Competitive Analysis of the Bulgarian Seaside Destination Sunny Beach:

A Cluster Approach

Jesús Álvarez and Evgueni Spassov

Introduction

Sunny Beach, situated on the Bulgarian Black Sea coast, is the paradigmatic
example of the development of sun, sea and sand tourism in Bulgaria.
Established in 1958, as a result of the strong geo-political ties among the
countries of the Eastern bloc, the destination soon became one of the most
renowned holiday locations on the Black Sea coast. The collapse of the
Communist system, though, led to a hasty, irresponsible expansion, bringing
about the consolidation of a short-term vision development model. The huge
growth in hotel construction and property development and the total lack of
adequate infrastructure bring to light the absolute and uncontrolled mass
development implying the destination’s entry into a stage of decline.

A brief overview of the importance of tourism for the country’s economy reveals
that during the past six years the sun, sea and sand tourism in Bulgaria has
experienced an average annual growth of 15.3%, thus generating some 75% of
the national tourism receipts. Both an outcome and a propelling factor, the
available accommodation in the major seaside resorts has grown by 20-25% on
an annual basis. In Sunny Beach, Bulgaria’s single biggest tourism destination,
the accommodation capacity reached 100,000 beds in 2006, marking a 25%
increase with respect to 2005, against a 10% projected increase in visitor
numbers for the same period (Sunny Beach AD, 2004; Nessebar Municipality,
2005).

Nonetheless, the lack of reliable information further impedes the accurate

evaluation of the economic efficiency and the related effects stemming from
tourism activity in Sunny Beach which has undergone a tremendous expansion
in the past six years. In the 2001-2004 period tourism-related investment in the
municipality mounted to some 600 million Euros, the greatest part of which has
been poured into the construction of colossal accommodation establishments.
Logically, this growth determined to a large extent the raise in revenue for the
entire municipality and its annual budget as in a period of just 6 years it almost
quadrupled (Strategy for Sustainable Tourism Development in Nessebar
Municipality 2005-2010, Nessebar Municipality, 2005).

Quite disappointingly, no comprehensive research to analyze the situation has

been undertaken in the past 16 years. The few known efforts in this period have
mainly been directed at descriptive rather than analytical and critical
conclusions. Even the Strategy for Sustainable Development 2005-2010
produced and largely publicized by the municipality to which Sunny Beach
belongs is limited to endorsing action plans unsubstantiated by the commitment
necessary at all levels.

In view of the of the upcoming entry of Bulgaria into the European Union, Sunny
Beach, along with the surrounding region, has reaffirmed itself as an area of
strategic national importance and a key element in the future development of the
tourism sector in the country. Furthermore, being the biggest tourism destination
in Bulgaria, the economic, socio-cultural, and environmental impacts extend
beyond its geographical boundaries; the national image and competitive position
are also being affected.

Therefore, it was decided to situate the analysis within a broader context in

order to identify the essential set of factors that presently shape the
development of the destination and to evaluate the extent to which these are, or
are not, affecting its competitive position. Subsequently, the results obtained
have been weighed against various theoretical models and, more importantly,
contrasted to current global trends in tourism destination management.

Literature Review

There is an increasing number of authors that convey a trans-disciplinary

multidimensional approach to planning as the only method of building the
(destination) value-chain. Swann and Prevezer, Enright, and Rosenfeld in
Álvarez et al. (2003), and to a larger extent Porter (1998, 2000), namely in their
endeavors on the concept of industry clusters, offer extensive studies of the
different components behind this idea. Moutinho (2000) and Toledo, Álvarez and
Castroman (2001) take the idea further by introducing tourism-specific aspects
to reinforce the concept of an integral approach to destination planning and
management. To a lesser extent we see this notion embedded in the studies
undertaken by Ritchie and Crouch (2003) and Dwyer and Kim (2003), yet the
destination determinants they introduce are of considerable relevance to the
actual assessment of the existing planning and management model.

The Tourism System

The idea of integration is strongly embedded in the work of Mill and Morrison
(2002) and underpins the destination mix concept, thus reinforcing the essential
motive behind this research, namely to identify the degree of integration as
reflected in the competitiveness of the destination. Integration in the context of
this analysis, though, comprehends elements that are only implicitly part of the
tourism system per se; it denotes a system in which demand and supply are the
natural outcome of an integral planning and management processes.

Valls (1996) illustrates the interdependences between destination

competitiveness and other elements that make up the role of the tourism
destination as an integrated venture. International competitiveness, economic
development, visitor satisfaction, and ultimately quality of life are the empirical
dimensions of the integrated tourism system.

Tourism Clusters

Porter’s research on the competitive advantage of nations in the late eighties

illustrated that leading companies in any given industry tend to group in
relatively confined geographic areas, thus becoming known under the name of
conglomerates or competitive clusters. This way, complex groups of interrelated
industries and clusters are being created within a nation’s economy, allowing
with their efficiency and productivity for a sustainable national competitive
advantage (Porter, 1998).

Therefore, as Porter (1998) argues, competitiveness is not a nation’s feature; it

is rather determined by the firms’ ability to innovate and continuously improve its
products and services while increasing productivity. In a globalized economic
environment, where comparative advantages are easily copied and enhanced,
the overall competitiveness of a nation is attributable to the degree of
competitiveness of its industries.

In reality, tourism and tourism destinations, more than any other industry or
economic unit, generate and sustain competitive advantages in specific
geographical areas. Hawaii and Orlando in the US, Costa del Sol in Spain,
Punta Cana in the Dominican Republic, and Riviera Maya in Mexico are but a
few highly competitive tourism clusters on a worldwide scale.

As a consequence, it was central to this research to consider the notion

introduced by Porter (1998) and further endorsed by Toledo et al (2001), namely
that the competitiveness of tourism clusters is ultimately determined by the
collective effort of the individual private firms, by the interrelation of sectors, and
the cooperation between central, regional and local authorities and private
sector. In effect, it is precisely the complexity and extent of the tourism value-
chain that determines the potential and competitiveness of tourism clusters in
which the visitor experience is a pivotal concept.

Research Methods

Organized according to the model introduced by Crouch and Ritchie (2000), the
present case study addresses an integrated competitive analysis of Sunny
Beach, a paradigm in the development of the sun, sea and sand model in
Bulgaria. The research aims to examine the multiple factors that determine a
destination’s degree of competitiveness. The integration of Porter’s Cluster
Development Model (1998) allowed for the exhaustive analysis of the dynamics
of the destination’s current development, thus amplifying the span of the study
beyond tourism-specific aspects, while Toledo et al’s (2001) Modelo de Sistema
Interfuncional Interrelacionado de Competitividad en Clusters Turísticos (SIIC)
further strengthened the analysis through the application of tourism-specific
attributes to the elements Porter introduces in his Cluster Development Model.

Fundamentally, the research follows case study methodology in order to apply

the acquired specific set of factors and indicators to the analyzed theoretical
models. The value of the chosen methodology arises from the need to situate
the findings within a broader theoretical context; this reinforces the final
appraisal of the working hypothesis and allows for the anticipation of any
shortcomings in the assessment as regards to the peculiarities of the analyzed
destination.

The choice for this approach stems from the particularity of the intended
research and the possibilities a case study methodology offers to carry it out.
The little control over the analyzed phenomena and the contemporary nature
and pertinence of the issues studied as well as the character of the research
questions naturally facilitated the causal analysis of a sequential set of events
taking place over time.

Moreover, since case study approaches essentially seek to develop theories

with empirically verifiable consequences what it also entails is an inference
towards existing theory rather than towards other similar cases. What makes
this logic fundamental to the research structure is the fact that the main study
objective is to assess the credibility of the analysis of a particular set of events in
order to, at a later stage, develop a theoretical model resting on its particular
findings (Yakuzzi, 2003).

As a consequence, the cases of Lanzarote and Calvià, among others, have

been used as points of reference for the purpose of streaming the research
efforts towards a preliminary identification of complex multidimensional interests
and the related set of interactions as a base for future development within and
ever more dynamic and competitive environment. It has to be noted, however,
that the subjective factors that have led to the current state of affairs in Sunny
Beach, as well as in the Bulgarian tourism sector in general, received particular
attention in the process of validation of the working hypothesis.

The process of formulating the primary research hypotheses has been to a large
extent outlined by the reviewed theoretical models and the intended study
approach, namely amplifying the research focus beyond destination-confined
aspects. Parting from what seemed obvious, the most reasonable general
hypothesis that further led the research has been formulated as follows:

The existing destination management model fails to consider the possible

negative economic, environmental, and socio-cultural impacts of boosting
tourism development.

Nonetheless, since the research essentially aimed at identifying the causes

within a broader context and pursued a convergence between general theory on
clusters (Porter, 1998) and specific tourism-related competitiveness features,
the other primary hypothesis logically embedded this particular notion.
The loss of competitiveness is largely due to the insufficient integration of
destination elements, actors, and processes.

Apart from providing a preliminary structure for the entire research, the decisive
role of these hypotheses was to help adequately address the problematic issues
that were identified as hindering the degree of competitiveness of the
destination.

Research Development

The case-study instigated the compilation of a large amount of secondary

information including statistics on visitor numbers and officially registered
establishments, surveys on service quality, as well as surveys and inquiries on
various aspects of the tourism activity in the destination and its surroundings.
Official reports and programs related to the tourism development of Sunny
Beach have been reviewed. Realty development publications have been taken
into consideration; interviews with entrepreneurs have been carried out, hotel
owners, heads of tourism associations and public authorities’ representatives
have been surveyed. Information and publications of the Bulgarian Council of
Ministers regarding tourism development plans, official legislative information
and regulations, and other information and publications in the general and
specialized press have been closely studied.

The investigation has been supplemented by extensive fieldwork which was

conducted by one of the authors and was organized in two separate phases.
During the first phase, from July to September 2005, a total of 74 semi-
structured interviews were carried out and divided in the following categories: 37
with hotel managers, 25 with entrepreneurs and managers of tour-operators and
firms with significant activity in the region, and 12 with representatives of the
public administration and different tourism associations. Additionally 20
structured interviews were carried out with real estate agents. The investigation
process was complemented with participatory observations under the auspices
of one of the big tour-operators in the region. The second phase of the fieldwork,
which took place in February 2006, was dedicated to hypothesis validation and
formulation of conclusions.

Main Findings

Considering the various approaches to competitiveness used to structure the

entire study, the processing and analysis of the information compiled in the
course of the research generated results that reinforce the following ideas:

• Sunny Beach is a well-known destination whose popularity in the

European emitting markets is primarily the result of a good price-quality
relation;
 • The strong seasonality of the destination is mainly due to the insufficient
diversification of the complementary activities and to the weak domestic
market with only 8% of all visitors being domestic tourists;
• The growth in tourist numbers in the past two years, 2004 and 2005, has
not lived up to the expectations of managers and investors;
• The continuous construction of hotels and second-residence has led to
spatial saturation and excess in accommodation supply;
• Existing infrastructure does not correspond to the needs of the
destination and its rapid growth; there is acute lack of coordination
between public institutions and private sector to resolve the issue;
• The deficiencies in service-quality are being aggravated by the
employment of unqualified personnel and the lack of adequate human
resource policies;
• There is no uniformity in the application of categorization requisites to
tourism establishments and there are no clear quality standards.

The analysis indicates that another primary issue concerning accommodation

establishments is their insufficient functionality. It can be argued that the strong
seasonality is the main obstacle for the investment in more functional
establishments, thus taking advantage of the climatic conditions which are
favorable for year-round tourism. Nevertheless, the uniformity in construction,
along with other aspects further analyzed, presents a serious difficulty for the
diversification and de-seasonalization of the destination.

At present, Sunny Beach’s competitiveness assessment is being solely done

through the evaluation of quantitative factors, constraining the analyses to the
appraisal of economic achievements. Yet, it can be argued that the latter is fairly
misleading since the determination of these achievements is largely based on
absolute values. Moreover, the lack of a unified register system makes the
assessment principally dependent on the numbers reported deliberately by the
different establishments.

The most important issue, though, is that tourism destination competitiveness

can only be determined through an integral analysis of carefully selected
components. As World Tourism Organization (UNWTO) publications suggest
(Indicadores de desarrollo sostenible para los destinos turísticos - Guía práctica,
2005), the quantity and extent of the indicators needs to be adapted to the
characteristics of the destination in order to consider all necessary aspects.

For that matter, the comprehensive analysis of destination competitiveness

entails the application of quantitative and qualitative indicators, both adjusted to
the accelerated transformation of Sunny Beach into a second-home destination.
Correspondingly, a set of indicators is required for the evaluation of the
conditions induced as a result of the tourism activity and the immediate proximity
of the destination to other urban settlements.
The interviews and the observations carried out in the course of the fieldwork
generated crucial information as regards the deficiencies in service-quality in
tourism establishments in Sunny Beach. Due to various reasons the majority of
employees lack basic professional preparation in tourism. The processed
information indicates that the central issue lays in the lack of quality
management policies in the majority of the establishments, directly resulting in
inadequate, if any, human resource management and ultimately in poor overall
service quality.

However, the possibilities for employing qualified personnel are also quite
limited since there are practically no professional education establishments in
the region to match the increasing needs of the destination. Those that do exist,
one in Bourgas some 30 kilometers south and one in Varna, 100 kilometers
north, lack the physical, technical, and academic capacity to prepare and
provide a labor force to Sunny Beach and the majority of coastal destinations.
More importantly, there are currently no programs implemented either by the
private sector or by the public authorities to stimulate and use the potential of
these educational institutions.

The planning structure and management model currently observed in Sunny

Beach fails to recognize the need for strategic pondering over the complexity of
a dynamic system that the tourism destination effectively is; instead, in the
existing realm of destination management short-term economic performance
takes precedence over the integral approach to anticipating the vulnerability of
the tourism product. However, with the risk of getting too critical, recent years
have shown that even economic results have not lived up to managers’
expectations.

In the course of the study a serious disparity was identified between the line of
development of Sunny Beach and the global trends in tourism destination
management. As a result of the lack of consistent developmental policies
cultural and natural resources are still being regarded as objects of exploitation
for the sake of tourism development with little or no involvement of local
residents in the related decision-making and planning process. Local community
demonstrates a conditional support for the development of tourism in the area
as the IRIDEX indicates shift in current attitude from euphoria to apathy
(Stoychev, 2005).

The cultural and historical identity of the area, concentrated in the town of
Nessebar, a UNESCO World Heritage Site since 1983, is in danger due to the
trans-culturization to which local inhabitants are submitted. This is further
aggravated by the insufficient interest of public authorities in restraining this
process by means of supporting and promoting local culture.

The development of tourism activity and the competitiveness of the destination

are also strongly related to availability of and accessibility to natural resources.
At present, the environmental management in Sunny Beach and the surrounding
areas is of insufficient quality resulting in a rapid diminishment of the
destination’s attraction. The continuous massive construction exacerbates the
erosion of the coastline and makes the recovery of the biological diversity even
more difficult.

With respect to general destination management, other critical aspects to

highlight are the short-term quantity centered vision, the unlimited and totally
uncontrolled development of hotels and second-homes, the reactive and
restrictive management strategies as opposed to raising awareness and
encouraging good practices, and the little, when any, involvement of local
residents in the decision-making process. All these and the utterly
undifferentiated product make the low price the unique selling point of the
destination.

On the other hand, various sources and best-practice cases indicate that global
trends in tourism destination management have not yet been given
consideration in Sunny Beach. On the contrary, there are currently no limits to
growth, tourism receipts are not being proportionally enhanced with the increase
in tourist numbers, tourism activity has generally not contributed to the quality of
local life, and, more importantly, there are no prospects for an improved tourism
experience.

In effect, the current pace of tourism development in Sunny Beach has brought
about adverse effects with regards to job opportunities for the local population.
Not only does seasonal occupation generate low income but it also has direct
implications for the quality of service in the destination. Another important aspect
is the increase in prices of real estate and consumer goods in the region raising
thus the cost of living of local inhabitants, especially in high season.

Visitor Management

One of the most important tools in addressing increased use levels in tourism
destinations is visitor management. Not only does intensified use have a
significant impact on the environment but it also negatively affects the
recreational experience of visitors and the quality of local life. A prudent and
careful visitors management is therefore the key instrument in assuring visitors’
and local residents’ comfort and in complying with environmental requirements.

As opposed to existing concepts (Peterson & Lime, 1979), the current visitor
management model implemented in Sunny Beach is restricted to compulsory
measures, prohibitions, and legal restrictions. Landscape planning, including
development strategies on infrastructure construction is lacking, and more
importantly, positive channeling measures such as signposts, maps, and
attractive alternatives are only now entering into the municipality tourism
development agenda. In other words, visitors and local residents are presently
offered no means of information and education in order to raise their awareness
and the only visitor management efforts are centered on direct actions such as
mandatory permits and regulations with regards to the access of motorized
vehicles to the eastern part of the destination.

Even so, the participatory observations during the fieldwork revealed that the
access restrictions applied since 2002 are not as effective as initially contended.
The very entry system and the preceding application for the required magnetic
card are serious enough premises for bad practices and regulation defiance.
Implemented to guarantee tourists’ safety and security as well as their
incontestable right for recreation, the system is now being constantly questioned
for it was not accompanied by the construction of specially designated parking
places for vehicles without entry permits. As a result of the inadequate action,
the problem solution in the eastern part of the destination supposed the
aggravation of the traffic problems in all other parts of Sunny Beach.

Conclusions

The information processed throughout the various phases of the study

substantiated the conclusion that the existing destination management model
gives little consideration to the potential negative economic, socio-cultural, and
environmental impacts of boosting tourism development in Sunny Beach. Apart
from the Program for Sustainable Tourism Development in Nessebar
Municipality 2005 – 2010 partly dealing with some of the problems in Sunny
Beach and its surroundings there are currently no adequate developmental
strategies put into practice. Similarly, the very limited number of studies and
reports on the destination are confined to descriptive, rather than analytical and
critical analysis of the present situation.

More importantly, as put forward earlier, there are no indications of possible

advances in the elaboration and implementation of growth management
strategies. On the contrary, the study detected that critical issues are being
neglected, thus bringing about fundamental incoherencies between the existing
developmental approach and the primary objectives of sustainable, or balanced,
development (Timothy in Álvarez et al., 2003)).

Logically, the lack of a clear-cut growth management model and the priority
given to economic objectives have led to a series of interdependent issues
hindering the competitive advance of Sunny Beach. In the first place, the lack of
control and systematization of efforts has obstructed the enhancement of the
quality of development. Models for Environmental Impact Assessment regarding
new developments cannot yet find place in the agenda of local and national
authorities; practically no efforts are put into raising public awareness, partly
explaining the lack of participation of local residents in the decision-making
process.

The failure to identify current trends in destination management has clearly been
leading to mishandling of critical mass. Not only have colossal structures been
built at the expense of unique natural resources but there are no actions to
control and to anticipate the accelerated transformation of Sunny Beach into a
second-home destination.

Equally important, the quantity-oriented demand management and the short-

term individualistic development approach reflected in the lack of methodological
inter-sectorial focus in planning ultimately result in lock-in inefficiency and low
individual productivity levels. Not only does this question the sustained
competitiveness of the destination as a whole but also undermines the observed
destination management model. The particularization of strategic processes, to
the extent to which these can be called strategic, will ultimately have a
‘boomerang’ effect on those who are currently promoting it, as the tourism
activity cycle gets more and more fragmented and as long as integral evaluation
of qualitative outcomes within the realm of Bulgarian tourism is not implemented.

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