Tourism ‘defended’ the title of the most successful activity in : in 2018 it has reached a record revenue and exceeded the figure of one billion euros. During 2017, the total tourist arrivals exceeded the figure of 2 million, and in 2018, it has set an even higher record.

Source: Statistical Office of Montenegro The World Travel and Tourism Council (WTTC) has ranked Montenegro as the third country in the world (from 185 countries) when it comes to the tourism growth in its report from 2018, and in regard to tourism's contribution to the GDP, Montenegro is ranked as the 30 th world economy.

Source: Statistical Office of Montenegro

I

Town of Budva is a leader in the tourism sector, with almost 900 thousand of tourist arrivals in 2018, followed by and Ulcinj. Six municipalities of the coastal region comprise 85%, and the Capital City of Podgorica comprises 8% of the total tourist arrivals. Winter-tourism centres, Kolasin and Zabljak, record a significantly higher number of tourists than the rest of the northern region, comprising 72% of total tourist arrivals in the north.

Source: Adriatic Appraisal and Statistical Office of Montenegro The average length of stay of tourist visits is 5.9 nights in 2018. Coastal municipalities record the highest average lengths of stay for both domestic and foreign tourists. Although it is one of the municipalities with the highest number of tourist arrivals, the average length of stay in Podgorica is around 2 nights; indicating that Podgorica is visited rather for short-stay business and conference travel.

I

Source: Statistical Office of Montenegro

Majority of foreign tourists are from Europe (91.6%), with passengers from Serbia, Russia and Bosnia and Herzegovina comprising the largest groups. Among the non-European countries, the largest shares of tourist arrivals are from China, Israel and the USA. Montenegro’s tourism is booming with 2.2 million tourist arrivals in 2018 and 12.9 million overnight stays, out of which foreign tourists accounted for more than 95% of the overnight stays.

Source: Statistical Office of Montenegro

I

Overnight stays of foreign tourists show a high seasonality with the rapid growth in visits and the highest peak occurring in August. The majority of the overnight stays foreigners have spent in a period from June to August (70.7% of recorded overnight stays). On the other hand, the overnight stays of domestic tourists have a more gradual growth in visits, with a milder seasonal influence. 46.1% of domestic overnight tourist stays are recorded from June to August, which is significantly less than an equivalent percentage for the foreign guests. Higher percentages for overnight stays of domestic tourists are recorded in the off-season period (autumn and winter), compared to the same percentages for the overnight stays of foreign tourists. Majority of overnight stays are recorded in individual accommodation (67.4%) and the remaining 32.6% is recorded in collective accommodation.1

Source: Statistical Office of Montenegro

Hotels are leaders in collective accommodation facilities, with 2.7 million recorded overnight stays, comprising 65% of the total overnight stays in the collective accommodation or 21% of the overnight stays in total.

1 Collective accommodation facilities include hotels, inns, motels, holiday villages, tourist resorts, hostels, camps and other establishments that provide accommodation services on the basis of approval for accommodation services according to the Tourism Law. Private acco mmodation facilities include accommodation in houses and rooms for rent, as well as in tourist apartments that provide services in the house holds with a maximum of 15 beds and owned by natural persons.

I

Source: Statistical Office of Montenegro

51% of tourist arrivals and 67% of overnight stays recorded are in the category of individual (private) accommodation establishment, meaning that proportionally tourists in the individual accommodation tend to stay longer in the country. On the other hand, collective accommodation accounts for 49% of all arriv als but only 33% of the overnight stays, meaning that tourists who stay in the collective accommodation visit Montenegro for a shorter period. A described pattern presents a logical trend, considering that the collective accommodation establishment is more expensive than the individual accommodation. 5 million of the overnight stays (38.5%) are recorded in the , followed by 2.7 million (21.2%) in the Herceg Novi Municipality and 1.8 million (14%) in the . The remaining 2.7 million of the overnight stays in the southern region are recorded in the municipalities of Ulcinj, Tivat and Kotor. The second-highest number of the overnight stays of tourists are recorded in Podgorica, Zabljak and Kolasin.

I

Source: Statistical Office of Montenegro

Proportionally to their respective arrivals, the tourists tend to stay longer in the Herceg Novi Municipality (21.2% of overnight stays and 14.2% of tourist arrivals) and in the Bar Municipality (14% of overnight stays and 8.7% of tourist arrivals). Other municipalities do not record significant differences between their respective percentages of tourist arrivals and overnight stays. The highest number of the overnight stays are recorded by the tourists from Russia, with 3.1 million of the overnight stays (25.1%), followed by the tourists from Serbia, with 3 million of the overnight stays (24.5%) and the tourists from Bosnia and Herzegovina, with 1.1 million of the overnight stays (9.1%).

I

Source: Statistical Office of Montenegro The trend of overnight stays for foreign tourists is slightly different compared to the trend for foreign tourist arrivals. The highest number of overnight stays is recorded by tourists from Russia, who take the second place when looking at the number of tourist arrivals. Proportionally to their respective arrivals, the tourists from Russia tend to stay longer than tourists from other countries. Besides the Russian, tourists from Serbia and Ukraine also have a higher share in the overnight stays compared to the share in tourist arrivals. On the other hand, tourists from China, Albania and Turkey have a higher share in tourist arrivals than in overnight stays, meaning that the tourists from those countries tend to stay for a shorter period. Among the other countries, there are no significant disparities between the arrivals and the overnight stays.

I

Source: Adriatic Appraisal and Eurostat

The average length of stay for European tourists is 6.3 nights, while the average length of stay for non- European countries is 2.6 nights.

Source: Eurostat

The net occupancy rate of bedrooms in hotel and similar accommodation in 2018 shows that Montenegro, compared to the other countries with a significant tourist inflow, have a high seasonality and sharp ‘peaks’

I

in the occupancy rates. The net occupancy rates are higher than in Greece only in July and August, and they broadly match the ones of Croatia and Cyprus. The shoulder seasons show lower occupancies in Montenegro. The tourist arrivals increase steadily from March to August, followed by a significant decline. The record-high numbers are noted in July and August, accounting for more than 500 thousand of tourist arrivals for each month. The occupancy rates are somewhat higher in June than in September, which has been a new trend for the last two years. By looking at a ‘tourism density’ for several popular tourist destinations in the region, the following results are shown:

Source: Adriatic Appraisal and Eurostat In 2017, the population in Croatia amounted to approximately 4 million inhabitants, with almost 17.5 million tourist arrivals recorded. This positions Croatia as a country with the most tourist arrivals per capita in the analysed region, with 4.19 tourists per resident. Montenegro also ranks high, right after Malta and Cyprus, with 3.21 tourists per resident. In almost all of the countries, the tourists outnumbered the locals, except in Turkey, which is the largest analysed country both by the size and by the population. Based on the Guest Survey, conducted by the National Tourism Organization in 2014, Montenegro is characterized by relatively young tourists (47.6% between 30 and 49 years old), who stayed between 4 and 7 nights (34.7%) or 8 and 10 nights (30.6%). Also, the survey showed that the average total spending per tourist was EUR 540; an equivalent of EUR 62 per day. The largest total travel spending was recorded by the Russian tourists (EUR 856), followed by the tourists from Ukraine and Belarus (EUR 795), Scandinavian countries and the UK.

I

In case you require the full version of our market report, or report about any specific segment or practice of the real estate market, please feel to contact one of us and we will get back to you with our detailed market research service proposal.

Darko Djikanovic Real Estate Market Analyst [email protected] T: +382 20 235319

Adam Ragab, MRICS Managing Partner, SEE [email protected] M: +382 67 800003 T: +382 20 235319

Darko Bogetić, MRICS, d.i.g. Partner, Head of Valuation and Building Surveying [email protected] M: +382 67 670967 T: +382 20 235319

For further information about the company, including our references, publications and the services that we offer, please visit our website on www.adriaticappraisal.com or contact us directly on one of the email addresses or phone numbers above.

Neither the whole, nor any part, nor reference thereto, may be published in any document, statement or circular, nor in any communication with third parties, without prior written approval of the form and content in which it appears. Whilst every effort has been made to ensure its accuracy, we accept no liability for any direct or consequential loss arising from its use.

I