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May 2018 Newsletter

Editorial

Labour shortage bites

Not for the first time the Bulgarian Black Sea seems to be suffering from a shortage of summer labour. An estimated 2700 vacancies are struggling to be filled according the Country’s Employment Agency. Staff shortages are a re-occurring problem that no-one seems to have fixed despite the government noises that this year, non EU nationals from the likes of Moldova and Ukraine would be brought in to work in the hospitality industry.

The shortage of labour is in fact a problem that is starting to appear across many industries within the country as certain industry sectors see a boom in growth within them. This is especially true within the IT and BPO sectors where, for example call centres, are now battling with each other to try lure staff into their own operations as their own business operations continue to expand. The potential end result is that wage inflation kicks in and these once cost effective shores suddenly become less cost effective and these business’s move elsewhere.

If we transpose this to the leisure and hospitality industry then the same or similar rules apply; Bulgaria is attractive to many as it is perceived as a cheap summer and winter destination, which in political correct speak translates to ‘” provides value for money’”. The reason why it is cheap is that the operating costs of hotels and restaurants are low as those employed within them receive a fraction of the salary that people working in similar jobs in other countries receive. Thus why work in Bulgaria when you can work anywhere across Europe and earn much more? This is even more the rule of thumb for those engaged in summer employment, especially students. The options thus become to either pay more to keep people employed within Bulgaria and to stop them being lured into working overseas which in turn increases cost, which accordingly makes Bulgaria a less attractive potential destination, or to bring in new labour from alternative source markets who have either high unemployment or whose nationals struggle with work visas in other parts of Europe. Enter Ukraine and Moldova.

However, as we see, the theory and the reality of actually getting these people into actual jobs appears somewhat different.

 

Mark Thomas

Managing Director

HRG Bulgaria

Fancy buying a new toy?

If you have been saving those stotinki for years and years and are looking for something to spend them on, then Airbus’ s portfolio of planes might be of interest to you. The bad news is that their price list might just be a tad out of reach for most of us but if owning your own plane appeals to you, then these are the official list prices of its planes before any discount: –

A319 –  92.3m USD / A319 NEO –  101.5m USD

A320 –  101m USD / A 320 NEO – 110.6m USD

A321 – 118.3m USD / A321 NEO – 129.5m USD

A330-200   – 238.5m USD / A330-800 NEO –  259.9m USD

A350-800  –  280.6m USD / A 350-900 NEO  –  296.4m USD / A350-1000  – 366,5m USD

A380   – 355.6m USD

Part-ex considered. Just bring it to the show room for an evaluation.

When the boat comes in

The turmoil in and around the Black Sea, in particular the Russian seizure of Crimea and the political instability in Turkey, has this year had a negative knock on effect for the Bulgarian Black Sea tourism; 2018 will see no cruise ships calling at the Black Sea ports of Bourgas and Varna.

Cruise itineraries are planned some two or three years in advance with the two Bulgarian ports often seeing up to 40 ships spending time there and bringing some 25,000 tourists.

The flip side of this of course is that the same instability in Turkey has generally helped boost Bulgarian beach visitor numbers by exponential amounts.

 

Seriously!

The recent nutter event in the USA where a passenger tried to bring a peacock on board a flight as an ‘” emotional support animal”’ has prompted another US carrier, this time American Airlines to revise its own pet support rules.

From July 1st 2018, no more ferrets, goats, spiders or hedgehogs will be accepted although trained miniature horses will still be allowed (quote).

Normal people in more sane parts of the world still need convincing that this is not an April fool’s joke. Sadly.

 

Longest World cruise ever

Cruise operator Viking has announced details of its latest monster cruise that will be the longest ever continuous world cruise. The new cruise departs London on 31st August 2019 and will run for 245 days covering six continents, 59 countries and 113 ports.

Guests can choose to sail one of two segments, a 127-day cruise calling at 61 ports or a 118-day cruise calling at 55 ports in 29 countries. Or both.

The total cost is 92,990 USD per person…..including gratuities! Book now though and get a 4000 USD shore excursion credit!

The taxman cometh

The rise and rise in the popularity of Airbnb definitely rubs certain City authorities up the wrong way as well as most city hotel owners. The main gripe of the authorities is not so much that premises are unregulated and uncontrolled, but more of the fact that they lose millions in lost tax collection from guests who have taken their business elsewhere. The city of San Francisco is one of those cities at the forefront of bringing Airbnb to heel and is seeking to set an example for others to follow by seeking to fine two property owners 5.5 million dollars for renting out 14 apartments via Airbnb.

San Francisco’s claim is that in 2014 the couple illegally converted an apartment building for short term rental use by evicting tenants. At that time a fine of 276,000 USD was imposed on the couple who had to provide an undertaking not to violate short term renting laws again. However, the city argue that the same apartments have been rented out for 2,271 nights since then, hence the charge of 5.5 m USD!

Apparently the owners tried to be as clever as possible by renting out the apartments using friend’s names. When inspectors visited the apartments they found that despite the initial impression that these apartments were not being used for short stays. The same food items were placed in each apartment, the same arrangement of dirty dishes in each kitchen sink and the same personal products in each bathroom! The same make of damp towel s were also artistically placed in the same position in each apartment!

 

New best Passport

Singapore has lost its top spot of being considered the World’s Most desirable passport after Japan stole a march on the Island state. Japanese passport holders can gain visa free entry to 189 countries across the globe whilst Singapore passport holders get access to 188. Indeed, Germany also shares second spot with Singapore. Third place belongs to a cluster of countries including Finland, France, Italy, Spain, Sweden and South Korea who can access 187 countries. Bulgaria sits in 16th spot with Romania, Croatia and Hong Kong with access to 169 countries. The passport best avoiding is those from Iraq and Afghanistan who sit at the bottom of the pile in 100th place and with access to just 30 countries.

The actual top 10 rankings of passports is: –

Ranking            No; of countries

With visa free

Access to:                         Country

1          189                              Japan

2          188                              Singapore, Germany

3          187                              Finland, Sweden, Italy, Spain, France, South Korea

4          186                              UK, Austria, Luxembourg, Netherlands, Norway, Portugal, US

5          185                              Belgium, Canada, Denmark, Ireland, Switzerland

6          183                              Greece, Australia,

7          182                              Malta, New Zealand, Czech Republic

8          181                              Iceland,

9          180                              Hungary, Slovenia Malaysia

10        179                              Lithuania, Latvia, Slovakia

Money for nothing

The trick of charging passengers for checking in baggage has enabled airlines in the USA to record a whopping 15,5 billion dollars’ profit in 2017, an increase of over 10% on the previous year.

Total revenues of the 23 airlines whose data was used reached 175.3 billion dollars comprising of 130.5 billion from air fares alone and 4.6 billion dollars from “baggage fees”.  An additional 2.9 billion dollars was extracted from passengers who changed their reservations.

Thus it’s reasonable to assume that the spurious baggage and reservation fee which total almost 7 billion USD or approaching half of the airlines total profit, could, on a balance sheet, be described as ‘” un earned income”!

Accor pick their move

French based hotel group Accor is about to expand with its acquisition of Swiss based Movenpick Hotels and Resorts. The cost of the sale is reported to be 560 million Swiss Francs (484 million Euros).

Movenpick currently operates in 27 countries with 84 hotels and is particularly strong in the Middle East.

eatstaylovebulgariaCultural dilemma

The motorway network across Bulgaria and indeed connecting it with the neighbouring countries is still far from being classed as “good’” despite the massive improvements in the overall road infrastructure in the past decade or so. One of the main issues has always been the road south to Greece which, despite now being some 75% complete in terms of being motorway standard, still faces a big engineering challenge with the Kresna Gorge section where a clear plan for its construction seems to be some way off. To ‘” tunnel or not to tunnel”” seems to be the question here although the lack of any suitable cost effective alternative means almost certainly that tunneling the 30 odd kilometers is the only option on the table. That however is not the only dilemma.

During the motorway construction near Blagoevgrad, a large and impressive Thracian era archeological site as well as the well-kept remains of a Roman settlement have been discovered at what is called Skaptopara, the forerunner of the modern day town. Calls now abound to re-route the motorway around the site which not only will add on extra cost to the construction but it will also add on a couple of years’ delay to the completion of the section.

The choice seems now to be between modernization or preserving the culture of the region. Hopefully some sort of inexpensive compromise can be reached as such sites are a national treasure and can also boost tourism in the country. For those who have spent decades struggling to Greece on inappropriate roads, waiting a couple of more years won’t be too painful.

 

Top marks to Ryanair

Despite its troubles in 2017 when it had to cancel some 20,000 flights due to a management cock up of monstrous ineptness, Ryanair had another record year with profits of 1.45 billion Euro. This comes from a turnover of 7.15 billion Euro.

The numbers of passengers carried also rose 9% to 130 million and its average fare was 39.40 euro per leg. Indeed, the average fare fell by 3% compared with 2016.

Love them or hate them, Ryanair must be the envy of just about every other airline in Europe or indeed the world. The business model: fill the planes and the business takes care of itself. Quite simple really isn’t it?

Own goal

The current spat between Mr Trump and Iran might cost American business more than he realizes as both Boeing and Airbus could lose 39 billion USD in plane orders from the Islamic Republic who had originally ordered a total of 200 new planes from Boeing, Airbus and ATR.

Even though Airbus is a non USA entity, the new sanctions would affect its contracts as it includes US parts.

What Mr. Trump should be aware of is that both China and Russia have new airline production capabilities with planes that are designed to compete with Boeing and Airbus on the world stage and they will no doubt happily supply the Iranians with new planes if no-one else is allowed to.

If you’d like to subscribe your friends or colleagues and for all your travel requirements, reservations or for more information about any of the items mentioned in the newsletter, please contact us:

Tel:+ 359 (2) 943 3011;
Fax:+ 359 (2) 946 1261;
e-mail:mark@bg.hrgworldwide.com