TOURISM BOARD AND REFORMS

Azerbaijan continues the implementation of reform in the recreational sector launched last year. According to the recently signed presidential decree “On additional measures for the development of tourism in Azerbaijan”, the Tourism Board to be established in the country will restructure the tourism sector in accordance with modern requirements and international best practices. It is also necessary to ensure the construction of economy hotels, to launch low-cost budget flights, and to do everything possible to promote the country's tourism potential abroad.

The post-oil period of development dictates the need for tangible reforms in tourism sector. The objective is to gradually turn the industry into an industry of mass recreation. The driver of the long-sought-after reforms is the protracted energy crisis and the devaluation of the national currency, pushing the tourism market participants to conduct a more flexible policy, in particular the development of budget lines in domestic and especially inbound (incoming) tourism.

President Aliyev has called for the necessity of such reforms a year ago and formulated a clear task: to increase the competitiveness and attractiveness of the tourism sector. During this period, the experts of the Ministry of Culture and Tourism, as well as professional associations have developed a number of proposals to encourage market players to invest in the construction of budget hotels, to reduce prices, improve service levels and to develop new attractive recreational areas. The foreign low-cost airlines launched flights to and from Azerbaijan. Reduction of airfares has also contributed to the establishment of CJSC Azerbaijan Airlines (AZAL) budgetary unit, AZALJET. Significant changes include the abolition of licenses and simplification of travel procedures, as well as the launch of ASAN Viza system, which significantly simplifies and accelerates visa procedures for foreigners.

The efficiency of these measures is confirmed by a multifold growth of visitors from Russia, Iran, and the Gulf States spending their spring and, especially, summer holidays in Azerbaijan.

The logical continuation of the reform in recreational sector the presidential decree “On additional measures for the development of tourism in Azerbaijan” signed on Sep 1, 2016. As follows from the document, Tourism Board of Azerbaijan will be established in order to fulfill the tasks envisaged in “The main directions of strategic roadmap of the national economy and the main sectors of economy”, to establish modern tourism industry, which will meet high economic, social and environmental requirements, and to further increase the share of industry in the national economy. Using its powers, this new structure will to analyze the current situation in the industry and ensure inter-agency coordination in order to take effective measures to eliminate the problems in the industry. The Board may invite independent experts and specialists, as well as establish working groups based on international best practices.

The establishment of inter-agency coordinatiion bodies is a well-known international practice, binding together the interests of the state, market actors and civil society organizations. When applied to the tourism sector, this provides a greater vision for the future and scope of problems in the industry. The experience of European countries, Southeast Asia or Turkey, where similar structures exist, confirms that the effectiveness of interagency coordination bodies is guaranteed through feedback mechanisms with in the market. This allows for providing quick and immediate response to industrial changes, making adjustments in the regulatory sphere and administration mechanisms to support the most promising trends and directions available at that stage.

“The Tourism Board will play a significant role in the development of domestic, as well as inbound and outbound tourism. It will join professionals and experts, who will study all the intricacies of this sector to prepare a detailed action plan. The Board will also be an effective platform for the coordination of activities of professional associations in tourism sector, and will definitely intensify their participation in the recreational sector reforms”, says adviser to the chairman of Azerbaijan Tourism Association Muzaffar Agakerim.

President instructed the Cabinet of Ministers and the Ministry of Tourism to prepare proposals on the improvement of regulatory mechanisms for the tourism sector. It is expected to diversify touristic spheres in regions, in particular to establish tourist routes based on national, historical, cultural, socio-economic and natural characteristics of the geographical area; to improve the quality of tourism services including through the expansion of international cooperation. The presidential decree also contains a paragraph on the development of beach tourism infrastructure and more efficient use of the Azerbaijani sector of the Caspian Sea for tourism purposes.

“In general, we will continue to work on eliminating the seasonal nature of tourism in Azerbaijan. This provides a broader perspective to develop the areas such as nautical tourism, to establish recreational areas, to expand the types of health tourism and to further develop winter tourism”, said the Minister of Culture and Tourism Abulfaz Garayev.

Another important aspect of the presidential decree is a set of proposals on establishment of tourist and recreational zones with the greatest tourist potential based on public-private partnership, as well as the proposals for the provision of tax and customs benefits and privileges at such zones. It is also expected to expand targeted educational institutions, i.e. vocational schools and lyceums supported by the Azerbaijan University of Tourism and Management. Relevant land territories and property will be allocated for this purpose. A separate item is the development of a master plan aimed at developing tourist and recreational zones in Khizi, Khachmaz, Guba, and Gusar and ensure the state registration of their passports.

It is noteworthy that a similar experience has already been applied in Azerbaijan in order to promote industrial development of the country. Depending on the extent and nature of industrial activities, the industrial facilities are located at industrial parks and districts, agro-parks, business incubators, free trade zones and other clusters. Most importantly, this provides a variety of fiscal, utilities or credit preferences to such facilities. Such multi-level diversification has proven its effectiveness during the recent years through the rapid development of the real sector of economy.

It is likely that the segmentation by geographic areas and directions will better regulate budget injections and investment flows, provide benefits and preferences, encouraging the development of the most demanded industrial mainstreams in tourism sector.

“Azerbaijan is recognized in the global tourism market as a country providing luxury tourism services: there is a set of high-class tourist infrastructures and branded hotels operating both in Baku and the regions. Today, however, the tourism industry faces a new task – to create a network of two- and three-star hotels that provide a flow of foreign tourists to the country with different budget possibilities”, says Minister of Tourism A. Garayev, noting this is one of the most significant challenges indicated in presidential decree.

The government will continue to work on the establishment of new and affordable international flights to attract foreign tourists to the country. This task is entrusted to the State Administration of Civil Aviation and Azerbaijan Airlines.

But not only cheaper transportation costs should attract foreign tourist to Azerbaijan. It is planned to hold annual shopping festivals in Baku. This initiative will be financially supported from the President's Reserve Fund: 400 thousand manats in 2016. In the future, customs and tax concessions will apply, including discounts at retailers. Together with the development of tax-free system and the increasing number of retail facilities connected to this system, this will guarantee an additional incentive for incoming tourism.

Special tourism representatives of the tourism at diplomatic missions of Azerbaijan in priority countries will attract travelers to the country and promote domestic tourism products. In the near future, tourist promotion and advertising campaign will be launched through dedicated websites and the Tourism Registry. The legislation will also be improved to fast track the foreigners and stateless persons through the border crossings with Russia, Turkey, Iran, and Georgia.

“We believe that all aspects of the presidential decree are quite reasonable. Soon we will see significant progress as a result of the implementation of complex tourism measures in Azerbaijan”, says Samir Dubendi, the Chairman of Association of Hotels and Restaurants (DAIR). According to him, these reforms facilitate the transition of the tourism industry to a higher level of development. The National Fund for Entrepreneurship Support and the introduction of public-private partnership in tourist zones and tax and customs preferences will play the most important role in the development of the business.

In short, the private companies and government agencies try to be fully prepared for the upcoming tourist boom in Azerbaijan.