Marko Pahor is a researcher, full professor and Vice Dean for Finance at SEB, UL. He teaches courses in data analysis, applied statistics and research methods, at both undergraduate and graduate levels, including MBA study. He is also published, with co-authors, in a wide range of business and economics articles, including tourism economics, marketing and finance. Professor Pahor explains the drivers of the tourism industry in Slovenia and points out that not everyone can run a business in tourism. He also comments that, in the long-term, Slovenian rail infrastructure may affect the country's tourism industry as Slovene rails are among the slowest in the Europe.

According to the World Travel & Tourism Council (WTTC), in 2018 the total contribution from tourism to GDP in Slovenia increased by 6 percent and accounted for 12.3 percent of total GDP. Relative to the European average of 3.1 percent, this is a big increase. How do you see it from the tourism economics perspective?

The increase in tourism is surely the trend of the restructuring of the whole economy which is moving toward service industries. In general, the share of service industries is increasing which includes also tourism. One reason that has allowed Slovenia to be discovered is that enough time has passed since the time of the iron curtain and the socialism that prevented many people form the west to come here, and another is the events in Turkey, South Africa, etc. meaning that people stay in Europe. Slovenia has had a steady increase in the number of tourists from the Far East, especially China. As GDP in China is growing tremendously, more and more people can afford to travel and Europe is a popular destination. However, Slovenia is not a priority for Chinese when they come for the first time, but when they return for the second time they for sure visit Bled, Ljubljana and Postojnska jama.

The eurozone economy is slowing, however, it seems that the tourism sector has a different dynamic, it is a growing sector. Can that be an important option for the diversification of a business so that it can somehow balance the impact of an economic slowdown? 

I am not sure that is the best strategy! I have spent some time in the supervisory board of a company that is actually combining these two activities - a classical manufacturing activity with tourism activity and I have seen that it has always been a little bit of a struggle. Although tourism presents one third of total revenue of that company, it is basically a break-even activity for them, they never see themselves as a tourist company. Most of the expertise was in their core business. Even in the past we have seen the moves when, for example, the rubber production company, Sava, diversified into tourism; they had a little bit of luck because they hired good directors and at least to some extent they are doing fairly well. An older story was also Istrabenz who diversified into tourism, but these stories in Slovenia are never very happy stories. Because tourism is a serious business and probably one of the challenges is the mentality that "everyone can do tourism, which is something easy", but that is not true. You need a certain expertise and you have to know how to do it. Therefore, I do not see diversifying into tourism to be such a great idea. 

In terms of ownership, are the best tourism practices in Slovenia on the private or state side?

Definitely the success stories that I can recall are mostly connected with local, private ownership where there is integration, because one thing in tourism is that you should integrate different aspects: content, gastronomy and logic. That means that someone who wants to attract tourists to stay in a hotel has to also offer gourmet food or if I take the good practice of the ski resorts in Austria or Italy. Usually, the ski resorts are owned by a holding of local businesses (hotels, guest houses, etc.) and so the logic is that tourists go there because they want to ski, but they need to sleep somewhere and this is a good case of a reinforcing that creates synergies and profit. 

Slovenia has huge challenges in the areas of flight connections and rail infrastructure. Could that affect the future growth of total tourism to GDP?

In terms of air, I believe in the short term we will feel the fact that Adria went bankrupt and even the idea of Slovenia airlines that are appearing right now would not solve this. SEB UL has been organising big conferences and when talking to those people, we ask "but why do not you come to Slovenia" and they say "it is hard to get there". Even though many Slovenes fly from Zagreb, Venice or Graz, for tourists those are another country and it does not matter if the airport of Zagreb is 10 minutes from the Slovenian border and just one hour to Ljubljana, it is off the map!

And rail could definitely affect tourism long-term. If Europe is going to move towards more sustainable types of transport, and rail is definitely more sustainable than road transport, we do not have very good links, we do not even have rail infrastructure! The rail infrastructure is worse than it was in the time of the Austro-Hungarians. I have seen a map, not long ago, showing the average speed of trains across Europe - I think the average is between 60 and 70km per hour - and Slovenia is one of the slowest in Europe. 

The International Journal of Hospitality Management published a study of Performance drivers in the casino industry that you prepared together with Professors A. George Assaf and Ljubica Knežević Cvelbar. What has been the main outcomes? How attractive is the casino industry? 

First of all, we wanted to find out how efficient are not just casinos, but all the gaming facilities and what the drivers for that are. When you have a concentration of bigger facilities you can attract gamers from a wider pool. It is like gravity - if you have more mass, you will be attracting tourists form further parts. It is definitely a complementary industry and the most famous locations are Vegas, Atlantic City and then Macao, where there is the biggest concentration for the Chinese. Casinos in Slovenia are traditional - Portorož, Gorica and Lipica, they have been attracting mostly local people from the region, foremost around the Italian boarder. Maybe it is a pity that Ljubljana does not have a proper Casino anymore, because the occupancy rate of Ljubljana hotels is more than 70 percent and there are even periods when you cannot find a hotel in Ljubljana at all. 

SEB UL has more than 200 exchange agreements with institutions, in more than 40 countries and every year you host more than 700 full-time foreign students. It's a great news, however the number is growing and it has become challenging from the perspective of housing for these students. How do you approach it?

This year was, for the first time, when the problem became so serious that we actually started losing exchange students. It happened for the first time that exchange students left after a few weeks because they could not find permanent lodging to stay somewhere. The challenge is because the students' dorms are run by a separate public institution and their mission is first of all to catch Slovenian students, and in terms of public housing there is definitely not enough capacities in Ljubljana, they cover only two thirds of the capacities and the entity that runs these dorms in 2019 even decreased the number of beds for foreign students, because they needed more beds for Slovenes. Additionally, when the Ministry for Education realised they needed beds for students, they found out they do not have money to build further housing facilities. 

The University of Ljubljana celebrates 100 years and does not offer housing capacities for students. Do you think it should be reasonable to re-think it?

The University should definitely do something in this respect. SEB UL is a little bit of a pioneer of internationalisation, but the rest of the universities are following and they are starting to think about these challenges too. Because the students are coming from abroad, they are used to being offered a package and they are willing to pay for it. One good practice comes from the London School of Economics, which owns facilities and every first-year students gets a bed as a part of the package and they treat domestic and international students the same. At least in Ljubljana, the challenges to find appropriate lodging are greater than for Slovenian students, because if a student comes from Macedonia or Kosovo, a lot of landlords do not want to give the housing, although they are a great students who behave nicely - prejudice is stronger.

According to the World Travel & Tourism Council (WTTC), in 2018 the total contribution from tourism to GDP in Slovenia increased by 6 percent and accounted for 12.3 percent of total GDP. Relative to the European average of 3.1 percent, this is a big increase. How do you see it from the tourism economics perspective?

The increase in tourism is surely the trend of the restructuring of the whole economy which is moving toward service industries. In general, the share of service industries is increasing which includes also tourism. One reason that has allowed Slovenia to be discovered is that enough time has passed since the time of the iron curtain and the socialism that prevented many people form the west to come here, and another is the events in Turkey, South Africa, etc. meaning that people stay in Europe. Slovenia has had a steady increase in the number of tourists from the Far East, especially China. As GDP in China is growing tremendously, more and more people can afford to travel and Europe is a popular destination. However, Slovenia is not a priority for Chinese when they come for the first time, but when they return for the second time they for sure visit Bled, Ljubljana and Postojnska jama.

The eurozone economy is slowing, however, it seems that the tourism sector has a different dynamic, it is a growing sector. Can that be an important option for the diversification of a business so that it can somehow balance the impact of an economic slowdown? 

I am not sure that is the best strategy! I have spent some time in the supervisory board of a company that is actually combining these two activities - a classical manufacturing activity with tourism activity and I have seen that it has always been a little bit of a struggle. Although tourism presents one third of total revenue of that company, it is basically a break-even activity for them, they never see themselves as a tourist company. Most of the expertise was in their core business. Even in the past we have seen the moves when, for example, the rubber production company, Sava, diversified into tourism; they had a little bit of luck because they hired good directors and at least to some extent they are doing fairly well. An older story was also Istrabenz who diversified into tourism, but these stories in Slovenia are never very happy stories. Because tourism is a serious business and probably one of the challenges is the mentality that "everyone can do tourism, which is something easy", but that is not true. You need a certain expertise and you have to know how to do it. Therefore, I do not see diversifying into tourism to be such a great idea. 

In terms of ownership, are the best tourism practices in Slovenia on the private or state side?

Definitely the success stories that I can recall are mostly connected with local, private ownership where there is integration, because one thing in tourism is that you should integrate different aspects: content, gastronomy and logic. That means that someone who wants to attract tourists to stay in a hotel has to also offer gourmet food or if I take the good practice of the ski resorts in Austria or Italy. Usually, the ski resorts are owned by a holding of local businesses (hotels, guest houses, etc.) and so the logic is that tourists go there because they want to ski, but they need to sleep somewhere and this is a good case of a reinforcing that creates synergies and profit. 

Slovenia has huge challenges in the areas of flight connections and rail infrastructure. Could that affect the future growth of total tourism to GDP?

In terms of air, I believe in the short term we will feel the fact that Adria went bankrupt and even the idea of Slovenia airlines that are appearing right now would not solve this. SEB UL has been organising big conferences and when talking to those people, we ask "but why do not you come to Slovenia" and they say "it is hard to get there". Even though many Slovenes fly from Zagreb, Venice or Graz, for tourists those are another country and it does not matter if the airport of Zagreb is 10 minutes from the Slovenian border and just one hour to Ljubljana, it is off the map!

And rail could definitely affect tourism long-term. If Europe is going to move towards more sustainable types of transport, and rail is definitely more sustainable than road transport, we do not have very good links, we do not even have rail infrastructure! The rail infrastructure is worse than it was in the time of the Austro-Hungarians. I have seen a map, not long ago, showing the average speed of trains across Europe - I think the average is between 60 and 70km per hour - and Slovenia is one of the slowest in Europe. 

The International Journal of Hospitality Management published a study of Performance drivers in the casino industry that you prepared together with Professors A. George Assaf and Ljubica Knežević Cvelbar. What has been the main outcomes? How attractive is the casino industry? 

First of all, we wanted to find out how efficient are not just casinos, but all the gaming facilities and what the drivers for that are. When you have a concentration of bigger facilities you can attract gamers from a wider pool. It is like gravity - if you have more mass, you will be attracting tourists form further parts. It is definitely a complementary industry and the most famous locations are Vegas, Atlantic City and then Macao, where there is the biggest concentration for the Chinese. Casinos in Slovenia are traditional - Portorož, Gorica and Lipica, they have been attracting mostly local people from the region, foremost around the Italian boarder. Maybe it is a pity that Ljubljana does not have a proper Casino anymore, because the occupancy rate of Ljubljana hotels is more than 70 percent and there are even periods when you cannot find a hotel in Ljubljana at all. 

SEB UL has more than 200 exchange agreements with institutions, in more than 40 countries and every year you host more than 700 full-time foreign students. It's a great news, however the number is growing and it has become challenging from the perspective of housing for these students. How do you approach it?

This year was, for the first time, when the problem became so serious that we actually started losing exchange students. It happened for the first time that exchange students left after a few weeks because they could not find permanent lodging to stay somewhere. The challenge is because the students' dorms are run by a separate public institution and their mission is first of all to catch Slovenian students, and in terms of public housing there is definitely not enough capacities in Ljubljana, they cover only two thirds of the capacities and the entity that runs these dorms in 2019 even decreased the number of beds for foreign students, because they needed more beds for Slovenes. Additionally, when the Ministry for Education realised they needed beds for students, they found out they do not have money to build further housing facilities. 

The University of Ljubljana celebrates 100 years and does not offer housing capacities for students. Do you think it should be reasonable to re-think it?

The University should definitely do something in this respect. SEB UL is a little bit of a pioneer of internationalisation, but the rest of the universities are following and they are starting to think about these challenges too. Because the students are coming from abroad, they are used to being offered a package and they are willing to pay for it. One good practice comes from the London School of Economics, which owns facilities and every first-year students gets a bed as a part of the package and they treat domestic and international students the same. At least in Ljubljana, the challenges to find appropriate lodging are greater than for Slovenian students, because if a student comes from Macedonia or Kosovo, a lot of landlords do not want to give the housing, although they are a great students who behave nicely - prejudice is stronger.