Effects of the recession on Bulgarian Family-Hotels

Abstract

During the last decade the development of tourism in Bulgaria was marked by a rapid expansion. Existing hotels were of privatized and many new ones were built. Years long the high season has been threatened by excessive construction works in the otherwise popular resorts and villages. At the background of this expansion many families and micro-enterprises succeeded to create a good image providing a product that had not been present in the past. However the increased amount of new establishments influenced badly the business and profitability of everybody, proving that he market was not ready for such rapid increase in the number of beds and instead of profit many entrepreneurs suffered disappointment and losses. Than came the financial crisis. The low occupancy and aggressive competition that were existing even before gave indications that the recession will have a devastating effect on the industry. This is confirmed by the expectations of experts that the average occupancy in the country for 2010 will be 30%, while the sector needs at least 60%-65% to develop. On the other side some possible effects could also occur. Bad service has always been the major problem of Bulgarian tourism and hotel-owners have been justifying that with the unavailability of well prepared employees. There were expectations that the high level of unemployment may have a favorable effect on the labor market and help managers to recruit well educated staff with experience even at lower wages. This project addresses the latest trends in the whole sector and provides a detailed investigation of the small hotels and the difficulties they meet during the crisis. Both primary and secondary research is included, consisting of two separate questionnaires intended to present the view of both managers and visitors of small hotels, observation of a small sample of hotels and the latest official statistics and articles.