Last year, Montenegro generated 1.46 billion euros from tourism, marking a decrease of 3.6 percent compared to 2023. This amount reflects the total estimated spending by tourists in the country; however, the income from this vital economic sector falls short of covering the trade deficit, which stood at 3.4 billion euros last year, representing an increase of 8.6 percent or nearly 300 million euros.

The simultaneous drop in tourism revenue and rise in the trade deficit suggests a slowdown in economic growth, which Monstat is set to assess in September this year.

Immediate action needed for the economy

The Tourism and Hospitality Committee of the Chamber of Commerce expressed concerns two days ago regarding the decline in tourism revenue, attributing it to poor decision-making in the sector and urging for urgent interventions to halt this downward trend.

“For the first time since the restoration of independence, excluding the pandemic year, tourism revenue is declining year-on-year. This indicates that tourism, a strategic economic sector for our country, is bearing the brunt of misguided decisions in shaping the tourist offering, a lack of long-term vision for development, and its incomplete execution at both state and local levels,” stated the Chamber of Commerce and Industry of Montenegro.

According to Monstat statistics, Montenegro welcomed 2.6 million tourists last year, who recorded 15.6 million overnight stays. This number is just seven thousand less than the previous year, but there was a decrease of 800,000 overnight stays, which primarily contributed to the drop in revenue.

The Central Bank calculates total tourism revenues by multiplying the estimated daily spending of tourists by the total overnight stays. Last year’s estimated daily expenditure was 94 euros, roughly two euros higher than the previous year.

Factoring in an average inflation rate of 3.3 percent for last year relative to 2023, the real value of tourism revenue in 2024 is approximately seven percent lower.

Monstat’s data shows that collective accommodations (hotels, motels, campsites) accounted for 5.2 million overnight stays, while private accommodations recorded 10.4 million overnight stays, representing two-thirds of the total. Compared to 2023, collective accommodations had an increase of 80,000 overnight stays, but private accommodations saw a decline of around 900,000 overnight stays.

Significant declines in overnight stays in Bar and Budva

Bar experienced the steepest drop in overnight stays, from 2.4 million to 2.1 million, while Budva’s figures shifted from 5.6 million to 5.4 million. Herceg Novi saw a decrease from 3 million to 2.85 million, and Ulcinj had a drop from 1.83 million to 1.57 million. The number of overnight stays in Tivat remained stable at 1.3 million, while Kotor saw an increase from 1.29 million to 1.36 million.

Podgorica’s overnight stays held steady at 400,000, and Žabljak reported 120,000 overnight stays. Kolašin experienced a slight rise from 123,000 to 139,000. The remaining 16 municipalities together accounted for only 2.2 percent of the total overnight stays. Cetinje, the capital, recorded 69,000 overnight stays, which is two thousand fewer than the previous year.

Looking at private accommodations, the decline in overall tourist numbers was evident. In Bar, overnight stays in private properties decreased from 1.9 million to 1.6 million; in Budva, from 3.3 million to 3.1 million; in Ulcinj, from 1.36 million to 1.15 million; and in Herceg Novi, from 2.17 million to 2 million. However, Tivat and Kotor remained close to 1 million overnight stays each.

In Podgorica, private accommodation overnight stays increased from 43,000 to 53,000, from 74,000 to 76,000 in Žabljak, and from 46,000 to 58,000 in Kolašin. The other 16 municipalities collectively recorded just 1.8 percent of the total overnight stays in private accommodations. In Cetinje, there was a slight decrease from 42,000 to 41,000 overnight stays.

In some smaller tourism-focused municipalities, private accommodations experienced significant growth, such as Andrijevica, increasing from 2,000 to 3,600 overnight stays, and Plav rising from 10,000 to 12,000. However, others, like Rožaje, saw considerable declines from 27,000 to 17,000. Berane recorded the fewest overnight stays in private accommodation, only 742, but this was still an increase from 431 the previous year.

Competing for every guest and investor

The President of the Tourism Committee of the Chamber of Commerce and Industry of Montenegro, Ranko Jovovic, remarked that the past tourist season posed significant challenges, especially in terms of quantitative indicators for 2023, which do not satisfy tourism stakeholders, particularly given the expectations of a more prosperous season.

He emphasized that the rise in the VAT rate on accommodation from 7 to 15 percent, effective from January 1, will substantially impact the competitiveness of Montenegrin tourism in the near future.

“It is crucial to carefully assess how the business environment can influence tourism operations and the strategic goal of attracting investors. As Montenegro competes for every investment opportunity, it is essential not only to uphold incentives and benefits but also to extend them across the entire economy, particularly for those sectors that employ large numbers of workers,” said Jovović.

Tourism industry representatives are also raising concerns over issues relating to beach rentals, requesting that their points based on references be considered, as well as the continuation of utility exemptions for four- and five-star hotels.

In its 2024 economic analysis, the Chamber of Commerce outlined general recommendations for environmental improvement, including the tourism sector. These include addressing the challenges surrounding the employment of foreign labor, insufficient enforcement against unfair competition, the disconnect between education and economic needs, and the lack of adequate consultation with the economy during legislative preparations. Specific tourism recommendations include developing a strategic marketing plan, starting seasonal preparations immediately after the previous season’s end, implementing incentive measures for the off-season, addressing noise issues, easing tourist registration processes, improving air access, and maintaining the reduced VAT rate on accommodation services.

Russian tourists: overnight stays turning into residence permits?

The largest group of visitors came from Serbia, with 449,000 tourists contributing to 3.5 million overnight stays, accounting for 23.5 percent of the total. Serbian tourists spent an average of 7 to 8 days in Montenegro, registering 100,000 more overnight stays compared to the previous year.

Following Serbia, tourists from Bosnia and Herzegovina ranked second with 207,000 visitors and 1.26 million overnight stays, which was 100,000 fewer than in 2023, with an average stay of six days.

Russian tourists ranked third, totaling 198,000, who collectively recorded 2.7 million overnight stays, averaging 13.8 days. This group sees a decrease of 50,000 tourists from the previous year, with one million fewer overnight stays logged.

It’s important to consider the political-administrative context when analyzing the number of Russian tourists. Due to the ongoing crisis in Russia during 2023, many Russian citizens arrived in Montenegro, establishing businesses and purchasing real estate to obtain residency rights. Therefore, it is plausible that many registered as tourists upon arrival before later fulfilling the residency requirements. This notion is further supported by the fact that Russian tourists logged 3.4 million overnight stays in 2019, and 3.7 million in 2023.

Turkish tourists ranked fourth last year, numbering 164,000 with 740,000 overnight stays, which was an increase of 300,000 from 2023. This rise in Turkish visitors could also be linked to similar factors affecting Russian tourism in 2023.

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