Azerbaijan tourism industry: prospects and challenges Country set to become tourist hotspot by 2026

This year, Azerbaijan has made steady progress in restoring tourism and overcoming the pandemic impacts in this area: in January-November 2022, the number of foreign visitors more than doubled. According to the Azerbaijan State Tourism Agency (ASTA), in the near future, the growth in the recreational sector will be 20%, and the target of the agency is to increase the number of foreign travelers to around 4 million people by 2026. The key trends that should promote the development of the domestic tourism sector in the next four years were discussed at the "Azerbaijan Tourism Summit - 2022" held on December 8.

The main challenge facing the recreational sector of Azerbaijan is related to the need to quickly overcome the effects of the crisis related to the COVID-19 pandemic in order to bring the tourist flow into the country to reach indicators of a prosperous 2019 (in the pre-crisis year the country entered the record 3.170 million) and then exceed that figure. This is the goal set out in the Strategy for Socio-Economic Development of Azerbaijan for 2022-2026: in particular, it is planned to increase the share of tourism in non-oil GDP of the country by 1.5 times compared to 2019, while the share of revenues from the industry in the next four years should increase by an additional 20%.

The "Azerbaijan Tourism Summit 2022," organized on December 8 at the initiative of the State Tourism Agency, discussed key development trends and inclusive opportunities to increase industry momentum, including through the development of new destinations and expanding public-private partnerships. The forum included four-panel discussions on state policy in the tourism sector and regulation of the industry market, aspects of the development of recreation in the liberated territories, marketing activities in the main target markets, as well as the current situation and plans in the tourism industry.

"We can definitely state that the tourism sector has entered into a period of post-pandemic recovery, and this is clearly demonstrated by current statistics: more than 1.458 million foreign tourists visited Azerbaijan in the first 11 months of this year, which shows a 2.1-fold increase compared to the same period in 2021," Chairman of the Azerbaijan State Tourism Agency Fuad Naghiyev said during the summit. The Head of the ASTA noted that the forecasts of the recreational sector development for the current year as a whole have been justified, the industry was able to recover by 50% of the pre-pandemic level, moreover, the growth of tourist traffic in countries such as Türkiye, Saudi Arabia, India climbed above 90%, and indicators for Belarus, Pakistan, and Jordan even exceeded the record statistics of a successful 2019.

It is noteworthy that these successes were achieved despite certain quarantine restrictions in the country, including closed land borders. Well, after such obstacles are overcome, the dynamics of inbound tourism can be further increased. It is quite realistic to implement at the expense of the inflow of tourists from Southeast Asia, as well as the Land of the Rising Sun, as in the coming days Azerbaijan plans to sign a memorandum of cooperation with Japan in the field of tourism.

"Our goal is to increase the number of foreigners visiting Azerbaijan to 4 million people in 2026 and to bring the indicators of domestic tourism to 6 million citizens," Naghiyev said, stressing that in four years the turnover of the domestic tourism sector will quadruple compared to 2021 and reach 11.2 billion manats, of which about half will be formed by foreign tourists.

In order to implement such an ambitious task for the next four years the specialists of the State Agency for Tourism and other specialized structures set the goals on 10 main directions aimed at the comprehensive development of tourism and turning Azerbaijan into a stable and affordable tourist region. In particular, it should be achieved at the expense of the promotion of domestic and foreign tourism in the off-season time, first of all at the expense of the development of balneological resorts which provide services to foreign citizens within the framework of medical tourism. Measures are also planned to simplify visa legislation and increase the share of budget airlines, as the main goal of the strategy is to increase incoming (inbound) tourism, for which a number of additional actions are to be implemented to promote the country's potential to the international level. To this end, it is planned to strengthen cooperation with the UN World Tourism Organization (UNWTO), the World Bank, as well as other international structures, in order to implement, in particular, measures to preserve historical and cultural heritage, create new tourist destinations, promote and advertise Azerbaijan's recreational product at the world level during exhibitions, conferences, specialized forums. The implementation of various programs with the participation of the State Tourism Agency, the Bureau of Tourism, and other agencies aimed at expanding the educational and training opportunities of the tourism sector, and the introduction of innovation in this area is also conceived.

These tasks are not as simple as they seem at first glance. Perhaps the biggest obstacle to the development of the incoming sector has to be overcome - the country's lack of access to the services of low-cost airlines. "High prices for air travel to Azerbaijan considered one of the obstacles for inbound tourism: air tickets from different European cities are several times more expensive than to neighboring Türkiye and Georgia," Mohammad Nuriyev, head of the Department of Tourism Policy and Strategy of the ASTA said. - We hope that in the coming years there will be positive changes in this direction for the tourism sector". The head of the department believes that the approaches in the socio-economic development strategy of the country provide for the optimization of the activities of state-owned companies, and the application of a unified approach to them. In this regard, the ASTA has put forward the issue of optimizing the policy in the field of transport tariffs, taking into account the interests of the development of the tourism sector, and these proposals are submitted to the government for consideration.

Another important direction of the tourism sector is to improve service standards in the hotel industry of the country, the correlation of price parameters with the level of services, including through increased participation of hotels in the second year of the program "National system of star classification". As of today, 150 local hotels have applied for the star classification program, about 100 applications were considered and 44 hotels were awarded 5, 4, and 3 stars and received corresponding certificates. Of course, this work should be accelerated by connecting a considerable part of more than 600 hotels and hotel-type facilities available in the Republic to the system of star classification. According to the new law "On tourism" each hotel must apply for receiving stars within six months from the beginning of its activity, and though the implementation of this process was disrupted during the pandemic COVID-19, today the efforts of the ASTA are aimed at expanding consulting work with hotels, providing them with consulting support in this issue.

In perspective, ASTA should strengthen its participation in the regulation of not always simple relations between hotels and travel agencies. It is also necessary to encourage the creation of a preferential mechanism (including during the off-season) for domestic travel agencies, which express dissatisfaction with the lack of benefits in the pricing policy of the local hotels.

No less important task is to improve the skills of personnel in hotels, tourist guides, and other participants of the tourism sector in accordance with modern international requirements. At the V General Assembly of the Azerbaijan Hotels Association, its executive director Gunay Saglam raised the topic of personnel shortage. "One of the problems faced by the hotel industry in our country is related to the lack of qualified personnel. Currently, some of the national workforces is working in Qatar, largely because of the higher pay. But we continue to build our human resource capacity, and to this end, we are working with the State Employment Agency under the Ministry of Labor and Social Security, as well as doing relevant work in universities," Saglam notes.

All these tasks must be implemented in the shortest possible time, taking into account the creation of a number of new destinations in the country as the development of hotel and resort business in the Karabakh and East Zangazur economic regions. In this regard, the cooperation with Türkiye, Pakistan, the Gulf States, and other countries - members of the Organization of Islamic Cooperation (OIC), which show genuine interest in investing in recreational projects in the liberated territories and attract here tourists from Islamic countries, is considered significant. The ASTA believes that the Karabakh region of Azerbaijan will become open to foreign tourists in 2024, and although demining and the creation of primary infrastructure is still underway here, construction of the first tourist facilities has already begun in Shusha, Kalbajar and Tartar districts, including in the village of Sugovushan.