills
       and numbers;
       Setting out quality standards i.e. introduce quality management systems for
       educational institutions;




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       Emphasis and strengthening international cooperation of secondary schools and
       faculties, visiting professors from abroad, transfer of international know how;
       Establish career centres within Secondary schools and University that will work on
       strengthening the liaisons of educational institutions and tourism industry, offer
       internships and employment for scholars and students as well as preparing them
       on how to search for jobs – career development.
       Introduce a scholarship programme (5 – 15 scholarships per year) for the best
       students sponsored from Industry that will guarantee employment to the students
       after the end of the studies under the terms and conditions regulated in the
       scholarship contract.

   o   Modernisation of professional training

Practical training must be provided for the Tourism Industry labour force as well as all
interested parties. The general conclusion is that at this moment the offer of professional
training is satisfactory. The negative aspect of the offer of professional training is that the
offer is spontaneous, without deep analysis of industry needs and without established
relation to the Tourism Industry. The proposed measures are as follows:
        Conduct a Labour force survey that will identify training needs of the Tourism
        industry;
        Establish close relations (eventually professional association) between Employers
        and Training Providers, that will improve the actual offer of professional training
        and the quality of training;
        Establish a Governmental body that will set up the quality standards for training
        providers and introduce the certification and licensing process.

Develop High Performance Workforce

The professional and customer oriented approach is an indispensable factor for tourism
development. The Tourism Industry workforce has been analysed in Chapter 6 of Part II
of this document. The conclusion is that currently, there are deficiencies in the skills as
well as the professional background. Introducing well structured HR Management and HR
Development in this sector must be considered as necessity. Lack of full time trainers on
staff and lack of training budget are only a few of the areas of interventions.

       Conduct a Tourism Labour Force Survey that will provide exact information of the
       numbers of employees in the Tourism sector, educational background, professional
       background, soft skills, professional skills, IT skills, foreign languages, HR
       Management system in the Company…
       Implement annual training programme for employees in order to decrease the
       effects from seasonality of the job as well as to develop the needed skills.
       Tourism Industry stakeholders should allocate an annual training budget in their
       respective Companies;
       The Government should offer subventions for training in order to help the Industry
       stakeholders to produce and train a High Performing Workforce. Practically
       speaking, the Government should cover at least 50 per cent of the annual training
       budget. The other 50 per cent should be covered by the Industry. These
       measures include study visits abroad, international training, international 3 – 6
       month practices that will ease the transfer of International know how as well as
       domestic training for all employees in the Tourism industry.


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       Implement HR Management system in the Industry - Job Analysis and Job
       Description, Training and Development of Employees, Organisational
       Development, Career Development. At the moment, given the current situation,
       special accent should be given to the Training and Development of employees.
       Implementation of Performance Appraisal – In order to increase the motivation of
       the employee, a fair system of performance appraisal should be implemented by
       the Tourism Industry stakeholders. The employee that surpasses the targets
       should be rewarded with possibility for promotion, extra bonuses, and incentives -
       according to their performance.

   o   Tourism training needs

During the assessment of the skills and competencies of the Tourism Industry Workforce,
the overall training needs of the tourism industry were identified. Nevertheless, for more
precise and accurate training needs analysis, a Tourism Industry Labour Force Survey
should be undertaken. Based on a segmentation that has been undertaken in Chapter 6
of Part II of this report, on Managerial staff, Professional/non managerial staff, Skilled and
semi skilled workers and unskilled staffs, the identified general training needs are as
follow:

     1. Managerial staff –
          Communication skills
          Team Building and Leadership
          HR Management
          Financial and accounting
          Applied Marketing
          Foreign Languages
     2. Professional/non managerial staff
          IT skills
          Customer relations
          HR Management
     3. Skilled and semi skilled workers
          Foreign languages
          Communication skills
          Customer relations
     4. Unskilled staff
           Foreign Languages

As regards technical training needs the list is:
           Culinary skills
           Food and Beverage
           Bartending
           Hotel and restaurants maintenance
           Front office
           Tour Guiding including communication skills
           Service skills




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Regarding the situation in the Tourism Industry and the analysis of the Labour Force, a
few important training programmes with more detailed elaboration are strongly
recommended:

           Work-readiness: Includes skills needed for success in any occupation, e.g.,
           basic literacy, computer skills, communication skills, work ethic, punctuality,
           respect for employee rules, dress code awareness, service orientation, basic
           understanding of employer’s mission statement.         Soft-skills training has
           become more important in a time of high unemployment where those not
           working are more likely to have work-readiness problems.

           Entry level management skills: including basic financial literacy and leadership
           training, basic knowledge of marketing, business and human resources.

           Professional development training for employees who want to expand skills and
           progress along the industry career path by staying in touch with changing
           trends and demands in the market place.

           Cultural awareness: providing Macedonian cultural training for Tourism Industry
           employees that effectively supports cultural tourism;

           Computer literacy and knowledge of new technologies especially in
           maintenance and front desk management of hotel properties. Many employees
           are feeling the complex demands of the 21st century workplace;

           Tourism industry awareness: understanding business culture/mission of
           tourism. Learning about the big picture of how tourism functions globally can
           help reduce negative stereotypes of the tourism industry and motivate more
           people to work within the local industry.

           Second language training needed in response to global clientele (preferred
           training in English, Greek etc - for other languages please refer to the
           Marketing Chapter, Chapter 12 in Part III of this report).

           Industry managers need to be educated in the challenges of national
           economics so that they recognise employee issues that may be affecting
           workplace performance.

           Train the trainer programs: regarding the limited training budget, those
           programmes are providing best quality/price ratio for the Industry especially in
           technical training needs.

       o   Training delivery issues

With reference to training, delivery of the subject is an issue needing examination.
Companies must set-up clear standards for training providers to ensure that training
outcomes correspond to training objectives and expectations.

           Feedback between educators/training providers and industry businesses is
           needed to ensure that curriculum is current with industry standards.



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           The delivery of training needs to be customised to fit the workplace: i.e., class
           schedules should take into consideration work schedules.

           Tourism industry representatives and human resources representatives can
           develop a sustained partnership to make the training and HR projects more
           effective.

           Industry might consider the benefits of standardising certain types of training;

           Job training should encourage lateral flexibility (i.e., moving from waiter to front
           desk or vice-versa) could expand skill-sets and maybe even enhance job
           satisfaction of individual employees.

Develop High Performance Environment

The Tourism Industry is not able to guarantee safe living conditions for its workforce in
spite of the required serious skills and competencies. According to the situation analysis,
the percentage of unregistered employees is between 15,000 and 30,000 people
compared with 20,000 registered. Consequently, the unregistered employees feel
insecure and unprotected according to the Macedonian labour code and legal framework,
without a labour contract and without having the possibility to profit from employment
social benefits packages.

Another important issue is reported average salaries. The average salary in hotels and
restaurants services was 7,397.00 MKD for May 2007 – roughly 47 percent lower than the
national average of 14,100.00 MKD. The real paid salaries are higher by approximately 30
- 50 per cent compared to declared salary. Most of the jobs are declared on minimum
salary and the employers avoid paying the full amount of social obligation (pension fund on
benefits on the employees) and taxes.

The list of proposed measures for building a competitive environment is as follows:

           A compensation and benefits survey (as a part of the labour force survey)
           undertaken by the Tourism Industry and based on trust and honesty is
           necessary before taking any serious action.
           Promote tourism industry standards for tourism service delivery to increase
           consistency of service excellence across the industry.
           Identify practices that may benefit from adopting new technologies or improved
           processes.
           Promote these technologies and improved processes within the tourism
           industry.
           Propose regulatory changes that could increase productivity and flexibility in the
           tourism industry
           Implementation of tourism industry Best Practice Standards.
           Raise awareness in the tourism and catering industry of workplace safety
           standards and best practices.




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Creation of a stable environment for employment
Securing a stable environment for employment is a basic element in developing a high
performance working environment. Predictable living conditions and perspectives must be
provided for the workforce to increase the appreciation of tourism industry employment.

Permanent (non seasonal) employment and better salaries are needed. Management
should be improved to make a profitable operation possible.

Young graduates must be assisted to find employment according to their qualification.

The Tourism Industry as a labour-intensive business can play a significant role in the
creation of new jobs. Therefore reporting of employment must be enforced.

The proposed measures in order to develop a secure and stable working environment are:
          Regular assessment (based on annual survey) regarding employment,
          professional trends and tendencies in tourism;
          Implementation of all aspects from legal frame work related to Employment and
          Employee especially from Labour Code and the law for protection at the
          working place;
          Active fight with regular control, sanctioning, pressure by professional
          association and community against enterprises offering unfair working
          conditions;
          Active fight with regular control, sanctioning for all unreported employees;
          Establishing working group between Ministry of Labour and Social Policy,
          Employment Bureau, Ministry of Justice and Tourism Industry representatives
          that will provide options for different legal forms and working contracts that will
          help in reporting employees and simplify this process.
          Social dialogue between all the parties included; Employers, Employee,
          Ministry of Labour and Social Policy.


14.4   Human Resources Planning in the Ministry of Economy

In Chapter 6 of Part II of this report special accent was given to the Human and
Organisational capacity of the employees in the Tourism Sector (MoE) as key carriers in
the process of implementation of all National Developmental Strategy and Policy.

The assessment of the Tourism Sector of the MoE clearly demonstrates very limited
capacity in terms of both, numbers and skills. Urgent restructuring and capacity building of
the Tourism Sector is urgently needed and should be one of the top Governmental
priorities.

If the Tourism Industry is on the Governmental Priority list, separate bodies with an
independent budget should be seriously considered as an option (Agency, Ministry for
Tourism…)

Performance appraisals provide managers with information for making strategic
management decisions. The information gained through urgent measures for the existing
Tourism Sector are:


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           Job Opening for Senior Marketing Expert (University Degree and at least 3 – 5
           years of Marketing Experience in a Marketing Agency or equivalent) who will be
           responsible for executing the Governmental programme for tourism promotion;
           furthermore, specific marketing unit should be established.
           Job Opening for Legal Expert;
           Organising training for present employees on the following topics: Project cycle
           management, Tourism Policy Development and planning, Tourism Product
           Development; Marketing and fairs organisation; on-going courses in English
           language and advanced administrative IT skills (MS Office package).
           Regarding the organisational restructuring and capacity building, hiring of an
           external consultant is a necessity. The role should be clearly defined with
           accent on setting up the standards and procedures for Human Resources
           Planning, Job analysis process, Recruitment and Selection, Training and
           Development, Career Development, Organisational Development and
           Performance Appraisal.
           Effective human resources management recognises and utilises the human
           asset of an organisation in order to fulfil short and long term goals. The
           Tourism Sector is, possibly, the most important single factor in ensuring
           successful, well structured and integrated management and development of
           tourism. Good human resources planning and development create a workforce
           that is more likely to succeed.
           Each post assigned to an employee should have a specific and detailed job
           description. The purpose of defining each work assignment is to ensure job
           satisfaction for the individual and an efficient and effective organisation overall.
           Job analysis is a commonly used strategy for identifying organisational human
           needs and is recommended here.
           The information derived from job analysis is the key criteria for recruiting job
           applicants in a targeted manner. Selecting the ideal applicant should be based
           upon the measurable criteria determined from the job analysis.
           By applying a well ordered and professional human resources development
           (HRD) approach to work, the skills, knowledge and attitudes of the Tourism
           Sector personnel will be enriched and the overall quality of work performed will
           improve.     The three branches of HRD are: training and development,
           organisational development and career development.
           Collection, analysis and evaluation of employees’ performance enable
           managers to communicate with staff about performance.                 Performance
           appraisal tied to remuneration level is one way to encourage implementation.

14.5   Conclusions – The Way Forward

Human resources are essential for tourism development. All employees in the tourism
industry need to be recognised as its valued ambassadors, who are offering experience
instead of product. In this section priority actions are identifed for implementation in order
to offer a competitive, effective, efficient, high performing labour force.

The first step should be organising and performing a Tourism Industry Survey that offers a
response to all aspects of the Industry and it will be a basis for any future action.

The next steps should be taken by leading industry associations who will work with their
members to review the strategy actions and identify those they will focus on immediately.
The Government of Macedonia with MoE and the Tourism Sector should support the


                                                                                           224
tourism industry in its implementation of the strategy by identifying opportunities for
collaboration across industries. This will enhance effectiveness and efficiency, and allow
government to keep abreast of emerging issues and take action as required.

The possible challenges that tourism stakeholders and the Tourism Industry may face in
implementation include:

          Assigning priorities to actions;
          Engaging all industry members and other stakeholders and securing their
          commitment to collaborate in moving forward with specific actions;
          Avoiding fragmentation and duplication of implementation activities within the
          tourism industry and other industries;
          Collaborating with stakeholders in other industry sectors on cross-sector
          initiatives;
          Monitoring labour market conditions – within the industry, regionally, nationally
          and globally – and adjusting strategy actions and priorities to respond to
          changing circumstances, and
          Keeping the momentum going on the implementation of strategy actions over
          the next five years.

The Tourism Industry, stakeholders and the Government of Macedonia should also work
together to review the strategy, to adapt the strategy and to monitor the success of this
strategy over the next five years. The Tourism industry should share the information about
their achievements and learning on effective practices for workforce development. By
industry and government working together, Tourism should start growing and all industries
as well as the Government of Macedonia will benefit.




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15. Tourism Organisation and Management

In the Government’s national development plans, tourism is identified as a sector
with potential for substantial growth. The Tourism Sector in the Ministry of
Economy needs to be significantly strengthened and supported by an Agency for
Promotion and Support of Tourism that will bring about separate policy and
monitoring from implementation.


Introduction

The implementation of this strategy will ensure that tourism plays its optimum role in
increasing the tourism sector contribution to the national economy in foreign exchange
earnings, creation of additional jobs, regional distribution and additional tax contributions to
government and municipal revenues. This implementation requires that the government
role is re-defined and that the necessary organisation is in place.

The Law on Establishment of Agency for Promotion and Support of the Tourism,
independent from, but under the auspices of the Ministry, actually follows the international
best practice. The majority of countries that are successful in tourism have adopted this
option that allows the Agency for Promotion and Support of the Tourism to operate outside
the constraints that normally apply to the operations within government ministries in regard
to decision making, purchasing, recruitment, contracting, delegation of authority and
responsibility.

The Agency has an Executive Board consisting of representative of the industry and the
government which will bring together the public and private sectors in implementing
tourism policies and plans.

Each year the plans and budgets of the Agency are subject to approval by the
Government and all accounts and monetary transaction will be subject to Government
audit.

The Ministry sets and monitors the Agency for Promotion and Support of the Tourism’s
targets for tourism growth and monitors the performance of the Agency for Promotion and
Support of the Tourism and the sector.

The Ministry concentrates on the big picture and the long term national objectives without
being diverted by short term issues and changes in market or other circumstances. The
Agency for Promotion and Support of the Tourism in conjunction with the industry follows
annual work programmes and concentrates on the immediate, with the ability to respond
quickly to short term issues and change short term strategies and plans as necessary.

Long term policy, strategy and planning, together with the setting of objectives and targets
and the monitoring of performance are separated from the implementation of short to
medium term plans and programmes to achieve defined growth targets.




                                                                                            226
The organisation of the government’s role and management of the tourism sector is vital to
the implementation of the Tourism Strategy. For this reason we go further than would be
normal in a strategy document in detailing the organisation and roles of the Ministry and
the proposed Agency for Promotion and Support of the Tourism.

15.1   Organisational Roles and Functions

Role of the Government in Tourism

The Government role in Tourism is to provide leadership for the total industry as an
economic force in the nation. It should, however, only intervene where the industry itself is
unable to act effectively. Specifically the Government roles are to:

       Formulate medium to long-term tourism policy, plan for tourism development, and
       regulate tourism activities through legislation, licensing and classification.

       Monitor performance on quality, safety and targets.

       Facilitate tourism development by providing the economic, infrastructure,
       regulatory, fiscal and political environment that encourages investment and orderly
       growth.

       Ensure the marketing of the Republic of Macedonia as a tourist destination.

Role and Functions of the Ministry Responsibility for Tourism

The fundamental tourism role of the Ministry is to formulate medium to long term tourism
policy and monitor its implementation. This allows the Ministry to concentrate on medium
to long term policies and objectives and not to be diverted by “immediate crises”. The
Agency for Promotion and Support of the Tourism responds to such events and
concentrates on annual operational programmes, short term activities and targets

The Functions of the Ministry are to:

o   Formulate and elaborate medium term tourism policy and plans

This is the most important function of the Ministry. It should be an annual exercise
involving:

       Analysis of domestic and international tourism trends in order to guide policy
       development
       The setting of overall targets for tourism (5 to 10 year targets)
       Establishment of Policy guidelines and incentives to achieve the stated targets
       Elaboration of new initiatives to develop tourism
       Approval of Annual Work Plans and Budgets for the Agency for Promotion and
       Support of the Tourism.
       Approval of the overall budgets/resources to be allocated to the Agency for
       Promotion and Support of the Tourism.




                                                                                         227
It is important to note that the on-going formulation and elaboration of tourism policy
necessitates access to a comprehensive database on the size and performance of the
tourism industry, within the Republic of Macedonia, regionally and internationally.


o   Secure adequate funding and resources for tourism

The Ministry submits to the Ministry of Finance and Government proposal for allocation of
          funds for tourism related developments including training, domestic and
          international marketing of the Republic of Macedonia as a tourist destination.

o   Ensure the allocation of infrastructural and other resources that will have a
    positive impact on tourism

A key development function for the Tourism Ministry is to advise on the allocation of
        existing resources in a manner, which will assist in increasing the economic
        contributions of the tourism sector. This will involve recommendations on
        expenditure allocation on the basis of the economic impact of each area of
        expenditure.

Thus for example public funds are allocated to roads, public works etc., on the basis of
          their contribution to tourism development. It is important that the tourism
          implications of such funding are evaluated for each activity by identifying all the
          inputs (by the involved Ministries,) and the associated quantitative and
          qualitative outputs (foreign revenues from tourists, domestic expenditure, jobs,
          environment protection etc.) thus permitting an assessment of the returns to the
          country from supporting the activity.

o   Co-ordinate other Government Ministries, Municipalities and Agencies actions
    impacting on tourism development

There are a number of Government ministries and state agencies as well as municipalities
which are significantly involved directly or indirectly in the tourism sector. These include
ministries of Finance, Transport and Communications, Agriculture, Forestry and Water
Supply, Labour and Social Policy, Education and Science, Local Self Government,
Environment and Physical Planning, Foreign Affairs, Interior, and the Ministry of Culture.

o   Co-ordinate bilateral and multilateral relations in tourism with international
    organisations, funding and donor agencies

This multifaceted activity ranges from relations with the UNWTO, other international bodies
and donor and funding agencies (EU, EIB, UNDP, World Bank etc.), to the
supervision/direction of technical assistance projects.

o   Research and input to general policy and planning

This function involves:

       Researching various issues
       Preparation of papers for the Government



                                                                                         228
       Preparation of long-term development plans for the tourism industry in
       Republic of Macedonia
       Preparation of inputs on development of the tourist industry for national
       economic plans
       Preparation of inputs to the development of national budgets, policies and
       strategies

o   Monitor and evaluate performance of the tourism industry and the Agency
    for Promotion and Support of the Tourism

The Ministry will monitor the performance of the tourism industry and, in particular, the
Agency for Promotion and Support of the Tourism. This will involve the setting of targets
and the development and monitoring of criteria against which the performance of their
activities will be evaluated.

Thus each year, as part of the on-going process of monitoring and evaluation, the Ministry
will assess the performance of the Agency for Promotion and Support of the Tourism in
terms of the:

       Activities undertaken in performance of its Annual Work Plan
       The resource allocated to these activities
       The economic and social impact of these activities in the context of the
       objectives for tourism development.
       The achievement of the national tourism revenues and number of targets

o   Drive the implementation of the National Tourism Strategy

The Ministry will promulgate the National Tourism Strategy to other government ministries
and agencies, the tourism industry and the wider commercial, financial, donor and
international agencies in Republic of Macedonia. The Ministry will:
        Secure the strengthening of the Tourism Sector in the Ministry
        Implement the capacity strengthening of the Agency for Promotion and
        Support of the Tourism;
        Manage the continuing implementation.

Role of the Agency for Promotion and Support of the Tourism

As the main vehicle for the implementation of the Ministry’s tourism policy the role of the
Agency is to encourage and promote the development of tourism to and within the
Republic of Macedonia. This will be achieved through the formulation and implementation
of short to medium term policies, strategies and plans. The functions of the Agency
include the following:

o   Market the Republic of Macedonia as a tourist destination domestically and
    internationally
Based on market research and market intelligence, which it will have commissioned,
purchased or gathered itself, the Agency for Promotion and Support of the Tourism will
formulate annual, medium and long term marketing strategies, plans and actions for the
promotion of tourism. To implement such plans the Agency for Promotion and Support of
the Tourism will:



                                                                                       229
       Carry out any kind of promotion (public relations activities, advertising,
       consumer events and so on) the objective of which is to attract international
       and domestic tourists
       Establish, equip, operate, engage or assist in the operation of tourism
       office/representation abroad and regionally to market the Republic of
       Macedonia.
       Undertake market research
       Collect and collate relevant statistics from the tourism industry (hotels,
       Statistics Office, etc) on a regular bases
       Assemble data on tourism products, services and facilities
       Produce, publish and distribute promotional materials, videos, Web-site and
       so on, on tourism
       Engage with the travel trade, product, services and facilities providers in
       joint marketing activities on a co-funding basis.
       Contact with and co-ordinate the marketing activities of the tourist industry.

o   Assist in the development of marketing skills and initiatives within the industry

To ensure that the industry is equipped to play its role in successfully marketing the
         Republic of Macedonia the Agency will:

       Provide, publish and otherwise make available, information which would
       improve the marketing effectiveness of the industry - market research,
       statistics, market data and so on.
       Organise conferences, seminars, workshops or other methods to assist in
       the development of marketing skills and initiatives within the industry.

o   Promote high standards of tourism facilities and amenities and monitor quality
    and safety

This will involve the preparation and updating on a regular basis, with assistance of the
           municipalities and organisations, of an inventory of tourism resources. Using
           market research, exit surveys and consumer comments the Agency will review
           the standards of tourist facilities, amenities and services, and advise the
           Industry representatives on improvements and trends and necessary revisions
           of standards and criteria. The Agency will:

       Use incentives by way of awards and public recognitions to raise standards
       within the industry.
       Ensure that the facilities, amenities and services provided for tourists
       comply with safety requirements.
       Based on its own knowledge and research and on feedback from the
       industry revise the licensing and categorisation criteria so as to encourage
       the industry to keep standards in line with market expectations and
       international competition.




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o   Promote and ensure the provision of human resource education and training

In consultation with the industry and the HRD Advisory Committee will:

       Undertake continuous assessment of the manpower training needs of the
       industry in terms of numbers and skills required
       Organise and, where appropriate arrange for the provision, implementation
       and certification of training programmes for those employed in the industry
       and for new entrants to the industry
       Implement bilateral exchange training programmes in tourism
       Liaise with the universities, schools and colleges and other relevant
       institutions and the industry on the nature and type of training programs and
       courses with a view to advising on specific manpower needs of the industry.

o   Promote the development of tourism products, services and facilities that have
    potential to attract tourists

To stimulate investment and the provision of tourist attractions, services and facilities the
Agency will:

       Publish tourism statistics, research studies, marketing plans, development
       plans and other information of interest to the industry
       Formulate market led strategies and plans for tourism developments
       Encourage and assist the municipalities in the drafting of tourism related
       development plans
       Encourage the private sector to invest in and develop viable products, and
       facilities that will attract tourists
       Provide practical advice on research/promotion/business strategy etc, to the
       tourism enterprises.

o   Promote an increased awareness in the Republic of Macedonia on the benefits
    of tourism through awareness and education programs

To ensure that the Government and the people appreciate and support tourism and
welcome visitors the Agency will:

       Identify and estimate the economic, social, environmental and cultural
       benefits of tourism to the Republic of Macedonia and its people
       Undertake publicity campaigns involving the dissemination of information on
       the benefits of tourism.

o   Establish and administer annual budgets

Prepare and submit to the Ministry responsible for tourism detailed work plans and
budgets for the annual funding of the Agency

       Account for all monies granted to the Agency and revenues collected
       Prepare and publish year - end accounts, and annual reports of the Agency.




                                                                                         231
The Tourism Role and Functions of the Municipalities

The Republic of Macedonia local government is constituted in eighty four municipalities
and the City of Skopje.

Each municipality and the City of Skopje receive 20 per cent of all tourist overnight stay
taxes collected within their area.

The tourism role of the municipalities and the City of Skopje is to develop, on their own
behalf and assist the Agency for Promotion and Support of the Tourism in developing
tourism at local level and to foster and sustain communal interest in, and support for,
tourism. Specifically, the municipalities are required to and are best positioned to:

       Maintain an inventory of main tourist resources;
       Administer the local registers of tourist accommodation and services;
       Draft tourism development plans;
       Contribute to the increase in the quality of tourist products;
       Establish and operate Tourist Information Centres
       Market their area, and in partnership with other municipalities their regions,
       to the domestic market and in appropriate areas to the regional markets

Role and Functions of the Private/Commercial Sector Enterprises

The fundamental role of the private/commercial sector enterprises is to provide for reward,
goods, facilities and services to tourists and the tourist sector

The functions of the private/commercial sector enterprises can be stated as follow:

       To provide goods, facilities and services compatible with the expectations and
       desires of the tourist in quality, quantity, safety and in conformity with national
       policy, laws and regulations and international requirements.
       To ensure that the potential tourists are aware of the products, services and
       facilities on offer, and to promote them in the market place.
       To ensure workers in the industry are properly trained and compensated for their
       employment and are provided with working conditions that are in conformity with
       best practice.
       To ensure the protection of the environment and Eco-system in all their enterprise
       activities.

Roll and Functions Private/Commercial Sector Organisations

The private/commercial sector has two types of organisations, namely sector
representative organisations and group marketing organisations. In this report we will
confine ourselves to the representative organisations as the marketing group organisations
are established by niche groups or geographic groups where a marketing need is evident.

The private/commercial sector is best served by organisations representing the sub-
sectors such as hotel associations, tour operator associations, regional organisations etc.
and a confederation of the sub-sector organisations to provide a unified industry voice to
articulate the tourism industry-wide major issues of national significance.



                                                                                        232
The role of the sub-sector organisations is to represent the interests of their sector/region
to government bodies and other organisations and in the case of regional organisations to
initiate and coordinate local tourism development.

The functions of the private/commercial sector organisations and regional organisations,
inter alia, are as follows:

       Identify, formulate and articulate the needs and contributions of their respective
       sectors.
       Communicate and liaise with the government, government organisations, civil
       authorities and other commercial sectors.
       Contribute to the marketing of the destination and the private sector through joint
       activities.
       Research, prepare and make submissions to the appropriate authorities on matters
       of concern to the sector.
       Contribute to national policy and planning
       Give advice and guidance to members.

The function of the tourism industry-wide agency (confederation) is to identify research
and articulate through documented submissions to central government and national
authorities the needs and views of the whole tourist industry on policy, strategy and other
issues of tourism industry wide significance.


15.2   Proposals for Organisation in Tourism

The following chart sets out the proposed organisations and inter-relationships in the
tourism structure in the Republic of Macedonia. The primary policy body is the Ministry
responsible for tourism.

The new Agency for Promotion and Support of the Tourism is the body that implements
the policies enunciated by the Ministry on behalf of the government.

Ministry Responsible for Tourism

The Ministry is responsible for ensuring that the government’s policies, plans, objectives
and targets for the growth and development of domestic and inbound tourism are
implemented and achieved. Within the context of this report we deal only with the tourism
role and responsible section.

Tourism and Catering Sector within the Ministry

The organisation of the government’s role and management of the tourism sector is vital to
the implementation of the Tourism Strategy. For this reason, we go further than would be
normal in a strategy document in detailing the organisation and roles of the Ministry and
the proposed Agency.




                                                                                         233
Role of the Government in Tourism

The Government role in Tourism is to provide leadership for the total industry as an
economic force in the nation. It should, however, only intervene where the industry itself is
unable to act effectively. Specifically the Government roles are to:

       Formulate medium to long-term tourism policy, plan for tourism development, and
       regulate tourism activities through legislation, licensing and classification.

       Monitor performance on quality, safety and targets.

       Facilitate tourism development by providing the economic, infrastructure,
       regulatory, fiscal and political environment that encourages investment and orderly
       growth.

       Ensure the marketing of the Republic of Macedonia as a tourist destination.

Role and Functions of the Ministry Responsibility for Tourism

The fundamental tourism role of the Ministry is to formulate medium to long term tourism
policy and monitor its implementation. This allows the Ministry to concentrate on medium
to long term policies and objectives and not to be diverted by “immediate crises”. The
Agency for Promotion and Support of the Tourism responds to such events and
concentrates on annual operational programmes, short term activities and targets

The Functions of the Ministry are to:

o   Formulate medium to long term tourism policy and plans

This is the most important function of the Ministry. It should be an annual exercise
involving:

       Analysis of domestic and international tourism trends in order to guide policy
       development
       The setting of overall targets for tourism (5 to 10 year targets)
       Establishment of Policy guidelines and incentives to achieve the stated targets
       Elaboration of new initiatives to develop tourism
       Approval of Annual Work Plans and Budgets for the Agency for Promotion and
       Support of the Tourism.
       Approval of the overall budgets/resources to be allocated to the Agency for
       Promotion and Support of the Tourism.

It is important to note that the on-going formulation and elaboration of tourism policy
necessitates access to a comprehensive database on the size and performance of the
tourism industry, within the Republic of Macedonia, regionally and internationally.




                                                                                         234
o   Secure adequate funding and resources for tourism

The Ministry submits to the Ministry of Finance and Government proposal for allocation of
          funds for tourism related developments including training, domestic and
          international marketing of the Republic of Macedonia as a tourist destination.

o   Ensure the allocation of infrastructural and other resources that will have a
    positive impact on tourism

A key development function for the Tourism Ministry is to advise on the allocation of
        existing resources in a manner, which will assist in increasing the economic
        contributions of the tourism sector. This will involve recommendations on
        expenditure allocation on the basis of the economic impact of each area of
        expenditure.

Thus for example public funds are allocated to roads, public works etc., on the basis of
          their contribution to tourism development. It is important that the tourism
          implications of such funding are evaluated for each activity by identifying all the
          inputs (by the involved Ministries,) and the associated quantitative and
          qualitative outputs (foreign revenues from tourists, domestic expenditure, jobs,
          environment protection etc.) thus permitting an assessment of the returns to the
          country from supporting the activity.

o   Co-ordinate other Government Ministries, Municipalities and Agencies actions
    impacting on tourism development

There are a number of Government ministries and state agencies as well as municipalities
which are significantly involved directly or indirectly in the tourism sector. These include
ministries of Finance, Transport and Communications, Agriculture, Forestry and Water
Supply, Labour and Social Policy, Education and Science, Local Self Government,
Environment and Physical Planning, Foreign Affairs, Interior, and the Ministry of Culture.

o   Co-ordinate bilateral and multilateral relations in tourism with international
    organisations, funding and donor agencies

This multifaceted activity ranges from relations with the UNWTO, other international bodies
and donor and funding agencies (EU, EIB, UNDP, World Bank etc.), to the
supervision/direction of technical assistance projects.

o   Research and input to general policy and planning

This function involves:

       Researching various issues
       Preparation of papers for the Government
       Preparation of long-term development plans for the tourism industry in
       Republic of Macedonia
       Preparation of inputs on development of the tourist industry for national
       economic plans
       Preparation of inputs to the development of national budgets, policies and
       strategies


                                                                                         235
o   Monitor and evaluate performance of the tourism industry and the Agency
    for Promotion and Support of the Tourism

The Ministry will monitor the performance of the tourism industry and, in particular, the
Agency for Promotion and Support of the Tourism. This will involve the setting of targets
and the development and monitoring of criteria against which the performance of their
activities will be evaluated.

Thus each year, as part of the on-going process of monitoring and evaluation, the Ministry
will assess the performance of the Agency for Promotion and Support of the Tourism in
terms of the:

       Activities undertaken in performance of its Annual Work Plan
       The resource allocated to these activities
       The economic and social impact of these activities in the context of the
       objectives for tourism development.
       The achievement of the national tourism revenues and number of targets

o   Drive the implementation of the National Tourism Strategy

The Ministry will promulgate the National Tourism Strategy to other government ministries
and agencies, the tourism industry and the wider commercial, financial, donor and
international agencies in Republic of Macedonia. The Ministry will:
        Secure the strengthening of the Tourism Sector in the Ministry
        Implement the capacity strengthening of the Agency for Promotion and
        Support of the Tourism;
        Manage the continuing implementation.

Agency for Promotion and Support of the Tourism

Following international best practice it is recommended that an Agency for Promotion and
Support of the Tourism be established by legislation as a body (similar to the Investment
Agency “Invest Macedonia”).

The establishment of the Agency as a special body has a number of positives. As a body
it is funded from government resources, donations and monitored by the Ministry and
subject to annual audit. It will have an Executive Board drawn from the private sector and
representatives of the public sector, thereby providing a centre of cooperation and
collaboration between the government and the commercial private sector.

The legislation sets out the objectives, authority, Board membership,               Board
responsibilities, decision making powers, Board procedures and bylaws.

Constitution of the Executive Board together with representatives, all appointed by the
Government:
       Members:
   • Representative from the Ministry responsible for Tourism
   • Representatitve from the Ministry of transport and communications
   • Representative from the tourism industry
   • Four members appointed by the Government of the Republic of Macedonia.



                                                                                      236
In the structure below we indicate the range of responsibilities and functions under each
directorate or department of the Agency for Promotion and Support of the Tourism.

Job Descriptions for the senior management posts are set out in the appendices of the
report.

The board to meet on a monthly or bi-monthly basis to consider proposals and reports
from the Agency Executive on such matters as:

              Monthly financial reports
              Budgets
              Policy
              Marketing, Development and other strategies
              Marketing and Development Plans
              Tourism Industry HRD policy, plans and strategies
              Categorisation recommendation
              Monthly activity reports

The executives in the Agency will be decision makers with freedom of action within agreed
policies, plans and budgets, accountable to the Board through the Director General of
Agency. Recruitment will be freed of civil service regulations, allowing recruitment and
termination within good commercial practice.

It is recommended that the title “Director of Agency” be used for the executive head of the
organisation. This will give the organisation more of a private commercial sector image.




                                                                                       237
Structure, Functions and Responsibilities of the Agency for Promotion and Support of
                                   the Tourism

                                      MINISTRY OF ECONOMY




                                              Executive Board



                                                                                                 Internal
                                                 Director                                        Auditor




      Marketing                        Administration                       Development              Industry Human
                                                                                                        Resources
                                                                                                       Development




   Research & Statistics              Establishment               Policy, Planning                  Identify National
       •    Surveys                                               and Strategy for                  Tourism Training
       •    Statistical Analysis      Internal H.R.                    •     Environment            Needs
       •    Market Data Base                                           •     Infrastructure
       •    Information to            Finance                          •     Products               Plan, Implement and
            Industry                                                   •     Services               Promote Actions to
                                      Procurement                      •     Amenities              meet Industry Needs
   Brand & Services Marketing
       •    Campaign Design &         Transport                   Promote, and assist               Ensure Curricula are
            Management                                            Development                       up to date
       •    Cooperative               Protocol
            Marketing                                             Ensure Quality Control –          Provide, Promote
                                      Corporate PR                Licensing, Categorisation         and Certify Tourism
       •    Photo/Video/DVD
            Library                                               etc.                              Education and
                                      Legal                                                         respective
       •    Print Design &
                                                                  Collection of Product and         Institutions
            Production
                                      Information                 Facilities Data for input to
                                      Technology and              General Data Base                 Promote in-house
   Publicity & Partnerships
                                      General Data Base                                             Training
        •    Public Relations
                                      Maintenance                 Tourist Information
             covering                                                                               Secretariat to HRD
             Educational & Fam                                    Centres Network
                                                                                                    Advisory Committee
             Trips, , Media Visits,
             Press Releases
                                                                                                    HRD ADVISORY
   Digital Marketing
                                                                                                    COMMITTEE
        •    Website Development
             & Management                                                                           Members
   Destination Management                                                                           Ministry responsible
        •    Industry                                                                               for tourism.
             Development within                                                                     Associations.
             Republic of                                                                            Ministry of
             Macedonia                                                                              Education.
                                                                                                    Vocational Trainers.
   International Operations                                                                         Trade Unions.
                                                 Market Based
                                                 Representation




                                                                                                              238
Agency Functions and Responsibilities

Marketing Directorate

o   Complete research and formulate annual, medium and long-term marketing
    strategies, plans and actions for the promotion of the Republic of Macedonia as
    an attractive tourist destination.

       Undertake, purchase and/or commission and analyze market research and market
       intelligence including market and exit surveys.
       Assist and advise the State Statistics Office on the collection, collation and
       interpretation of relevant statistics from the tourist providers and others (hoteliers,
       airlines, restaurants, immigration etc.) on a regular basis.
       Develop and maintain a comprehensive market database on the tourist statistics,
       research and survey results.
       Publish tourism statistics, research studies, marketing plans and other information
       of interest to the industry.

o   Promote and market the country as a branded tourist destination locally,
    regionally and internationally.

       On a planned campaign basis engage in promotional activities: educational and
       familiarisation visits, media visits, advertising, other public relations activities,
       cooperative marketing initiatives, the objective of which is to attract international
       and local tourists.
       In support of such campaign produce, publish and distribute quality promotional
       collaterals (CDs, DVDs, videos, brochures, flyers etc.) on the country as a tourist
       destination.
       Develop and implement a digital marketing system through a website with an on-
       line press office including a photo library.
       Establish, equip, operate, contract, or assist in the operation of Market Based
       Offices/Representation (MBRs) in connection with tourism promotion in viable
       international and regional markets.
       Assist and advise the Municipalities, regional and community organisations on
       marketing their areas in the domestic and appropriate regional markets.

o   Assist in the development of marketing skills and co-operative initiatives within
    the tourism industry

       Liaise with and co-ordinate the marketing activities of the tourist industry.
       Provide, publish and otherwise make available, information which would improve
       the marketing effectiveness of the industry (market research, statistics, market
       data, website etc.)
       Organise conferences, seminars, workshops or other methods to assist in the
       development of co-operative marketing initiatives and marketing skills within the
       industry.
       Ensure industry participation and input to destination marketing through input to the
       development of marketing policies, strategies and plans and through joint activities.
       Provide practical advice on research/promotion/business strategy etc. to the
       tourism enterprises.



                                                                                          239
o   Promote an increased awareness of the benefits of tourism

       Identify and estimate the economic, social, environmental and cultural benefits of
       tourism to the country and its people.
       Undertake publicity campaigns involving the dissemination of information on the
       benefits of tourism to the country at national, regional and community levels.

Development Directorate

o   Strategically plan for tourism
    In consultation with and in cooperation with local and regional administrations

        Prepare and update on a regular basis an inventory of tourism resources.

       Advise on and draft tourism development strategies and plans in order to guide
       national investment in tourism.

o   Advise ministries, national and regional agencies, donor agencies and
    municipalities on the allocation of resources that impact on Tourism

       A key policy function for the Agency for Promotion and Support of the Tourism is to
       advise on the allocation of existing and new resources in a manner, which will
       assist in increasing the economic contributions of the tourism sector. This will
       involve recommendations on capital expenditure allocation on the basis of the
       economic impact of each area of expenditure.
       Advise on the plans for tourist areas and resorts and proposals, and plans for
       constructions to be used for tourism.
       Ensure the provision of environmental impact studies for tourist sites or areas as
       required.

o   Promote the development of tourism products, facilities and services.

       Promote, encourage and otherwise assist in the provision, extension or
       improvement of accommodation for tourists.
       Promote, encourage and otherwise assist, in the provision, extension or
       improvement of facilities, products and services, at tourist resorts and elsewhere,
       which appear to the Agency for Promotion and Support of the Tourism to be
       calculated to increase tourism to and in the country.
       Promote, encourage and otherwise assist the municipalities in protecting and
       maintaining tourism assets.
       Prepare development plans, physical plans, feasibility studies, and so on, designed
       to promote the development of tourism products.
       In association with “Invest Macedonia” promulgate the investment incentives
       available for the development of tourism products and services.
       Provide advice, information and other assistance to potential tourism developers




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o   Control quality and safety and develop high professional standard of service

       Through licensing/registration and categorisation ensure that the facilities, services
       and conditions provided for tourists are of an acceptable standard and are safe.
       Publish or cause to be published annual lists of licensed/registered premises
       Based on its own knowledge and research and advice from the Marketing
       Directorate revise and harmonise the criteria for licensing/registration and
       categorisation so as to encourage the industry to keep standards in line with
       market expectations and international competition.
       Promote high standards of tourism facilities and amenities
       Using market research, exit surveys and consumer comments, review the
       standards of tourist facilities and amenities and advise the tourism Industry on
       improvements and trends.
       Use the categorisation of accommodation as a development tool to raise standards
       in the accommodation sector
       Use incentives by way of awards and recognition to raise standards within the
       tourism industry.

o   Ensure the provision of information and services to tourists within the country
    through a network of Tourist Information Centres (TICs)

       Encourage the municipalities to establish Tourist Information Centres in
       appropriate locations.
       Give advice and guidance on the fitting, equipping and operation of TICs
       Provide or organise training for TIC staffs particularly to meet seasonal needs.


Industry Human Resources Development Directorate

o   In consultation with the Human Resources Advisory Committee ensure the
    provision of adequate human resources in education, skills and numbers to
    meet the tourist industry quality service needs.

       Carry out regular sectoral consultations and research studies so as to identify
       national tourism training needs.
       Develop Human Resource Development policies and plans for the tourism sector
       Provide, promote and certify accredited education and training programmes in line
       with international best practices for the tourism sector.
       Cooperate with relevant bodies in developing and updating the national curriculum
       for all levels of personnel in the hospitality, travel and tourism industry.
       Provide and promote “train the trainers” programmes suitable for hospitality, travel,
       and tourism organisations.
       Keep and maintain a register of hospitality, travel, and tourism training institutions
       and in conjunction with other relevant authorities, monitor the training programmes
       as to subjects, curricula, standards, duration and type.
       Affiliate with any international or national university or hospitality or tertiary level
       institutions so as to develop and offer higher degree programmes in hospitality and
       tourism studies.




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Administration Directorate

o   Identify, secure and administer the annual budget for the organisation

       Prepare, in collaboration with the other directorates, and with the approval of the
       Board, submit to the Ministry for approval detailed Work Plans and Annual Budgets
       for the Agency for Promotion and Support of the Tourism
       On a continuing basis, supply to the Ministry of Finance and other relevant
       ministries, information on the progress of tourism development, its impact and
       potential impediments to its growth.
       Account for all monies granted to the Agency for Promotion and Support of the
       Tourism and for all revenues collected.
       Ensure proper records are kept of all monetary transactions
       Prepare and produce year-end accounts, and annual reports for the Agency.

o   Ensure the Agency is properly equipped, staffed and serviced

       Procure, maintain and secure all material assets of the Agency for Promotion and
       Support of the Tourism (buildings, furniture, equipment and transport etc.)
       Recruit, equip, train and maintain a level of highly skilled personnel that enables
       the Agency for Promotion and Support of the Tourism to fulfil its role and objectives
       Ensure the transport and protocol needs of the organisation are provided
       Provide secretarial services to the Board of the Agency
       Provide legal advice to the Agency

o   Ensure the Agency for Promotion and Support of the Tourism is properly served
    though efficient management of Information Technology and a comprehensive
    data base.

       In collaboration with the other directorates and other sources collect and collate
       relevant information on products, services and facilities
       Build and maintain an up-to-date information system that is the principal source of
       Republic of Macedonia tourism data.
       Provide to the other directorates with information technology support as required
       Provide input to the daily operations of the Republic of Macedonia Marketing Web
       Site

o   Ensure good government relations and that the Agency projects a positive
    public image

       Liaise with government ministries on matters of mutual concern
       Using planned public relations ensure the Agency’s work and achievements are
       recognised in the public domain
       By regular internal communications ensure a high level of staff morale

Municipalities

As stated earlier the tourism role of the municipalities is to develop on their own behalf and
assist the Agency in developing tourism at local and regional level and to foster and
sustain communal interest in, and support for, tourism. With the establishment of the eight
regional bodies, part of the activities of the municipalities will transfer to the regional


                                                                                          242
bodies. It is important that the Agency and the local administrations establish a strong
working relationship, particularly in the area of planning and physical development.

       Maintain an inventory of main tourist resources;
       Administer the local registers of tourist accommodation and services;
       Draft tourism development plans;
       Contribute to the increase in quality of tourist products;
       Establish and operate Tourist Information Centres
       Market their area, and in partnership with other municipalities their regions to the
       domestic market and in appropriate areas to the regional markets;
       Identify, preserve, protect and develop tourism assets and resources within the
       county/area;
       Generate positive attitudes to tourism, promulgating the benefits of well managed
       tourism activities;
       Undertake research and data collection to contribute to national surveys
       commissioned by the Agency for Promotion and Support of the Tourism;
       Make recommendations to the Agency on actions to benefit tourism.
       Register complimentary accommodation
       Collect the overnight tax


Tourist Information Centres (TICs)

A number of local administrations operate Tourist Information Centres. On visits to a
number of them it was noted that there is very little uniformity in the services they provide.
Some were closed early in the evenings and on weekends. None were self financing or
indeed partially financed from their own activities.

The primary role of TICs is to provide information and promote local tourist products so as
to encourage tourists to extend their stay in the area

It is recommended:
          Legislation be enacted to restrict
          the use of TIO and TIC signs and
          the international “I” sign to offices
          so licensed by the Agency for
          Promotion and Support of the
          Tourism;
         That the local administrations establish street level Tourist Information Centres in
         all major tourist areas in city/town centres with the guidance of the Agency for
         Promotion and Support of the Tourism;
         That TICs sell maps, guides and tourist literature and charge commission for
         reservations
         That the TICs provide the following:
             o Information on tourist products, accommodation and other services
             o Assistance in finding accommodation
             o Literature on local and neighbouring tourist products and facilities
             o A reservation service for overnight accommodation
     • Assist with media and tour operator/travel agency visits




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Confederation of Industry Associations

An industry-wide organisation articulating a single voice on major issues does not exist in
the Republic of Macedonia at present.

The industry needs to strengthen the membership of the present associations. To articu-
late major policy matters that are of industry wide and of national interest and significance,
it is recommended that the organisations that represent the various sectors form a
confederation with a council whose members are nominated representatives of the
constituent organizations. The policies and views expressed should be those agreed by
the council.

15.3   Legislation

Tourist Information Centres
Experience elsewhere has shown that the titles for Tourist Information Centres have been
misused, by giving the impression that a centre is official, to attract visitors for the purpose
of selling tours etc. The titles for travel agents etc. are protected under the licensing
legislation. An amendment to the legislation is recommended to give similar protection to
the following:

       Tourist Information Centre
       Tourist Information Office
       Tourism Bureau
       The “ i “Sign


15.4   Licensing and Categorisation

The implementation of the licensing and categorisation is unsatisfactory in that the star
categorisation has not been applied to all premises and its application does not reflect
international standards, (e.g. hotels of three star quality being awarded four stars).

A national classification system is primarily a marketing tool which can also be used as a
development tool to raise standards which in the long run can enhance the sector. It is not
a negative for the industry. A classification system can therefore only be successfully
implemented where there is a good understanding and partnership between Government
authorities and the private sector of the tourism and hospitality industry.

It is desirable that the categorisation assessors are well trained with a hospitality
background that they should be more private sector inclined as advisers rather than as
government inspectors.

It is recommended that classification be confined to accommodation.

Tourists do not tend to seek information on restaurants prior to arrival in a destination.
Restaurant selections are usually based on local recommendations, independent guides,
visitation and appearance.




                                                                                            244
While restaurants are classified in a number of destinations this is usually done by non-
statutory bodies such as commercial food guides or automobile clubs. These can be
totally subjective in the application of the system and can be selective on the restaurants
they include and exclude. A statutory system cannot be so selective and would have to
base its judgments on objective as well as subjective elements.

The subjective elements are the dominant elements in restaurants as the basic product is
the food and service and the quality of these. The ambience, atmosphere and general
environment are equally important to the guest satisfaction level and are even more
subjective. The assessment of the subjective elements requires highly experienced
assessors with a detailed knowledge of food preparation, presentation and service and, as
mentioned above, freedom from statutory impositions.

The safety issues in catering establishment are covered by hygiene, health, fire protection
implemented by the appropriate authorities.

The presence or absence of facilities and services are important criteria in assessing the
categorisation of accommodation. Equally important elements of all services to visitors are
the subjective criteria such as the quality of the furnishings, decor, facilities, fittings,
equipment, food and services. The present criteria for classification is lacking in the
subjective elements. It is recommended that the categorisation criteria be revised to
include the subjective elements.

In addition to providing information on standards, facilities and services it is strongly
recommended that categorisation be used as a development tool to raise standards.
Categorization can be used in this way by informing the facility manager of shortcomings
and necessary improvements to retain a categorisation or to move up to a higher
categorisation. Pre-determined time period should be allowed to reach the standards.

This requires a number of administrative decisions:

       To have trained and experienced inspectors who have the ability to give advice and
       guidance to operators/agents – the inspectors are usually recruited from hotel
       management and personnel;
       To allow a categorisation to stand while the agreed improvements are being made;
       To grant an up-grade to a higher categorisation on an undertaking.


15.5   Summary of Strategy and Recommendations

Strategy
That the long term policy, strategy, planning and objectives be separated from the
implementation of short-term plans and programmes to achieve defined growth targets.

Recommendations

       That the organisational structures, roles and functions as set out be adopted and
       implemented
       That the Tourism and Catering Sector of the Ministry be strengthened
       That the capacities of the Agency for Promotion and Support of the Tourism be
       strengthened


                                                                                        245
That technical assistance be engaged to support the Head of the Tourism Sector,
the Agency’s CEO, the Heads of HRD and marketing of the newly formed Agency
for Promotion and Support of the Tourism for up to two years
That the interim proposal be implemented while awaiting the necessary legislation
That the industry associations form a confederation to provide a single voice on
significant issues
That the use of the following the titles be protected by law:

   o Tourist Information Centre
   o Tourist Information Office
   o Tourism Bureau
   o The “ i “Sign
The criteria for accommodation categorisation be reviewed to add a qualitative
subjective element
Categorisation be adapted to be used as a development tool




                                                                             246
16. Tourism Awareness
Although we are all tourists at some time, few realise tourism’s economic
importance and how they can benefit from it and the need to welcome visitors.


Hospitality and tourism awareness concerns everyone who is directly and indirectly
dealing with hospitality and tourism - service providers and local authorities, mayors and
ministers, people employed in the tourism industry, investors in hotel and tourism facilities,
local and regional planners, taxi drivers, police officers, border police and customs, as well
as the media and the public in general.

All people directly and indirectly involved in the hospitality and tourism industry and in
making the tourist experience a positive one, should be aware of their role and influence.

Tourism is Everybody’s Business. It shows that everyone in the country, the different
municipalities, the towns and villages has a stake in the tourism industry. Tourism
development does not only profit those directly employed in the tourism industry, but
indirectly everyone.

Public tourism awareness has to start in a very early stage, preferably already at primary
schools, integrated in the school curriculum.

Hospitality and tourism awareness should be integrated at each level, both in general
formal education at secondary level and certainly as part of any tourism related vocational
training programme.

The general lack of tourism awareness needs to be addressed. First of all among those
who are directly and indirectly involved in hospitality and tourism and secondly among the
whole population, to better understand the importance of tourism for economic and social
development.

Tourism awareness benefits not only international tourism, but also domestic tourism.
Hospitality and visitor satisfaction awareness should become a new common value in
society, for foreign visitors as well as for domestic tourists.

Tourism Awareness Programme

It is recommended that a comprehensive national tourism awareness programme be
developed and implemented during the coming years in order to improve the general
attitude towards hospitality and the quality of service, among all directly and indirectly
involved in tourism. It will also serve to create a positive tourism image and reputation for
the Republic of Macedonia, nationally and internationally.

The importance of implementing a Tourism Awareness Programme was emphasised by
the Tourism Leadership Group at its first meeting.




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Program Target Groups

Several priority target groups can be identified for a comprehensive tourism awareness
training programme to focus on:

   The hospitality industry at all levels (hotel and catering service staff)

   The tourism and travel sector at all levels (service staff, tourist guides, tourist
   information staff, etc.)

   National, regional and local public authorities

   Those indirectly involved in tourism but directly dealing with visitors (National Park
   safeguards, border police, customs, taxi drivers, museum staff, etc.)

   Primary school children through school teachers

   All general education and vocational training providers

   The public in general.




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                                         Part IV

                                    ACTION PLAN

The items in the Action Plan are listed in priority order. Priority 1 is for immediate
implementation. Implementation of Priority 2 should start by early 2010.

The "Time Scale" is the anticipated length of time the action will take whenever it is
started.

The "Lead" is the organisation considered the most appropriate to prepare proposals, seek
funding and lead the implementation of the action.

The "Partners", those organisations who may assist in the action, are listed.

The ‘‘Indicative Budget’’ is the broad estimate for undertaking a particular action where a
figure in Euros is identified or otherwise it may be described as an action to be undertaken
under a possible Donor funded programme or as part of existing ministerial/departmental
duties and thus under existing budgets.

The "Success Criteria" are measures to evaluate whether the action has been successfully
completed.

The sources of funding for the activities will include national government (ministries,
government agencies and organisations), local governments, private sector, donor
agencies and international funding agencies.




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        Republic of Macedonia                 National Tourism Development Strategy 2009-2013
  Government of Republic of Macedonia




  Action Plan 2009 - 2013
 Priority            Objective                  Action                  Rationale             Lead          Partners            Indicative            Success
Timescale                                                                                                                         Budget              Criteria
                 TOURISM PRODUCTS & SERVICES
                Create iconic           • World Heritage Site       International         Ministry of   Ministry of        Euros 30,000 for       Number of final
     1          products                  for Markovi Kuli -        recognition will      Economy       Environment,       web site and           products by 2011
                                          Prilep and Cocev          generate publicity                  Ministry of        brochures
2009-2011                                 Kamen - Kratovo           and “must see”        Agency for    Agriculture
                                        • Pursue NASA claim         attractions.          Promotion                        Other actions
                                          on Kokino as a pre-                             and Support   NGOs               conducted under
                                          historic observatory                            of Tourism                       existing Ministerial
                                        • Mother Theresa                                                                   admin/other budgets
                                          House Reconstructed
                                          Green Tourism
                                          Destination/ Organic
                                          Food
                Create general          • Signpost Scenic           Signposting routes    Agency for    Road Fund          Euros 50,000 for       Signposts, travel
     1          Tourism                   Routes to diversify       off highway           Promotion                        500 signs and Euros    maps developed
                Products                  tourists to off highway   attractions could     and Support   Rent-a-car         20,000 for travel      and distributed
2009-2010                                 attractions               make tourists         of Tourism    agencies and gas   maps                   by 2010
                                        • Develop itineraries to    extend their stay                   stations
                                          achieve regional          and increase the
                                          spread                    number of visits to                 Ministry of
                                        • Develop list and          regional areas,                     Transport
                                          promote activity          thus increasing the
                                          products                  tourism benefits
                Increase the            • Quality Pension Style     Small- and            Agency for    Ministry of        Euros 20,000 for       5 new high-
     1          number of                 Hotels – Family           medium-size           Promotion     Economy            Monastery brochure     quality
                accommodation             operated, small,          companies and         and Support                      and marketing          international
 2009 -                                   traditional               presence of           of Tourism    Private Sector     support                hotels by 2012
  2011                                  • Internationally           international
                                          recognized/ High          brands create         Investment                       Other actions are
                                          Quality Brands –          higher confidence     Agency                           private sector
 Priority      Objective              Action                 Rationale            Lead             Partners              Indicative          Success
Timescale                                                                                                                  Budget            Criteria
                                Skopje                   and attract more                                           funded
                              • Low-budget               investors
                                Internationally
                                recognized Brand on
                                Corridor X
                                Monastery
                                Accommodation – co-
                                operate in marketing
                                guide, brochure
            Accommodation     • Introduce annual fees    Number of non-       Ministry of      Ministry of Local    Euros 20,000 for a   50% increase in
            Categorisation      to contribute to cost    standardized         Economy          Government           directory of         registered
   1                            for regular              accommodations                                             registered           accommodation
                                assessments              and evasion of tax   Municipalities                        accommodation        by 2011
2009-2011                     • Review criteria and      payment
                                introduce subjective
                                qualities – food,
                                decor, service etc
                                Regularise Grey
                                Market
                                accommodation
            Tourist           • National Park            Improve the          National         Ministry of          Euros 200,000 for    Plans complete
   1        exploitation of     business plans           financial and        Parks            Environment          interpretation       and approved,
            National Parks    • More activity in parks   environmental                                              centres              interpretation
 2009 -                         to exploit their         sustainability of    Agency for       Ministry of Labour                        centres and huts
  2011                          potential plus build     national parks       Promotion        and Social Policy    Euros 200,000 for    built/improved by
                                two interpretation                            and Support                           20 new huts          end 2011
                                centres                                       of Tourism       NGO’s
                              • Improve Mountain                                                                    Euros 100,000 for
                                Huts, children’s and                                                                30 improved huts
                                worker’s
                                accommodation
            Exploit Wine      • Introduce as part of     Development and      Tikves Wine      Ministries of        Euros 100,000 for    Sign posted
   1        Tourism              Rural Tourism           promotion of this    Route            Agriculture,         200 signs            routes and menu
                              • Develop scenic           type of tourism      Foundation       Economy and                               of tourist offers in




                                                                                                                                                                251
 Priority      Objective                Action                  Rationale              Lead             Partners               Indicative             Success
Timescale                                                                                                                        Budget                Criteria
  2009 -                          itineraries, walking,     and its exploitation   and Agency       Transport,            Euros 20,000 for        place by end
   2010                           rural accommodation                              for Promotion                          wine routes map         2010
                                  and traditional cuisine                          and Support      Explore
                              •   Tikves Wine Route                                of Tourism       Macedonia.com,
                                  Foundation be
                                  assisted with
                                  signposting and
                                  marketing
            Exploit Rural     •   Brajcino as               Make use of this       Municipalities   Ministry of           Euros 300,000 for 3     3 additional
   1        Tourism               extraordinary             enormous               and Agency       Agriculture           villages (to include    villages
                                  example of                potential as an        for Promotion    (especially in        web sites, maps,        marketing
2009-2012                         development               alternative form of    and Support      connection with       training and NGO        themselves as
                                  challenges                tourism                of Tourism       the introduction of   support)                rural destinations
                              •   Pehcevo, Berovo,                                                  the EU funded                                 by 2012
                                  Kolesino, Bansko,                                                 IPARD
                                  Mokrino, Smolare,                                                 programme)
                                  Vevcani, and
                                  Galichnik all have                                                NGO’s
                                  potential
                              •   Municipalities,
                                  Agency for Promotion
                                  and Support of
                                  Tourism, NGOs
                                  support with joint
                                  development
                                  programs and
                                  promotions
            Exploit Culture   •   Publish annual            Low level of           Agency for       Ministry of Culture   Euros 25,000 for a      Directory
   1        and Handcrafts        calendar and events       awareness of           Promotion                              calendar/events/craft   published in hard
            as tourist        •   Bring Tour Operators      Macedonia’s            and Support      Ministry of           businesses directory    and web formats
 2009 -     products              and cultural              cultural appeal        of Tourism       Agriculture/IPARD     and website             by end 2010
  2010                            organisers together       and attraction
                              •   Grouping events and
                                  packaging                                                         Explore
                                                                                                    Macedonia.com




                                                                                                                                                                       252
 Priority      Objective                 Action                  Rationale               Lead            Partners               Indicative             Success
Timescale                                                                                                                         Budget               Criteria
                                • Use crafts and
                                  culture in promotional
                                  activities
            Exploit Spa and     • Upgrade/renovate           The basic spa           Spa             Municipalities        Euros 50,000 for        Four refurbished
   1        MedicalTourism      • Convenient for local       product is not          proprietors     Ministry of Health    market study to         spa resorts with
                                  and regional markets       competitive             and Agency                            identify market         three star
2009-2012                         Be health/wellness         internationally. It     for Promotion   Ministry of           needs/opportunities     grading by 2012
                                  centres rather than        is below standard       and Support     Economy               which will direct new
                                  just medical facilities    for regional visitors   of Tourism                            investment
                                  Conduct market             and should
                                  study to examine spa       upgrade and                                                   Renovation funded
                                  market needs and           concentrate on                                                by private sector
                                  new niche medical          this market
                                  sectors
   1        Improve             • Develop a training         Improve visitor         Agency for      Ministry of Culture   Donor funded            Training/seminar
            interpretation at     programme and              experience,             Promotion                             opportunity             programme
2009-2011   heritage              seminar for                encourage longer        and Support     NGO’S                                         established by
            attractions           management and             visitor stays and       of Tourism                                                    2010/11
                                  staff of the attractions   increase levels of
                                                             expenditure
            Exploit hunting       Stricter controls over     Insufficient            Ministry of     Ministry of           Euros 50,000 for        50% increased
   1        tourism               illegal hunting            exploitation of this    Agriculture     Economy               marketing study         stock by 2010
                                  Increase stock             tourism potential
 2009 -                           Targeted marketing                                 Agency for      Municipalities                                50% increase in
  2010                            and marketing study                                Promotion                                                     hunters by 2012
                                  needed when stocks                                 and Support     State Forest
                                  and controls in place                              of Tourism      Enterprise and
                                                                                                     Private Sector
            Conferences and     • Produce                    EU accession            Agency for      Ministry of           Euros 25,000 for        Directory in hard
   1        Meetings              comprehensive              activity generate       Promotion       Economy               directory/brochure      copy and on web
                                  directory/brochure of      meetings and            and Support                           and website             by end 2009.
  2009                            conference facilities      opens up the            of Tourism      Explore
                                  Commission study           European market                         Macedonia.com         Euros 50,000 for        Study complete
                                  into potential national    as a source of                                                feasibility study       by end 2010.
                                  conference centre          international




                                                                                                                                                                       253
 Priority      Objective                   Action                Rationale             Lead            Partners             Indicative           Success
Timescale                                                                                                                     Budget             Criteria
                                                             meetings
            Publicise             Create a directory of      Increase stays in                     Macedonian          Euros 25,000 for      Leaflet and web
   2        monastery             monastery                  rural locations and   Agency for      Orthodox Church     leaflet and website   section in place
            accommodation         accommodation and          increase              Promotion                                                 by end 2009
2009 and    as a special          promote to tour            awareness of          and Support     Explore
on-going    feature of            operators and public       cultural appeal of    of Tourism      Macedonia.com
            Macedonia                                        Macedonia

            Preserve and          Further develop National   Increase visitor      Ministry of     Ministries of       Euros 20,000 for a    Centre open by
   2        promote               Handicraft Centres as      spend on quality      Culture         Economy             Handicrafts Centre    end 2010
2009 and    traditional           workshops and retail       souvenirs and
on-going    handicrafts           outlets for traditional    conserve                              Ministry of         Euros 10,000 for
                                  crafts                     handicraft                            Agriculture/IPARD   organising a
                                                             traditions                                                Handicraft Fair
            Build awareness       Create a directory –       Provision of full     Agency for      Sports clubs,       Euros 30,000 for      Published trail
   2        of the diversity of   printed and on web – of    details on hiking     Promotion       donors              directory and         directory and
            hiking                the main hiking trails     trails stimulates     and Support                         website               website section
2009 and    opportunities in      and day hikes, including   operators, clubs      of Tourism                                                by 2010
on-going    Macedonia             accommodation and          and individuals to
                                  transport details and      come hiking
                                  publicise
            Provide unusual       Develop show caves by      By developing         Speleological   Agency for          Euros 30,000 for      2 caves
   2        attractions in        provision of access and    quality attractions   Association     Promotion and       infrastructure        developed by
            rural locations       parking, designated        in rural areas that                   Support of          provision and         end 2011
2009-2011                         walkways, thematic         are non seasonal                      Tourism             leaflet/map
                                  lighting, interpretation   one can spread
                                  and guiding and            traffic and extend                    Ministry of
                                  promotional materials      stays                                 Environment
            Improve the                Enforce hunting       Hunting is a          Ministry of     Ministry of         Euros 100,000 for a   Reproduction
   2        hunting offer              controls more         lucrative, off-       Agriculture     Economy, Agency     Reproduction Centre   Centre
                                       effectively           season, self-         and IPARD       for Promotion and                         established by
2009 and                               Establish a game      sustainable                           Support of                                end 2010
on-going                               reproduction centre   tourism sector if                     Tourism,
                                       to re-stock hunting   managed                               Municipalities,
                                       area                  effectively                           landowners and




                                                                                                                                                                254
 Priority      Objective                 Action                 Rationale              Lead            Partners         Indicative            Success
Timescale                                                                                                                 Budget              Criteria
                                     Increase promotion                                            Macedonia
                                     of the hunting                                                Forests PE
                                     product

            ACCESS AND INFRASTRUCTURE
            Air Access            • Pursue full              Liberalisation of air   Ministry of    Agency for       Actions conducted     More attractive
    1                               implementation of        transport will          Transport      Promotion and    under existing        air access costs
                                    European Community       improve access                         Support of the   Ministerial           by 2009/2010
2009-2010                           Aviation Area            and help reduce                        Tourism          admin/other budgets
                                    Agreement for III, IV    air fares
                                    and V Freedoms
                                  • Provide conditions for
                                    low cost carriers
            Road Transport          Push for                 Good signage            Ministry of    Municipalities   Euros 50,000 for      Signs for two
                                    implementation of road   assists tourists see    Transport                       500 signs             themed routes
    1                               improvements in the      more attractions                                                              in place and
                                    National Development     and routes,                                                                   500 brown signs
2009-2010                           Plan (NPD)               encourage longer                                                              by end 2010
                                    Improve signposting      stays and regional
                                    Extend use of Brown      spread.
                                    Tourism signposting
                                    Develop criteria for
                                    using such signs
            Visa and                Allow EU citizens to     Lack of entry           Ministry of    Ministry of      Actions conducted     Increase in EU
    1       Immigration             enter on National        restrictions            Interior       exterior         under existing        and Albanian
            controls                Identity cards           encourages more                                         Ministerial           tourists
  2009                              Remove visa              travel                                                  admin/other budgets
                                    requirement for
                                    citizens of Albania

            HUMAN RESOURCES
            Identify the future   Undertake a Labour         No correlation          Agency for     Ministry of      Euros 25,000 for      Survey
    1       staff requirements    Force Survey to identify   currently between       Promotion      Economy,         Labour Force          completed by
            of the tourism        employment and             job requirements        and Support    Ministry of      Survey                end 2009




                                                                                                                                                              255
  2009      sector and their      training needs               and provision of        of the        Labour and
            training needs             Tourism                 skilled staff           Tourism,      Social Security
                                       management                                      HRD
                                       training                                        Committee
            Improve                    Improve supply of       Practical skills are    Ministry of   Agency for          Donor funded          Increased
   1        hospitality and            training equipment      required by             Education     Promotion and       opportunity           percentage
            tourism education          in education            employers                             Support of                                employed by the
2009-2011   and training in the        Increase percentage                                           Tourism, HRD                              industry
            school system              of practical training                                         Committee and
                                       hours                                                         Austrian
                                       Development of                                                Development
                                       training                                                      Agency
                                       programmes
                                                                                                     Private Sector
            Improve industry      Establish HRD                More specific           Agency for    Ministry of         Actions conducted     Regular
   2        and educational       Committee in Agency          education to meet       Promotion     Education and       under existing        improvements in
            system liaison        for Promotion and            employer needs          and Support   industry employer   Ministerial           training and
2010-2013                         Support of the Tourism                               of Tourism    associations        admin/other budgets   curricula


            ENVIRONMENT AND CULTURAL
            HERITAGE
            Improve the           Introduce waste              Overcome the            Ministry of   Municipalities,     Euros 50,000          Waste
    1       general physical      management operations        present very            Environment   local               contribution to a     management
            environment           and public awareness         negative image                        administrations,    national awareness    improvement
2009 and                          schemes                      created by the litter                 community           campaign              evident by mid
on-going                                                       problem                               groups and                                2010
                                                                                                     Agency for
                                                                                                     Promotion and
                                                                                                     Support of
                                                                                                     Tourism
            Improve                  Prepare and               These plans will        Ministry of   Ministry of         Actions conducted     Plans for
    1       protection of            implement                 improve solid           Environment   Agriculture         under existing        national parks
            natural heritage         management plans          waste and waste                                           Ministerial           by mid 2010, for
2009-2011   sites                    for all national parks    water                                 Agency for          admin/other budgets   nature reserves
                                     and nature reserves       management and                        Promotion and                             by end 2010




                                                                                                                                                                  256
                                      including waste           help prevent fires                      Support of
                                      management and fire                                               Tourism
                                      protection
                                      Install litter disposal
                                      and designated fire /
                                      barbecue areas in
                                      nature reserves
              Identify additional   • Create basic cultural     Under-exploitation     Ministry of      Ministry of      Actions conducted     Creation of
    1         cultural heritage       heritage database         of cultural heritage   Culture          Economy,         under existing        database by
2009-2010     sites of tourist                                  as tourism                              Agency for       Ministerial           2010
              potential which                                   potential                               Promotion and    admin/other budgets
              needs protection                                                                          Support of
                                                                                                        Tourism
              Improve               • Prepare and               These plans will       Ministry of      Ministry of      Actions conducted     Cultural
     1        protection of            implement Cultural       improve the            Culture          Economy,         under existing        Heritage
2009 - 2011   existing cultural        Heritage Protection      cultural heritage                       Agency for       Ministerial           Protection Plans
              heritage sites           Plans against            management                              Promotion and    admin/other budgets   by 2011
                                       excessive tourism        against tourism                         Support of
                                       exploitation             exploitation                            Tourism
              Visitor               For national parks and      Good information       Ministry of      Municipalities   Actions conducted     Reception
    2         management in         natural heritage sites:     enhances visitor       Environment                       under existing        centres in all
              natural heritage          Provide reception       enjoyment and                           Agency for       Ministerial           national parks
 2009 and     sites through             facilities and / or     helps prevent                           Promotion and    admin/other budgets   by end 2010
 on-going     better information        information points      undesirable activity                    Support of
                                        Provide signage for                                             Tourism
                                        trails, parking,
                                        picnicking and other
                                        recreational areas
              Identify additional       Municipalities and      Formal protection      Municipalities   Ministry of      Actions conducted     Number of new
    2         natural areas with        NGOs to identify        may be required to     and NGOs         Environment      under existing        natural heritage
              tourism potential         additional natural      secure areas from                                        Ministerial           sites designated
2009-2013     requiring                 sites requiring         damaging                                Agency for       admin/other budgets
              protection                protection              development                             Promotion and
                                        Ministry of                                                     Support of
                                        Environment to                                                  Tourism
                                        consider appropriate
                                        protection measures




                                                                                                                                                                  257
           TOURISM MARKETING
           Improve visitor        Immigration officials to      Number of tourists     Ministry of   State Statistical   Donor funded         Data published
           statistic collection   define foreign visitor        to Macedonia is        Interior      Office              opportunity          monthly from
   1       to permit better       arrivals at least by          currently unknown                                                             end 2009
           assessment of          purpose – transit, day        to the tourism                       Agency for
2009 and   volume and value       visitor and staying visitor   sector institutions                  Promotion and                            Exit Surveys
on-going   of tourism             and publish monthly by                                             Support of                               begun by mid
                                  border post and mode of                                            Tourism                                  2010
                                  transport and conduct
                                  regular exit surveys.
           Provide the            Obtain occupancy data         Occupancy data is      State         Agency for          Donor funded         Statistic
   1       industry with          monthly from all              needed for             Statistical   Promotion and       opportunity          published
           monthly                registered                    marketing,             Office        Support of                               monthly to the
2009 and   accommodation          accommodation and             development and                      Tourism, HOTAM                           industry
on-going   occupancy              publish by                    investment                           and
           statistics             accommodation type            planning purposes                    municipalities
                                  (star category) and main
                                  regions.
           Develop powerful       Appoint an international      Lack of tourism        Agency for    Ministry of         Euros 100,000 for    Logo and
   1       tourism brand          consultancy to create         branding               Promotion     Economy             consultants          slogan created
 2009                             tourism logo and slogan                              and Support                                            by end 2009
                                  as recognizable marks                                of Tourism
                                  in international
                                  communication
           Establish a            Create a database of all      Comprehensive          Agency for    Municipalities      Euros 50,000 for     Comprehensive
   1       dynamic                tourism products and          information            Promotion     and tourism         database             information
2009 and   database of            services to provide           presented              and Support   industry                                 available online
on-going   tourism products       outputs via, website,         impartially is         of Tourism                                             by mid 2010
           and services           publications, TICs, etc       required by tourists
           Undertake                   Identify priority        Marketing needs to     Agency for    Tourism industry    Euros 600,000 over   Marketing Plan
   1       targeted                    markets and              be planned and         Promotion                         5 years              and list of joint
           marketing of                segments                 targeted rather        and Support                                            ventures
2009 and   Macedonia as a              Compile and              than ad hoc            of Tourism                                             published
on-going   tourism                     implement annual         promotion in order                                                            annually
           destination                 marketing plan           to maximise




                                                                                                                                                                  258
                                                              impact
              Expand the         Agency for Promotion         The Internet is an   Agency for      Tourism industry   Euros 25,000 to       10% annual
    1         tourism portal     and Support of Tourism       increasingly         Promotion                          expand the portal     increase in site
              and create new     and Exploring                important            and Support                                              visits
 2009 and     websites           Macedonia.com to             information source   of Tourism
 on-going                        collaborate in insertion     for travellers and   and Exploring
                                 of comprehensive and         tour operators       Macedonia.
                                 impartial data on portal                          com
                                 as well as new sections
                                 for special products
                                 such as monastery
                                 accommodation, wine
                                 route, etc.
              Improve the             Develop operational     Although locally     Agency for      Municipalities     Euros 75,000 over 5   TICs open
              Tourist                 guidelines for TICs     funded and           Promotion                          years                 seven days a
    1         Information             Deliver regular         operated national    and Support     Ministry of                              week and
              Centre network          training to TIC staff   standards need to    of Tourism      Economy                                  increase in
 2009 and                             Regulate use of TIC     be set for                                                                    visitors
  ongoing                             name and logo           information
                                                              provision
              Develop a              Develop new and          Information          Agency for      Municipalities     Euros 400,000 over    New
     1        cohesive and           attractive               disclosure and       Promotion                          5 years               promotional
   2009       coordinated            promotional              visitor attraction   and Support     Ministry of                              materials by
              range of tourist       materials                                     of Tourism      Economy                                  end 2009
              resort
              promotional
              materials
              Marketing of the       Participate in           Insufficient         Agency for      Municipalities     Euros 500,000 over    50% increase in
     1        Macedonian             international fairs,     promotion            Promotion                          5 years               fairs
2009 - 2010   destinations and       promotion in media       internationally      and Support     Ministry of
              attractions            and cooperation                               of Tourism      Economy
              internationally        with foreign tour
                                     operators




                                                                                                                                                               259
            ECONOMIC DEVELOPMENT OF
            TOURISM
            Ensuring pre-       Introduce turnover        Improved             Ministry of   Ministry of Economy,       Donor funded         TSA
    1       conditions for      monitoring system         statistical data     Finance,      State Statistical Office   opportunity          established by
            Tourism Satellite   through TSA                                    National                                                      2012
2009-2012   Accounts (TSA)                                                     Bank
            system
            Improved            Strengthen                Improved             Ministry of   All Government             Actions conducted    Development
    1       understanding of    Governmental and          linkages between     Economy       Ministries/Departments     under existing       and
            economic            private sector            tourism and other                                             Ministerial          implementation
2009-2011   benefits from       awareness of tourism’s    sectors is                         Chambers of                admin/other          of seminar
            tourism             role in the economy       mutually                           Commerce                   budgets              programme
                                through seminar           beneficial and
                                programmes                reduces                            Private Sector             Possible donor
                                                          economic                                                      funded opportunity
                                                          leakages                           NGO’S

            INVESTMENT
            POLICY
            Tourism given       Ensure that tourism       Priority sector      Ministry of   Invest Macedonia/          Actions conducted    Tourism granted
   1        priority economic   becomes the sixth         status raises the    Economy       Agency for Foreign         under existing       priority status by
            sector status by    economic sector given     profile of tourism                 Investments                Ministerial          Government
  2009      Government          priority status by        and helps attract                                             admin/other
                                Government/Invest         interest and                                                  budgets
                                Macedonia                 investment
            Assist the          Set up a small            Advice to            Ministry of   Ministry of                Actions conducted    Small/medium
   1        development of      business advisory         potential            Economy       Agriculture/IPARD          under existing       sized business
            small to medium     service for tourism       investors will                                                Ministerial          advisory service
  2009      sized tourism       sector investors in       result in better                   Chambers of                admin/other          for tourism
            enterprises         Government                planned and                        Commerce/Private           budgets              sector
                                                          viable businesses                  Sector                                          established
            Encourage and       Plan, organise and        Enabling potential   Ministry of   Invest Macedonia/          Euros 300,000 for    Holding of 2
   2        assist the          launch an initial and a   investors/advisors   Economy       Agency for Foreign         two Forums/Fairs     Tourism
            attraction of       follow - up Tourism       to meet owners of                  Investments                                     Investment
2011 and    domestic and        Investment Forum/Fair     project                                                                            Forums/Fairs
on -going   foreign                                       opportunities will                 Ministry of




                                                                                                                                                                  260
            investment into                               assist the pace of                   Agriculture/IPARD and
            the Macedonian                                tourism                              Chambers of
            tourism sector                                development                          Commerce/Private
                                                                                               Sector
            Improve             Assist the process of     Transparency of        Ministry of   Invest in               Actions conducted   Improvements in
   1        confidence in the   Land Cadastre             land ownership is      Economy       Macedonia/Agency for    under existing      the registration
            status of land      development               fundamental to                       Foreign Investments     Ministerial         process
2009 and    title/ownership                               assisting the                                                admin/other         generally and
on -going                                                 investment                           Ministry of             budgets             where tourism
                                                          process                              Agriculture/IPARD and                       investments are
                                                                                               Chambers of                                 concerned
                                                                                               Commerce/Private
                                                                                               Sector

            ORGANIZATION
            Strengthen the      - Engage Short Term       A strengthed           Ministry of   Ministry of Finance     Donor funded        Tourism
            Tourism Sector of   Technical Assistance      Tourism                Economy                               opportunity         Department
   1        the Ministry        to advise on              Department is                                                                    strengthened and
                                recruitment and           essential to                                                                     fully operational
  2009                          operational and           ensure that                                                                      by end 2009
                                management systems        Government
                                and establishment of      policies and
                                the Agency for            objectives and
                                Promotion and Support     target are fulfilled
                                of Tourism
                                - Recruit the following
                                senior personnel for
                                the Department:
                                    • Department
                                        Head
                                    • Economist
                                    • Strategic
                                        Planner
                                    • Senior
                                        Administrator




                                                                                                                                                               261
            Strengthen the       Engage long term          The new              Ministry of    NGOs                      Donor funded      Fully functional
            capacity of the      technical assistance to   organisation will    Economy                                  opportunity       Agency for
   1        Agency for           coach CEO,                need to build its                                                               Promotion and
            Promotion and        Marketing,                capacity very                                                                   Support of
2009-2010   Support of           Development and HRD       rapidly and is                                                                  Tourism by end
            Tourism              directors and staff of    likely to lack                                                                  2009
                                 the new Agency for        international
                                 Promotion and Support     expertise
                                 of Tourism
            To ensure            Constitute an Advisory    An effective         Industry       Ministry of Economy,      Actions           Council in place
   2        industry and         Council to the Agency     public private       Associations   Regional Local            conducted under   by mid 2009
            regional local       of Tourism over the       partnership is                      Governments,              existing
  2009      government input     following themes:         essential to                        Industry, Agency for      Ministerial
            and participation    marketing and             success in the       Ministry of    Promotion and Support     admin/other
            in tourism growth    promotion; product        growth of the        Economy        of Tourism                budgets
            and effective        development; human        tourism sector
            public private       resource development                                          Private Sector
            partnership          and service standards;
                                 and, roles and
                                 functions of the
                                 Agency
            Make the                  Introduce quality    The current          Ministry of    Municipalities, Private   Actions           Revised scheme
            categorisation of         criteria into        system is not        Economy        sector                    conducted under   in place by end
   2        accommodation             requirements         enforced fully                                                existing          2009 and fully
            more realistic and        Align star ranges                                                                  Ministerial       operating by
2009-2011   meaningful                to equate with                                                                     admin/other       2010
                                      Western standards                                                                  budgets

            TOURISM AWARENESS
            Develop and              Launch awareness      Ensure full          Ministry of    Agency for Promotion      Euros 200,000     Increase in
            implement a              campaign for          awareness of the     Education,     and Support of the        for a 5 year      students training
   2        Tourism                  tourism hospitality   economic and         Ministry of    Tourism,                  campaign          for tourism
            Awareness                Introduce tourism     social benefits of   Economy        HRD Committee                               industry
2009 and    Programme                awareness/ career     tourism and
on-going                             opportunities to      encourage better
                                     high school           hospitality
                                     curriculum




                                                                                                                                                               262
FLOW
CHART

Elect               Strengthen             Establish Agency for      Establish Advisory       Review of:                 Compile and               Improve
Leadership          Tourism Sector         Promotion and Support     Board to Agency          • Categorisation           Undertake                 Natural
Group                                      of the Tourism and                                 • Statistics               Targeted                  Heritage
                    Engage Technical       engage Technical                                     Collection               Marketing Plan            protection
                    Assistance             Assistance                                         • Exit Survey


                                                                                                                                                         *
Implement HRD       Improve                Attract FDI and local     Address the Grey         Address Seasonality        Tourism Product           Improve
recommendation   ,Environmental
                  Protection
                                         ,investments in Tourism ,   Accommodation        ,   Festivals and Events
                                                                                                                     ,   Improvements and
                                                                                                                         Development
                                                                                                                                               ,   Tourism
                                                                                                                                                   Portal
College based                                                                                                            • Green Destination
                    Address Waste                                                             Conferences and            • Touring Routes
Industry based      Management                                                                Meetings                   • Accommodation
                    Problems                                                                                             • Things to do and
                                                                                                                           see
                                                                                                                         • DMC's

       *
Improve Access      Develop Products       Further Present,          Implement
Air                 Monastery              Develop and Protect       Tourism Promotion
Immigration         Accommodation          Natural Parks and         Plan
Roads               Handcrafts             Heritage Sites
                    Hiking
                    Rural
                    Hunting
                    Iconic Attractions




                                                                                                                                                                263
APPENDIX I


       SELECTED EXAMPLES OF BEST PRACTICE




                                            264
National Tourism Development Strategy 2009 – 2013




Supported by:




                                                    265
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