VZCZCXRO2331
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHBM #0575/01 2031148
ZNR UUUUU ZZH
P 211148Z JUL 08
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC PRIORITY 8498
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 BUCHAREST 000575 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD RO
SUBJECT: ROMANIA: TOURISM GROWING, BUT FALLING SHORT OF POTENTIAL 
 
Sensitive but Unclassified; not for Internet Distribution. 
 
SUMMARY 
 
¶1. (SBU) Romania offers travelers an intriguing if complicated mix 
of stunning scenery and rich culture and history, juxtaposed with 
generally poor infrastructure, widespread litter, and 
often-disappointing service quality.  Industry experts say that 
although the travel and tourism sector is expanding, mainly driven 
by business travel, growth is far below potential.  Leisure tourism 
growth is slow and inconsistent, primarily due to the absence of an 
international promotional strategy and haphazard development 
planning.  Underreporting of business activities in the hospitality 
industry makes it difficult to quantify the exact contribution of 
tourism to GDP.  Experts concur that a strategy for addressing these 
problems should begin with greater inter-governmental agency 
coordination and a greater awareness of the economic importance of 
travel and tourism.  End Summary. 
 
ENORMOUS TOURISM POTENTIAL... 
 
¶2. (U) Romania is blessed with incredible natural, cultural, and 
historical attractions.  Natural features include the majestic 
Carpathian Mountains, the Danube Delta Biosphere Reserve, and 152 
miles of the Black Sea coast.  There are six UNESCO World Heritage 
Sites, impressive medieval castles and fortresses, and many 
picturesque rural villages where traditional ways of life seem 
little changed from centuries past.  Major Romanian cities are 
connected by a good domestic air network and by the fourth largest 
rail network in Europe.  Young Romanians tend to be conversant in 
several foreign languages, typically English, French, and Italian. 
 
¶3. (U) Business travel is an important segment of Romanian travel 
and tourism, driven primarily by strong inward investment flows and 
the corresponding increase in foreign businesses with facilities in 
Romania.  In Bucharest, 90 percent of travel and tourism is 
business-related, of which 60 percent is comprised of international 
business visitors, according to tourism association reports.  Over 
50 percent of international business travelers stay at one of six 
existing four- and five-star hotels, with a total capacity of 1,467 
rooms.  The World Travel and Tourism Council (WTTC) estimates that 
Romanian business tourism will grow by 20 percent in 2008, compared 
with an overall tourism growth forecast of 7.9 percent. 
 
...BUT SERIOUS CHALLENGES 
 
¶4. (U) Despite these attractions, there are serious handicaps that 
are keeping Romania from realizing its full potential in attracting 
foreign tourists, particularly in leisure travel.  The main problem 
areas were identified in a "Master Plan" for Romania drafted by the 
United Nations World Tourism Organization (WTO) at the behest of the 
Government of Romania (GOR) and released in early 2008.  Pollution, 
including Communist-era industrial ruins dotting the landscape and a 
major litter problem brought on by societal indifference and poor 
waste management, is one serious deterrent.  Infrastructure, chiefly 
poor road quality and the lack of trans-European highways, is 
another concern.  There is a general lack of awareness among 
Romanians of the importance of tourism and its potential for their 
economy, which manifests itself in the dearth of Tourism Information 
Centers and signage to tourist sites.  The Tourism Sector Committee 
of the American Chamber of Commerce in Bucharest tells post that it 
concurs with the Plan's conclusions, but notes that the Plan 
contains only voluntary targets and is not binding on the GOR. 
 
¶5. (SBU) In a July 3, 2008 meeting with EconOff, Paul Marasoiu, 
President and CEO of the tourism consultancy company Peacock 
Hotels/Global Hotel Management, echoed the above list of problems. 
He added that the principal problem in his view is a lack of 
attention and resources devoted to tourism by the Ministry of Small 
and Medium Sized Enterprises, Trade, Tourism, and Liberal 
Professions.  Marasoiu said the fact that tourism is lumped into a 
single ministry with so many other agencies and responsibilities is 
an indication of the low regard in which it is held by the GOR. 
Marasoiu complained that the tourism authority has suffered repeated 
changes in management and the ministry under which it is 
subordinated.  He added that the GOR earmarks significantly smaller 
budgets (3-4 million euro a year) for tourism promotion than do 
regional competitors Hungary, Bulgaria, and Turkey. 
 
¶6. (U) The GOR's lack of clear tourism policies has also come under 
fire from both the WTO and the AmCham Tourism Committee.  One of the 
Master Plan's primary criticisms is that the GOR has failed to 
produce a strong, positive brand for Romania as a tourism 
destination.  The AmCham Committee consensus is that there is a lack 
of marketing, planning, and research at the national level, and 
tourism offices abroad are ineffectual due to low staffing.  Current 
promotional activities, such as international tourist offices, 
fairs, and advertising, are poorly coordinated and scattershot, 
according to the Master Plan.  Additionally, use of the internet for 
information, promotion, and reservations is underdeveloped, and 
Romania is not well represented on tourism websites. 
 
 
BUCHAREST 00000575  002 OF 002 
 
 
BETTER PLANNING NEEDS BETTER STATISTICS 
 
¶7. (SBU) The GOR does not fare much better in tourism development 
planning, which is fragmented and uncoordinated, according to the 
Master Plan.  Informal, unauthorized development projects; 
over-development in ecologically sensitive tourist areas; discordant 
architectural design; and sub-standard support infrastructure, such 
as parking and toilets, are threats to future growth that have 
arisen through haphazard planning.  The Master Plan cites poorly 
defined responsibilities and coordination between the national, 
regional/county, and local/urban planning authorities as the 
underlying causes. 
 
¶8. (SBU) Local media challenged the veracity of tourism statistics 
after the National Statistics Institute (INS) issued a yearly 
tourism report in January 2008.  The key media claim - that many 
hotels and rural inns do not report much of their activities to the 
INS in an attempt to conceal earnings and wages - was substantiated 
by industry association representatives in discussions with EconOff. 
 Marasoiu said that the official statistics are meaningless, and 
that hotels at all levels underreport activity.  This makes accurate 
research and planning all the more difficult for tourism 
authorities. 
 
DEVELOPMENT OPPORTUNITIES 
 
¶9. (U) The State Secretary for Tourism in the Ministry for SMEs, 
Trade, Tourism, and Liberal Professions, Lucia Morariu, told EconOff 
in a July 14 meeting that the biggest missing piece in the tourist 
sector is a major convention center.  The Master Plan, Peacock's 
Marasoiu, and the AmCham Tourism Committee members all identified a 
modern conference center, able to host up to 10,000 participants, as 
a top priority to raise Bucharest's profile as a major business 
travel and tourism destination. 
 
¶10. (U) There is also a strong need for additional hotel capacity, 
particularly in the four- and five-star range.  According to 
Marasoiu, Bucharest loses five to ten major (defined as over 3,000 
visitors) events a year due to a shortage of rooms.  The Master Plan 
reports that there is a major imbalance between the current room 
capacity and future demands: there is an immediate demand for more 
four- and five-star hotels; there are ample mid-level (two- and 
three-star) hotels to meet forecasted demand until 2020; and there 
is a huge oversupply of lower-grade accommodations.  According to 
Marasoiu and to WTTC studies, international chains looking at 
expanding into Romania include Kempinsky, Hyatt, Starwood, Le 
Meridian, and Sheraton.  Marasoiu said that these chains typically 
build larger capacity (250-400 rooms) four- and five-star hotels. 
However, State Secretary Morariu told EconOff that none of them has 
formally approached the authorities with firm plans so far. 
 
COMMENT 
 
¶11. (SBU) With the Romanian economy facing many continuing 
challenges as it integrates into the EU, it is clear that tourism is 
suffering from a lack of attention.  The tourism agency within the 
Ministry of SMEs and Trade is still trying to digest the 700-page 
WTO Master Plan months after its release.  State Secretary Morariu's 
statements in the July 14 meeting indicate that she considers most 
of the problems confronting the sector, such as infrastructure and 
environmental degradation, to be outside the Ministry's domain, and 
that there are no inter-agency mechanisms in place to address the 
problems.  Nearly every stakeholder EconOff met with expressed 
pessimism that the Master Plan would be implemented, given its size, 
lengthy list of problems, and the extensive coordination it would 
require among GOR agencies and with the private sector.  The AmCham 
Tourism Committee, with post's cooperation, is engaging with the GOR 
to help it prioritize a list of actions for the short and medium 
term.  Chief among these would be a request for greater inter-agency 
coordination and a greater recognition of the economic importance of 
tourism.  End Comment. 
 
TAUBMAN