Tourism 2.0 in Albania: A new opportunity for resilient growth

Tourism 2.0 in Albania: A new opportunity for resilient growth - 2023-02-22

In a striking example, Albania has shown how the tourism sector can drive economic development. Following the country’s turbulent economic and political transition in the 1990s, tourism was perched on the sidelines of the Albanian economy. International travel, hospitality and related services essentially catered to returning members of the country’s large diaspora. However, in the 2000s, several major European tourism operators started recognizing Albania’s potential to join the Mediterranean’s thriving, though often overcrowded, sun-and-sand destinations. A surge of investments followed, and, between 2000 and 2019 the number of hotels, rooms, and beds increased more than tenfold.

Over the past two decades, the contribution of Albania’s tourism and travel sector to the country’s gross domestic product (GDP) has steadily increased and reached more than 8%, creating jobs and generating 38% of total exports. Looking back, 2019 was Albania’s best year for tourism, with 6.4 million foreign visitors and $2.3 billion in sectoral earnings. The future looked promising.

Unfortunately, when COVID-19 swept across the world, the number of international arrivals plunged by 60% and the sector’s earnings fell to $1.1 billion with the accommodations subsector shrinking by 75% in the second quarter of 2020. While 10% of Albanian businesses reported shutting down, another 60% earned less than 10% of their 2019 revenue, and more than half the employees in the sector were laid off.

Luckily, as travel restrictions eased and economies launched recovery efforts, the tourism sector bounced back with the arrival of 5.7 million foreign visitors and tourism earnings achieving pre-pandemic levels during the summer of 2021. While the sector was just finding its feet, Russia’s invasion of Ukraine dealt a second blow. The good news is that, despite the war, the summer of 2022 has been even better—as of October, the country received 6.8 million visitors, with projected earnings of more than $3.3 billion.

While the recovery was swift and remarkable, COVID-19 exposed the tourism sector’s vulnerability to external shocks, highlighting the need for a more diversified, resilient, and sustainable tourism sector.

https://blogs.worldbank.org/europeandcentralasia/tourism-20-albania-new-opportunity-resilient-growth