Sound and robust frameworks are essential for the tourism sector to drive positive economic development, enhance competitiveness, and strengthen resilience within economies, particularly those heavily reliant on tourism. This chapter assesses the comprehensiveness of the legislative structure and practices governing tourism across three sub-dimensions. The first sub-dimension, governance and enabling conditions, assesses the effectiveness of efforts aimed at strengthening strategic co-ordination and co-operation in tourism across governance, vertical co-operation, public‑private dialogue, and data collection. The second sub-dimension centred on accessibility, tourism offer and human resources, examines progress and challenges in addressing the sector’s connectivity framework and infrastructure, accommodation capacity and quality, and availability of qualified workforce. The third sub-dimension, sustainable and competitive tourism, explores the impact of tourism branding and marketing strategies, natural and cultural heritage valorisation frameworks, and operations promoting sustainable development.
Western Balkans Competitiveness Outlook 2024: North Macedonia
Abstract
North Macedonia's tourism policy dimension has seen its overall score rise from 1.5 in the CO 2021 assessment to 2.0 in CO 2024, albeit remaining below the WB6 average of 2.5 (Table 16.1). Positive developments in North Macedonia encompass tourism governance, public-private dialogue, connectivity, and the availability of a qualified workforce, while limited progress has been observed in data collection, the accommodation framework, and tourism marketing, highlighting the need for enhanced vertical co‑operation, information sharing, and the promotion of sustainable tourism through a co-ordinated institutional framework for improved competitiveness.
The key findings are:
There is increased recognition that the current strategic framework is not reflective of current needs, signalling the imperative for the formulation of a new strategy. Existing strategies and policies are widely viewed as outdated, limiting the tourism sector's ability to fully realise its potential. Effective mechanisms and communication, including strong support from leadership and the creation of a dedicated department, will be essential in the development of such a strategy.
Informed decision making on tourism and its economic contribution is now largely facilitated by the availability of datasets generated by the Tourism Satellite Accounts (TSA) in 2022. Any discontinuation or underdevelopment of these resources would be detrimental to the sound growth of the tourism sector.
North Macedonia has taken notable steps towards the promotion of innovation across different areas of tourism. Nevertheless, it is necessary to develop a detailed and comprehensive plan that seamlessly integrates innovative approaches into strategies and practices.
Collaboration across different levels of government or organisations is still in the phase of finding solid ground. While some initiatives, such as the establishment of destination management organisations (DMOs), appear to be heading in the right direction, many hurdles and gaps still need to be overcome.
North Macedonia is taking positive steps towards laying the foundation for skills development, with regional initiatives focused on enhancing the VET framework within the tourism sector to elevate qualifications and standards and address the skills gap for a qualified workforce.
North Macedonia has been experiencing an upturn in its tourism sector since the last assessment. The year 2022 was characterised by positive trends pointing to a return to pre-pandemic levels. However, tourism has been hit with serious challenges in recent years, such as COVID‑19, Russia’s war of aggression against Ukraine and the energy crisis. In 2022, the tourism sector made a significant contribution to gross domestic product (GDP), both directly and indirectly, amounting to 5.6% (or EUR 0.73 billion). Forecasts for 2023 indicate a potential increase to 5.9%, underscoring the sector's role in the national economy. International visitors played a crucial role in bolstering the economy, with spending reaching EUR 0.40 billion in 2022, reflecting the economic significance of tourism. The tourism sector provided employment for 51 400 individuals in 2022, accounting for 7.1% of total employment, including jobs indirectly supported by the industry. Projections for 2023 suggest a slight decrease to 6.6%, reflecting the sector's ongoing role in providing livelihoods. (World Travel & Tourism Council, 2023[1])
North Macedonia's accommodation establishments recorded 2 848 604 overnight stays in 2022, with international tourists contributing 55.3% (537 436) and domestic tourists 44.7% (431 841) of the total 969 277 arrivals, according to North Macedonia's State Statistical Office in 2023. The figure of 2.95 nights per tourist in North Macedonia is behind Serbia’s (3.16) and Montenegro's (3.7) figures (State Statistical Office of North Macedonia, 2023[2]). Figure 16.1 shows a strong seasonal distribution of arrivals, centred on the summer months with a larger share of domestic arrivals.
Stays and arrivals are expressed in millions (left); seasonal arrivals are expressed in thousands (right)
Source: State Statistical Office of North Macedonia (2023[2]).
In 2022, North Macedonia offered 321 accommodation establishments in hotels and similar establishments for visitors, comprising 11 175 rooms and 24 686 beds, increasing slightly by 0.63% compared to 2021. Albania recorded a more significant increase of 11.96%, while Bosnia and Herzegovina recorded a considerable increase of 6.86%. North Macedonia recorded a slight rise in guest rooms by 1.28%, Albania by 18.61% and Bosnia and Herzegovina by 8.54%. In terms of bed capacity, North Macedonia recorded a slight increase of 1.14%, Albania 13.56% and Bosnia and Herzegovina 8.94% (UN Tourism, 2023[3]).
North Macedonia's tourism governance faces challenges that impact the full implementation of existing tourism-related strategies. There has been growing awareness within the government that a new tourism strategy is necessary to reflect the current global situation and evolving nature of tourism, and further enforce the notions of innovation, sustainability and green policies. While under discussion, the new strategy will be designed to include a detailed action plan with clear policy measures. However, a clear timeframe and policy focus areas for developing and adopting such a strategy are yet to be communicated. Efforts to promote innovation in tourism since 2021 have primarily strengthened the sector through initiatives such as digitalisation, active and rural tourism and female entrepreneurship in the tourism industry. From Montenegro's Smart Specialisation Strategy (2019-24), North Macedonia can learn how to shape tourism as part of innovative strategy development (Box 16.1). Due to tourism’s role in the economy's economic growth, tourism policies have been reflected and budgeted in national policies related to trade and investment promotion strategies but its contribution remains inadequately recognised with limited explicit references or sizeable budgetary allocations. A number of other strategies or policies include specific tourism-related measures (Table 16.2); however, these do not reflect current evolutions and, therefore, offer a limited framework for sustainable tourism development to meet current needs and criteria.
Source: Government of North Macedonia, CO assessment 2024.
The implementation of measures is hindered by a number of challenges that include a lack of commitment to the strategy, poor communication and co-operation among responsible ministries and public authorities, and limited training for staff involved in these processes. While there is evidence of co‑operation with global and regional bodies in the field of tourism development, there are ongoing challenges in implementing a regular monitoring and evaluation system for tourism strategy implementation. Furthermore, the absence of a dedicated department for tourism strategy governance in the ministry responsible for tourism further exacerbates challenges for effective strategy execution. Currently, the Ministry of Economy holds the overarching responsibility for tourism development and strategic planning. Additionally, it oversees the Agency for Promotion and Support of Tourism, which is tasked with implementing the policies formulated by the ministry. Focal points in other ministries have been designated to address tourism-related issues. Numerous initiatives aimed at bolstering local and regional economies are presently under way, notably through projects dedicated to revitalisation, cultural heritage preservation, and innovation. Examples are projects such as “Lake Prilep – New Adventures, New Opportunities” and “Smart Lake Mladost” (Agency for Promotion and Support of Tourism, 2024[4]).
Montenegro's commitment to sustainable and health tourism is embedded in its strategic framework led by the Council for Innovation and Smart Specialisation. Established in August 2019 and reconfigured in June 2021, the Council co-ordinates the implementation of science, technology, and innovation (STI) policies, including the Smart Specialisation Strategy (S3). This integration emphasises the promotion of innovation in tourism. The Council manages innovation activities and plays a crucial role in aligning sustainable and health tourism with cutting-edge technologies, reflecting Montenegro's dedication to a sustainable and innovative approach to tourism development.
In order to become a recognised destination for sustainable and health tourism, Montenegro has set a visionary goal for 2024 that focuses on innovative business models and services. The strategic plan aims to introduce breakthrough changes in the industry that include the introduction of advanced medical services, compliance with international quality standards and, as mentioned, the application of cutting-edge technologies.
Key objectives include the integration of innovative business models and services into the sustainable health tourism sector. Montenegro aims to improve its medical services to meet and exceed international quality standards and position itself as a hub for medical excellence. This strategic vision aims to boost economic growth and establish Montenegro as a leading destination for health and wellness seekers.
In the existing sector, Montenegro is focusing on the application of green and smart technologies in sustainable nautical tourism. In addition, the economy is developing standardised and innovative therapy and rehabilitation programmes for various health conditions, including methods such as balneotherapy, thalassotherapy and mineral water therapy. Looking to the future, the economy has identified potential in areas such as sports, leisure and wellness tourism, oncology using advanced technologies, development of pharmacotherapy, application of nanomaterials in medicine, and nutrition programmes.
Montenegro's solid research and innovation environment includes co-operation with scientific and educational institutions such as the University of Montenegro, the Adriatic University and the Montenegrin Academy of Sciences and Arts. Businesses, including hotels, holiday resorts, travel agencies and pharmaceutical companies, play an important role. The active participation of business associations, public institutions and the civil sector, represented by organisations such as the Chamber of Commerce and the Montenegrin Tourism Association, reflects a comprehensive and collaborative approach.
The effective implementation of tourism strategies, especially concerning the vertical co-operation and information-sharing indicator, has been hindered by the limited progress in co-ordinating efforts among tourism administrations at different levels. Nevertheless, a working group, chaired by a senior official from the Ministry of Economy and comprising representatives from the Chamber of Commerce, eight regions, municipalities, educational institutions, NGOs, and other associations, has been established as the formal co-ordination body for the development of the tourism strategy. While the establishment of a formal tourism vertical co-ordination body is a positive step forward, the collaboration, engagement, and information flow between national, regional, and local authorities on strategies and decision-making processes in the tourism agenda appear opaque. This opacity is further exacerbated by limited financial and human resources available to support the implementation of local/regional tourism strategies such as the Municipal Tourism Development Strategy Ohrid 2020-25, Strategy for the Development of Rural Tourism Pehchevo 2018-23, Strategy for the Development of Tourism in the Eastern Planning Region with an Action Plan 2016-25, and Strategy for the Development of Tourism of Skopje 2020-23. Destination management organisations (DMOs) are the primary mechanisms to support tourism projects, but actions and systems to operationalise these mechanisms seem limited (Partale and Partale, 2019[7]). In North Macedonia, the framework for DMOs, including responsible entities and a timeframe, has been outlined under an IPA (Instrument for Pre-Accession Assistance) project. However, implementation of these structures is still pending. North Macedonia can gain insights from Greece into its approach to destination management and marketing organisations (DMMOs) and observatories (see Box 16.2). On the information-sharing front, the absence of a comprehensive tourist information system is a noteworthy gap that limits dissemination of relevant information for both tourists and stakeholders to ensure a positive visitor experience.
There is a solid foundation for public-private dialogue in North Macedonia. This is supported by the presence of a formal tourism management and co-ordination body, which includes private companies, academic representatives, and NGOs. This inclusive approach fosters collaboration among a diverse set of stakeholders and is a constructive starting point. However, addressing the challenges related to the operation of this body is paramount. Weak government commitment and a lack of financial resources undermine the effectiveness of this collaborative platform. The commitment to presenting the national tourism strategy at various levels and making it accessible to regional and local tourism organisations is commendable, as it ensures that the private sector is informed and engaged. However, the absence of a monitoring and evaluation mechanism for assessing the efficiency of co-operation at the national level is a notable gap.
North Macedonia has made progress in data collection by adhering to international standards, and the State Statistical Office (SSO) is using electronic systems for data collection (E-stat). SSO collects data on tourist arrivals and overnight stays (monthly), trips by the local population (quarterly) and foreign tourists in accommodation establishments, as well as surveys on foreign visitors at border crossings (every three years). According to the SSO, the first Tourism Satellite Accounts (TSA)1 (OECD, European Union, United Nations, WTO, 2010[8]) were prepared in 2019 and the first dataset was published in 2022 (State Audit Office of North Macedonia, 2022[9]). The existence of a permanent data repository (MakStat Database) and a monitoring and evaluation mechanism increases the credibility and reliability of tourism statistics. Monitoring and evaluation are managed through an annual progress report. However, a lack of expertise, skills, and knowledge, as well as a low level of co-operation among public institutions, hinders the effective implementation of data collection systems. Additionally, issues such as a lack of co‑ordination and co-operation among institutions have the potential to disrupt the data collection process.
Since the 2021 assessment, very limited progress has been made on a connectivity framework. North Macedonia has not taken specific measures or adopted mechanisms to facilitate and monitor visa requirements and border crossing. On the other hand, North Macedonia is a member of the EU Strategy for the Adriatic and Ionian Region (EUSAIR) that aims to “connect people and institutions to build a common understanding of co-operation for a harmonised, integrated and sustainable region”. Furthermore, the focus on investments in more sustainable transport infrastructure and transport-related emissions showcases a commitment to environmental responsibility (EUSAIR, 2024[10]). The Agency for the Promotion and Support of Tourism has taken responsibility for the development of specific initiatives – such as bike tourism, which aims to map bike routes, including those intended for mountain biking. Cross-border hiking trails, such as the High Scardus Trail, improve the connection for tourist offers.
Concerning accommodation capacity and quality, North Macedonia has established consistent accommodation quality standards using EU standards and a mandatory categorisation system for accommodation facilities. Challenges include the absence of training courses for the categorisation process and quality standards, potentially impacting consistency. While regular inspections occur, a shortage of budget and human resources may hinder efficiency.
North Macedonia has a defined human resources policy as part of the national tourism strategy, which shows a commitment to the availability of a qualified workforce in the tourism sector. The economy has established a vocational education and training (VET) and higher education framework for tourism, laying the foundation for skills development. A significant development is launching a regional project to improve the VET framework. This initiative, named “Towards regionally-based occupational standards TO REGOS”, began in 2019 under the leadership of the Education Reform Initiative of South Eastern Europe (ERI SEE) and focused on enhancing the qualifications and standards within the tourism sector, contributing to a more skilled workforce. Regional initiatives support national efforts to close the skills gap. Despite these positive steps, challenges exist, including limited financial resources and qualified staff to support quality assurance and accreditation in vocational training and higher education.
North Macedonia has made progress in creating a tourism brand identity with “North Macedonia Timeless”. This branding initiative is an important step in promoting the economy's offerings to potential visitors and remains under the responsibility of the Agency for Promotion and Support for Tourism. One notable challenge in tourism branding and marketing is the absence of a comprehensive tourism marketing strategy that identifies target markets and provides a framework for promotion. Although digital marketing activities are included in the overall strategy, there is a lack of government incentives to support private tourism operators and local destinations in the use of marketing tools. Monitoring and evaluation are carried out for a media campaign on an annual basis, but no mechanisms seem to exist for brand image and marketing strategy, which is a missed opportunity for tailored efforts based on real-time data and feedback, ensuring more effective and responsive marketing campaigns.
North Macedonia is making progress in the natural and cultural heritage valorisation frameworks by integrating them into the national tourism strategy and the environmental strategy. However, there is no specific government policy or framework for valorising cultural heritage, although it is mentioned in various documents.2 Furthermore, some foreseen strategies on heritage were never adopted and implemented, providing minimal targeted measures for developing this indicator. Overall, progress on this has been very limited.
The economy did not provide any information on the important indicator of the promotion of sustainable development and operations, which indicates limited efforts towards sustainability. It is worth mentioning the rather poor ranking of 85 for investments in green energy and infrastructure, which is below average compared to the region and further impedes progress (World Economic Forum, 2022[11]). For sustainable tourism development, North Macedonia can gain insights from Greece in its approach to DMMOs and observatories (Box 16.2).
In response to the growing importance of sustainable tourism, Greece has taken a proactive step by establishing a National Observatory of Sustainable Tourism Development. This initiative aims to centralise data collection at the national level, providing a comprehensive understanding of the economy's tourism landscape. One of the key outcomes is the publication of an Annual Tourism Sustainability Report, offering valuable insights into the progress of sustainable tourism development. This report serves as a critical tool for evidence-based policy making, allowing policy makers to make informed decisions that align with sustainability goals.
To ensure the success and sustainability of the National Observatory, Greece is actively building a network with various data providers. This involves signing memorandums of understanding to establish lasting cooperation and fostering regular database updates. Additionally, the creation of a digital platform and a dedicated website showcasing major sustainable tourism indicators enhances accessibility and transparency, making the information readily available to stakeholders and the public.
Complementing the national effort, Greece is also focusing on local and regional sustainable tourism development through the establishment of DMMOs and corresponding tourism observatories. These entities play a crucial role in creating a governance framework for efficient destination management and fostering collaboration among stakeholders and competent bodies. The Local/Regional Sustainable Tourism Development Observatories, integral components of this initiative, provide essential data for integrated planning of tourism strategies. Their responsibilities include conducting market studies, shaping policy proposals, and promoting local/regional thematic tourism products. This decentralised approach ensures that sustainable tourism efforts are tailored to the unique characteristics and needs of each locality, contributing to a holistic and impactful strategy for Greece's tourism sector.
Sources: OECD (2022[12]); Greece Ministry of Tourism (2022[13]).
North Macedonia’s progress on the 2021 recommendations has been mixed. Moderate progress was achieved in improving the governance structure and regional destination management organisations. Nevertheless, room for improvement remains on many other fronts, such as advancing on the development of sustainable development and related infrastructure (Table 16.3).
To ensure further successful development of tourism, policy makers should:
Establish a dedicated Tourism Strategy Department to drive the tourism agenda, streamline the process, and ensure alignment of efforts among the various agencies and stakeholders in the development and implementation of a new tourism development strategy. North Macedonia can gain insights from other OECD countries (Box 16.3).
Allocate additional resources for vocational education and training (VET) to support education and training programmes in the tourism sector. Implementing monitoring and evaluation mechanisms will help track the progress of the VET and higher education framework.
Develop and implement a comprehensive tourism marketing strategy. The government should develop and implement a marketing strategy that clearly identifies target markets and provides a framework for promotion. A strategic marketing approach is essential for attracting specific visitor segments and promoting the economy's unique offerings. Additionally, the strategy should include digital marketing initiatives and incentives to support private tourism stakeholders in utilising digital tools.
Establish a framework to promote sustainable development and management of the tourism sector, ensuring that sustainability criteria are mandatory for all investments in tourism infrastructure. This framework should be supported by public incentives and include initiatives to sensitise and train tourism sector stakeholders to sustainable business practices. It should also be based on monitoring the sustainability of tourism in the country. North Macedonia could learn from the Greek concept of the National Observatory for Sustainable Tourism Development (Box 16.2) and other OECD countries (Box 16.4).
Estonia’s National Tourism Strategy 2022-25 has a goal to become a sustainable tourism destination that offers visitors diverse and unique travel experiences in all seasons. Estonia’s cross-cutting approach to sustainability is defined by three principles: valorisation of the local culture, the environment and the community; co-operation; and contribution to fulfilling the UN SDGs. Activities already set out by the Estonian Tourist Board for the period 2022-25 to enhance the sustainability and resilience of the Estonian tourism sector include:
Participating in the international Green Destinations programme, running the annual GreenEST summit and circular economy programmes.
Recognising sustainable tourism operators and enhancing the application of eco-labels.
Sharing information and best practices about green investment and resource saving support options and the best sharing practices.
Providing financial support for sustainable and inclusive tourism sector product development (EUR 14.1 million from REACT EU measures).
Supporting new business models.
Developing thematic networks and routes.
The Strategy also sets out several measurable goals for the tourism sector to be achieved by 2025. These goals include increasing the average length of stay of international tourists to at least four nights, increasing participation in the network of sustainable tourism businesses to include at least 150 firms, and at least six Estonian destinations have received the Green Destinations Award.
In May 2022, Germany established a steering committee consisting of high-ranking members across all relevant ministries to tourism in Germany. The main task of this steering committee is to develop key points for the National Tourism Strategy and to agree upon a working programme for the Federal Government. Germany is now creating the national platform “Future of Tourism” as the central instrument for co-operation and integration for the development of a National Tourism Strategy. The platform will be expanded to include representatives of the sixteen federal states and stakeholders of the tourism sector early in 2023. Within this platform, all actors will work together to evaluate, adjust and amend the measures of the working programme. This will utilise different working groups to ensure the right people are addressing the right issues.
Source: OECD (2022[12]).
A Tourism Strategy 2027 was launched in 2017 with the vision to affirm tourism as a hub for economic, social and environmental development, and to position Portugal as a key competitive and sustainable tourism destination. In line with the Strategy and the UN SDGs, Portugal has since developed a Sustainable Tourism Plan 2020-23, which follows on from the recovery plan Reactivate Tourism - Building the Future. Under the Plan, a set of 43 sustainability indicators are used to benchmark and assess progress for tourism businesses and the sector as a whole. Regular surveys are carried out on environmental practices and social responsibility in hotels and golf courses. The Plan stipulates the following targets for 2023: 75% of tourism companies with energy efficiency, water and waste management systems, and not using Single-Use Plastics; Clean & Safe Seal: 25 000 members, 30 000 graduates and 1 000 audited; and 50 000 professionals trained in the areas of sustainability. The set of initiatives covered by the Plan contributes to promoting an increasingly distinctive offer and to accelerating the sustainability of tourism companies.
Source: OECD (2022[12]).
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[1] World Travel & Tourism Council (2023), North Macedonia, 2023 Annual Research: Key Highlights, March 2023, https://researchhub.wttc.org.
← 1. The Tourism Satellite Account (TSA) is a standard statistical framework and the main tool for the economic measurement of tourism. The TSA allows for the harmonisation and reconciliation of tourism statistics from an economic (National Accounts) perspective. This enables the generation of tourism economic data (such as Tourism Direct GDP) that is comparable with other economic statistics.
← 2. North Macedonia has two properties inscribed on the World Heritage List: Ancient and Primeval Beech Forests in the Carpathians and Other Regions of Europe, and Natural and Cultural Heritage of the Ohrid Region, https://whc.unesco.org/en/statesparties/mk.