Value Added Tax (VAT) must be reduced to five per cent – or seven per cent at least – across the entire tourist sector to salvage business and keep it afloat, according to Donka Sokolova, the chair of the Bulgarian Association of Tourist Agencies (BATA), reports Stroitelstvo Gradut.

Bulgaria's profile as a tourist destination must also be raised in the European Union and abroad. Other measures to revive the industry, floated by Sokolova,  include the introduction of a visa-free system for Russians and Ukrainians and the abolition of airport taxes. All these recommendations will be put to the Government.

Although Bulgaria is supposedly a cheap destination, Turkey, Spain, Cyprus and Tunis are actually cheaper, according to Sokolova, quoted in Stroitelstvo Gradut. Consequently, she is asking hotels in Bulgaria to implement a rational pricing policy – or face a further deterioration in revenues.

Hotel managers, however, are reluctant to lower prices further. Georgi Shterev from the Union of Hotel Owners in Golden Sands, has explained that "the (foreign) competition can afford to drop their prices because they enjoy their respective governments' support".

In a letter to Prime Minister Sergei Stanishev, the Russian union of tour operators has demanded a reduction in accommodation prices as well as the abolition of the visa regime, "otherwise Bulgaria is likely to lose its Russian tourists because other countries offer far cheaper and more attractive packages than Bulgaria".

According to BATA statistics, the implementation of free visas would cost Bulgaria around 16 million leva, but the revenue from subsequent influx of Russian tourists would be 10 times that amount.  In January, 30 per cent fewer visas were issued to Russians. In February the number was 50 per cent.

Sokolova believes that some of the extra initial expenses envisaged under these proposals can be covered by the 500 million leva the Government has allocated to assist small and medium sized businesses.