In recent years, Azerbaijan has witnessed a significant surge in the growth of its tourism sector, playing a pivotal role in the country’s overall economic development. As the nation continues to diversify its economy, the tourism industry emerges as a key player, attracting visitors from around the world and contributing to job creation, infrastructure development, and cultural exchange.
In January 2024, tourists in Azerbaijan collectively spent 193,254.3 thousand manat. The distribution of expenses included 87,434.7 thousand manat for transportation, 37,207.6 thousand manat for accommodation, 40,323.6 thousand manat for food, 837.7 thousand manat for cultural activities, 83.8 thousand manat for purchasing tourism packages, 212.7 thousand manat for renting transportation vehicles, 1,065.6 thousand manat for sports and entertainment services, 18,139.3 thousand manat for purchasing goods and gifts, and 7,945.2 thousand manat allocated for other expenses.
Compared to previous years, there was a twofold increase in transportation expenses, amounting to 45,345.4 thousand manat. Accommodation expenses saw a rise of 45.4%, totaling 11,625.9 thousand manat, while food expenses increased by 59.2%, reaching 14,988.8 thousand manat. Cultural expenses witnessed a growth of 40.9%, amounting to 243.1 thousand manat, and expenses on purchasing tourism packages rose by 63%, totaling 32.4 thousand manat. Moreover, expenses for renting transportation vehicles increased by 41.5%, reaching 63.7 thousand manat, while sports and entertainment services saw a 2.3-fold increase, totaling 602.4 thousand manat. Purchases of goods and gifts increased by 50.3%, amounting to 6,072.5 thousand manat, and other expenses rose by 30.8%, reaching 1,872.6 thousand manat.
Here poses several questions: How to attract foreign and domestic investments for the development of tourism in Azerbaijan? What steps should be taken in this direction?
Chairman of the Board of Directors of DAIR Association of Hotels and Restaurants and Executive Director of Azerbaijan Ecotourism Association Samir Dubendi told Azernews that for the development of each economic sector, investments need to be directed toward that sector.
“This involves placing financial resources into infrastructure, human resources, research, start-ups, business expansion, strengthening its potential, standardization, networking, and other related issues. One of the most widely employed means of attracting investments is through business loans, particularly recognized for their extensive use among Small and Medium-sized Enterprises (SMEs). As we know, SMEs, the Entrepreneurship Development Fund, and other institutions offer favorable credits for businesses. The annual interest rate for these loans is approximately around 5%,” he added.
According to him, specialized loans, differentiated by interest rates and payment terms, tailored specifically for companies operating in the tourism and hospitality sectors, should be widely offered across the entire banking system.
“Currently, such specialized credit offerings are scarce in the financial products market. It’s worth noting that the tourism and its influential counterpart, the hospitality industry, are among the priority economic sectors in the country, holding strategic importance for the country’s economic development.”
He stressed that projects, grants, and competitions aimed at supporting the development of the tourism industry are implemented by various state institutions.
“These financial processes directly impact the positive development of tourism. Among those are the State Tourism Agency, the Entrepreneurship Development Fund, and various national funds. In recent years, the share of foreign investments in the country’s tourism sector has increased. For instance, the investment in the Sea Breeze complex was announced with a volume of 1 billion US dollars. I believe that liberated territories will attract investments in the tourism sector, especially from foreign sources,” Dubendi told.
The tourism expert also touched on the role of foreign investors in this field.
“In the past, the World Bank, GIZ, UNDP, USAID, EBRD, and other foreign institutions were more active in financing infrastructure and institutional projects. However, some of their approaches are questionable. For instance, I’d like to point out shortcomings we observed in our own experience. An external donor institution is implementing the South Caucasus Tourism Development project, with its main office established in Tbilisi. However, it operates with the goal of channeling finances back to US companies or investing in Georgia. Such approaches, in my opinion, are not fair.”
“Considering all these aspects, I believe that our country should enrich the investments in the tourism industry through the national banking system, using more favorable and convenient business loans and leases. Local funds should pay more careful attention to tourism projects. In conclusion, I would like to emphasize that to establish these matters correctly and cost-effectively, working on the investment strategy of the tourism and hospitality industry can bring more precise and sustainable results,” Dubendi concluded.
Courtesy: Azernews
