Market Assessment

Market analysis of the tourism industry in Zlatibor County, Serbia, 2010

    Description
    The Private Sector Development (PSD) programme is a three-year programme in South-West Serbia sponsored by the Swiss Agency for Development Cooperation (SDC), and implemented by the Regional Development Agency (RDA) Zlatibor. The overall objective of the programme is to contribute to income and employment. It applies the M4P (Making Markets Work for the Poor) approach with the view ot facilitate sustainable system change in the market, aiming to contribute to the creation of profit and employment.

    This report presents the findings of the market analysis for the tourism sector.
    Tourism has been selected for three main reasons:
    • Relevance: The industry currently employs more than 3,000 people, and is increasingly playing an important role in the region as source of income and employment. It offers a wide range of different professional opportunities, ranging from low to high-skilled professions, which are particularly interesting for young people. Furthermore, the tourism industry is a crucial consumer market for other interconnected local product
    and service markets.

    • Growth potential: The Zlatibor County is one of the most popular tourist destinations in Serbia. However, tourist arrivals have been fairly constant over the past years and gains are still grossly unequally distributed between municipalities in the district (Cajetina has by far the biggest market share). Overall competitiveness has become under threat, as Serbia is increasingly exposed to the regional and international tourism market. Nevertheless, the PSD programme believes that there is good and more inclusive growth potential if some of the underlying systemic causes for underperformance are addressed.

    • Intervention potential: The project found development intervention in the tourism industry very feasible, especially given the large number of potential partners. All municipalities in the programme region have identified tourism as one of their priority areas, which promises a good basis for cooperation. Anticipated changes in the sector match with the PSD programme’s overall objectives of income and employment creation, and intervention areas have been
    identified that promise feasible leverage with given programme resources.



    Summary of results
    Four intervention areas have been identified as the result of the market analysis, which aimed at identifying problems in the industry that prevented more inclusive growth, and tried to understand the systemic root causes for these problems. The following four were seen as the most feasible for PSD programme intervention:

    • Human resource development: The ability to meet customer preferences for high quality services in a growing international market environment is essential for the overall competitiveness of the industry. Although four vocational schools for tourism exist in the Zlatibor County, the private sector is not satisfied with the quality of graduates and has increasingly resorted to informal
    in-house training. Apart from being costly, this has implications on the overall quality standard of services, as well as the inability of small businesses to access skilled labour. The PSD programme aims to establish better cooperation mechanisms between schools and private sector in order to ensure that the requirements and needs of the industry are met.

    • Regional marketing: In order to attract more tourists to the Zlatibor County and spread gains more evenly, it is absolutely essential to find a common and effective public-private approach to promoting regional attractions, touristic products and services. Though this is one of the main tasks of the tourist organisations, no such regional marketing approach exists. There is furthermore a lack of market research that would help to shape the regional touristic offer. The project therefore aims at initiating a process that will lead to the establishment of a sustainable consumer research function, an inventory of the regional touristic offer, and a dialogue process between public and private sector that will lead to a regional marketing plan and the
    implementation of pilot marketing projects.

    • Innovation in rural tourism: In order to distribute gains in the tourism industry more evenly across the district, it is important to find mechanisms that stimulate innovation and start-ups of tourism businesses in a rural environment. A larger and morewidely distributed offer of touristic products and services will increase also the overall attractiveness of the region as tourist destination, and therefore benefit all market players. So far efforts have focussed on providing direct support to rural entrepreneurs and village communities, however with limited effect, and rural entrepreneurs still lack
    access to essential services to support them in setting up a touristic business. The PSD programme will therefore facilitate the establishment of a model of embedded services that aims at increasing the flow of knowledge and information between national travel agencies, local travel agencies and individual entrepreneurs in rural areas.

    • Cooperation and coordination: In order to overcome systemic constraints in the
    tourism industry and address issues of joint interest, coordination and cooperation between different market players is absolutely necessary. Individuals are weak, but jointly they can tackle the problems. Coordination in the industry is currently very weak: a sense of rivalry overweighs in the private sector with only very limited and informal forms of cooperation; coordination between public agencies in order to find a common promotion approach to tourism is non-existent; public-private cooperation is only
    sporadic and on an individual basis. Through its interventions in the other areas, the programme aims at improving the cooperation between different market players, and also increasing coordination within the private sector by supporting the Chamber of commerce in playing a lead role in this regard.

     
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