After the boom, now a slump in Montenegro's tourism

By Thomas Brey May 25, 2010, 15:11 GMT

Budva, Montenegro - Those who may have recently visited the Adriatic coast region would have searched in vain for any foreign tourists.

In the rainy pre-season the large hotels dotting the wildly romantic steep coastline of Montenegro were virtually empty. Except for a few Russian guests, no foreigners were to be seen on the streets and boulevards.

A certain sign that the years of gold rush fever in Montenegro's tourism are over were the many signs saying 'store for rent' - for example, in the town of Petrovac or along the main promenade of the popular tourism city of Budva.

For years, the Russians have been spending big time in Montenegro: they built and built, and matters like money or economic feasibility did not seem to play a role.

But alongside the Russians, the Montenegrins also were building: around 100,000 properties are said to have been built without permission - and without any overall planning concept or consideration for the environment. In places, the coastline has been replaced by concrete.

And now the country's parliament has once again postponed, for two years, putting measures into effect to stem the illegal construction and to tear down the illegal buildings. Municipal elections were at the end of May - and, among the country's 620,000 citizens, everybody must know of someone who has illegally built a house.

Everywhere you look, hotel ruins and half-completed apartment buildings are a scar on the landscape. And the prices have dramatically plunged.

'Luxury apartments' today are being offered at 1,700 euros (2,200 dollars) per square metre - 50 per cent less than the going price a few years ago. Villas on the coast can be bought for 600,000 euros, a ludicrously cheap price compared to previously.

Montenegro's steep coastline actually does not lend itself to huge projects like those in the flat beachside areas of Spain or Italy.

The wild landscape with its tiny bays and inlets - out of 290 kilometres of coastline only around 70 kilometres are suited to bathing - was stretched beyond its limits by the construction boom. In the summer, there is, by far, not enough room on the beaches for vacationers. Roads and parking areas are also insufficient.

The Montenegrin government has placed its bets on wealthy tourists, while regular visitors were often treated with condescension. Two large German travel operators, TUI and Neckermann, already pulled out of Montenegro two years ago. This summer AldiReisen, a travel outlet of the German discount retail chain Aldi, is going to try its luck.

Critics point to the high prices, lack of cleanliness on the beaches, and the constant noise caused by too many people jammed together in too little space.

So far, the efforts to woo the big-spending foreigners have met with little success. Local officials continue to count on Russian investors and guests.

And yet, Canadian entrepreneur Peter Munk is now building his 'Porto Montenegro' project outside the city of Tivat. His dream is to lure the super-rich with their big yachts and to displace Cannes and Monaco.

And the Swiss company Orascom-Holding aims to build its own tourism city right next door, replete with apartments, hotels, yacht harbours and a golf course.